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Statement on overseeing financial sustainability in the further education sector

20 July 2015

A statement from Meg Hillier MP, Chair of the Committee of Public Accounts:

"This is a deeply alarming report. I do not believe it is any exaggeration to say the future sustainability of the Further Education (FE) sector is at risk of financial meltdown: 110 colleges in deficit at the end of 2013-14 up from 52 in 2010-11. Meanwhile, the number of colleges rated as financially inadequate by the Skills Funding Agency (SFA) has more than doubled from 12 colleges to 29 colleges (out of 244) over the same period.

The financial health of colleges is only getting worse with the SFA expecting the number of ‘financially inadequate' colleges to rise to 70 by the end of 2015/16.

Further education could play an important role in meeting the UK's skills shortage and help kickstart productivity growth in the UK. But, at a time when the government has set out its stall to create a high-skilled economy, the financial stability of the FE sector is worryingly uncertain.

FE can transform lives, and for many can be a second chance at education.  But when colleges have financial difficulties, it is not only college employees that suffer but learners too. I worry that many colleges are taking tough decisions to avoid financial difficulty, and trying to maintain educational standards, without having the right financial management skills in place.

Although BIS and the SFA have improved their analysis of risk in the sector, they must support colleges in spotting financial difficulties sooner so that colleges can get back on track before needing formal intervention.

Too often further education is seen as the Cinderella of education when the reality is that it plays a vital role in equipping young people and adults with the skills to contribute to a growing economy. The FE sector must be put on a more stable financial footing. The independence of FE colleges doesn't mean the Department and the SFA can abdicate their responsibility to get best value for the taxpayer from the public funding to colleges."

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