Minutes of a Meeting of the Board of Leicester College Corporation:

Meeting of the Finance and General Purposes Committee Minutes 4 December 2024

Present: Danielle Gillett (Chair), Robert Radford, Shabir Ismail, Chan Kataria, Lee Soden

In Attendance: Louise Hazel Director of Governance and Policy, Jane Parkinson Director of Finance, Della Sewell Director of HR, Shaun Curtis Director of Estates and Campus Services (items 4-5)

1. Declaration of Interest  

   • 1.1 Shabir Ismail, Louise Hazel, Jane Parkinson and Della Sewell declared an interest in item 7. Shabir Ismail and Louise Hazel declared an interest in item 8. 

2. Apologies for absence 

   • 2.1 Apologies for absence were received from Lesley Giles. 

3. Minutes of the Last Meeting and Matters Arising 

   • 3.1 The minutes of the meeting held on 3 October 2024 were received and agreed.

   • 3.2 As a matter arising, the Acting Principal gave an update on discussions with the City Council over High Needs funding. The Council had confirmed that it would provide an additional £1 million for 2024/25, taking the total allocation to £2 million. The Council acknowledged that this was a compromise position. Negotiations for 2025/26 had resulted in an agreed allocation of 158 students for the City and County. The College would resource for 158 students but had made clear that full funding would be required for any students above this number.

   • 3.3 Governors asked a number of questions including:

     • 3.3.1 How could the College ensure that the agreed number was not exceeded and what might be the potential impact on students and parents, and on the College’s reputation? The process was now well understood and the deadline for submissions had been met. The College had kept in regular dialogue with the Council and would continue to do so. It would keep a count of students recruited and if it looked as if numbers might be exceeded, an early conversation would be sought with the Council.

     • 3.3.2 How would it work if there were more students than the agreed allocation? It was anticipated that 90-100 current students would progress into next year so only 50-60 new students would be recruited.

     • 3.3.3 What happened to the students who fell outside the allocated numbers? It would be for the LA to find them places in other institutions or confirm full funding for additional numbers at the College. There was a concern that the LA might want to review the College’s cost base but this had been carefully worked through and the College would need to hold its position on cost.

     • 3.3.4 The hard work involved should be acknowledged and staff thanked for their persistence in getting to this position. Agreed; Kully Sandhu and Helen Lewis had done an excellent job.

4. Sustainability Annual Report

   • 4.1 The Director of Estates and Campus Services presented the Sustainability Annual Report for 2023/24. The following points were highlighted.

     • 4.1.1 The Aeronautical project was on target to achieve BREEAM Very Good standard.

     • 4.1.2 The Association of Colleges (AoC) roadmap had been revisited as the previous version included some elements which colleges were struggling to achieve.

     • 4.1.3 Although a proposal for a PPA for photovoltaic cells had been considered, it was felt that the 25 year term, on which the provider would not move, was too long. Alternatives were being considered including the costs and payback period associated with the College purchasing the cells itself.

     • 4.1.4 A Salix bid to improve lighting at SMC had been submitted; if approved this should help reduce energy consumption.

     • 4.1.5 Staff training on sustainability was now mandatory.

     • 4.1.6 RSM had completed a sustainability audit and made a number of recommendations.

     • 4.1.7 Energy use was trending downwards. Gas was easier to control but would probably not reduce much more. Electricity was harder to control and required changes in staff behaviour.

     • 4.1.8 The College was currently on a pure green tariff although this was £35k more than a standard tariff and so it was proposed to come off the tariff and look at ways to reduce consumption instead.

     • 4.1.9 Scope 1 and 2 emissions had ambitious targets; there had been a 32% reduction against a target of 70% which was unlikely to be achieved.

     • 4.1.10 There was a lot of activity within the curriculum; examples were given.

     • 4.1.11 Objectives for 2024/25 were outlined; working to the new AoC roadmap would be a priority for the year.

   • 4.2 Governors asked a number of questions including:

     • 4.2.1 It was acknowledged that the College could only go so far with the funding and the estate it had; what else could be done and was an action plan following the RSM audit needed? An action plan was in place. There were ongoing opportunities to bid for Salix funding and additional government funding announced for capital would be available. It was likely that any future bidding opportunities would be heavily weighted to improving sustainability.

