Some £6 million of public money has been spent to date on administrators for Hadlow College, the Education and Skills Funding Agency (ESFA) said today.
Speaking in front of the Commons Public Accounts Committee today, Matthew Atkinson, director of provider market oversight at the ESFA, said that the figure could still rise – as the administration process is yet to be completed.
"The administrators charge by the hour, so the longer the case goes on, the higher the cost," he said. "And we also have a panel from which we choose administrators on a rotational basis. And that is significantly reduced charge-out rates to normal, but the cost to date of the administrators for both administrations is £6 million."
College finances: 64 colleges struggle with 'cash days' left
Need to know: Hadlow College placed into education administration
Labour MP Meg Hillier, chair of the committee, said that she “could imagine principals around the country gasping”, as the committee was.
In May 2019, Hadlow College became the first FE institution to go into administration after stacking up £40 million in debt amid concerns about the college’s former leadership.
The break-up of the college began at the start of 2020 – with the college’s Mottingham campus transferred to Capel Manor College on 1 January, and Hadlow’s Spring Lane (Canterbury) campus and the Ashford site of West Kent and Ashford College transferred to East Kent Colleges Group on 31 March.
Hadlow College: Insolvency 'the cheaper option'
Eileen Milner chief executive of the ESFA, said £6 million was a “gut-wrenching” figure.
“We have done assessment into Hadlow and West Kent and what would have happened if we hadn't pursued the insolvency regime option that we have, and the assessment shows that it would have cost us more than it cost us," she said.
“The £6 million figure is, if I'm completely honest, a gut-wrenching amount of money to spend. But it was cheaper than the alternative of not using an insolvency-based option.”
In July this year, the Ney report into how the government monitors colleges’ finances and financial management was published.
The report said that the nature of the current regime, the lack of a sector-wide strategy and the capacity and resources of the ESFA “have resulted in a relationship between government and the sector which is largely focused on financial failure” and which “inhibits colleges being transparent with government”.