Finance and General Purposes Committee Minutes 3 May 2023
Finance and General Purposes Committee Minutes 3 May 2023
Corporation and Committee Minutes- Finance and General Purposes Committee Minutes 3 May 2023
Minutes of a meeting of the board of Leicester College Corportation: Finance and general purposes committee
Held on 3 May 2023
Present: Danielle Gillett (Chair), Chan Kataria*, Nicola Gonsalves*, Lee Soden, Verity Hancock, Caroline Tote
In Attendance: Louise Hazel - Director of Governance and Policy, Shabir Ismail - Deputy Principal/CEO, Della Sewell - Director of HR
* Joined via Teams
Declarations of interest
1.1 Members of staff declared an interest in agenda item 6.2 (pay award). Verity
Hancock, Louise Hazel and Shabir Ismail declared an interest in item 10.
Apologies for absence
There were no apologies for absence.
Minutes of the previous meeting and matters arising
3.1 The minutes of the meeting held on 1 March 2023 were received and
agreed.
3.2 The confidential minutes of the meeting held on 1 March 2023 were
received and agreed.
Finance report (Period 8)
4.1 The Deputy Principal presented the finance report (period 8). The following
points were highlighted.
4.1.1 The year to date result was an operating deficit after restructuring
costs of £3,681k compared to the budgeted deficit of £3,347k.
4.1.2 16-18 learner responsive learner numbers were above allocation by 85
students. However, due to the mix of students recruited, the allocation
had been reduced in year by £161k.
4.1.3 The R08 data return and discussions with curriculum directors
suggested that the College would fall short of the spring reforecast
AEB target.
4.1.4 Apprenticeship income was currently in line with the revised autumn
reforecast target but there would need to be a significant number of
achievements over the remainder of the year to achieve the target.
4.1.5 HE recruitment was below target. A decrease in income of £70k was
factored into the spring reforecast.
4.1.6 As a result of the spring reforecast the College would breach two of its
bank covenants. At a recent meeting, Santander confirmed that bank
covenants would either be suspended or waived for 2022/23. This had
been confirmed in an email and further written confirmation was
awaited.
4.1.7 The bank had no issues with the College’s cash position from a going
concern point of view.
4.1.8 The College’s financial health remained in the ‘requires improvement’
financial health rating at 140 points.
4.2 Governors requested sight of the email from Santander.
4.3 Governors asked a number of questions including:
4.3.1 Was it likely that the summer reforecast would take the deficit
down further? It was likely that the AEB forecast would decrease
further although an additional 2.2% funding would be applied at the
end of the year. Current forecasts suggested an additional deficit of
around £490k although the summer reforecast had not been
completed and there would be other savings.
4.3.2 So was there a potential for a £2.3 million deficit? Yes, it could be
slightly more at £2.4 million.
4.3.3 Was this the worst case scenario? Probably although the funding
through AEB and End Point Assessments remained the most difficult
to predict.
4.3.4 Was the reason for underachievement of the allocation a result of
over-optimism in forecasting? In part. Pre-pandemic, the College
had comfortably met and exceeded AEB targets so it had felt there
was a reasonable assumption that recruitment might return to near
normal after the pandemic. However the rising cost of living had
meant that more adults were prioritising work over study, impacting on
participation. In addition, the government’s new Multiply programme
which displaced some of the AEB delivery and which the College had
expected to recruit to had not been successful. The County Council
had issued a contract late and the City Council had not got its
programme off the ground. It had only become clear at the end of last
term that referrals would not be forthcoming.
4.3.5 The College would need to think carefully about plans for next
year; the adult position could get worse. Agreed, this had been
taking place through the curriculum planning process. For 2023/24, the
College would base the curriculum plan on outturn for this year and
allocate resources accordingly.
4.3.6 Although the bank had indicated it would be happy to suspend or
waive the covenants, what would have been the impact on the
covenants of the increased deficit? The College would have
breached the covenants anyway and there was no further impact.
Santander’s potential areas of concern would be around the cash
position and the ELT’s ability to manage the position and they had no
concerns with either.
4.3.7 Was Santander aware of the potential increase in deficit? Yes, the
College was open and transparent with the bank.
4.3.8 Would the increase in deficit change the financial point score and
what would the impact be? Anything above 110 points would be RI
but anything below 130 might cause the ESFA to ask questions. A
score below 110 would result in intervention and a deficit of £6m would
push the College into inadequate financial health.
4.3.9 The cash position might look healthy but it would decline over
time given the capital programme. Agreed; the underlying cash
position was still around £4-5 million.
4.3.10 What was the value of the additional 85 students? Around £1
million. The ESFA had been approached to see if an in-year business
case could be made but it could not so the College was effectively
teaching these students unfunded and was also incurring student
support costs.
4.4 Members noted the period 8 finance report
Capital programme update
5.1 The Deputy Principal presented an update progress with projects in the capital
programme. The following points were highlighted.
5.1.1 Tenders for the Wave 4 T level project had come in significantly over
budget at around £3.4m. To help mitigate this, the DfE had been
approached and had confirmed additional funding of around £100k
and that the College could use other capital funding flexibly although
this might impact on other projects.
5.1.2 The value of the quote for the Savoy Trust kitchen redevelopment
meant that only one kitchen could now be completed.
5.1.3 The gas workshop project was on track although there was some cost
increase.
5.1.4 The OfS project was going out to tender. If the tenders exceeded the
estimated project cost it would be necessary to scale down the design
but build it with foundations to allow further floors to be added at a
future date if funding became available.
