Minutes of a meeting of the board of Leicester College Corporation:

Held on 19 November 2024 on Teams

Present: Zubair Limbada (Chair), Neil McDougall, Tom Wilson, Roger Merchant, Louisa Poole,Vipal Karavadra

In Attendance: Louise Hazel - Director of Governance and Policy, Jane Parkinson - Acting CFO, Mark Dawson - KPMG, Georgia Burke - KPMG, Timothy Wakefield - KPMG, Aaron MacDonald - RSM, Neil Challinor* - Quality Development Manager, Matt Widdowson (Minutes) - Governance and Policy Officer

*present for item 8

1. Declaration of Interest

   • 1.1. There were no declarations of interest.

     • 1.1.1. Vipal Karavadra had joined the Audit Committee and was welcomed to the meeting

2. Apologies for absence

   • 2.1 There were no apologies for absence.

3. Minutes and matters arising from the last meeting held on 25 September 2024

   • 3.1 Minutes of the meeting held on 25 September 2024

   • 3.2 Governors made the following comments:

     • 3.2.1. There was a typo in para 5.3.3.  It should read “USB.”

     • 3.2.2. Where were the figures for the completion of the Boxphish training? The figures had been emailed; however, a more comprehensive update could now be provided:  45% of staff had completed all modules (around 23 modules); 90% of staff had completed more than one module (397 staff only had between one and three modules outstanding); 219 members of staff had not completed any modules, these were mainly cleaning and catering staff and casual staff and governors.  This would continue to be monitored every month.

     • 3.2.3. The Minutes of 25 September 2024 were agreed as an accurate record and approved.

   • 3.3 Action Record

   • 3.4 Governors noted the Action Record

4. Risk Management Progress Report

   • 4.1. The Director of Governance and Policy presented the Risk Management Progress Report. The following points were highlighted.

     • 4.1.1. There had not been much movement in terms of risk scoring. There might be more movement seen at the next meeting including some improvement around cybersecurity and business continuity.

     • 4.1.2. On the quality of provision (risk 1), the potential impact of qualification reform was still uncertain. There might be more clarity following the national curriculum review. This would also be considered as part of the curriculum planning process.

     • 4.1.3. On the risks to staffing (risk 2) there was the potential for industrial action. The AoC had recommended a 2.5% pay award. Colleges were considering this and some local colleges had already awarded more than 2.5%. Additionally, the Sixth Form Colleges Association had launched a judicial review over the decision to exclude them from the 5.5% pay award offered to schools. Industrial action was planned for sixth form colleges which might be replicated in General FE. A pay award paper would be going before the F&GP Committee and Corporation in December 2024.

     • 4.1.4. On cybersecurity (risk 3) some of the timelines for actions might need to be amended. The blocking of USB devices had been planned for October 2024, but testing was still underway to ensure that certain groups of students were not disadvantaged by this change. The implementation of this change might need to be pushed back until the February 2025 half-term break. MFA for students might need to be pushed back beyond the February half term to avoid the period when students are starting their assessments. Mitigations for these were in place.

     • 4.1.5. For Business Continuity (risk 4) there had been a half-day session with JISC to test the College’s disaster recovery (DR) processes. There would also be a DR shut down of servers over the Christmas period, followed by another three-day test in July 2025.

     • 4.1.6. On financial stability (risk 7) there was no real change. The Finance Team were working on the autumn reforecast. An agreement had been reached with the local authority on high needs income which would be in place for the next two years.

     • 4.1.7. On collaboration and partnerships (risk 8), the College had not been chosen as a merger partner for SMB Group. There needed to be consideration of what a potential merger between SMB and Loughborough College would mean for Leicester College.

     • 4.1.8. For sustainability (risk 11) at the moment there was a target of achieving net zero by 2030 but there needed to be discussions around whether this was realistic given the financial commitment required.  This could be discussed as part of the strategic planning.

   • 4.2. Governors made the following comments.

     • 4.2.1. The risk level might be based on mitigations which were not yet in place. It appeared that the benefits of mitigations had been banked without the work being done. If this were the case, it would cause problems if there was an incident, and the College was subjected to external scrutiny. Quite a few of the mitigations had been in place for some time, however it was important not to take them for granted.

     • 4.2.2. When it came to cybersecurity it often seemed like there were always reasons to not act. Quite often, timelines tended to slip. This could affect the ability of the College to gain Cyber Essentials

       Plus. Noted. The College was confident that the issues around having MFA for students would not affect the achievement of Cyber Essentials Plus.

     • 4.2.3. If all the listed actions were completed, would we see a downwards trajectory in terms of risk scores? In theory, yes, although some of the risks were more around not making the most of opportunities. It also depended on risk appetite, for example there was a higher risk appetite around digital and sustainability than there was around safeguarding. The risks would still be dispersed as it was more of a case of bringing them within appetite.

