Minutes of the Finance Business Operation - 3 June 2025

M. Hartland in the Chair.

17/25.  Declarations of Interest

No pecuniary interests were declared.

18/25.  Minutes of Meeting Held 08 April 2025 (Appendix – Agenda Item 3)

Resolved:  That the Minutes of the meeting held on 08 April 2025, be approved as a true and correct record.

19/25.  Matters Arising

None.

20/25.  Period 9 Management Accounts (Confidential Appendices - Agenda Item 4)

The Committee received the Period 9 Management Accounts (previously circulated).  The Accounts had been circulated to all governors. 

Following a presentation from the EDoF (previously circulated), the Committee noted the following -

• The college's forecast financial health score was "Outstanding," maintaining the score from the previous period (Period 7).
• The forecast EBITDA as a percentage of income had decreased from P7. The EDoF explained that this reduction was primarily due to backdating of the cost of living pay award of 5.5% to 1 September 2024.
• A forecast operating surplus exceeding the full year budget was still expected. This included in-year growth funding, an estimate for the pay award grant and National Insurance Grant apportioned to 2024-25.

The Committee also received an update on the 2024-25 Budget and performance for the year to date with respect to –

1. 16-18 Core funding, Work Placement and High Needs funding

• The forecast outturn exceeded the budget. This included in-year growth funding and an estimate of the grant to offset the additional cost of the 5.5% pay award from 1 April 2025. The college was waiting for confirmation of its individual funding allocation for the additional pay award grant.  The NI Grant for April 2025 to March 2026, would be paid in September 2025.

High Needs Element 3 funding:

• The forecast outturn showed a shortfall against budget. While overall recruitment had increased, the number of high needs students was lower. The EDoF explained that, as reported at the last meeting, the formal contract with Shropshire Council had still not yet been signed.  The forecast did not yet include potential additional Element 3 funding for students assessed as needing EHCPs but without them.  The Committee sought assurance that this would not materially affect the college’s funding position. The EDoF explained that whilst the relevant strategic risk score had been raised, he considered that the risk was primarily one of timing and would be mitigated.

Apprenticeship income:

• After a successful January 2025 recruitment window, the focus was now on retaining existing apprentices and achieving 60% of remaining achievements to meet the forecast.

Adult Income now Known as Adult Skills Fund (ASF):

• Trades Union Studies (TUS) and Distance Learning required further activity to meet forecast. The EDoF explained that a shortfall in TUS or other forecast delivery might lead to a claw-back if the national allocation dropped below 97%. However, there was potential for payment of some of the FCFJ out-of-tolerance over-delivery, not yet included in the forecast.  The college expected to utilise its full allocation in the West Midlands Combined Authority, with anticipated payment for over-delivery.

Higher Education (HE) Income:

• The forecast outturn was below budget. September 2024 enrolment had been below projections and plans for additional HTQ HE students in February/March 2025 had not materialised, raising the risk of a potential clawback in 2028 if HSIF target enrolments were not met over the next three years. However, the Department for Education (DFE) had relaxed HSIF grant funding enrolment targets, mitigating some of the risk.  The EDoF confirmed that the college would continue to monitor HE learner recruitment closely and develop contingency plans for potential HSIF clawback.

Pay

• The impact of the Sixth Form Colleges Association (SFCA) pay settlement of 3.5% from 1 September 2024 and 5.5% from 1 April 2025, had added to pay costs, with a corresponding estimated increase in grant funding. The P/CEO explained that following confirmation of in-year growth funding it was affordable to bring the college’s staff pay increases into line with that of schools and academy sixth form colleges (i.e. to provide a 5.5% uplift from 1 September 2024). Teaching staff had been paid a cost-of-living increase of 3.5% backdated to 1 September in March 2025. In the month of P9 (April), the payroll cost included both the 5.5% cost of living backpay due for Support staff backdated to 1 September 2024, plus the additional backpay of 2% covering the period from 1 September to 31 March to teaching staff.  These two factors plus the increase in National Insurance from 1 April accounted for the large in-month variance to budget.  In response to a question, the P/CEO explained that while pay costs had increased due to backdated pay awards and National Insurance increases, a reduction in LGPS employer pension contributions partially offset these rises.  Restructuring pay costs were also likely to reduce as provision planning for the 2025 – 26 year was completed, as little restructuring activity was expected.  The Committee supported this.

Non-Pay Expenditure:

• Total non-pay expenditure was forecast to slightly exceed the full year budget.
• Subcontracting Costs: Slightly lower than budgeted due to reduced subcontracted FCFJ activity in the GLA devolved region.
• Premises Costs: No longer included additional security expenditure (which had been reallocated to Pay costs).
• Cost Pressures: Forecast increases reflected ongoing cost pressures, higher building maintenance, and higher than budgeted energy costs.
• Marketing Costs: Costs are ahead of budget and the forecast now included an additional contingency to allow for this.

Capital Expenditure

• The Performing Arts block roof renewal project, not planned for 2024-25, would commence to enable the works to be completed by September 2025.

Efficient Cash Management:

• Despite the NI grant delay, cash held was strong, supported by effective treasury management generating significant investment income.

