Northern College faces 'perfect storm' over finances

College achieved 'outstanding' financial health over recent years but risks being downgraded due to Covid

Julia Belgutay

College funding: Northern College faces 'perfect storm' over finances, warns FE commissioner

Northern College, one of just two institutions in England to offer residential courses to adults, faces a “perfect storm” threatening its future, the FE commissioner has warned.

In a report published today, but dated March 2021, the commissioner says the institution was well led by its board of governors and “a highly committed principal and senior team”. “Despite this, the college faces an increasingly uncertain future due to a combination of factors, which taken together contribute to a ‘perfect storm’,” the report says.

These include a potentially substantial repayment of funds to the Education and Skills Funding Agency (ESFA), a significant shortfall in enrolments and income mainly as a result of Covid, current and planned reductions in funding for residential provision, the implementation of devolved funding and the long-planned retirement of the long-serving assistant principal for finance and business services.

Background: Combined authorities step in to save Northern College

More: FE funding clawback could lead to staff and course cuts

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The report says the college had achieved “outstanding” financial health over recent years “with no borrowing and healthy cash reserves, built on sound financial management plus the benefit of a funding uplift for residential courses”. “However, the issues that are highlighted above means that there is a risk that the final financial health grade for 2019-20 is moderated down to ‘inadequate’ because of negative earnings before interest, taxation, depreciation and amortisation (EBITDA), funding audit clawback and concerns over the long-term financial sustainability of the college.”

Northern College risks 'inadequate' rating on its finances

According to the report, based on the January 2021 management accounts, total income is forecast to be 27 per cent lower than budget, due to the impact of the Covid-19 pandemic.

The commissioner recommends that governors should agree to participate in a structure and prospects appraisal, led by the commissioner’s team, and a local provision needs analysis (LPNA) alongside the Sheffield City Region and West Yorkshire Combined Authority. This should explore options “including structural change and standalone as a way of securing a sustainable delivery model”.

Last month, Tes revealed that West Yorkshire Combined Authority and Sheffield City Region had together agreed a funding uplift of 4.7 per cent to save Northern College. This meant the college would be able to continue to offer its provision to West Yorkshire residents.

Sue Pember, director of policy at Holex, said at the time: "This decision from Sheffield City Region and West Yorkshire is welcome. However, it is hoped that all options are considered, including Northern College continuing to operate as a standalone charity, and it is not forced into a merger that compromises its core mission." 

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Julia Belgutay

Julia Belgutay

Julia Belgutay is head of FE at Tes

Find me on Twitter @JBelgutay

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