WARWICKSHIRE College Group has been saved from the brink of insolvency by a government bailout.
The group – which teaches some 13,000 students at colleges in Leamington, Moreton Morrell, Rugby and Warwick, together with Evesham and Pershore in Worcestershire – received news, just a week before Christmas, that it would receive a financial support package from the Department for Education (DfE).
A DfE assessment of WCG revealed the extent of the financial crisis after the board of governors had become “increasingly concerned about the financial fragility of the college” and what would “be required for the college to remain solvent”.
The board requested the ‘health check’ assessment which was headed up by Further Education Commissioner (FEC) Shelagh Legrave, whose report noted WCG had “experienced significant financial challenge” for several years.
She concluded: “With no emergency support or loans, the college will run out of unrestricted cash during January 2025 and needs £1.7million support”.
WCG had also asked the government for help to refinance the remainder of a £3million bank loan which it was in danger of defaulting on.
Staffing costs were singled out as a major factor in WCG’s financial difficulties. The group employs some 1,300 staff, the cost of which the report described as “significantly above budget”, accounting for more than 70 per cent of the group’s total income of £51.6million in the last financial year.
And the report also noted WCG’s focus on repaying debts by relying on income surpluses and selling assets left it “financially vulnerable”.
Plans to tackle the cash crisis are already in place with a number of savings identified, together with plans to sell off its Malvern Hills campus and part of its Evesham campus.
Government skills minister Jacqui Smith wrote to WCG on December 17 confirming the financial support and urging college leaders to ensure recommendations made by the FEC were “fully implemented”.
These included developing a single improvement plan for the college, supported by a financial recovery plan and strategy, and developing key indicators to drive and monitor performance.
The commissioner did praise new principal Sara-Jane Watkins’ “positive, joined up approach to leadership and governance” after taking up the job in September.
And the assessment did conclude WCG should overcome its financial problems with careful management.
Ms Legrave said: “The college has a size and diversity of provision that, with an appropriate level of refinancing put in place soon, and a closely monitored financial recovery plan it should be able to return to good financial health.”
The FEC team is set to conduct a further assessment to review progress in March.
The Observer has contacted WCG for a comment and has also asked what the total financial support package amounted to.
