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21st September 2020

Financial health of the college sector remains fragile

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This is the conclusion of The National Audit Office in its report on the financial sustainability of further education and sixth-form colleges published on 16 September 2020. Most of the evidence was gathered before the COVID-19 pandemic.

The NAO had last reported on the sector in 2015. Then it had concluded that steps had been taken by the Government to improve its oversight of the sector but that these actions were not likely to be sufficient to address a growing structural problem. The latest assessment concludes that since then changes have been made aimed at producing a more financially resilient college sector and improving governmental oversight and intervention arrangements. But these approaches have absorbed considerable amounts of public money, while many colleges remain in financial difficulty. The breadth of curriculum and levels of student support are among the aspects of provision that have been affected by financial pressures.

The programme of area reviews led to structural change which, the report concludes, had some success in making the college sector more financially secure. The Department for Education is now formulating a strategic reform programme intended to remedy systemic long-term weaknesses in the sector. Whilst welcoming this development, the NAO stated that, until such a programme is in place and achieving results, it cannot conclude that the Department is responding effectively to the financial sustainability challenges that colleges are facing.

The NAO referred in its reports to the Government’s expectation that colleges will play an increasingly prominent role in skills development, given the challenges facing the country. The following issues are mentioned:

  • the likely increase in domestic demand for technical skills in a range of sectors arising from Brexit;
  • some governmental plans (eg developing national infrastructure and increasing the number of public servants such as nurses and police officers) requiring the deployment of a more skilled workforce;
  • the Government’s ambition to ‘level up’ skills and prosperity across the country; and
  • developing the skills of people who retrain or change roles as a result of the economic impact of the COVID-19 pandemic.
It is to be hoped that, in light of the fundamental nature of these economic needs of the country, sufficient resources are provided to the college sector, notwithstanding the competing demands of so many areas for state funding.

If you wish to discuss any of the items raised in this article please contact Stephen Cole on 01604 233233 or click here to email Stephen.

To read the National Audit Office's report please click here.