Merseyside college is at risk of insolvency
A further education college in Merseyside is at risk of insolvency following a costly merger.
A report on St Helens College has revealed the college will go under if a rescue plan is not put into place.
The college is one of the largest in the North West and is spread across four sites.
The issues are linked to a merger with Knowsley College in 2017 to form SK Colleges Group.
According to a report from FE Commissioner Richard Adams the current financial position of the college is not sustainable.
The merger was backed with a £14.1m grant from the ESFA’s restructuring facility.
The merged college group has an annual turnover of £32m, more than 600 staff and 10,000 students including Higher Education students.
But the cost of the merger was seriously underestimated.
The report said: “The income targets used in the original restructuring facility application were too optimistic and the college would not have proceeded with the merger if they had fully understood the impact on overall financial and quality performance.”
The level of funding required to support a successful merger did not take account of certain PFI arrangements or over-stated recruitment targets at Knowsley.
The principal of SK Colleges Group Jette Burford has recently retired and has been replaced by an interim.
The college has now been told to implement a recovery plan by the ESFA.
Monica Box, the interim principal of SK College Group, said: “During the last six months, the college has produced and is implementing a clear three-year recovery business plan.
“The board is monitoring the plan vigorously, and is confident it is robust, achievable, and will deliver the necessary actions to provide a sound financial position during the lifespan of the plan.”
In a statement addressing the reasons for the financial positions, Principal Box said: “Timing really had an impact; this was compounded by considerable delays in finalising the merger, thus preventing early implementation of identified efficiency and cost saving initiatives.
“Like many other further education colleges across the country, financial pressures are a reality. The college had recognised that it needed to take swift action to mitigate its financial position, and has been responding vigorously to this over the last academic year.
“Students and parents can be confident that quality and the student experience will not be adversely affected by any of the actions within the plan, in fact it is the complete opposite. The new curriculum developments and enrichment activities planned will only serve to enhance and improve the overall student experience.”