   • 4.3. Governors noted the Risk Management Progress Report.

     Debi Donnarumma left the meeting.

5. Audit Committee Annual Report 2023/2024

   • 5.1. The Director of Governance and Policy presented the Audit Committee’s Annual Report for 2023/2024. The following points were highlighted.

     • 5.1.1. This report followed a similar format to previous years and would go before Corporation at the December 2024 meeting.

     • 5.1.2. Highlighted in the report were:

       • The rationale for the approach taken by the committee and the use of both an internal audit service and external reviews.

       • Details of the whistleblowing incident.

       • A description of the internal audit reviews and the risk ratings agreed

       • Details of external reviews with a summary of the issues

       • A summary of the committee self-assessment and governor development

       • The approach to risk management

     • 5.2. Governors made the following comments.

       • 5.2.1. Most Audit Committee members were members of the Student Liaison Committee. There were no members who also sat on the CSQI Committee. This was correct. Work was underway to recruit new members who would be able to sit on both the Audit Committee and the CSQI Committee.

       • 5.2.2. Had it always been the case that the Chair of the Corporation could not sit on the Audit Committee? Yes. The Corporation Chair did not sit on the Audit Committee to ensure independence. The Principal, staff governors, student governors and members of the F&GP Committee are also not able to become members of the Audit Committee.

       • 5.2.3. The ESFA would be disbanded in March 2025. Were there any indications that the audit code of practice would be changing? Nothing had been heard about this yet.

     • 5.3. Governors agreed to recommend the Audit Committee Annual Report 2023/2024 to Corporation.

6. KPMG Audit completion report to Audit Committee - year ended 31 July 2024

   • 6.1. The External Auditor presented the Audit Completion Report for the year ended 31 July 2024. The following points were highlighted.

     • 6.1.1. The audit was substantially complete and there were only a few areas where work was being finalised. Some of the outstanding work could not be completed until the end of the process. The list of outstanding items was on page 6 of the report.

     • 6.1.2. A clean opinion was expected. There had been no issues identified for the three significant risks highlighted at the planning stage.

     • 6.1.3. Auditors had been comfortable with how the evaluation of pensions obligations had been presented in the accounts.

     • 6.1.4. Auditors had been satisfied with the management override controls.

     • 6.1.5. Auditors had been comfortable with how revenue had been recognised in the accounts.

     • 6.1.6. There had been a small number of changes to disclosures which were detailed on page 22 of the report.

     • 6.1.7. There had been an internal consultation process this year in respect of going concern, due to the potential for breaching the covenant prior to the waiver being agreed. 

   • 6.2. Governors made the following comments.

     • 6.2.1. Page 22 referred to the confirmation of independence and not misstatements in respect of disclosures. This appeared to be on page 20. This should say page 20.

     • 6.2.2. Was there all the evidence required from the pension fund to support the valuation of the assets? Yes. The External Auditors were happy with this. An estimated return on assets was used to calculate the pension asset. Due to the way it is calculated, the valuation was always on the optimistic side and the actual rate would be slightly lower than the estimated rate but still within acceptable limits. It should also be noted that, while the actuaries had calculated a surplus for the pension scheme, it could not be recognised on the balance sheet as an asset as the College did not have the right to any benefit associated with it.

     • 6.2.3. It was good that there were more assets than liabilities in the pension fund as valued, and it could potentially mean a reduction in contributions going forward. This meant that there could potentially be a benefit in the future. However, as the future was uncertain, it was unclear what benefit the College would ever receive. In terms of the rationale for not recognising the asset this is correct. However, contribution rates are not set by reference to the accounting valuation but instead with reference to the actuarial valuation which is carried out on a triennial basis. The next full valuation would be due on 31 March 2025 and, following this, the contribution rate would be set.

     • 6.2.4. Was the waiver already in place with the bank? A waiver had been agreed before the end of the financial year for one of the three bank covenants and would be in place for a year.

     • 6.2.5. It should be noted that no matters had been identified with regards to regularity and compliance which would mean that the opinion had to be modified.

     • 6.2.6. The upcoming changes to accounting standards were not far away. It might be a good idea to consider the impact of these changes. The impacts of these changes would be known soon.

     • 6.2.7. KPMG and the Finance Team were to be thanked for their work on this.

   • 6.3. Governors approved the Audit Completion Report to Audit Committee – Year Ended 31 July 2024.

7. External Reviews

   • 7.1. JCQ Review

     • 7.1.1. The Director of Governance and Policy presented the JCQ Review. The following points were highlighted.

       • 7.1.1.1. This report was based on an unannounced inspection by JCQ.

       • 7.1.1.2. There were 26 checks, with 25 items being found to be compliant.

       • 7.1.1.3. There was one issue identified around the secure storage of exam materials at APC. This had since been rectified and the APC exams office was now compliant.

     • 7.1.2. Governors made the following comments.