     • 4.2.2 Was the Leicester Climate Partnership working well? It had worked well although the loss of key personnel at the Council meant it had lost some impetus recently.

     • 4.2.3 If the College moved away from the pure green tariff it would be sensible to allocate the saving to specific projects to reduce consumption. Agreed.

   • 4.3 Members noted the Sustainability Annual Report.

5. Capital Update 

   • 5.1 The Director of Estates and Campus Services presented an update on capital projects. The following points were highlighted.

     • 5.1.1 The Aeronautical project was going well and although there was a slight delay it was felt this could be caught up. There was a 44 week contract works period with OfS spend to be completed by March 2025.

     • 5.1.2 The APC fencing was still being pursued with support from a planning consultant. Local councillors had indicated their support for the scheme and discussions with the planning team were ongoing. It was anticipated that an agreement should be reached soon.

     • 5.1.3 The electrotechnical project was out to tender.

     • 5.1.4 It was proposed to bring forward £300k of capital spend from 2025/26 to this year; this was to cover some large health and safety related issues including the lockdown alarm, and smoke and heat detector replacement. Chan Kataria joined the meeting

   • 5.2 Governors asked a number of questions including:

     • 5.2.1 Whether the £300k bring forward needed to be included in the reforecast. It would affect the cash rather than the operating position and had been factored into the cashflow projection.

     • 5.2.2 Was there any intelligence about when the funding might be available and was the College ready to bid for any projects? It was likely to be late January; £300m was available for colleges and indications were that it would be distributed on a formula basis and on the condition of the estate although this was still to be confirmed.

   • 5.3 Members noted the capital update and approved the bringing forward of £300k of estates capital expenditure from 2025/26 into 2024/25.

6. Finance Report (Period 3) and Autumn Reforecast

   • 6.1 The Director of Finance presented the finance report (period 3) and autumn reforecast. The following points were highlighted.

     • 6.1.1 The year to date result was an EBITDA surplus after restructuring costs of £970k compared to the budgeted surplus of £1,044k.

     • 6.1.2 16-18 learner responsive learner numbers were above allocation by around 200 students, although there had been under recruitment to T level courses. This was expected to result in additional in year income and a cautious estimate of £550k had been included in the autumn reforecast.

     • 6.1.3 Initial indications were that the College was on track to achieve its Adult Skills Fund (ASF) allocation.

     • 6.1.4 Apprenticeship starts were slightly below target. An allowance of £100k for underperformance against the budget had been included in the autumn reforecast.

     • 6.1.5 HE recruitment was below target and was expected to result in a decrease in tuition fee income of £395k.

     • 6.1.6 Discussions with Leicester City Council had resulted in additional high needs funding of £407k.

     • 6.1.7 An autumn reforecast had been undertaken. Key movements were outlined including growth funding for 16-18, reduced income for apprenticeships and HE, additional high needs funding and pay cost increases including a pay award and national minimum wage increase. Overall, the expected EBITDA surplus after restructuring costs had decreased by £255k, from a surplus of £2,277k to a surplus of £2,022k.

     • 6.1.8 The College would meet its bank covenants and achieve a ‘good’ financial health rating, following the autumn reforecast.

   • 6.2 Governors asked a number of questions including:

     • 6.2.1 The balance sheet page was missing from the report. This would be circulated.

     • 6.2.2 The national insurance increase would be a significant impact; what certainty was there that the government would fund this? The AoC had received confirmation that colleges would be treated as public sector and there would be funding although it was not yet clear how this would be distributed or whether it would fully fund the costs.

     • 6.2.3 Did the good financial health rating flow from the reforecast? It did.

   • 6.3 Confidential

   • 6.4 Confidential

   • 6.5 Members noted the period 3 finance report.

   • 6.6 Following discussion of the pay award (item 7), members agreed to recommend the autumn reforecast to the Corporation for approval.

7. Pay Award - Confidential

   Shabir Ismail, Louise Hazel and Jane Parkinson left the meeting.

8. Interim Leadership Arrangements - Confidential

   Shabir Ismail, Louise Hazel and Jane Parkinson rejoined the meeting.

9. Report on Student Union Accounts for Year Ending 31 July 2024

   • 9.1 The Deputy Principal presented the Student Union Accounts for Year Ended 31 July 2024. The following points were highlighted.

