The Department for Education is to commission an external review of how it identifies financial-management issues at colleges, in the wake of the Hadlow College case.

The move was revealed by apprenticeships and skills minister Anne Milton, as she admitted that problems at Hadlow “went on too long without us knowing about it”.

After announcing the review at the Association of Colleges’ (AoC) Spring Policy Conference in London today, Ms Milton told Tes that the DfE would be reviewing its process for whistleblowing, in a bid to help it identify financial problems at an earlier stage.

Yesterday, Hadlow became the first college to be placed into education administration by a High Court judge. This means that it will be the first institution to go through the college insolvency regime.

Read more: Hadlow leaders 'put sustainability of two colleges at risk', says FE commissioner

Background: Hadlow College placed into education administration

Read more: Five colleges to bid for Hadlow College provision

'Major failings' at Hadlow College

Two reports into the institutions that make up the Hadlow College Group – Hadlow College and West Kent and Ashford College – were published today by the FE commissioner.

The reports by FE commissioner Richard Atkins highlight “major failings in a number of areas", and conclude that there has been a "corporate failure of leadership, financial management and governance".

Ms Milton told the AoC conference: “It’s not a decision we’ve taken lightly. We’ve been working with and supporting the college, providing emergency support to keep it going while we investigated the problems, and developed options to secure its future. Administration is one of the tools we’ve decided to use to deliver a long-term plan.”

'Other cases of concern'

Highlighting an article on the Hadlow case written for Tes by AoC chief executive David Hughes, Ms Milton said: “David is right that it’s a worrying time for the sector, and it is always time for reflection and learning lessons for all of us.

“But I hope colleges can take heart from the amount of effort and resources we are putting into sorting this problem out. Our top priority is to make sure that students in Kent, like everywhere else in the country, have access to high-quality further education.

“We will be doing an external review to look at the systems within the DfE so that problems with financial management are identified at the earliest possible stage. This went on too long without us knowing about it. You can’t always mitigate against every risk that’s out there. But it’s a good time to have an external look at those procedures that we have.”

She added that there were a “few other cases of concern” in the sector. But, speaking to Tes after her speech, Ms Milton stressed that Hadlow was an “exceptional” case.

'Always come to us'

“It’s important to distinguish between colleges which struggle financially and Hadlow College, which appears to have used funds in a way we wouldn’t expect them to have been used. So there’s a stark difference: colleges that are struggling financially, we will always go in and support," she said.

“We hear about them, they come to us. We’re really keen [to do that], and part of the expanded role of the FE commissioner has been his diagnostic assessments. So I think the important message to the sector is: always come to us if you’re having problems. We are there to help you.”

She added: “But come early, not too late.”

When asked about the DfE’s review of its processes for monitoring colleges’ finances, Ms Milton said: “The important thing is, what could we have done which would have highlighted these problems earlier? You can’t always have procedures that…mitigate against every risk, but we will have a look and see if there’s something we can do that would highlight issues like this.

DfE whistleblowing review

“I’ve asked officials, do we have the right process on whistleblowing? Because whistleblowing can be quite useful. Sometimes complaints are vexatious, but it is one route to people highlighting concerns about a college.”

While admitting that Hadlow's fall into administration had been a “sombre occasion” for the sector, Ms Milton stressed that it was an “exceptional” case.

“One college has not behaved as we’d expect them to do," she said. "It doesn’t mean that other colleges aren’t doing brilliantly. It’s really important that it doesn’t taint the well of colleges, most of whom do a brilliant job in difficult circumstances.”

Yesterday, Mr Atkins told Tes that five colleges were preparing bids to take on provision run by the Hadlow College Group.