Increasing financial pressures on colleges have triggered a growing demand for exceptional financial support, the final annual report of the Skills Funding Agency (SFA) has revealed.
According to the SFA’s annual report and accounts document for 2016-17, £4.15 million was released in exceptional financial support to colleges with poor financial health in 2016-17, while £2.85 million was spent on restructuring facility funding to support FE or sixth-form colleges making organisational changes following the area reviews. The total value of outstanding loans for exceptional support and restructuring facilities now stands at £47.13 million.
The report also identifies four major risk factors that could threaten the sector: an overall decline in financial health; a failure to meet the “expectations” of the government’s apprenticeship programme; delays in devolving adult education funding; and weaknesses in financial controls. A worsening of the sector’s financial health could lead to “greater demand for intervention and growing pressure for exceptional financial support, resulting in an unfunded pressure on the adult education budget”, the report states.
The SFA has spent £200 million less on overall programme expenditure this year - some £3.22 billion compared with £3.44 billion in 2015-16. The agency says this “in line” with the reduction of funding from the Department for Education, but that it also “reflects the transfer of responsibility for funding capital projects at FE colleges from the SFA to [local enterprise partnerships”.
Not all assistance for struggling colleges is released in exceptional financial support. In January, former skills minister Robert Halfon announced that the government would spend £140 million on “propping up colleges facing extreme financial difficulties” by March. “That money should have been spent on education and training priorities,” Mr Halfon said.
‘High thresholds’
Julian Gravatt, deputy chief executive of the Association of Colleges, said: “[The] government makes exceptional financial support loans to colleges who cannot obtain cash from other sources. The current [exceptional financial support] loan balance of £50 million is less than 4 per cent of total college borrowing or £1.5 billion, and less than 1 per cent of total college income of £7 billion. [The] Treasury [gave] more than £500 million in loan funds between 2016 and 2019 to support college restructuring. The fact that only £3 million had been advanced by March 2017 shows the high thresholds that ESFA is applying to college applications.”
In March, the SFA merged with the former Education Funding Agency to form the Education and Skills Funding Agency.
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