Shrewsbury Colleges Group
Group Minutes of Finance & Business Operations Committee
Date 29th June 22
Time 5.35 pm
Minutes Membership G. Mills (Chair), D. Pulford, J. Staniforth, P. Tucker and R. Wilson.
In Attendance Member of the Senior Leadership Team:
P. Partridge, Executive Director, Finance (EDF)

Clerk to the Board, T. Cottee
Apologies None.

25/22. Declarations of Interest


26/22. Minutes of Meeting Held 24 May 2022 (Appendix – Agenda Item 3)

Resolved: That the Minutes of the meeting held on 24 May 2022, be approved as a true and correct record, subject to the inclusion in attendance that P. Tucker was absent from the meeting

27/22. Matters Arising


28/22. Human Resources & Development Annual Report

The Committee Chair reported that this report would be considered at the first Committee meeting 2022/23, as it could include the outcome of the latest Staff Survey.

29/22. Period 10 Management Accounts (Appendix – Agenda Item 6)

The Committee considered a report (previously circulated) with respect to the Management Accounts to 31 May 2022, which highlighted the key results, measures, and risks. All governors had been supplied with a copy of the Report.

The forecast EBITDA outturn had been further reduced due to:

      • A reforecasting of staff costs to reflect the current monthly run rate for the last two months of the year. This reflected the costs of new student support roles introduced in the spring of 2022, reflecting the decision to invest in additional resources to address the ongoing impact of COVID on student behaviour, attendance, and progress.
      • reductions in expected Adult Education Budget (AEB) income from Trades Union Studies activity due to the on-going impact of COVID on delivery, partially offset by a reduction in forecast IT & premises costs and exams fees.
      • Forecast Subcontracted AEB delivery had been reduced due to partners being unable to deliver the contracted volumes by the end of the year. This was offset by a corresponding reduction in subcontract costs.

As a result, the cash amount expected to be clawed back by the Education & Skills Funding Agency (ESFA) and Devolved Authorities in January 2023, had increased.

The Committee acknowledged the greater than forecast shortfall in AEB delivery remained a significant risk and that any further shortfall in delivery would directly impact EBITDA.

The ED, F also reported that the ESFA had confirmed that it would claw-back funding for any under-delivery below the 97% threshold for the 2021/22 allocation. The P/CEO explained that, despite another volatile year, no consideration to the ongoing impact of disruption caused by the Covid pandemic this academic year, had been given. The Committee agreed that the combination of local restrictions in autumn 2020 and the national lockdown had disrupted the college’s ability to meet this year’s targets, so this news was disappointing.

The Committee sought assurance that the college was taking appropriate mitigating action whilst recognising the exceptional nature of the challenges and therefore the finite limit on mitigations. The ED, F explained that the GVP and his Team were focussed on ensuring maximum possible starts and completions during the remaining academic year and had employed temporary teaching staff where possible.

      • Apprenticeship income remained significantly positive compared to budget due to growth in new starts. However, with the growth in activity came increasing pressure for additional assessor resource and workshop space.

In response to a question from the Board Chair, the ED, F explained that the mobile Health Education Unit purchased as part of the Strategic Development Fund collaborative project would be used by the Health and Social Care Team and would provide a positive opportunity for the College to engage both current and potential students.

Resolved: That, having considered the report, the Committee received the Management Accounts to 31 May 2022.

30/22. College Financial Forecast and Draft Budget 2022/23 (Confidential Appendix – Agenda Item 7)

The Committee reviewed the Draft Budget and revised two-year Financial Plan, prior to consideration by the Board (previously circulated).

