Minutes of a meeting of the board of Leicester College corporation: Finance and general purposes committee

Held on 4 May 2022

Present: Danielle Gillett (Chair), Ed Marsh*, Verity Hancock*, Caroline Tote, Chan Kataria

In Attendance: Louise Hazel - Director of Governance and Policy, Shabir Ismail - Deputy Principal/CEO, Della Sewell - Director of HR, Craig Paterson - Bespoke Consulting (item 3)

*Joined meeting online via Teams

1. Declaration of interests

   • 1.1 Verity Hancock, Louise Hazel, Shabir Ismail and Della Sewell declared an

     interest in item 3
     

2. Apologies for absence

   • Apologies for absence were received from Jonathan Kerry.
     

3. Senior postholders pay review - CONFIDENTIAL minute

   Verity Hancock, Louise Hazel and Shabir Ismail joined the meeting
   

4. Minutes of previous meeting and matters arising

   • 4.1 The minutes of the meeting held on 2 March 2022 were received and

     agreed.
     

   • 4.2 As a matter arising it was asked if there had been any update to the Changing

     the Face of FE report. Work was ongoing and there was nothing to update on

     at this stage.
     

   • 4.3 The confidential minutes of the meeting held on 2 March 2022 were

     received and agreed.
     

5. Financial report (Period 8)

   • 5.1 The Deputy Principal presented finance report (period 8). The following points were highlighted.

     • 5.1.1 The College was on track to hit the spring reforecast position. The

       year-to-date result was an operating deficit after restructuring costs of

       £2,428k compared to the budgeted deficit of £2393k.

     • 5.1.2 The College was not expecting to meet its 16-18 learner responsive

       learner number and funding target by the end of the year. There were

       still some withdrawals and achievement was not yet known.

     • 5.1.3 Indications from the latest data return and discussions with the

       curriculum directors suggested that the College would also fall short of

       its AEB allocation. This was reflected in the spring reforecast.

     • 5.1.4 Apprenticeship income was currently in line with the reduced spring

       reforecast target of £3.9m, excluding employer incentives. The impact

       of COVID-19 on new starts in 2020/21 had resulted in fewer carry-ins

       for this year.

     • 5.1.5 A further reduction of £327k in HE income was included in the spring

       reforecast. This had associated cost savings of £27k

     • 5.1.6 Pay continued to be very tight and it was unlikely there would be any

       further efficiencies. Pay and non-pay would be reviewed further in the

       summer reforecast.

     • 5.1.7 The College continued to meet its bank covenants and remained in the

       ‘requires improvement’ financial health rating at 170 points. Cash

       balances were healthy. The bank remained supportive and

       discussions continued over the College’s position.
       

   • 5.2 Governors asked a number of questions including:

     • 5.2.1 If the points total for the autumn reforecast should read 170 not

       160. It should, this would be corrected.

     • 5.2.2 The College was on track for the spring reforecast but the

       summer reforecast would be important. Agreed, for the summer

       reforecast all lines would be reviewed again. Enrolment was still

       taking place for AEB provision in ESOL and City Skills.

     • 5.2.3 What was the risk around a £3 million adverse movement which

       would move the College from ‘requires improvement’ to

       ‘inadequate’ and intervention? This was felt to be low risk; it might

       occur through a combination of lower income and/or higher costs but it

       was unlikely that the College would be in that position. The main

       concern was around the risk of breaking bank covenants. Dialogue

       had already taken place with the bank but it remained supportive. The

       College did not want to revisit the covenants.

     • 5.2.4 Was there anything in writing to indicate the bank’s support?

       This had not yet been requested. The summer reforecast and budget

       for next year would be completed and then a view would be taken as

       to which year would be under more pressure and at what point the

       bank’s formal support might be needed.
       

   • 5.3 Governors noted the period 8 finance report.
     

6. Final funding allocations 2022/23

   • 6.1 The Deputy Principal presented a report on the final funding allocations for

     2022/23. The following points were raised.

