Stoke-on-Trent College received a half-million bailout


Stoke-on-Trent College is almost £16 million in the red and received more than £500,000 in exceptional financial support in December alone, while it awaits the outcome of a £21.9 million application to the government restructuring facility.

In the meantime, it is “reliant on the continued availability of bank loans (in respect of which covenants have been breached) and an overdraft, together with short-term cashflow support from the Education and Skills Funding Agency”, according to its 2016/17 financial statements.

These circumstances “constitute a material uncertainty that may cast significant doubt on the group’s and the college’s ability to continue as a going concern.”

The college went through four different principals during the year – one of whom cost the college £67,000 for just over three months’ work.

An additional £150,000 was spent on “compensation for loss of office paid to former key management personnel”.

A spokesperson for the college insisted that remuneration for the top job “represented a salary consistent with the previous year” – which was between £170,001 and £180,000, according to the accounts – but with the “addition of a one-off expenditure that was in line with the organisation’s contractual responsibilities”.

He said the college had “implemented a number of cost-saving measures in the past year to stabilise its finances”, and these “unavoidable” payments were an “element of the fresh-start process through which the college is going”.

Revealed: the 12 colleges surviving on government bailouts

The college would not be drawn on what this fresh start involves, but a note from the college’s July 2017 governing board minutes indicated that it was expected to cost £550,000 in 2017/18.

The grade three college, which had an operating deficit of £1.61 million in 2016/17 and debts including a £12.75 million loan from Lloyds Bank, had two separate requests for EFS approved during the year, the accounts revealed.

The first, in February, was for £990,000, and the second, in July, was for £2.55 million.

It’s not clear if the £535,959 it received in December was part of, or in addition to, this £3.5 million.

Unlike other colleges with similarly precarious finances, Stoke-on-Trent has no plans to merge.

An FE commissioner-led structure and prospects appraisal in February “recommended a ‘fresh-start’ approach as the college had been unable to find a willing strategic partner”.

Despite this, the college is in the process of submitting a bid to the restructuring facility – a fund designed to pay for post-area review changes that colleges are unable to afford.

But the £21.9 million it has requested is intended cover the college’s debt, along with “a small short-term loan request to provide additional headroom in the context of adverse variances against forecast operational cash flows”.

Stoke-on-Trent, which slipped from ‘good’ to ‘requires improvement’ in November 2016, received a notice of concern for financial health in October 2014, which led to intervention by the FE commissioner.

That process concluded a year later, although the notice remained in place – and was joined in February last year with a notice for financial control.

Your thoughts

Leave a Reply

Your email address will not be published. Required fields are marked *