Cadbury Sixth Form College, in Birmingham, has been warned its future is in the balance in a damning report by the further education commissioner released today.

Concerns over the running of the college, rated as requires improvement after an Ofsted inspection in 2016, prompted an assessment visit by a team from the FE commissioner’s office last October.

But the problems were worse than first thought - resulting in a Financial Notice of Concern being issued by the Education and Skills Funding Agency and the college being referred to the FE commissioner, Richard Atkins.

Highly critical

His assessment summary states: “There was no evidence of work to improve student recruitment in the future or to reducing costs. The principal did not consider the college’s recent requires improvement judgement from Ofsted was negatively impacting on student recruitment despite a sharp fall in student numbers”.

The initial visit “highlighted significant concerns, particularly in relation to deteriorating financial performance. The FE commissioner (FEC) team were not confident that the principal had the capacity to put in place solutions”.

The report adds: “In addition, there was a lack of confidence in the governance at the college - which has been poor, with limited oversight of the college’s financial position and an insufficient challenge of the principal.”

This resulted in a formal intervention assessment visit to the college in December 2017.

The report says: “The FEC team assessed the former principal and chair to have both failed in their respective responsibilities and insufficient action had been taken to address declining financial health and underperformance in quality.”

The previous principal and chair stepped down late last year.

Financial problems

There were financial issues “which could result in the college being at immediate risk”, according to the report.

It says: “College finance records were poor with some accounting still being carried out in handwritten ledgers.”

The college has also “breached bank loan covenants” and although it has could repay the loan, this would affect its “cash holding to below the level needed for operational purposes”.

Despite this, “management accounts and the proposed budget for the coming year did not highlight concerns over the college’s cash flow position”.

The college’s focus on dealing with its financial problems “may serve to detract attention from quality improvement,” according to the report.

Serious failings

It concludes that the college was “unable to demonstrate clear and credible strategies, processes and actions for improvement”.

In addition: “Governors and leaders were not deemed to have the right skills and capacity to deliver positive outcomes, giving rise to a very high risk that the college will fail financially. There was found to be a serious failure in management and governance and a lack of internal financial control.”

It recommends that the FE commissioner “undertake a Structure and Prospects Appraisal to determine if there is a sustainable future for Cadbury Sixth Form College. This will include identification of an appropriate merger partner”.

Pressure from skills minister

In a letter to David Cragg CBE, the college’s chair of governors, released alongside the report, Anne Milton, the skills minister, says: “I am pleased to hear that a commissioner-led Structure and Prospects Appraisal (SPA) is already underway. Through a merger with an appropriate partner, the solution identified will need to address the college’s financial and quality issues.”

She warned that in the meantime the college needs to continue to “take the actions required to contain its operating losses”.

Andrew Cropley, the college’s interim principal, told Tes: “We are on the brink of selecting our merger partner and the board will meet on Monday evening to make a final decision.”

He added: “We are confident that the chosen partner will work with us to create a positive future for the college and its students”.

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