01/22. Declarations of Interest
None.
02/22. Minutes of Meeting Held 07 December 2021 (Appendix – Agenda Item 3)
Resolved: That the Minutes of the meeting held on 07 December 2021, be approved as a true and correct record. They were signed by the Committee Chair at the meeting.
03/22. Matters Arising
None.
04/22. Period 5 Management Accounts (Appendix – Agenda Item 5)
The Committee considered a report (previously circulated) with respect to the Management Accounts to 31 December 2021, which highlighted the key results, measures, and risks. All governors had been supplied with a copy of the Report.
Regarding the 2021 – 2022 Outturn, the FD reported that there had been some significant adjustments to forecast since the Period 3 October 2021 management accounts (F&BO Min. No 58/21 refers) reflecting the challenges facing the college as in-year activity levels materialised.
The main expected changes to the budget at this stage were:
- The 16-19 Core funding forecast assumed that the catch-up funding allocated to the college was used in-year and that the portion of bursary income not used last year, be used and recognised during this year. This increased bursary income was offset by increased contingency for additional student welfare costs vs budget in the forecast.
- 16-19 High Needs Element 3 income has been reduced reflecting a reduction in high needs students who are no longer with the college.
- The Adult Education Budget (AEB) income forecast had been reduced reflect expected under-delivery. This reflected National Skills Funding which the college was unlikely to access and significant challenges with delivery of distance learning, Trades Union Studies (TUS) courses and lower Shrewsbury based adult enrolments.
- Apprenticeship activity remained significantly up on budget. As such the forecast income in this area was forecast better than expected in October 2021.
- Education contracts activity had been boosted by a second unbudgeted cohort of full-cost engineering students and a resumption of small education contracts income. The forecast for these areas had therefore improved. The P/CEO explained that this was as a result of building successful relationships with employers to meet local skills needs. The Committee supported this approach.
- HE income and Adult Learner Loan income was estimated to be below budget due to lower numbers of new starts than planned, withdrawals during Term 1 and contingency for expected further withdrawals.
- Full cost Tuition and exams fees income had been reduced.
- Energy costs had increased significantly following the recent price spike in electricity and gas; the forecast therefore anticipated an additional cost over budget. Challenges to the college’s energy provider regarding the rates set in October 2021, had resulted in a revised lower rate for electricity and this had enabled the college to reduce the expected overspend.
- While Pay costs were running slightly below budget year to date, this had not yet been reflected in the forecast, providing contingency to cover uncertainties for the remainder of the year.
The Committee discussed that the main 2022 – 2023 outturn risks therefore appeared to be -
- While the number of 16-19 students enrolled this year had increased, this was lower than planned and therefore directly impacted funding for 2022 - 2023. The funding increase announced in November 2021, meant that overall 16-18 income for 2022 – 2023, was still expected to be higher than originally anticipated for 2022/23. However this also included the requirement for delivery of an additional 40 hours to students.
- The impact of lower funded numbers in 2022 - 2023 was expected to be partially offset by continued growth in apprenticeships and potentially lower staffing costs (as the 2022 - 2023 budget had assumed further staff increases to meet additional student growth).
- Cost Inflation remained a risk area with inflation currently over 5%, and higher in particular for energy costs and materials and services. The impact of these cumulative costs increases would further impact the college’s cost base for 2022 - 2023 and was expected to significantly reduce the surplus expected in 2022 - 2023.
The P/CEO reported that the college had that day been notified by the Education & Skills Funding Authority (ESFA) that it had received additional in-year growth funding to meet additional costs this year.
In response to a question on the reasons behind the lower than forecast High Needs Funding outturn and the college’s plans to mitigate this risk, the FD explained that the outturn had been significantly affected by students leaving the college in Term 1. In response to a question regarding the under-delivery of the AEB, the FD explained that a slow return by employers and trades union representatives to face to face activity in TUS and changing market conditions leading to increased competition in Distance Learning as providers who had not been successful in securing contracts in devolved budget areas were moving into markets without a devolved budget, such as Shropshire. As part of the 2020 – 2023 provision planning process, curriculum leaders were being challenged to think about growing adult provision. The increased apprenticeship activity was likely to carry on through to 2022 – 2023.
