60/22. Declarations of Interest
None.
61/22. Minutes of Meeting Held 01 November 2022 (Appendix – Agenda Item 3)
Resolved: That the Minutes of the meeting held on 01 November 2022, be approved as a true and correct record.
62/22. Matters Arising
Minute Number 58/22 – Risk
The EDF explained that the risk of the possibility of power cuts had been added under Strategic Risk FBO 6 ‘Risk that Insufficient Business continuity plans are in place to manage a major incident.’
63/22. Financial Statements Year Ended 31 July 2022 (Appendices, Agenda Item 5)
The Committee considered the draft year-end financial statements (previously circulated) for the year ended 31 July 2022. They have been audited by the Financial Statements auditors who indicated a ‘clean’ unqualified audit opinion in terms of both truth and fairness and regularity.
The Audit Committee had also considered the draft Financial Statements at its meeting on 23 November 2022 (Audit Min. No. 30/22 refers) and had recommended them to Board.
The Financial Statements auditors would attend the Board meeting.
On 29 November 2022, the Office for National Statistics (ONS) had reclassified all college corporations as public sector institutions, retrospective to April 1993. In response, the Department for Education (DfE) had introduced some new rules for colleges with immediate effect. However, none of the rule changes had a significant impact on the college. The Department was expected to continue to review this change and issue further guidance over the coming 12 to 24 months. The college would also continue to keep further changes under consideration. A statement to this effect had been inserted into the Draft Financial Statements to be considered at the Board meeting on 12 December 2022.
The EDF also advised that governors were required to assess the college’s going concern and that the auditors needed to be satisfied that the assessment was robust. The Committee accordingly considered a paper (previously circulated) with assurance regarding the status of the college as a going concern.
The draft year end accounts, 2022-23 financial plan and year to date operating outcomes demonstrated continuing good financial health. Despite the ONS reclassification and that, with immediate effect, DfE permission would be required as a condition of funding for any new private sector borrowing, the college’s status as a going concern remained unaffected. To help colleges manage their cashflow, the DfE would invest funds before the end of the current financial year and rebalance monthly payments, by bringing forward payments. Each college would receive an additional funding payment in March 2023, with an equivalent reduction in funding for each college between April and July. This change would help provide more consistent cash-flow for the college moving forward, which would mitigate against the fact that the contingency of an overdraft in March/April 2023, would no longer be allowable following the ONS decision.
The P/CEO observed that the college had delivered a reasonable financial outcome and had invested in a capital programme, despite a turbulent year as a consequence of the pandemic, exceptional energy costs and general inflation.
Resolved: That, having considered the draft Financial Statements, the report of the Executive Director of Finance and Financial Statements auditors and the reports on going concern, the Committee RECOMMENDED TO BOARD that
- the Committee considered the Shrewsbury Colleges Group to be a going concern; and
- the audit findings and draft year-end financial statements 31 July 2022 be approved.
ACTION: REPORT TO BOARD
64/22. Period 3 Management Accounts (Appendix – Agenda Item 6)
The Committee considered a report (previously circulated to all governors) on the Management Accounts to 31 October 2022, which highlighted the key results, measures, and risks.
- In response to questions, the EDF reported that the college was planning January HE starts to fill the anticipated shortfall in HE funding.
- In response to a question, the EDF explained that there was potential, now that the sector was classified as ‘public sector’ for the government to not require the bond requested by Shropshire LGPS to cover the existing pension deficit because of a perceived risk of the government not guaranteeing the deficit.
- In response to a question, the EDF explained that the staff pay budget projections allowed for the SFCA offer to teaching staff of 5.0% rising to 8.9% for teachers on the lowest pay points. If this pay award was accepted, this would not affect the year-end outturn. However, the teaching unions had rejected this offer. NEU had a mandate for industrial action and the NASUWT were balloting their members.
65/22. Estates Strategy and Capital Bids Verbal Update (Agenda Item 7)
The EDF provided a verbal update, as follows –
- As part of a Strategic Development Fund Mark 2 project run in collaboration with Hereford, Ludlow and North Shropshire, and Telford Colleges, the college has been provided with a grant of £422k to expand and develop its Renewable Energy training. The college would develop a new air source heating training space at the London Road Campus, building on its existing expertise to specialise in Air-source heat pumps and Electric Vehicle charging. This would support the Marches region’s drive towards a net Zero economy. It was anticipated to be completed by 31 March 2023. While this permanent new space was being created, from January 2023, the Lower Ground floor at English Bridge Campus would be used to start to deliver small group courses for Air-source heat pump training
- The college’s two Post-16 Capacity bids had been submitted: 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. In response to a question, the EDF confirmed that both projects were now ‘shovel ready’ and planning permission had been secured for the London Road project.
- The Department for Education (DfE) had announced today (6 December 2022) formula-based allocations for all schools and colleges for investment in energy efficiency schemes. The college would receive an additional £147k of funding to be spent over the next two years. This would pay for LED lighting at Welsh Bridge Campus and for the voltage optimisation project, designed to further reduce energy costs, being implemented between the end of term and the start of the new term in January.
- The college had received details of the Wave 5 T Level courses and bids would close on 05 February 2023. The bids would require an element of match funding and, should the Post-16 Capacity Bids be unsuccessful, funding allocated could be diverted to these bids. The Committee encouraged the college to pursue every available opportunity to improve student experience and offer provision to support the growth of local skills.
- The college had received a further approach from Shrewsbury Town Council over the possibility of a short-term lease of Wakeman Field. The Committee agreed that the college enter into discussions.
The Committee requested a short update paper on the progress of Estate Strategy projects and capital bids be presented to Board.
66/22. Outcome of Office National Statistics (ONS) Decision on the Classification of Colleges in the UK Accounts
The Committee had already discussed the implications of the decision. The item was on the Board of Governors agenda for Monday, 12 December 2022.
67/22. College Governing Body Finance Dashboard (Appendices – Governance Pack)
The Committee had received instructions on how to access the dashboard and considered the college’s information (previously circulated).
The FEC had recommended a change in the way the sector’s Financial Health would be calculated, to be introduced for 2023 – 2024. Having modelled the proposals, the college’s status would change from Good to the top of Requires Improvement. The SLT was considering the strategic implications of this in terms of the college’s strategic ambitions and would report to Board. The Committee agreed that this would affect the entire sector and once rebased, the financial health score of many colleges would further deteriorate.
68/22. 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. The 2022– 2023 Strategic Risk Register would be presented to the Board at its next meeting and the updated risks would, from that point, be included on subsequent committees’ agendas.
69/22. Date of Next Meeting – 07 February 2023 at 5.30 p.m. Venue - tbc.
The meeting concluded at 6.52 p.m.