Public Accounts Committee

Overseeing financial sustainability in the further education sector inquiry

Inquiry status: Concluded

Report published 16 December 2015. Government response published 3 March 2016.

Report published

Around 4 million people attend further education institutions in England each year. Further education is formal learning outside of schools and higher education institutions, covering academic and vocational courses and training for apprenticeships.

In England, there are around 1,100 providers of further education, including around 240 colleges. The Education Act 2011, and subsequent policy documents, have emphasised colleges' independence, and their freedom to manage their own affairs, with external intervention occurring only where a college is failing.

College sector financial health in decline

The financial health of the FE college sector has been declining since 2010–11. In 2013–14, the sector was in deficit for the first time and 110 colleges recorded an operating deficit, up from 52 in 2010–11. In the same period, the number of colleges assessed by the Skills Funding Agency (SFA) to have 'inadequate' financial health rose from 12 colleges (5% of colleges) to 29 colleges (12%). The SFA anticipates that this number will continue to grow. On current trends, it could be around 70 colleges by the end of 2015–16.

The financial support that the SFA offers to struggling colleges has increased significantly since 2010, but most has not yet been repaid. The outstanding balance, including new advances, stood at £45 million by February 2015, relating to 13 colleges.

This inquiry will challenge government on whether it is taking responsibility for protecting the taxpayers' money invested in the sector; examine whether the balance between 'prevention' and 'intervention' is correct when responding to financial sustainability issues; and obtain assurances that government has robust plans in place for creating a sustainable college infrastructure for the future.

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Read all transcripts, written evidence and other material related to the overseeing financial sustainability in the further education sector inquiry.

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