     • 6.1.1 The Agency funding allocations for 16-19 funding and AEB had been

       received. The total AEB allocation was £10,337k compared to

       £10,309k in the current year and so was effectively being held at pre-

       COVID levels. There was no change in the 97% tolerance and no

       increase in the funding rates for an eleventh year. More adult funding

       was being devolved which left a smaller central funding pot.

     • 6.1.2 The 16-18 allocation showed a reduction of 203 students to 3,364, an

       impact of COVID-19. This equated to nearly £1.5 million of funding

       that the College would ordinarily have received. There was additional

       funding for T levels and the TPS so overall the reduction looked to be

       around £250k less than 2021/22. This included the increase in rates.

       Although it was reported to be an increase of 8% the AoC estimated

       that it was much lower than this in real terms.

     • 6.1.3 The National Skills Fund (NSF) would continue to impact on the loans

       allocation.

     • 6.1.4 Discussion was ongoing with the local councils around high needs

       funding. It might be necessary to revisit discussions about the viability

       of the PMLD provision again.

     • 6.1.5 Overall, allocations were 2.4% higher than 2020/21 but this hid the

       additional required 7% increase in delivery for 16-18s.
       

   • 6.2 Governors noted the final funding allocations.
     

7. Tuition fees 2022/23

   • 7.1 The Deputy Principal presented a paper on the tuition fees for 2022/23. The

     following points were highlighted.

     • 7.1.1 The fees policy was largely unchanged. The College would continue to

       adopt an assumed fee element of 50%.

     • 7.1.2 The funding rules now reflected changes following Brexit including that

       only EEA students with settled or pre-settled status, under the EU

       Settlement Scheme, were now eligible for ESFA funding. This now

       included those who entered the UK under Ukraine and Afghanistan

       resettlement schemes.

     • 7.1.3 The College had taken the decision to surrender its Home Office

       Sponsor Licence. It would retain fee levels for international students

       currently on programme. Deposits would no longer be required for

       overseas students as this was no longer relevant.
       

   • 7.2 Governors asked a number of questions including:

     • 7.2.1 What was the policy on agreeing discounts? All avenues including

       providing access to bursaries and more flexible instalment plans were

       offered before discounts were agreed. These would be in exceptional

       cases and might be 10-15%.

     • 7.2.2 Had the Home Office Sponsor Licence been suspended after the

       Ofsted RI rating? It had and had then been restated. The pandemic

       had affected international recruitment and there was now so much

       competition for students that the numbers were unlikely to recover.

     • 7.2.3 Were there therefore implications for the International Office?

       There would be and this was currently being looked at.

   • 7.3 Governors approved the tuition fees for 2022/23.
     

8. ESFA Financial dashboard

   • 8.1 The Deputy Principal presented the ESFA Financial Dashboard. The following

     points were highlighted.

     • 8.1.1 Data had been taken from the financial record and from forecasts. It

       did not reflect any changes in policy that might have affected colleges’

       ability to forecast such as the introduction of the apprenticeships levy.

     • 8.1.2 The dashboard confirmed there were no issues with financial controls.
       

   • 8.2 In response to a question about why the debt service cover charts showed

     such a decline and then incline, it was explained that this was based on the

     forecast assumption that the College would have to pay the AEB clawback,

     which it had not had to do.
     

   • 8.3 Governors noted the ESFA dashboard.
     

9. 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 The debts had been chased as far as possible and were now

       considered to be uncollectable.

     • 9.1.2 During the academic year to date, from 1 August 2021, there had been

       previous write offs of £46,615.29. With this recommendation, the

       cumulative total for the year would be £51,499.29.
       

   • 9.2 Governors considered the paper and agreed to approve the write-off of

     uncollectable debts totalling £4,884.
     

10. Waivers of financial regulations

    • 10.1 Governors received and noted the report on waivers of financial

      regulations.
      

11. Date of next meeting

    • 22 June 2022