Minutes of the Finance & Business Operations Committee - 4 November 2019

38/19. Declarations of Interest

R. Heath declared a standing interest as an employee of Harper Adams University.

39/19. Minutes of Meeting Held 25 September 2019

Resolved: That the Minutes of the meeting held on 25 September 2019, be approved as a true and correct record, subject to the following corrections –

Minute No. 32/19 – Matters Arising
Second paragraph, first sentence to read – “Regarding the Brick workshop, the Principal/CEO reported that the additional workspace had now been erected and was fully utilised, meaning it would recoup project costs within 18 months.”

Minute Number 33/19 – Management Accounts – Full Year to Date 2018 – 2019
Third paragraph, fourth bullet point – the FD advised that the College had delivered 104%.

40/19. Matters Arising

None.

41/19. Management Accounts to 30 September 2019 (Appendix – Agenda Item 5)

The Committee considered a report (previously circulated) with respect to the management accounts for the two months to 30 September 2019, which highlighted the key results, measures and risks. All governors had been supplied with a copy of the Report.

The Committee reviewed the Accounts and particularly noted that the outturn year to date was broadly as anticipated. The risks facing the College due to the lack of Non-Levy Apprenticeship funding had been significantly mitigated, but the overall risk in this area remained material.

The Committee reviewed the key changes to the forecast outturn –

• • Student Recruitment had been very positive this year, with the final student number at census point being above the budgeted 16-18 student headcount. If delivered as expected, the announced 4.7% increase to the funding rate for 2020-21, would further add to the planned income for 2020-21. The lagged nature of this funding however, meant that the College had more students and in some cases more groups than planned for. This had led to higher pay costs than planned in some areas and was therefore reflected in the forecast pay bill.
  • The College continued to attract increasing numbers of “high needs” students with additional support requirements, in recognition of the College’s reputation in delivering support for these students. Because of the higher than planned support required the College had invested in additional teaching assistant support to continue to deliver the levels of support required and commissioned for students. The Committee was advised that there was no allowance for overheads within the funding mechanism and that increasing numbers of teaching assistants had created new requirements for welfare and office space. Over the summer, space at the London Road Campus had been refurbished and provided for teaching assistants ‘use. The Committee recognised that, as the numbers of high need students increased, the overall impact on the College and its facilities was an increasing concern. The Committee agreed that, unless additional funding was made available to provide the facilities needed this would create new, unfunded cost pressures. This Committee agreed that this situation and an appropriate level of contribution towards indirect overhead costs be raised with Shropshire Council should this situation remain.
  • The forecast outturn for HE recruitment had been reduced by £40k. Similarly, the forecast outturn for International fees had been reduced by £57k to reflect actual amounts charged for the year.
  • Since the Budget was established the GMB had asked the College to expand its TU education work into the London Region (which extended to the northeast of London). The recruitment of additional staff to support this work had been included in the full year outturn. The FD advised that the Greater London Authority (GLA) had confirmed that it would remove direct allocations to colleges outside the Region after 2020 – 2021, unless it met specific criteria that provision must be niche and not replaceable. The College had submitted a robust exceptional business case application setting out why it should continue to be offered a contract. The Committee acknowledged, however, that there remained a risk that this business case would not be accepted.
  • The Committee recognised that the reallocation of AEB funding required to satisfy the additional GMB work in London would further reduce the College’s available AEB allocation for subcontracting to c. £123k. The Committee acknowledged that there remained a risk that carry in commitments to subcontractors might result in overall AEB values delivered exceeding the allocated amount available. The Committee sought assurance that this would be monitored closely throughout the year. The FD advised that the College remained keen where at all possible to continue to support and work with subcontract partners, to ensure their own stability and access to funding for their delivery.
  • SBC had increased the amount of Non-Levy funding available to the College by £146k more than anticipated in May 2019. The West Midlands Combined Authority (WMCA) had also launched a Non-Levy Transfer facility to enable providers within the region to access surplus Levy funding made available within the region. The College had identified Non-Levy funded apprenticeships who qualified for this scheme and was working to access this funding instead of using the SBC contract allocation. The forecast outturn for Non-Levy income therefore reflected the anticipated switch of funds from the “Non-Levy” to the “Levy” funding line because of the WMCA Levy Transfer scheme. The Committee acknowledged that the lack of funding within the ESFA/DFE could mean that planning for new apprenticeship starts for 2019-20 and 2020-21 could continue to carry a significant risk.
  • The Committee observed that the College’s engineering and construction delivery remained at near full capacity both in terms of workshop facility space and staffing constraints. This presented an ongoing and increasing risk of failure to fulfil demand from local employers.
  • A new risk had arisen as the result of a change to the allocation of advance learner loan facilities by the Education & Skills Funding Agency (ESFA). The Committee sought assurance that the College was seeking a remedy. For 2019/20, the loan applications made by students now exceeded the reduced Advanced Learner Loan facility allocation given and the Loans Company had suspended new applications from Students. The College had contacted the ESFA requesting that the loan facility allocation be reviewed and increased. However, it had not provided any assurance that this matter would be satisfactorily resolved if the formulaic approach did not resolve the matter, and had not indicated that it would intervene to take any further action; this left a risk that the facility would not be adequately increased within the forecast and this in addition would detrimentally affect students who had chosen to study at the College.

