Shrewsbury Colleges Group
Group Minutes of Finance & Business Operations Committee
Date 1st November 22
Time 5.38 pm
Minutes Membership G. Mills (Chair), D. Pulford, J. Staniforth, N. Stitch, P. Tucker and R. Wilson.
In Attendance Member of the Senior Leadership Team:
P. Partridge, Executive Director of Finance (EDF)

Clerk to the Board, T. Cottee
Apologies None.

50/22. Declarations of Interest


51/22. Minutes of Meeting Held 27 September 2022 (Appendix – Agenda Item 3)

Resolved:  That the Minutes of the meeting held on 27 September 2022, be approved as a true and correct record.

52/22. Matters Arising


53/22. Period 2 Management Accounts (Appendix – Agenda Item 7)

The Committee considered a report (previously circulated to all governors) on the Management Accounts to 30 September 2022, which highlighted the key results, measures, and risks.

As it was early in the accounting year, adult and apprenticeship enrolments were ongoing but looked on-plan to date. HE and Advanced Learner Loan income were currently expected to be below budget based on current enrolment levels. 16 – 19 income funding was paid on a lag basis and would be on budget. Council High Needs funding was anticipated to be on budget.

The Committee reviewed the accounts and made the following observations –

      • The college had secured a number of additional contracts for delivery of specialist engineering courses, including the potential for a further, unbudgeted cohort in 2022 – 2022. The Board Chair welcomed this opportunity and in response to a question, the EDF confirmed that any additional staffing costs would be offset by the generation of additional income.
      • Apprenticeship income was expected to be on plan and the level of extra new starts considered achievable. In response to a question, the P/CEO confirmed that, whilst the growth in activity was welcome, this came with increasing pressure for additional assessor resource at a time when it was challenging to secure appointments.
      • Regarding actual 16 – 18 full-time enrolments against planned-for recruitment targets, in response to a question, the P/CEO confirmed that, at the six-week census point, enrolment had not met expected targets, leading to an income shortfall for 2023 – 2024. On the suggestion that the college considered offering short-term courses mid academic year, the P/CEO observed the college mostly offered full-year courses. He explained that about 100 year 11s locally had not engaged in applying to college and/or had taken up employment without training; furthermore, the percentage of young people not in education or work-based training (NEET) in Shropshire had increased. The local authority and specialist providers offered short-term, specialised programmes to support this cohort, however, they were usually of low volume and financial value, and it would not be appropriate for the college to enter this market at this time.
      • The Committee noted that, for 2022 – 20223, more courses offered by the college were eligible for National Skills Funding. However, more course participants would previously have funded their courses through an Advanced Learner Loan. Therefore, whilst this additional AEB income was positive and a more affordable solution for adults seeking to ‘re-train’ on certain Level 3 courses, this had resulted in a corresponding shortfall in Advance Learner Loan funded course income. This income line was now running below plan and had been reforecast.
      • In discussing the uncertain economic climate –
        • the P/CEO updated on the latest position regarding cost of living pay increases in the sector. Two teaching unions were demanding pay increases of c12%. If awarded and a similar award made to support staff, this would result in a wholly unaffordable increase for the college, as pay increases would not be funded from central government. In the meantime, college operations could be disrupted by strike action on pay.
        • recent inflationary pressures and instability had led to a more pessimistic outlook for Bank of England base rates. The forecast outturn had therefore been revised upwards to allow for rates to increase to 5% by 31 March 2023.
        • Energy costs for the year were slightly below budget as the college actively sought to reduce energy use where possible.

The Committee concluded that the prospect of unfunded pay awards in excess of those budgeted and rising energy costs presented significant risks and undermined what would otherwise have been a manageable financial position for the college.

54/22. Health and Safety Annual Report 2021 – 2022 and Policy (Appendix – Agenda Item 6)

The Committee reviewed the Termly and Annual Report on Health and Safety across the college for August 2021 to July 2022 (previously circulated), which provided an update on Health and Safety and included an Assurance Statement about the Board’s responsibilities for health and safety.

The Committee in reviewing the reports particularly noted the following -

      • All sites’ Fire Risk Assessments had been audited with low-risk remaining action points being implemented.
      • Health and Safety Audit outcomes. Key findings had been remedied quickly, with outstanding items followed-up.
      • There had been no RIDDOR reportable events during the reporting period.
      • There had been a reduction in the number of near misses being reported. The Board Chair observed that he would expect to see more of these; however, all health & safety incidents and near misses were analysed for any trends or training needs; no unexpected issues or unplanned additional needs had been identified during the period.
      • Risk assessments, policies and procedures and the measures implemented were continually reviewed and adjustments made where required to ensure the continued safety of all staff, students and visitors.

The Health & Safety Link Governor would review the report prior to submission to the Board. The Link Governor had continued to meet with the H&S Officer and had attended on-site H&S meetings, during the summer and this Term, to demonstrate continued governor engagement and oversight.

The Committee reviewed the College Health & Safety Policy, noting that there were no major changes for 2022 – 2023. The Policy would be presented to the next Board meeting in December. The Annual Health & Safety Policy Statement would also be signed by the Board Chair and Principal/CEO at that meeting.

Resolved: That, having considered the report, the Committee RECOMMENDED TO BOARD that the Health & Safety Annual Report and Policy be approved.

55/21. Estates Termly Report and Capital Bids Update (Confidential Appendix – Agenda Item 7)

The Committee received the report (previously circulated). The Committee had also discussed these matters extensively at its previous meeting (FBO Min No 45/21 refers).