     • 9.1.1 The Income and Expenditure Account showed an increase in income of £777 from £7,7612 to £8,538 and a decrease in costs of £5,366 from £15,579 to £10,213. The accounts showed a deficit for the year of £1,675.

     • 9.1.2 Student Union expenditure continued to exceed income, with the reserves that were accumulated over the less active Covid years being spent on an increased number of activities.

     • 9.1.3 The increase in the grant from Leicester College represented the contribution towards the costs of transport for the trip to the Houses of Parliament. There was no commission income from NUS totum cards this year.

     • 9.1.4 Conference costs had reduced as only the annual NUS conference was attended. There were fewer trips than in previous years.

   • 9.2 Governors made the following comments and asked a number of questions including:

     • 9.2.1 The union should be encouraged to spend more for the benefit of students. Agreed.

     • 9.2.2 Was it sustainable that the union continued to make deficits? At the moment it was given the reserves.

   • 9.3 Members noted the Student Union Accounts for Year Ended 31 July 2024.

10. Report and financial Statements Year Ending 31 July 2024

    • 10.1 The Director of Finance presented the Audit Completion Report and Financial Statements for year ended 31 July 2024. The following points were highlighted.

      • 10.1.1 The Audit Completion Report had previously been discussed by the Audit Committee and Corporation. All outstanding matters had now been addressed and the final report was awaited.

      • 10.1.2 There were no concerns, audit misstatements, control deficiencies or issues identified in the regularity audit.

      • 10.1.3 The College’s EBITDA was a surplus of £481,000 excluding the impact of FRS102 pension adjustments. This was achieved against a budgeted EBITDA of £398,000 (excluding FRS102 pension adjustments). The College outturned a deficit of £1,108,000, before restructuring and pension adjustments.

      • 10.1.4 It had a financial health status of ‘Requires Improvement’.

    • 10.2 Governors asked a number of questions including:

      • 10.2.1 The points raised around the Unison claim needed to be referred to the auditors and a revised completion report might be needed. Agreed.

      • 10.2.2 Was there a point at which, after reclassification, the pensions point became a non-issue? In some respects yes although the pensions would always be excluded from the operating position. The Government had confirmed that colleges would be included within the Local Government Pension Scheme guarantee which would reduce risk around pensions.

      • 10.2.3 What additional information had been requested in respect of the going concern work with the technical covenant breach? The reforecast would be provided along with calculations around the bank covenant and the latest student numbers. The auditors seemed comfortable with that information.

    • 10.3 Governors highlighted a number of drafting changes that were needed to the Financial Statements.

    • 10.4 Members agreed to recommend the Financial Statements to Corporation for approval, subject to the amendments noted.

11. Bad Debt Write Off

    • 11.1 The Director of Finance presented a paper requesting authority to write-off a debt that was considered uncollectable. The following points were highlighted:

      • 11.1.1 It was proposed that one debt of £6,165 was written off.

      • 11.1.2 The debt had been chased as far as possible and was now considered to be uncollectable.

      • 11.1.3 There had been previous write offs in 2024/25 of £4,624. Therefore, with this recommendation, the cumulative total for the year would be £10,789. 

    • 11.2 Members approved the write-off of the uncollectable debt of £6,165.

12. Reserves Policy 

    • 12.1 The Director of Finance presented a Reserves Policy for approval. The following points were highlighted:

      • 12.1.1 The College Financial Handbook indicated that colleges should have a separate Reserves Policy.

      • 12.1.2 The policy had been developed to include the most appropriate measure which was cash reserves.

    • 12.2 Governors asked a number of questions including:

      • 12.2.1 Whether the policy would include figures once published. It would.

      • 12.2.2 When the Committee would next see it. It would be reviewed and brought to the Committee annually.

      • 12.2.3 Whether the College set out anywhere its plans for how the reserves were used. This would be included in the accounts.

    • 12.3 Members approved the Reserves Policy.

13. Marketing Update

    • 13.1 Members received and noted the Marketing Update.

14. Waivers of Financial Regulations  

    • 14.1 Members received and noted the report on waivers of financial regulations. 

15. Date of Next Meetings  

    • 6 March 2025