More than 60 colleges have “issues” with the number of cash days left, the Education and Skills Funding Agency has said.

Speaking in front of the Commons Public Accounts Committee today, Matthew Atkinson, director of provider market oversight at the ESFA, said that 64 colleges had “imminent issues” when it came to this measure, which describes the number of days that an organisation can continue to pay its operating expenses, given the cash available. The ESFA would devote most of its time to supporting those colleges, he added. 

“In terms of the number of colleges who have issues on cash days - about 64 of them do - and that means that we will devote most of our time towards those because they seem to me to have the most imminent issues,” Mr Atkinson said.

He added that in July colleges were asked to supply an indicative financial health grade and that the largest movement was from “outstanding” to “good”. 

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Mr Atkinson added that the ESFA would spend around £70 million this year on emergency funding. 

Coronavirus: The impact on college finances

He said: “You will appreciate that you’re trying to forecast something that’s actually very difficult to forecast. Colleges are actually very good at mitigating when things go wrong - they’re highly adaptable businesses - so we’re expecting something like that, and that is more than we thought.

“Some of these issues are definitely Covid-related. If you’re a college exposed to apprenticeships or more exposed to commercial income, over the summer holidays you have to generate commercial income, then you’re more exposed to Covid. Some of the cases that we seen were already problems and that has been accelerated because of Covid.”

In September, skills and apprenticeships minister Gillian Keegan told MPs that the department was supporting 40 colleges, and that five FE colleges had needed extra financial support due to Covid-19. 

Eileen Milner, chief executive of the ESFA, added the college sector was diverse and complex, and that would “inevitably feed its way through in terms of funding lines”. 

Earlier in November, the impact of Covid-19 on college finances was analysed by the Institute for Fiscal Studies. In its Annual Report on Education Spending in England, the IFS found that despite the £400 million extra in funding this year, exceptional rises in student numbers could still lead to a real-terms fall in funding per student for college. 

The research found that student numbers in further education colleges and sixth forms are likely to increase this year owing to rising numbers of young people, combined with unusually high GCSE results and significant reductions in training and employment opportunities.

And in August, five colleges in the West Midlands told Tes that they were predicting a £22 million loss due to a drop in apprenticeship starts and a reduction in other income.