       • 7.1.2.1. Did APC have one secure location? The exam materials were kept in a safe but the safe was not kept in a secure room as was the case at FPC.

       • 7.1.2.2. Would there have been any consequences for not rectifying this issue? The College’s ability to hold exams was temporarily put on hold. This was not a concern however, due to the timing of the inspection over the summer break. This issue had been previously identified and did not come as a surprise.

       • 7.1.2.3. If this issue had been previously identified, the implication is that nothing was done about it at the time. It was planned work. The JCQ inspection escalated the timeframe for completing the work.

       • 7.1.2.4. This raised the question of whether there were any other issues which were known about but had not been addressed.  None were known of.  A series of external reviews and audits showed that there were robust processes around exams.

     • 7.1.3. Governors noted the JCQ Review.

       Neil Challinor left the meeting.

8. Achievement Rates 2023/2024

   • 8.1. The Quality Development Manager presented the Achievement Rates for 2023/24. The following points were highlighted.

     • 8.1.1. The overall achievement rate had decreased by 1.5% to 84.8% but was still above the 2022/23 NAR.

     • 8.1.2. There had been a 0.5% increase for 16-18 on the previous year. There had been year-on-year increases for the previous three years. It was still below the NAR by 2.5% and, although it was increasing, it may be increasing too slowly.

     • 8.1.3. The adult achievement rate decreased by 2.1% to 87% which was the same as the NAR. Adult numbers were significantly higher than 16-18 which was why this had a larger impact on the overall rates.

     • 8.1.4. There had been particular types of qualification which had seen declines, including certificates, ESOL and non-regulated. These were concentrated in particular programme areas such as Community Learning. There had been changes in Community Learning over the previous year which had meant moving away from ‘hobby courses’ towards tailored learning for adults.

     • 8.1.5. T Level pass rates had declined, and retention was below the NAR by 5%. This was most significant for on-site construction, building services and engineering manufacturing. There needed to be a conversation about whether T Levels were the right qualification for construction. There was also an issue around employers employing students during their work placements before they could finish their qualification.

     • 8.1.6. English GCSE declined by 6.4% from the previous years, while maths GCSE remained stable at 30.2%. When compared using MiDes, the College faired well in terms of English and maths outcomes.

     • 8.1.7. In terms of equality indicators, there were not any major variations, although, when broken down by age, mixed heritage students performed less well than other students. This would be in the QIP.

     • 8.1.8. Apprenticeship achievement was down by 3.2% to 52.4%, which was 5.4% below the NAR. When broken down by equality indicators, female apprentices were outperforming male apprentices. This was due to areas with predominately female apprentices such as Hair and Beauty seeing a significant increase in achievement compared to predominately male populated areas such as building, construction and engineering.

   • 8.2. Governors made the following comments.

     • 8.2.1. A lot of data had been presented. The questions were ‘So what?’ and ‘What next?’  How important was it for the College to compare itself to the national achievement rates? Did some of the poor results reflect local circumstances, or was there a problem with the quality of teaching? The data was used to identify underperforming areas so that interventions could be put in place. NARs were a good benchmark to understand just how underperforming areas were.

     • 8.2.2. What were the consequences for underperforming? The consequences of poor achievement rates were likely to come through in a poor Ofsted report. It might also lead to an intervention by the FE Commissioner.

     • 8.2.3. Consideration should be given to the statistical significance of some of the figures reported. Was there a tolerance band which could be used? It may be that this report could be presented in a slightly different way. For equality indicators a tolerance of 5% was used.

     • 8.2.4. Should there be two categories of ‘white’ and ‘non-white,’ as there is a lot of variation within the ‘non-white’ category? There was finer data available, and students were split down into ethnic groups for analysis.

     • 8.2.5. Regarding T Levels, childcare had put the work placement towards the end of the course to make leaving more unattractive. Industrial placements in Construction also came later in the course, however, the prospect of a job still persuaded some students to leave.

   • 8.3. Governors noted the Achievement Rates for 2023/24.

     Neil Challinor left the meeting. 

9. Any other urgent business notified to the Chair prior to the meeting

   • 13.1. There was no further business.

10. RSM Emerging Issues

    • 10.1 The Internal Auditor provided a brief verbal update on the internal audit work:

      • 10.1.1. The student outcomes and completion review had been completed and would be presented to the Audit Committee at the next meeting.

      • 10.1.2. The Risk Assessment and Health and Safety Review had recently started.

      • 10.1.3. The scoping for the Project Review would begin in January 2025.

      • 10.1.4. All reviews were currently ahead of the planned schedule.

    • 10.2. The Internal Auditor presented the Emerging Issues paper. The following points were highlighted.

      • 10.2.1. This was a report which was published by RSM every quarter and provided an update on the sector.

    • 10.3. Governors noted RSM’s Emerging Issues paper.

11. Dates and times of future meetings

    • 19 March 2025

    • 4 June 2025