21/25.  Draft Fee, Fee Remission and Refund Policy 2025 - 2026 (Confidential Appendix – Agenda Item 5)

The VP, Q,A & I presented the Draft Fee Policy 2025 - 2026 (previously circulated) for consideration prior to recommendation to Board.  The policy established a consistent framework for fee charging, remission and refunds, supporting the college's sustainable financial health and adherence to funding regulations.  This included managing revenue streams from diverse student groups and employer contributions.

The VP reported on the amendments and updates to the 2025 - 2026 Policy –

• Minor changes had been made to reflect changes in job titles and increases in fees, where applied.
• The draft Policy clarified the position regarding compensation for students affected by industrial action affecting HE courses, based on guidance received from the Office for Students (OfS)
• The draft policy would be further amended to incorporate suggestions from the EDoF.

These amendments were accepted by the Committee.

RESOLVED:  It be RECOMMENDED TO BOARD that the draft Fee, Fee Remission and Refund Policy 2025 - 2026, as amended, be approved.

Action:  Recommendation and amended Draft Policy to be included in Governance Pack for July Board

22/25.  Subcontractor Management, Retained Funding Policy 2025 – 2026 (Confidential Appendix, Agenda Item 6)

The VP, Q,A & I presented the Draft Policy (previously circulated) for review prior to recommendation to Board.  This policy standardised the management and recruitment of subcontractors for all provision funded by the Department for Education (DfE), as well as Devolved Regions, adhering to the DfE Subcontracting Standard and best practice guidelines.

In response to a question on how the college approached the selection of sub-contracting partners, the VP explained that the college worked with providers who delivered provision not delivered by the college that supported skills needs.  The policy also aimed to ensure fair subcontractor selection based on ethos, capacity, capability, quality and financial standing.

The VP was confident in the quality of provision delivered by sub-contracting partners, as the college had robust controls in selecting, monitoring, and managing delivery partners.  An audit of the college’s subcontracting arrangements would be required by July 2026, in line with the DfE Subcontracting standards.

The Committee agreed that subcontracting supported the college's strategic objectives by addressing local, regional and national needs, widening participation, responding to employer demand and enabling specialist delivery. 

RESOLVED:  It be RECOMMENDED TO BOARD that the draft Sub-Contractor Management and Retained Funding Policy 2025 – 2026, be approved.

Action:  Recommendation and Draft Policy to be included in Governance Pack for July Board

23/25.  Estates Update (Confidential Appendix, Agenda Item 7)

The Committee reviewed a report (previously circulated) on recent college estates developments and improvements together with plans in development for maintenance and improvement across the college’s three campuses.  The paper also addressed campus capacity, land development and requests from the National Grid for substation relocation.  Board approval was required for entering into new leases covering the land in question.

The EDoF reported that –

• Campus Capacity Planning: General classroom space was expected to be sufficient for 2025-26, but specialist workshop space could be a limiting factor in the medium term. A feasibility study was underway to assess the structural viability and cost of adding a mezzanine floor in the English Bridge Campus sports hall. In response to a question, the P/CEO confirmed that the college would continue to monitor closely campus space utilisation to ensure sufficiency for the September 2025 demand. 
• A Condition Improvement Fund (CIF) bid submitted in December 2024, for funding to support the London Road Campus Performing Arts roof replacement had been successful and works were now scheduled.
• The Committee also received a further update on possibilities for land disposal. Further analysis and feasibility studies were being undertaken for the identified sites.
• Electrical Substations: National Grid had approached the college regarding relocating two substations impacting the English Bridge and London Road campuses.

Having discussed the impact on the college, particularly with respect to the benefits and drawbacks of agreeing to the substation moves, the Committee AGREED that

1. with respect to the proposals to relocate the existing substation at the English Bridge Campus it was minded to recommend to the Board agreement in principal, provided the relocations were carried out at no cost to the college and that the works would be undertaken outside of term time (without disruption to normal college operations); and
2. with respect to the proposals to relocate the existing substation at the London Road Campus it was minded not to recommend agreement at this stage, as the college required further assurance that the relocation proposals would not affect the college’s future plans regarding the development of facilities at the London Road Campus.

ACTION:  Decisions to be included in Committee Chair’s report to Board

24/25.  Letter from Department for Education: College Financial Statements 2023 to 2024 (Appendix, Agenda item 8)

The Committee reviewed the annual letter from the ESFA following the review of the college’s audited financial statements and associated returns for the year ended 31 July 2024.

Following the review, the ESFA had concluded –

• That the college’s financial health grade for 2023/24 based on the outturn forecast, was Good.
• No significant financial control concerns arose from the review of the college’s audited financial statements.

The Committee reviewed the Governing Body Finance Dashboard data (previously circulated) and concluded that the Management Account reports presented to every meeting met the Committee’s requirements and provided sufficient information to give assurance on the management of the college’s finances.

25/25.  Risk (Appendix - Agenda item 9)

The Committee examined those risks within its remit and agreed that they had been identified and adequately discussed at the meeting.

The Committee agreed that the greatest long-term strategic risk remained that campuses were not sufficient to meet demand.

26/25.  Date of Next Meeting – TBC.

The meeting concluded at 7.10 p.m.