Warwickshire College Group claims to have “restored financial stability” after a “difficult” couple of years that involved repaying more than £5 million in overclaimed funding.
The group almost entered insolvency last year amid a cashflow crisis but was saved by a last-minute government bailout. It has been subject to FE Commissioner intervention since 2024.
Financial troubles escalated when a Department for Education audit initially identified clawbacks of around £1.4 million across 16-to-19 provision and apprenticeships funding streams for the 2022-23 academic year.
But when investigators looked back to 2019 they unearthed a significantly larger number of funding overclaims.
WCG’s newly published 2024-25 accounts reveal the total clawback hit £5.4 million.
The group said the overspend concerned “historic funding claims” caused by “legacy control weaknesses” across “multiple funding streams”. This included the “retention of ineligible funding” related to apprenticeships.
A formal investigation report outcome is expected to be published by the DfE, which typically details what specific funding breaches were found.
A WCG spokesperson said the group “would not want to pre-empt their [DfE] conclusions by commenting further on detailed audit findings beyond what is already in the published accounts”.
The spokesperson added that signed accounts “bring to an end all historic funding assurance work relating to delivery between 2019 and 2023” and confirmed that the clawback had been repaid in full.
To remain afloat, WCG received two emergency loans from the DfE totalling £3.9 million, which were secured against the college’s Trident campus in Warwick, and Evesham campus which is now up for sale.
The group’s financial statements show a markedly improved position. Total income increased from £49.8 million in 2023-24 to £60.2 million for 2024-25, while education-specific EBITDA (earnings before interest, taxes, depreciation and amortisation) improved from a £270,000 loss to a £4 million profit over the same period.
Cash days in hand strengthened from eight in July 2024 to 35 days 12 months later.
WCG said its financial health score would be classed as ‘good’ under the FE Commissioner’s methodology, but this is prior to the “potential” automatic downward adjustment applied as a consequence of receiving emergency funding.
CEO Sara-Jane Watkins, who was appointed to the role in May 2024, said: “These accounts close a difficult but necessary period of work to resolve historic funding issues and restore financial stability.
“Over the past year we have taken decisive action to stabilise the organisation, rebalance our cost base and improve cash resilience.
“With all historic audits closed and no outstanding funding issues, the focus is now on maintaining financial health and delivering high-quality education and skills provision for learners and employers across the region.”
Improvement work
Help brought in to improve the college’s financial controls included “expert consultants” and a new specialist apprenticeship compliance manager, the accounts show.
They also reveal that the funding audit experience led management to “fundamentally develop and enhance” the college’s internal reporting processes and take a “sophisticated approach” to data governance.
Gill Clipson, chair of WCG since 2022, said: “The board has worked closely with the DfE and the FE Commissioner throughout this period. Financial oversight, governance and assurance have been significantly strengthened.
“While the issues addressed relate to historic activity, the actions taken over the past year have placed the group on a far more resilient and sustainable footing.”
The college group is responsible for around 13,000 students, including more than 2,000 apprentices, and has 1,300 staff across six colleges in Warwickshire and Worcestershire.
It’s made up of Evesham New College, Warwick Trident College, Rugby College, Royal Leamington Spa College, Moreton Morrell College and Pershore College.
The group sold several sites in controversial circumstances to repay its commercial debts, which peaked at about £23 million in 2014.
They include its Malvern Hills campus, its old Rugby College site for £7.6 million, its Henley-in-Arden site to Wasps Rugby for £6.5 million, and the sale and leaseback of accommodation blocks in Leamington for £5.2 million.
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