Select committee: Public Accounts Committee
Conclusion 26
Thirty-Eighth Report - Managing colleges’ financial sustainability
Published 27 Jan 2021
Addressed to HM Treasury
Public Accounts Committee Managing colleges’ financial sustainability All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
The ESFA confirmed that the administration processes for the two colleges were largely complete, although some statutory duties and administrative tasks remained to be done.46 It estimated that it would have spent more than £60 million on the two cases by the time they were completed. It said that a large proportion of this related to the costs of bringing the colleges’ estates up to a reasonable standard, before other providers took them on. It had also provided a significant amount of emergency funding to pay the colleges’ creditors.47 The ESFA estimated that the cost of the administrators 38 Q 97 39 C&AG’s Report, para 19 40 C&AG’s Report, paras 19, 3.21, Figure 9 41 Qq 99, 104 42 C&AG’s Report, para 20 43 Q 108 44 Q 110 45 C&AG’s Report, paras 3.31, 3.33 46 Qq 102–103 47 Q 92–93 14 Managing colleges’ financial sustainability was £6 million – 10% of the total cost – and was likely to rise further as the process was finalised.48 The Department asserted that, without the insolvency regime, it would have cost over £20 million more to resolve the problems at the two colleges.49
From: Public Accounts Committee, Thirty-Eighth Report - Managing colleges’ financial sustainability (HC 692), 27 January 2021
Government response
The government responded to the whole report on 26 March 2021.
Summary written by Accountability Index from the government's response. It is not the government's own words.The government states that it "agrees with the Committee's recommendation" on each of the seven recommendations in the response, with target implementation dates given for several.
- On VAT, it agrees with the recommendation and says the department will "explore the potential routes and efficacy" of it with HMRC, and will engage HMRC/HM Treasury "to gauge ministers' appetite" for changing or implementing legislation (target date: August 2021).
- On funding based on student numbers, the department says it is "currently developing a consultation" on how a change to the college funding formula could help, and is "considering the advantages, disadvantages and possibilities" of a system based on real time activity.
- On intervention, it will consult sector stakeholders to "review and publish an update" to its college oversight support and intervention policy in May 2021, and the Committee will be provided with a copy.
- On T Level work placements, the department will write to the Committee in July 2021 setting out what assurances it has that there will be enough industry placements, and the impact of COVID-19 on their availability.