      • The Estates Strategy had informed several projects undertaken over the summer of 2022 including window refurbishment, Main Block, London Road Campus and the Learning Resources Centre, student café and social space and Main Reception refurbishment and Drama relocation at English Bridge Campus. The Board had visited the latter project prior to holding its meeting in October 2022. The Strategy had also informed preparatory work for expansion and improvement activity at Welsh Bridge Campus.
      • Consultants were supporting the college’s two Post-16 Capacity bids ready for submission in November 2022: a Renewable Energy Centre (REC) at the London Road Campus and expansion and improvements of the Quarry Building and Learning Resources Centre at the Welsh Bridge Campus.
      • Architects had undertaken but not yet finalised, an initial space planning and feasibility study to ascertain the potential amount of additional teaching capacity which could be theoretically created by replacing the Austin Building at the Welsh Bridge Campus and by installing a mezzanine floor within the existing sports hall at English Bridge Campus.
      • To further reduce energy costs, the college had installed additional electricity circuit monitors across the London Road Campus to help to isolate and identify potential areas for reductions in use. Voltage Optimisation equipment would be installed in December following the end of term, requiring disconnection of the campuses during the final stages of this installation. College IT systems would be offline during this period and restored early the following week once power has been restored to the campuses. The Committee sought assurance that this procedure had been sufficiently risk assessed. The EDF confirmed that the installation was being undertaken by specialists with appropriate risk assessments and in the case of London Road with support from the DNO. There was no lower risk point in the annual calendar to further reduce any potential impact of disruption to IT services.

As explained at the last meeting, due to the current sensitivity and uncertainty on energy costs and the increased cost of borrowing, materials and labour, there was an inherent risk to the college’s financial health going forward. Any significant further capital investment (including match funding) was increasingly likely to require long term borrowing – even where grant funded through Post 16 Capacity or LEP grants. The Board had agreed the Committee’s recommendations that the REC and works at the Welsh Bridge Campus be pursued and that the college committed to match funding of 20% of the bids’ costs.

At the request of the Committee Chair, the EDF presented a verbal update on the two post-16 Capacity Bids. Whilst the Welsh Bridge Campus project progressed, the consultants had increased the REC project costs, which could impact on the amount of the college’s match contribution. The consultants agreed that the project remained a strong candidate for submission and the planning applications required were in progress. Due to the rise in inflation and borrowing costs, the overall financial viability of further capital investment in the estate required careful consideration and the Committee discussed at length options presented by the EDF on how to proceed.

The Committee concluded that

      1. Work to develop the REC project into a Post 16 Capacity Bid should continue, as it represented a strategic commitment to support skills growth and offer an enhanced learning experience for students.
      2. The Board had approved match funding of 20% of the bid cost.
      3. The REC project contribution should remain at the planned level of c.£400. while the expected project costs should be increased to reflect feedback from AA projects and ongoing uncertainty regarding construction costs and acknowledged that this would reduce the evaluation score of the colleges bid.

Regarding the Board’s request that the college continue to develop plans for the redevelopment of the Austin Building at the Welsh Bridge Campus, the Committee acknowledged that, despite this project being a key strategic ambition, under-recruitment in September 2022 and rising costs meant that the college would generate significantly less operating cash than planned in 2023/24. As a result, the focus for the coming 18 months to two years would be on energy efficiency and ensuring that the college invested appropriately on critical and immediate needs. The affordability of longer-term strategic projects will impact on the timescales for their delivery.

56/22. Draft Treasury Management Policy (Appendix – Agenda Item 8)

The Committee reviewed the Draft Treasury Management Policy (previously circulated). The EDF explained that this new Policy underpinned the college’s Financial Regulations, its purpose being to establish boundaries and parameters regarding how the college would approach investing cash to improve interest earned from these resources while not putting at risk access to sufficient liquid cash to allow the college to meet its obligations.

Resolved: That: having considered the report, the Committee RECOMMENDED TO BOARD that the Draft Treasury Management Policy be approved.
Action: Recommendation and Report to Board

57/22. Additional Item - Shrewsbury Colleges Group: College Financial Forecasting Return 2022 to 2024

The Principal/CEO referred to a letter received from the ESFA (previously circulated) confirming that the appropriate assessment grade, based on the College’s submitted financial plan was Good for 2021/22 (the latest outturn forecast year), and Good for 2022/23 (the current budget year).

Financial and Governance dashboards were now available in a new digital format via the ESFA. These Dashboards incorporated various key performance indicators and measured those against both target benchmarks and benchmarks achieved in the sector. Whilst the Governance Dashboard was currently unavailable, governors were encouraged to access the information going forward, as it provided additional contextualisation of college performance.

58/22. Risk (Agenda item 09)

The Committee examined those risks within its remit and agreed that they had either been identified and adequately discussed at the meeting. It was noted that the 2022– 2023 Strategic Risk Register would be presented to the Audit Committee at its next meeting and the updated risks would, from that point, be included on subsequent committees’ agendas.

In response to a question, the EDF explained that, in anticipation of potential rolling planned and unplanned power cuts, he had contacted Shropshire Council’s Risk Management and Emergency Response Team and the College was preparing to scenario plan its responses to both planned and unplanned power cuts. The Committee agreed that the possibility of power cuts be added to the Strategic Risk Register.

59/22. Date of Next Meeting – 06 December 2022 at 5.30 p.m. Venue - TBC.

The meeting concluded at 7.11 p.m.