Management and Financial Failures at KCC

In previous blogs the Grenfell Action Group promised to shine some light on the management of the Kensington and Chelsea College, and especially on our concerns that the College’s current problems have been caused by the actions of the Board members who were supposed to safeguard the wellbeing of this much loved educational institute.

Our earlier efforts to expose the shameful decision of KCC to sanction the international travels of former principal Mark Brickley, on a pretence of recruiting overseas students, has brought dividends. After publisising the fact that Mr Brickley had spent nearly £70,000 on his travels in pursuit of illusory international students the management  decided to veto further attempts to recruit students from abroad. This is welcome news as it is high time that the powers that be at KCC came to their senses and realised that their primary duty should be to serve local residents, including the community in the Wornington Road area which is one of the most deprived areas in the whole of the UK.

The Grenfell Action Group have now raised our sights to focus on two other issues that are causing concern. The first of these is the manner in which the Wornington College building was sold to the Royal Borough of Kensington and Chelsea, in May 2016, in what appears to have been a private backroom deal. The second issue we wish to expose is the sudden decline in the financial robustness of the College despite statements in the summer of 2016 from the Vice Principal with special responsibility for Finance and Resources that the College was in a sound financial position.

The Sale of Wornington College to RBKC:

The Grenfell Action Group will be writing to the Kensington and Chelsea College Financial Auditors, Grant Thornton, and raising our concerns about how the College was sold to the Council without an open tendering process and without the opportunity for the market to decide the true value of the Wornington Road site. We believe the sum of £25.4 million that the Council paid for the building falls short of what might have been obtained on the open market and we question why there was a need for so much secrecy surrounding the sale of this prized KCC asset. It has subsequently emerged that local Labour Councillors were not even informed of the sale until the deal had been completed and there is no evidence that any bid other than that by RBKC was considered.

The Financial Forcasts of KCC:

A look at previous minutes of the KCC Board of Governors raises a series of concerns that the Grenfell Action Group will be addressing with the current management team and the College’s financial auditors in order to understand what has actually been going on behind the scenes.

Our primary concern is the inexplicable change of fortunes of the College’s finances over the last four years. It is a matter of record that the financial forecasts for the College during this period have been totally inaccurate and call into question the professionalism of the manner in which these forecasts have been compiled and presented to the Board of Governors, despite the fact that the Skills Funding Agency (SFA) has written to Principals and Chairs to remind them of the importance of these budget estimates.

There is a history of inaccurate financial forcasting at KCC stretching back to 2012 and KCC has been in financial difficulties throughout this period. The Skills Funding Agency (SFA), on which KCC depends for a significant proportion of its annual funding, issued a formal Notice of Concern in October 2012 which was not lifted until September 2014.

The issuing of the Notice of Concern appears to have resulted from a pattern at KCC of initially forecasting end of year surpluses that subsequently degenerated into significant deficits by year end. In 2015 this pattern continued and worsened considerably. In July 2015 the College’s draft budget for 2015/2016 showed a planned surplus of £300,000 with surpluses of £331,000 and £312,000 predicted for the following two years. By October 2015 KCC were instead forecasting an in year operating deficit of £948,000 and this was followed, the following year, by a projected in year deficit of £1.7 million.

Back in July 2016 it is our understanding that Vice Principal Bill Blythe was responsible for producing a forecast of the College’s finances, that the Management Accounts were subject to detailed review from the Finance Committee, of which he was a member, and that the detailed budget and associated course plan for 2016/2017 were produced in collaboration with the managers concerned. The financial forecast reported that the College’s finances were in a healthy and robust state:

“The budget currently shows a surplus of £501k after taking into account the effects of depreciation and interest, the new headline measure – surplus before interest, tax, depreciation and amortisation costs is a healthy £1.213m surplus. The position improves further into 2017/2018 with an operating surplus of £917k forecast.”

At the same meeting Mr Blythe announced that he was jumping ship and had found alternative employment elsewhere. This news was recorded in the mintues thus:

” The Vice Principal is on a 6 -month notice period and is working with the Principal on an exit plan. The Principal is seeking a replacement for the post. The Board congratulated Bill on his appointment to a new post and relocation to Devon and thanked him for all his support and hard work at the College”.

Events that followed saw Mr Blythe, despite having given notice of his resignation, promoted to take over the overall running of the College following the sudden departure of Principal Mark Brickley, and Deputy Principal Fiona Ross, whose sudden resignations were not recorded in Board minutes and with no vote of thanks recorded for either.

Subsequently, the minutes of the Board of Governors in December 2016 containd an Annual Report from the Audit Committee which stated that:

“The Audit Committee’s opinion is that that the College’s risk management, control and governance systems and its internal processes for securing economy, efficiency and effectiveness at the College are adequate and effective and that the Governing Body should have confidence in relying upon them. The Committee is satisfied that where weaknesses are identified they have been responded to in an appropriate and timely manner”

However, subsequent minutes from the Board meeting in Feburary 2017 revealed that the College’s finances were in a much more precarious state than previously indicated. The minutes of that meeting reported that;

“The Management Accounts up to 31 December 2016 indicate that the College will fall significantly short of its income target for the current year. The overall shortfall is expected to be in the region of £1.7 million.

Governors expressed concern at the dramatic change in financial forecasts compared to what was reported to the Board in October, where the then Management Accounts forecast a year-end surplus of £256k.”

Due to cuts of 24% in the national budget provision for further education in 2015/2016 the SFA began recommending that FE colleges should merge wherever possible to strengthen their finances, and specifically recommended a merger between KCC and City Lit in which both parties would hopefully retain their individuality and a measure of independence. Unfortunately the KCC/City Lit merger fell through, and this has left KCC facing a hostile takeover by ‘Ealing Hammersmith and West London College’ (EHWL) in which KCC is likely to lose control over what’s left of its assets and operations at Hortensia Centre.

The situation as it now stands is that, despite repeated assurances by both RBKC and KCC that youth and adult educational provision will continue in North Kensington, the Youth training facility at Maxilla Walk has already been closed and Wornington Road College has been sold off to RBKC for redevelopment.

However, the closure of Maxilla and the sale of Wornington were first discussed and planned in 2012 and cannot therefore be blamed on the budget cuts inflicted on the SFA in 2015. The Maxilla closure and the Wornington sell-off are actually evidence of failing management and governance at KCC. These same failings have left KCC more vulnerable to the additional stresses resulting from the budget cuts of 2015. The subsequent failure of the City Lit merger has now left KCC at the mercy of EHWL and in a deep crisis of its own making. This also means that the future of further education in North Kensinghton cannot be guaranteed and can only be described as more precarious and uncertain than ever.

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