G. Mills in the Chair.
30/24. Declarations of Interest
No pecuniary interests were declared.
31/24. Minutes of Meeting Held 04 June 2024 (Appendix – Agenda Item 3)
Resolved: That the Minutes of the meeting held on 04 June 2024, be approved as a true and correct record.
32/24. Matters Arising
Minute Number 20/24 – Draft Digital Strategy
The meeting between the Board Chair, P/CEO and VP, Q,A & I prior to the revised Draft Strategy being considered at the September 2024 meeting, would be deferred.
Action. Board Chair, P/CEO and VP, Q, A & I meet by 31/07/2024. Item to F&BO October 2024.
Minute Number 28/24 – Discussion of Risk
The Committee had discussed the Board’s current approach to the review of strategic risk appetite and had requested the Audit Committee consider whether the current approach provided sufficient assurance that risk review was sufficiently regular and risk movement was fully understood across the other committees and the Board. Having considered this at its most recent meeting, the Audit Committee concluded that, as it at every meeting, reviewed risk appetite and movement which then informed the presentation of strategic risks to other committees, the current approach still added the most value to the effective management of strategic risk, as it provided assurance of the impact of risk mitigation, to inform other committees of risk movement. However, to support informed discussion, going forward, any changes in risk movement should be highlighted in risk reports the committees received.
33/24. College Financial Forecast and Draft Budget 2024/25 (Appendices, Agenda Item 5)
The Committee reviewed the Draft Budget and revised two-year Financial Plan, prior to consideration by the Board (previously circulated).
The EDoF explained that the report to Board would be updated to incorporate the Period 10 Management Accounts. He gave a detailed presentation to the Committee and explained the following key points –
- The initial plan for 2023-24, had been impacted by several significant challenges -
- A significant increase in staff costs due to the 6.5% pay increase awarded in 2023/24, which was 2.5% above budget. However, the additional 16 – 18 funding received largely compensated for this.
- Teacher pension scheme (TPS) contributions had increased by 5%. Additional TPS grant funding received had largely compensated for this.
- LGPS pension contributions had increased by 3% with no additional funding to compensate for this.
- Exams fees had increased by £150k per annum for the last 2 years, with a 13% increase in 2023 – 24. No additional funding had been received to cover this increased cost.
In reviewing the Draft Budget, the Committee deliberated on the following key issues:
- The Draft Budget allowed for additional modular accelerator courses and the impact of current HSIF funded marketing activity. However, HE income remained low. In response to a question, the P/CEO explained how the funded activity would be used to market the college’s offer to three sectors, the employed looking to upskill, those moving directly from 16 – 19 education and those looking to retrain to return to the workplace. Whilst the college would receive data from the marketing agency running the campaign, it would be challenging to identify the direct impact of the campaign on enrolments.
- Learner loans activity was forecast to reduce as more courses were now covered by Adult Education funding.
- Apprenticeship income was predicted to remain largely flat in profile, reflecting the slowing down in enrolments due to the downturn in construction activity.
- The pay costs forecast had increased by 15% on the 2023 – 24 Budget due to higher than forecast pay awards in 2023-24, increased pension contributions and a 5% increased headcount in response to student growth and increased applications for 2024/25. However, 16 – 18 income was lagged, hence this was adversely affecting the Budget Pay to Income ratio, which had increased by 2%.
- The college anticipated subcontracting to higher levels in 2024 – 25 unless there was a policy change regarding Trades Union education funding rates and access to funding from Devolved Authorities
- Regarding non-pay expenditure, exam fees were budgeted to increase by 10%, reflecting the forecast increase in the number of students and cost inflation applied by examination bodies. In addition, computer software costs had increased significantly. The EDoF explained that the college would be reviewing the software packages used to identify savings. However, after a sustained period of increases, it was forecast that energy costs would start to reduce in 2024 – 25.
- Regarding capital expenditure, the college planned to invest £1.48m of its own resources with the balance from capital grants already confirmed. In response to a question, the P/CEO confirmed that, whilst presenting a reduced level of capital investment from 2023 – 24, this would still enable the college to maintain its core estate and IT equipment whilst building reserves for future expansion.
The Committee, having reviewed the Draft Budget and considered the EDoF’s presentation, concluded that -
- The Draft Budget assumed a steady income position overall; this represented some growth in core areas which was offset by the college’s withdrawal from Trades Union apprenticeships.