The college grant application for the Public Sector Decarbonisation Scheme (PSDS3) funding to decarbonise heating systems at the London Road Campus remained under review with some feedback and requests for clarification which indicated that the application was being assessed. This required a capital contribution match funding for a grant to enable replacement of windows and heating systems across the campus with thermally efficient and carbon neutral technologies. The capital contribution was equivalent to the replacement cost of windows which were required over the coming years.
Resolved: That, having considered the report, the Committee received the Management Accounts to 31 December 2021.
05/22. Estates Report & Strategy Update (Potential Sources of Funding) (Confidential Appendix – Agenda item 6)
The Committee reviewed a confidential report (previously circulated), including progress against the various grant funding applications and potential sources of funding for the Draft Estates Strategy.
- The Estates Strategy Working Group had met on 18 January and would meet again on 15 February.
- Regarding the Post 16 Capacity Fund, the college would have the opportunity to bid for funding of capacity expansion projects later this year. Two potential opportunities were available for this grant.
- Expand Welsh Bridge Campus teaching space by relocating the Learning Resource Centre to Priory Hall.
- Add a mezzanine floor to an expanded Brickwork Workshop structure to create additional workshop space to enable growth of electrical and plumbing and gas provision at London Road Campus.
The guidance on the timing of post 16 capacity grants for 2022/23, had not yet been announced. The Committee agreed that both opportunities be developed into a “bid ready” state, to take advantage of the funding opportunity when it was announced.
- Regarding significant estates projects, the Committee noted the significant estates projects planned over 2022 – 2023.
The Committee also reviewed a Confidential report (previously circulated) setting out funding options available to the college to progress the Draft Estates Strategy. This report would be considered by the Estates Strategy Working Group at its next meeting.
The Committee reviewed the options presented, including scenarios illustrating the impact of additional borrowing on financial health. The FD explained the basis of the assumptions regarding the rate of interest charged. Any borrowing decision made which could affect the College’s financial health would have to be made at a strategic level. The college would also have to discuss with the ESFA how it would respond if the college made a strategic decision to affect its EBITDA.
In response to a question, the FD reported that the college would install the lift at the English Bridge Campus as part of the campus project. The college was currently making reasonable adjustments, including careful timetabling.
06/22. Health & Safety Report (Appendix – Agenda item 7)
The Committee reviewed the Term Health & Safety Report (previously circulated). The H&S Link Governor had reviewed the report and had been assured by its findings; he had also met recently with the Health & Safety Officer, as part of the Link Governor programme.
The Committee reviewed the findings of the latest Health and Safety Audits undertaken. The one critical finding was being addressed by staff. The agreed Action Plan would be monitored and followed up by the Health and Safety Officer within an agreed timescale to ensure the matters identified were addressed accordingly.
The Committee received assurance regarding continuing arrangements with respect to Covid. The college had retained the use of face covers in corridors and communal areas when ‘Plan B’ measures were relaxed in the wider community. The P/CEO reported that the Omicron variant had led to higher absence rates amongst staff and students than previous variants.
07/22. College Financial Regulations Review (Appendix – Agenda item 8)
The Committee reviewed minor revisions made to the College’s Financial Regulations to ensure they remained robust and effective.
The Committee requested that the current Financial Regulation which required that contracts for the provision of services to the College must specify the maximum duration of the contract and will not exceed five years be amended to make specific reference to the requirement to tender for external audit services every five years.
Having reviewed the recommended revisions, the Committee
Resolved: That the College Financial Regulations, as revised, be recommend to Board.
08/22. 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 costs and the impact on the College.
The P/CEO provided a verbal update on enrolments for the 2022 – 2023 year.
09/22. Date of Next Meeting – 05 April 2022 at 5.30 p.m. Venue - tbc.
The meeting concluded at 6.50 p.m.