Saudi Arabia will offer contracts of 10 years and longer for UK-based colleges that run courses in the country, it has been claimed.
Many participants in the kingdom’s controversial “colleges of excellence” (CoE) scheme launched in 2013 subsequently quit due to low demand, strict payment terms and delays, and difficulties of working under five-year agreements.
But Burton and South Derbyshire College (BSDC) chair Rajinder Mann told FE Week it discovered during a Department of Business and International Trade-led mission that there would be a tender launched this academic year for “much longer-term contacts of between 10 to 15 years”.
She said: “These new longer-term contracts will give colleges looking to get involved with technical colleges within the kingdom increased financial security when compared to previous contracts that were rolled over a number of times.
“We believe working in the kingdom offers real benefits to UK colleges and hope many more engage in this new tendering round.”
BSDC maintained a reduced operation in Saudi Arabia after its partnership was terminated in 2023 in the hope of securing a more favourable agreement.
Lincoln College is the only provider to currently hold a Saudi contract, while several others, including Activate Learning, quit the CoE scheme which had paid out a total of around £1 billion.
Saudi cost pressures
BSDC, which suffered financially due to its loss of Saudi income, operated a female-only college in Jeddah – the International Technical Female College at Jeddah – in partnership with other colleges under a company named Highbury Burton Saudi Arabia Limited (HBSA) until it became the sole shareholder in 2020.
Launched in 2013 on an initial five-year contract that was later extended until 2023 and worth £59 million, the Jeddah college provided vocational courses in areas including business management, IT and graphic design.
Minutes from May 2024 show the BSDC board agreed to shoulder “additional costs” by continuing operations in the country despite no longer holding a contract.
BSDC’s financial health rating dropped to ‘requires improvement’ for the first time in at least five years in 2023-24, recording a deficit and negative EBITDA, partly due to the loss of income from the Saudi project.
Financial statements revealed the board “recognised the risk” in exiting the country as this would make securing future contracts “impossible due to the high level of investment and the lengthy duration it would take to set up a company again”.
Ongoing costs to BSDC associated with the reduced Saudi operation include auditor fees, storage facilities for furniture and IT equipment, bookkeeping services, two members of staff and renewal of annual licences that must be retained under Saudi law. The college said it was using profits previously gained from the Saudi venture to cover the expenditure.
Mann said: “The year-end position reflects decisions to run a deficit budget for one year that considered pressures such as staff pay as well as the ongoing operation in Saudi.”
She added BSDC suffered extra “one-off and unforeseen” tax costs of £356,000 when the former Highbury College, Portsmouth, reneged on an agreement to contribute to a tax bill when it quit HBSA in 2020.
Highbury College, which left after financial trouble triggered government intervention, subsequently merged and is now part of City of Portsmouth College, which did not respond to a request for comment on the Saudi tax allegation.
‘Exceptional’ success
Mann said HBSA’s track record in Saudi was “exceptional” with achievement rates topping 90 per cent, the “highest” employment rates within the CoE programme at 71 per cent, and consistently achieved “good with outstanding features” grades from the kingdom’s quality assurance regulator.
She added: “We feel that our strong track record of high outcomes and excellent teaching and learning in the kingdom, partnered with our extensive in-country experience, effectively positions both BSDC and HBSA with the best possible chance of success in securing further contracts whilst also fulfilling our government’s ambitions of exporting high-quality education across the globe.”
Lincoln College landed an initial £250 million five-year agreement to operate in Saudi in 2014. It extended its presence in the country but on a reduced contract to run two colleges in the kingdom until 2029.
It told FE Week: “Lincoln College has successfully educated thousands of male and female Saudi students over the past decade.
“We work closely with the UK government to meet public sector requirements and expect this to continue as new opportunities come to the market.
“Our financial health for 2023-24 is rated as ‘good’ and will currently be ‘good’ for 2024-25, reflecting the success of our educational and commercial activities.”
A Department for Business and Trade spokesperson said: “We support skills development as one of several education goals under the UK-Saudi Arabia Strategic Partnership Council and we continue to work with the Kingdom of Saudi Arabia government and the UK sector to identify opportunities for education partnerships.”
Saudi’s CoE organisers did not respond to requests for comment.
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