The ED,F gave a detailed presentation at the Committee and explained the following key points –

      • High level review of income and expenditure based on carefully considered assumptions and scenario planning. The college was budgeting a surplus in 2022/22, and planning a small a deficit in 2023/24
      • The confirmed 16-19 funding allocation rises significantly in 2022/23 as a result of growth in student numbers and the additional funding for additional activity. The 16-19 allocation for 2023/4, was currently planned to fall due to lower retention factor, a small fall in student numbers, loss of Tuition Funding and loss of funding for Industrial placements.
      • Regarding Adult Education delivery –
        • The budget assumed 100% delivery in 2022/23. Trades Union activity remained substantially impacted by the Covid pandemic and there remained an ongoing challenge to deliver the volumes needed. Devolution remained an ongoing threat to Distance Learning provision as competitors who had not been awarded contracts under devolution moved into the market.
        • To mitigate this, the Group Vice Principal, Technical & Vocational Education, would address the adult curriculum, with a view to growth. Additional pay and direct costs had been allocated as contingency to ensure full delivery.
      • Regarding Apprenticeship income, the significant growth in 2021/22, was expected to roll over into similar growth in 2022/23 ,as existing apprentices continued. In response to a question from the Board Chair, the ED, F confirmed that the college had the capacity to meet this increase in the short term, but not in the medium term.
      • Regarding Pay Expenditure, the Committee acknowledged the impact of continued investment in tuition catch up and student support and assumed pay cost inflation. The Committee noted that each additional 1% variance awarded = c£227k. The Committee supported the college’s approach to investing in teaching staff to support students.
      • Regarding Capital Expenditure- 2022/23 expenditure had been increased to enable substantial condition and space improvements across the campuses. However, 2023/24 saw significantly reduced capital expenditure to reflect lower cash available due to lower EBITDA. The Committee sought assurance that the Draft Budget included reasonable provision to ensure that college continued to invest in I.T. Whilst operational costs had been built in, the capital impact of the college’s developing I.T. Strategy was at this stage, unknown.
      • The Committee noted that the Draft Budget planned to retain a Financial Score of ‘Good’. However, EBITDA as a percentage of income would fall in 2023/24. In response to a question from the Committee Chair, the ED, F confirmed that he would confirm with the college’s bank if it would provide an overdraft if needed going forward. Past discussions indicated that this would not be an issue.
        the ED, F confirmed that he would confirm with the college’s bank if it would provide an overdraft if needed going forward.

The Committee, having reviewed the Draft Budget and considered the ED, F’s presentation, concluded –

      • The 2022/23 Draft Budget enabled the college to manage the known financial challenges presented, as it included prudent assumptions regarding pay and non-pay costs made.
      • The 2023/24 financial position was very challenging with significant risks around pay and non-pay cost inflation plus reductions in pandemic, other 16-19 funding and other uncertainties, such as fuel costs and the impact of possible further education sector reclassification It was likely that the college would have a reduced Financial Health score within the ‘Good’ category due to EBITDA expected to be below 5%.

Having reviewed the Report, the Committee RESOLVED TO RECOMMEND TO BOARD the Draft Budget and revised two-year Financial Plan, as amended.
Action: Item to Board

31/22. Estates Report (Confidential Appendix - Agenda Item 8)

The Committee considered a confidential report on the college’s planned capital and estate development programme, going into summer 2023 (previously circulated) and considered the following key issues –

      • English Bridge - Refurbishment of the Learning Resource Centre (LRC), Drama facilities and Canteen at the English Bridge Campus as reported to governors on the Strategic Development Day held on 01 April 2022, planned for the summer break. The ED, F was working with the selected contractors to achieve completion of the works by September 2022. The Staff Governor reported that staff and students were excited at the prospect of the improvements being made. The college had also submitted a Post 16-19 capacity fund bid to expand the teaching space at the Campus.
      • Replacement of windows to the Main Block at the London Road Campus. The selected contractor was scheduled to commence over the summer break.
      • Classroom redesign projects at London Road Campus to build additional capacity for E-Sports provision.
      • Welsh Bridge Campus, as outlined in the Draft Estates Strategy, would form the basis of the post-16 capacity fund bid to be drafted over summer 2022. The ED, F had received indicative costings for the project and was now in a position develop a feasibility study, including how to develop a ‘shovel ready’ project. The Committee urged the college to make every effort to develop a ‘shovel ready’ project in order to take advantage of capital funding when announced, as it could not miss out on funding opportunities.

