Around 30 to 40 colleges are currently "of concern" due to their finances, the FE commissioner has said.

Speaking in front of the House of Commons Education Select Committee this morning, Richard Atkins would not be drawn on how many institutions faced formal intervention. He said intervention was not the only outcome for colleges hitting financial difficulty: "If they require funding they need to come forward and ask now. We may respond to that in a number of ways," he said.  

However, he added: "I've got to figure it in my head that I'm working on an assumption that there are 30 to 40 colleges at risk at the moment, going into the next financial year."

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Colleges 'of concern'

"At the moment, 30 to 40 colleges will be of concern, until I've seen their detailed financial return on the 31st of July, it would be foolish of me to give a precise number."

Mr Atkins added it had never been more difficult for principals and finance directors to put together a costed curriculum plan, "which is the engine room of any college": "With thousands of learners it is always challenging, but this year with a potential 50 per cent plus drop in apprenticeship starts potentially with unpredictable 16 to 18 numbers, with HE numbers being subject to no numbers cap, plus the commercial income that a lot of colleges have lost already, it's a complex picture for each college."

Mr Atkins, a former principal, said colleges had faced “a perfect storm” for the past seven to 10 years. 

“I think colleges have done a magnificent job, to be honest, at keeping their heads above water during this difficult time. Next year, they are going to have an injection of about £400 million in additional funding, core funding, the 16 to 18 [funding rate] is going up for the first time for almost 10 years, and there will be additional money for specialist Stem subjects and others. So there is an improvement and, of course, at last the demography starts to go up. So the next year, nearly all colleges will see a demographic increase in their area. However, as I said earlier, the unpredictables at the moment are greater than they have been in my 40-year career in the sector.

“I always worry about the financial stability of the sector, but I am just a touch more optimistic about next year than I have been in the last two or three years. There are, in my view, around 30 plus colleges that are at risk of running out of cash next year, but those colleges always receive financial support. Colleges don't just stop running.”

He added he was confident colleges would be reopening in September, and providing “service to all their learners”.

Yesterday, Tes revealed that more than 25 colleges are currently in formal intervention by the further education commissioner, and a quarter of them have been in that process for more than two years. One college has been in intervention for more than four years. 

In May, a survey by the Association of Colleges showed four in 10 college leaders predicting a deterioration in their college's financial health as a result of coronavirus, while a third predicted cashflow issues and 13 per cent believed there could be "a significant threat to solvency".