5.1.5 The fab and weld project was now considered to be amber or red.
Further discussion suggested that the College would not recoup the
funding through additional recruitment and it was therefore
recommended that the project not be pursued.
5.1.6 The College would receive £1.1 million through the FE Capital
transformation funding programme based on a condition survey
completed by Capita which identified the College as category B. A
meeting had taken place with the ESFA to challenge the allocation and
provide more detail from the College’s own condition survey.
5.1.7 Other projects were on track or complete.
5.2 Governors asked a number of questions including:
5.2.1 Was the fab and weld project funded by grant or reserves? It
would be both but not proceeding with the project meant that the grant
funding could be used elsewhere
5.2.2 The approach to the OfS project seemed sensible. It was likely
that the £5.5 million scheme would come in higher and so further
funding might be needed. What was the appetite of the OfS to
funding increased costs? This was not yet known.
5.2.3 The category B issue needed to be pushed with the ESFA.
Agreed, evidence had been provided and this would be followed up.
The College would work with the existing allocation and anything else
would be a bonus.
5.3 Members noted the capital programme update and agreed to cease the
fab and weld project.
Plans for 2023/24 - CONFIDENTIAL
Tuition fees
7.1 The Deputy Principal presented a report on proposed changes to the Tuition
Fees Policy. The following points were highlighted:
7.1.1 The minimum hourly rate would be increased to £10. Curriculum areas
were encouraged to charge more if the market would bear it.
7.1.2 Fees for unfunded students be retained at the same level since there
were students following two-year programmes.
7.1.3 Exam resit fees which had been suspended during the pandemic
would be reintroduced but a reduced to £5 to make them more
affordable.
7.1.4 For HE students, the cancellation period would be reduced from six to
two weeks for refunds. This would be in line with most other HE
institutions and consistent with the policy for the students at the
College who were on the DMU franchised programmes.
7.2 Members agreed the changes to the Tuition Fees Policy.
Loans and RCF update
8.1 The Deputy Principal presented an update on the loans and revolving credit
facility (RCF) position. The following points were highlighted.
8.1.1 The loan with Santander which was out of term had now transferred to
the Department for Education. The College had also taken the
opportunity to cancel the RCF and so non-utilisation fees would be
saved.
8.1.2 The terms of the DfE loan had prompted Santander to review its own
covenants and whether it would continue to retain the covenants in the
future, given that breach of the covenants and a possible renegotiation
of terms would probably not be agreed by the DfE.
8.2 In response to a question as to whether the move to the DfE provided further
security, it was confirmed that it did. All banks were reviewing their position
and colleges were now viewed as a safer bet. The bank might soften
covenants for next year.
8.3 Members noted the update on loans and the RCF.
Bad debt write-off
9.1 The Deputy Principal presented a paper requesting authority to write-off debts
that were considered uncollectable. The following points were highlighted:
9.1.1 It was proposed that one debt of £2,746.93 be written off.
9.1.2 The debt had been chased as far as possible and was now considered
to be uncollectable.
9.1.3 With this recommendation, the cumulative total for the year would be
£36,212.
9.2 Members considered the paper and agreed to approve the write-off of
uncollectable debt of £2,746.93.
Senior postholder procedures
Governors confirmed they were content for Senior Postholders to remain in the meeting.
10.1 The Director of HR presented the senior postholder procedures. The following
points were highlighted.
10.1.1 The Association of Colleges model documents had been used to
develop Disciplinary, Capability and Grievance procedures for senior
postholders (SPH). There were different arrangements for SPH
because of their reporting lines.
10.1.2 The policies had been shared with SPH and the NEU had been
consulted and given agreement to the policies.
10.1.3 The policies included procedures for how matters would be dealt with
through a Special Committee of the Corporation.
10.1.4 The Equality Impact Assessment showed no negative impacts.
10.2 Governors asked a number of questions including:
10.2.1 Who were the SPH and how were these procedures different from
those for other staff? SPH were the Principal/CEO, Deputy
Principal/CEO and Director of Governance and Policy. There were
different procedures because of the need to involve governors in the
process.
10.2.2 Who would be on the Special Committee? That would be a matter
for the Corporation. The Chair and Vice Chair would also have a role
in the performance management process and so membership of the
Committee would need to be agreed at the time it was needed.
10.2.3 Did the NEU offer any changes or recommendations? Some minor
changes had been incorporated. It had also been suggested that
separate capability procedures were needed for sickness and
performance issues but given the small number of people covered by
the policies it was felt this was not necessary.
10.2.4 Was there anything about referrals to the DSL or LADO including
allegations of harm included in the policy? This was implied but not
explicit; this would be added. Such events would be referred to the
LADO before any action was taken.
10.3 Members agreed to recommend the senior postholder procedures and the
terms of reference of the Special Committee to Corporation and received
the equality impact assessment.
Any other business
11.1 The Chair noted that this would be Caroline Tote’s last meeting. Caroline was
thanked for her contribution as a governor and particularly for her role as
safeguarding lead governor. Caroline said how much she had enjoyed being a
governor of a College which was so important to the local community and
expressed her confidence in the Executive Team leading the College through
what would be a challenging time. She wished the College well.
Waivers of financial regulations
12.1 Members received and noted the report on waivers of financial
regulations.
ESFA Financial dashboard
Members received and noted the ESFA Financial dashboard.
Dates of next meetings
22 June 2023