The Committee discussed the continuing development of the Draft Estates Strategy and the Estate Strategy ‘Roadmap’ developed by the Estates Strategy Working Group. At the Strategic Development Day held on 01 April 2022, after facilitated group discussing set questions around the Draft Roadmap, it had been concluded that -

      1. The planned direction of travel set out in the Road Map was a sound basis on which to proceed the Draft Estate Strategy.
      2. There was a strong consensus to proceed with investing in the detailed development of major projects such as the demolition and rebuilding of Austin Building, Welsh Bridge Campus, to create extra space in the town centre.
      3. There was an understanding of the need to explore the potential for disposal of some of land to finance /enable major campus development but a preference to prioritise other sources of funding
      4. There was appetite to consider increased borrowing to finance /enable major campus development, and an acceptance of the risk of a reduction in “Financial Health” from good to “Requires Improvement”, as a result.
      5. The Estates Working Group would recommend to the Board a list of priority projects, although this would need to remain flexible, to accommodate changing circumstances.

Whilst there had been an understanding of the need to explore the potential for disposal of some of land expressed at the event, the Committee agreed that it was still worth exploring development of the land's potential value given that this could take several years and that this should be discussed at the next Board meeting on 11 July 2022, when the Draft Notes of the Development Day would be presented.

To ensure effective governance oversight, the Committee suggested that the Estates Strategy Working Group meet from September 2022.

32/22. Health & Safety Update (Appendix – Agenda Item 9)

The Committee reviewed the latest report (previously circulated).

The College had encountered five near misses during terms 2 and 3. All incidents has been reviewed to ensure that actions was taken if appropriate.

The Health & Safety Link Governor remained assured as to the robustness of the college’s ongoing health & safety arrangements.

33/22. Office for National Statistics (ONS) Review of Classification of Colleges (Appendix – Agenda Item 10)

The Committee reviewed a report (previously circulated) on the recent announcement by the Office for National Statistics (ONS) that it was to review the classification of colleges for statistical purposes and that this could lead to a reclassification of the sector.

      • Currently, colleges were classified as part of the private sector, a decision the ONS took in 2012.
      • Whilst the review process would allow for representations to be made, how the government responded to any recommendations made, was largely up to them.
      • A change in classification could have an impact on commercial borrowing ability or VAT status going forward; however, any changes would not be made in the immediate future.

34/22. College Governing Body Finance Dashboard (Appendix – Agenda Item 11)

The Committee reviewed the latest ESFA Finance Dashboard (previously circulated).

The P/CEO commented on the clarity of information provided and invited the Committee to advise if it considered the college’s Management Accounts would benefit from any information featured in the Dashboard.

35/22. Risk

As part of the discussions on the College’s Risk Register (previously circulated) agreed by Board (Board Min No. 19/20 refers), the Committee examined those risks within its remit to ensure that they had either been identified or adequately discussed at the meeting. The Committee agreed that it had been advised of and had considered risks with respect to rising energy and building costs and the risks of under delivery of the AEB Budget and their impact on the College.

The Committee additionally observed that the risks associated with the English Bridge project had been considered at the pre-Audit Committee presentation on 15 June.

The ED, F provided a verbal update on the outcome of the recent invacuation event on that had recently taken place at the College. There had been a review of the college’s invacuation procedure following the incident and the Committee was assured that the college’s procedures had been effectively followed.

36/22. Committee Evaluation (Appendix – Agenda Item 12)

The Committee Chair would compile some initial thoughts and request the Clerk to circulate them amongst Committee members for comment. All committee members were encouraged to review the evaluation, which would inform development and improvements going forward.

37/22. Date of Next Meeting – 27 September 2022 at 5.30 p.m. Venue - tbc.

The meeting concluded at 7.34 p.m.