- Through prudent management, Cashflow remain sound.
- Ensuring that planned full cost and other income were delivered was key to achieving the college’s strategic objectives.
The EDoF was commended for his diligent approach to compiling the Draft Budget and the Committee supported the cautionary approach taken at this stage. It was also agreed that the presentation made to the Committee also be circulated to all governors as part of the Board Pack and that the EDoF present a precis of the key points in his presentation to Board.
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 and circulate presentation slides to committee members and include in Board Pack.
34/24. Period 10 Management Accounts (Confidential Appendices - Agenda Item 6)
The Committee received the Period 10 Management Accounts and finance update (previously circulated). The Accounts had been circulated to all governors.
The key issues and differences between Period 9 and Period 10 were:
Regarding Income
- The forecast outturn for Adult Education Budget (AEB) had been reduced to correct double counting of a new funding line within the Education & Skills Funding Agency (ESFA) allocation. Within AEB funding the Trades Union Education forecast had improved since Period 9. Distance Learning forecast had been reduced to reflect the updated expected outturn based on the year-to-date position. Forecast subcontracted activity had been increased to reflect the availability of additional high-quality courses offered by partners.
- Forecast Advance Learner Loan income had been further reduced in line with planned receipts from the learner loans company. This had been offset from an additional Modular Accelerator funded short HE course which was now recognised as part of HE Income.
- Full cost income activity remained below budget, however slightly improved reflecting continued slightly better than planned full cost work.
- Within Education contracts, the forecast had improved and now reflected Term 3 invoices raised through to the rest of the year.
- Within Other Grants income LSIF Income and HSIF grant income had now been included in the year to date and forecast position. This was in addition to SALIX Grant funding and SEA Grant funded equipment that fell below the capitalisation threshold.
Regarding pay:
- Overall forecast pay costs had been increased based on the current run rate.
Regarding non-pay:
- On the basis that exams fees were following a similar profile to 2023/24, the forecast had been left unchanged.
- Materials costs included equipment acquired as part of the T level Specialist equipment allowance that was below capitalisation thresh-holds and non-pay Multiply delivery costs. Whilst there was an overall reduction in Materials costs for the month, costs were broadly on budget overall though Carpentry and Joinery Materials costs remained significantly over budget.
- Fees and Subscriptions included Salix funded decarbonisation expenditure and partner delivery costs of Multiply activity. The forecast had been increased to reflect ongoing project and other fees.
- Marketing costs included HE Marketing expenditure funded through the HSIF grant. Core Marketing activity was forecast to be over budget.
In response to questions, the EDoF, explained the remaining risks:
- Trades Union Studies – short roll-on roll off courses.
- Distance Learning.
- Expected under-delivery in the Greater London Authority (GLA) region due to lower Trades Union Studies activity and delay/cancellation of planned subcontracted work which would result in clawback of funding at the end of the year of c £80k. Although over-delivery was expected in WMCA.
35/24. Estates Update (Agenda Item 7)
The EDoF provided a verbal update to the Committee on the following –
- Decarbonisation Progress
- Consultants had undertaken detailed design work to assess the costs of decarbonisation of the college’s heating systems at the English Bridge and London Road campuses. However, the outline cost of replacing the existing gas-based systems with air source heat pumps was unaffordable. It was likely that the college would need to replace old gas systems in the Darwin and Performing Arts buildings on a like for like basis over the coming 5 years. The work had identified areas where upgrading the fabric of the buildings to make them more thermally efficient could be implemented as part of ongoing phased maintenance and renewal activity.
- Land Development next steps.
- Progress on the numerous capital works being undertaken across the campuses.
36/24. Insurance Renewal Review (Agenda Item 8)
The EDoF gave a verbal update on the college’s review of its insurance arrangement and that it provided assurance that the college had in place adequate insurance arrangements. He considered the level and amount of insurance held by the college to be adequate.
37/24. Risk (Appendix - Agenda item 09)
The Committee examined those risks within its remit (previously circulated).
Also see Minute Number 32/24.
38/24. Thanks to Outgoing Board Chair
The Committee Chair expressed his thanks to the outgoing Board Chair, R. Wilson, who would be leaving the Board in August 2024. He thanked Mr Wilson for his personal support and for his active membership of the Committee.
39/28. Date of Next Meeting – Tuesday, 24 September 2024 from 5.30 p.m.
The meeting concluded at 7.21 p.m.