Borrowing costs for colleges have rocketed in the wake of recent insolvencies, according to a sector leader.

Addressing a session at the Association of Colleges’ annual conference in Birmingham, former AoC chief executive Martin Doel spoke of his period as interim chair of West Kent and Ashford College, from March to September this year.

In August, it followed Hadlow College in being placed into education administration.

News: West Kent and Ashford College to go into administration

Background: Hadlow College placed into education administration

FE commissioner: ‘High risk’ of college insolvency, warns FE commissioner

‘Obvious disadvantage of education administration’

Mr Doel, the Further Education Trust for Leadership professor of leadership in FE and skills at UCL Institute of Education, told a session at the conference: “The obvious disadvantage of education administration is the increased borrowing costs across the sector. The banks are at a greater jeopardy than they would ever have been before in terms of lending to the sector, that’s the downside. On the other hand, the reverse of that is there is less irresponsible lending going into the sector.”

Mr Doel also praised staff at the college for their attitude during the past few months, and said in his view the quality of education currently being delivered would deserve to be graded “good with outstanding features” by Ofsted.

Mr Doel also gave four pieces advice on how colleges can avoid falling into education administration:

• The finance director or chief financial officer should be required to take at least three weeks of leave during the summer each year. This would allow for any colleagues with concerns to come forward as whistleblowers in their absence.
• Audits should be carried out in the absence of the finance director or chief financial officer to ensure their impartiality.
• The principal should be asked to leave for the last 15 minutes of each board meeting, to give other governors the opportunity to raise concerns in their absence.
• Shadow boards created during mergers should have a set lifespan, and their minutes should be shared in full with the boards of the separate colleges.