The Committee observed that the budget for capital expenditure had been reduced for 2019 - 20 and sought assurance that this was enough to meet the College’s needs. The FD explained that the College had gone through a capital bidding round, to identify priorities and that the budget had been rationalised both to reflect the financial constraints on the College’s ability to fund large capital projects and to ensure there was sufficient cash during the March – April 2020 period, when the College’s cash reserves were at their lowest. Whilst the Committee recognised the need to remain financially prudent, it also recognised the risk of prolonged lack of investment.

The Committee acknowledged the value of holding this additional meeting to scrutinise the first set of Management Accounts for the financial year. The Committee reiterated its appreciation of how the Accounts were presented.

Resolved: That, having considered the report, the Committee received the Management Accounts to 30 September 2019.

42/19. Health and Safety Annual Report and Policy Review (Appendix – Agenda Item 6)

The Committee reviewed the annual report on Health and Safety across the College (SCG) for August 2018 to July 2019 (previously circulated) which provided an update on Health and Safety across the College and included an Assurance Statement about the Board’s responsibilities for health and safety.

The Committee in reviewing the report particularly noted the following -

• • All sites had undergone a Fire Risk Assessment with Action Points being prioritised considering first the urgency of legal requirements, recommendations and individual cost of remediation.
  • The Health and Safety Officer had commenced a programme of departmental audits with specific focus on health and safety high risk areas. The resulting report and action plan would be monitored and followed up by the Health and Safety Officer. The Principal/CEO expressed concern at the number of actions outstanding in Product Design; the FD indicated this had been followed-up.
  • There had been no RIDDOR reportable events during the reporting period. The Committee observed that there had been a slight increase in the number of near misses being reported which had identified potential hazards and the prevention of accidents. There had also been an increase in the number of Safety Concerns and Safety Issues raised due to improved reporting and the diligence of the Health & Safety Officer, which was recognised by the Committee.
  • The Committee also noted the Health & Safety Objectives and priorities for 2019 – 2020.

The College Health and Safety Policy (previously circulated) had been reviewed and updated. The Annual Health & Safety Policy Statement would be signed by the Board Chair and Principal/CEO at the next Board meeting.

Resolved: That, having considered the report, the Committee RECOMMENDED TO BOARD that the Health & Safety Annual Report and Policy be approved.

43/19. Estates Report Termly Report (Appendix – Agenda Item 7)

The Committee reviewed the confidential termly estates report which provided a summary of the estates’ improvement projects completed during the summer (previously circulated) and key activities and development in respect of the estate.

The Committee noted progress with respect to –

• • Estates work undertaken across the campuses, including the installation of new Brick workshop at London Road Campus, refurbishment of the London Road Sports Centre lobby and changing areas, disabled access improvements at Welsh Bridge Campus and roof repairs and photography studio improvements at English Bridge Campus; and
  • Projects being considered for Condition Improvement Grant applications.

The Principal\CEO and FD provided a verbal update on potential campus redevelopment, the details of which are set out in a Confidential Minute.

Resolved: That

1. 1. The Estates Report be noted; and
   2. The action set out in the Confidential Minute be agreed.

44/19. Terms of Reference of Committee – Review (Appendices – Agenda Item 8)

As part of its review of committee membership 2019 – 2020 (S&G Min No. 21/19 refers), the Search & Governance Committee agreed to recommend that the Human Resources Committee, the Branding Task Force and the Business & Community Forum be disbanded. This was subsequently agreed by Board and agreed that this Committee review its Terms of Reference at its next meeting, to consider including HR issues within its remit.

The Committee reviewed the current Terms of this Committee and of the Human Resources Committee (previously circulated) and agreed that it was pertinent for effective governance to include consideration of an Annual Human Resources Report and any employment relations matters referred by the Principal\CEO within the Committee’s Terms.

Resolved: RECOMMENDED TO BOARD That the Committee’s Terms of Reference be amended to include the following –

1. 1. 1. To consider and inform the Corporation on an Annual Human Resources Report; and
      2. To consider and make recommendations on any employment relations matters referred by the Principal/CEO.

45/19. Risk

As part of the discussions on the College’s Risk Register and Board Assurance Framework agreed by Board (Board Min No. 67/17 refers), the Committee examined those risks within its remit to ensure that they have either been identified or adequately discussed at the meeting.

The Committee concluded that the risks connected with the Committee had been identified, particularly in the Management Accounts and that there had been sufficient discussion of the issues at the meeting.

The FD mentioned at this point an increased risk to the College’s future contracted AEB provision with the devolved Regions North of Tyne and Sheffield.
 

46/19. Any Other Business

Principal/CEO Update

The Principal\CEO advised that he had, at a meeting that day, been given more information from the ESFA on the funding increase for further education planned from 2020 – 2021.

Letter from Deputy Director – Assurance, Education & Skills Funding Authority

The latest letter from the ESFA in response to submission of the College’s latest financial plan for 2018-19 – 2020 – 21 was circulated at the meeting.

The letter confirmed the appropriate assessment grade based the financial plan was Good for 2018/19 and Good for 2019/20.

The Committee also reviewed the financial dashboard incorporating various key performance indicators and measures. The Committee observed that the Management Accounts report already included these indicators, to assist in robust monitoring of the College’s financial health.

The Committee also noted the letter’s reference to the mayoral combined authorities (MCA)/Greater London Authority (GLA) stating that, where the Adult Education Budget was being devolved to a MCA\GLA, the ESFA had a data sharing agreement in place and would share copies of this financial health letter, college financial health grade and college dashboard with the relevant authority.

47/19. Date of Next Meeting – 03 December 2019. Venue – CEO/Principal’s Office, Welsh Bridge Campus.

Concluded at 7.15 p.m.