Colleges should aim to build up a collective surplus of as much as £500 million a year, according to the FE commissioner.

Sir David Collins has told sector leaders that colleges should hold an operating surplus of 3-5 per cent of their income. But analysis by TES reveals that, at present, fewer than a quarter of colleges would meet this target.

According to the most recent accounts, more than four in 10 colleges reported an operating deficit in 2014-15. In December, the Commons public accounts committee warned that the sector’s financial health was “declining”, and that funding bodies had been “slow to address emerging financial and educational risks”.

‘Financial sustainability’

The target of attaining an operating surplus of at least 3 per cent is one of a series of benchmarks outlined by the commissioner, with a view to securing the financial sustainability of colleges after the area reviews.

The Association of Colleges (AoC) said it would be a “struggle” for colleges to hit the target, while the University and College Union (UCU) described the goal as “arbitrary” and counterproductive.

According to the official report of a meeting of the national area review advisory group, seen by TES, Sir David told FE representatives that if colleges met the percentage target, “the sector could secure a surplus of £250 million per year at minimum, and possibly as much as £500 million”.

This is an edited version of an article in the 2 September edition of TES. Subscribers can read the full article here. This week’s TES magazine is available at all good newsagents. To download the digital edition, Android users can click here and iOS users can click here. You can also download the TES Reader app for Android and iOs. TES magazine is available at all good newsagents.

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