Hadlow College is the first further education college to enter insolvency after the Department for Education (DfE) called in administrators.
Education secretary Damian Hinds applied to the high court to place the failing provider in administration just four months after the government’s new insolvency regime was established.
The Association of Colleges (AoC) said in a statement: “This is an exceptional case under new legislation which has never been used before. Because of that, everyone involved in this will be learning as they go, so it is more difficult than usual to forecast what might happen.”
There is currently an investigation by the Education and Skills Funding Agency (ESFA) into financial irregularities at the college. The former principal, deputy principal and two college chairs have left the Hadlow Group over the investigation. Hadlow Group’s subsidiaries, secondary school and nearby West Kent and Ashford College are not included in the insolvency.
The AoC said in response to the news of Hadlow College: “The duties on college governors and leaders are clear. They need to manage resources responsibly and be careful about making commitments and in virtually every case they do that exceptionally well.”
A DfE spokesperson said to FE Week: “We can confirm that following a request from Hadlow College, we have applied to the court to place the college in education administration. This is matter for the court and it would be inappropriate to comment further until a decision is made.”
Hadlow College has been receiving exceptional financial support from the government because of its predicament and recently applied, but was denied, a £20 million restructuring fund from the ESFA.
In the statement, the AoC also said: “We see no sign that DfE will remove exceptional financial support from other colleges where they and the FE Commissioner are working together to address the tough funding environment. In fact, DfE recently confirmed that it may make emergency funding available where a college would otherwise run out of money in order to help the college to find a viable future solution.”
The new insolvency regime mandates an education administrator help oversee the process and ensure day-to-day teaching and qualifications are not affected.
On its website, the AoC says the DfE’s insolvency regime was introduced in January 2019 after “the experience of dealing with several financially weak colleges persuaded ministers and officials that it would help to have more clarity on what should happen and who should take responsibility.”
The AoC’s many colleges are under financial pressure. On its website, the AoC states that “funding rates paid to colleges have been fixed in cash terms while costs have risen because of inflation, the tight education labour market and unfunded obligations places on colleges”. It says FE sector competition, falling numbers of apprentices and bank loans have “left some colleges exposed”.
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