The skills minister, FE commissioner and the Association of Colleges have united to call on college leaders not to miss out on between £200 million and £300 million in restructuring funding, which is set to go unspent.

Around £700 million was set aside for a college restructuring facility to help pay for reorganisation and mergers following the area review process, which began in September 2015.

But with less than 10 weeks to go until the deadline for applying to the transaction unit, which administers the facility on behalf of the Education and Skills Funding Agency, Tes understands that between £200 million and £300 million is currently expected to return to the Treasury’s coffers rather than being spent on college reorganisation.

Colleges ‘should not feel reluctant to apply’

According to sector leaders, a fear that the act of applying for financial assistance could make them a target for closer scrutiny from the FE commissioner and Ofsted, and, ultimately, intervention from the Department for Education (DfE), has put colleges off applying.

The skills minister, Anne Milton, told Tes that colleges should not feel reluctant about coming forward for funding.

“This was facilitating money, this was money to enable colleges to do some of the things they needed to do in terms of mergers,” she said, adding: “I was really, really keen that colleges knew that as important as making sure they bid for the money if they needed the money [was] for them to realise this will be coming to an end.

“That’s the critical thing. This never was going to be available forever…Maybe there is a last opportunity [for colleges to apply], but they have to get a move on.”

Funding was ‘hard won’ from the Treasury 

Up to March, there had been 58 applications for the restructuring facility. FE commissioner Richard Atkins said the £700 million fund had been “hard won” from the Treasury by what was then the Department for Business, Innovation and Skills and the DfE.

He added: “I am disappointed that a significant amount of this scarce money will be unspent when the fund ends in March. I believe that consolidation within the sector will continue, as evidenced by the 20 ‘structure and prospects’ appraisals, which the FE commissioner team has facilitated this year.

“Not all of these colleges were failing; some took the far-sighted and strategic decision to find a suitable merger partner so that more money could be spent on frontline teaching and learning. In all of these cases, the college’s governing body made the final decision, not the FE commissioner’s team. I would encourage any colleges that believe that they might be eligible for restructuring funds to come forward before the 30 September deadline.”

Insolvency regime could leave ‘nowhere to go’

AoC chief executive David Hughes said some colleges in financial trouble were apprehensive about approaching the transaction unit for fear of being seen as a failure: “It isn’t just a perception of failure, it is also [a fear] that you get into a place where maybe the FE commissioner could get involved and you might get in a position where you might get pressured towards a merger or restructure that might not be appropriate.”

Mr Hughes added that he was concerned that the new insolvency regime for colleges could mean there would be “nowhere to go” for colleges in financial difficulty. “The [restructuring] fund was established to try to bring every college into a positive surplus. That has not been achieved and will not be achieved.”

This is an edited version of an article in the 3 August edition of Tes. Subscribers can read the full story here. To subscribe, click here. To download the digital edition, Android users can click here and iOS users can click here.