A Hampshire college hit by “serious cashflow pressures” has warned of “substantial redundancies” after it was placed in government intervention.
Havant and South Downs College (HSDC) was deemed to have ‘inadequate’ financial health by the year ending July 2024 and its audited accounts warned of “material uncertainty”.
Financial statements show a £550,000 deficit, a negative EBITDA (earnings before interest, taxes, depreciation, and amortisation) and a high staff-to-turnover ratio of 72 per cent – 7 percentage points above the FE Commissioner’s benchmark.
“Ongoing delays in the sale of land” related to its South Downs campus are also to blame for the college’s poor financial position, as it has meant that HSDC has had to “finance a higher proportion of its capital programme from working capital”.
The college also saw a fall in 16-to-19 enrolments in September 2024, which will “present a further financial challenge” due to the government’s lagged funding model that will hit budgets in 2025-26.
The Department for Education published a “financial notice to improve” (FNTI) for the college today which triggered FE Commissioner intervention.
HSDC principal Mike Gaston warned that large numbers of the college’s 1,000-strong workforce are likely to lose their jobs as leaders try to balance the books.
He told FE Week: “While the challenges outlined in the FNTI are significant, they compel us to take decisive action, including a process of right-sizing that may, regrettably, involve a substantial number of redundancies. I want to be unequivocal; these decisions are never made lightly.
“Our foremost priority is to stabilise the college to secure a sustainable future, ensuring that we continue to offer the high-quality education our students expect.”
According to HSDC’s accounts, the college self-assessed its financial health grade of ‘requires improvement’ for 2023-24, but this was moderated down to ‘inadequate’ by the government during a post-moderation process.
The FE Commissioner’s team will now conduct an “independent assessment of the college, and the capacity and capability of its leadership and management, and governing body to bring about the required changes and improvements”. The first visit was scheduled for May 1.
The FNTI said: “The Department for Education is issuing this financial notice to improve HSDC following the serious cashflow pressures facing the college and the confirmation of a post-moderated financial health grade of ‘inadequate’ for the year ending July 2024. This means that HSDC is now placed into formal intervention.”
The college’s accounts said leaders “recognise the importance” of addressing its high pay costs, tight control of non-pay costs and improving curriculum efficiency in order to improve EBITDA and help to lift the financial health score to at least ‘requires improvement’.
HSDC is now working on achieving cost reductions of “at least £2 million by 2025-26 to help”.
Gaston said: “I acknowledge the personal and professional challenges and distress this restructuring presents to my colleagues. The notice to improve does not in any way relate to the quality of teaching at the college, nor does it relate to or impact the experience of our students. The goal now is to build a college for the future, one that is financially secure, operationally sustainable, and continues to provide meaningful employment within the community.”
The college has over 1,000 staff, around 6,500 students and was judged ‘good’ by Ofsted in July 2024.
HSDC was originally incorporated as The South Downs College before merging with Havant Sixth Form College in 2017, and then in 2019 the combined college merged with Alton Sixth Form College.
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