The two biggest college groups in the UK have suffered a drop in income of between £20 million and £30 million since 2017-18, new analysis reveals.

In terms of overall income, LTE Group continued to be the largest college group in the UK, according to financial records recently published by the Education and Skills Funding Agency, with an overall income of more than £163 million in 2019-20 - a decrease of around £20 million from 2017-18, when it recorded £183 million. The group includes The Manchester College, UCEN Manchester, Novus, Total People and MOL.

The second-biggest college group in 2019-20 was NCG, which had a total income of around £129 million - this was around £30 million less than two years previously, when its total income was £158 million. NCG has a large geographical spread, incorporating Newcastle College, Lewisham College, Southwark College, Kidderminster College, Carlisle College, Newcastle Sixth-Form College and West Lancashire College.

Total income for the biggest college groups and colleges in 2019-20

Source: Financial records published by the Education and Skills Funding Agency

Background: The biggest colleges in England in 2017-18

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Liz Bromley, chief executive of NCG, said: “Since 2019, NCG has focused on providing exceptional teaching and delivering the technical and professional education of the future through our high-performing FE colleges. We are also building on the strengths of our HE-awarding powers in order to achieve our mission of enabling social mobility and economic prosperity for those in our local college communities.

“To achieve this, we have made changes to the way we operate, including the closure of our loss-making training businesses. The net result is a smaller but more successful and financially healthy organisation with strong foundations for the future.”

An LTE Group spokesperson commented: “LTE Group set a five year strategy from 2015 to 2020, the financial part of the Group strategy had three key themes. Reducing exposure to any one single funding stream, a focus on generation of cash and surplus rather than income, and much stronger alignment between the balance of quality and support for our people, alongside financial sustainability.

 A spokesperson from LTE group said: “In financial year 2019-2020 the Group decided not to retender or bid for some funding streams on the basis that our desired quality level for learners and customers could not be delivered with the financial envelope offered by the funding streams. In turn our strategic focus since 2015 to deliver better surplus and cash was a higher strategic priority than income alone. 

“In 2019-2020, as part of our strategic plan, income reduced, surplus increased slightly year on year and cash from operating activities increased year on year by 198 per cent, the latter being key to our plans to continue to award pay rises for our colleagues and to invest in major new facilities for colleagues, learners and customers in every part of the Group.”

College finances: Four groups with incomes over £100m

Four college groups in the UK had a total income of more than £100 million in 2019-20, accounts published by the ESFA reveal.

In 2017-18, Activate Learning was not in the top 10 biggest groups, but for 2019-20, it placed third, with a total income of more than £124 million. Activate has undergone several mergers in the past few years and is now made up of Banbury and Bicester College, Farnham College, Reading College, Bracknell and Wokingham College, Guilford College, City of Oxford College and Merrist Wood College. 

Ian Pretty, chief executive of the Collab Group, a membership organisation that represents several large colleges, said: “Overall, the trend towards larger regional college groups is maintaining itself, despite some of the significant challenges of the last year.

“The FE White Paper and the recent skills bill indicate that government wants to develop deeper strategic relationships with fewer, larger and more financially resilient colleges.

“Our view is that the government’s vision for the sector can be more readily achieved through large regional college groups, which can play a direct role in shaping the demand for skills in their region.”