The new college insolvency regime – what

it could mean for you Comment by TIM BROCK, qualified accountant and restructuring professional at chartered accountancy Mitchell Charlesworth

Colleges will be allowed to fail Further education funding challenges have been well documented over recent years with funding down and costs/competition up.

Should a college run out of money it

can apply to the Education and Skills Funding Agency for exceptional financial support (EFS) and gain access to a government backed loan. From 1 April 2019 this has no longer been the case. The Technical and Further Education Act

2017, effective 31 Jan 2019, removed the EFS rescue option and introduced an ‘Education Administration’. Colleges will be allowed to fail. New rules surrounding ESFA support are being worked on and

will be released shortly – it is likely these will factor in the new insolvency law.

Increased use of independent business reviews If a college is at risk of failure it should arrange for an independent business review (IBR) to be carried by a qualified restructuring professional. The IBR will confirm the viability of ongoing trade; the options

available and recommend next steps. The IBR could help prevent insolvency and reduce the risk of wrongful trading (see below).

Education administration and insolvency Should the IBR conclude that the college is insolvent it will be subject to both corporate insolvency law and potentially an ‘education administration’. An education administration is designed to protect the service while a rescue plan is implemented. Education administrators must be qualified insolvency

practitioners. They will seek to: • Rescue the college as a going concern, failing this; • transfer the college’s business to another institution, failing this; • allow existing students to complete their courses, wind down and close the college – with the college liquidated thereafter.

Investigation of the college leadership and governors Should a college enter an insolvency process, the administrators will investigate both the senior leadership team’s and governors’ actions prior to insolvency. Matters to consider include whether the leadership and governors are guilty of wrongful trading. Wrongful trading is a civil offence and takes place where an

individual knew or ‘ought to have known’ that insolvency was unavoidable, and action was not taken to avoid loss to creditors. If found guilty of wrongful trading, leaders and governors could

be held personally liable and ordered to make ‘such contribution as the court sees fit’. They could also be disqualified from being a director/governor.

Greater responsibility placed on college leaders and governors The government have placed far greater responsibility on a college’s long term future with the senior leadership team and governing body. To manage the risk of insolvency it is critical that colleges are proactive in managing their financial and strategic position. A greater emphasis needs to be placed on strong financial

controls and commercial awareness. Colleges should have a qualified accountant review their financials regularly to identify signs of distress early on and recommend how challenges can be overcome.

June 2019

Schooling our way out of the digital skills

crisis Comment by SHEILA FLAVELL, COO at FDM Group and Chair of the advisory board for the Institute of Coding

The ever-increasing digital skills gap is a widespread issue which is having a detrimental impact on our nation’s economy and leaving businesses poorly resourced. In fact, recent research has found that said skills gap could cost the UK £141 billion in GDP growth. This is a figure that we can only expect to rise considering the significant advancements being made in the technology and science industry, compared to the declining

interest in pertinent subjects such as coding and ICT. Thousands of companies and organisations are crying out for

workers with specialist tech-skills, such as data scientists and engineers, and research has found that in the last five years demand for these candidates has more than tripled. Therefore, it is essential that we begin to develop, nurture and encourage an interest in science and technology in our schools. From a young age many students will begin to have an idea of the field-of-work they would most like to pursue, based on a combination of the subjects in school that they excel in the most, and the windows of opportunity that each industry might provide. It is a travesty that take-up of computing courses in schools is

actually in deep decline. This is not due to a lack of interest from students, but through our education system, which has failed to ignite a passion for the subjects which could provide fascinating career opportunities for our future generations. Debates still rage around the removal of the ICT GCSE

qualification as well as the number of hours spent teaching coding falling from 31% between 2012 and 2017 in English Secondary Schools. Education should be our first port of call when it comes to plugging the digital skills gap, this makes it a huge shame to see that interest in STEM subjects seems to be waning at a time when our economy needs a fresh generation engaged in these vital courses. Moving forward, it is essential that the importance of the skills that these subjects provide and the windows of opportunity they present are made abundantly clear to all students on a consistent basis, and at the same time, many subjects relating to ICT and coding should be reintroduced to the core schooling curriculum. Another issue that is still prevalent in the education system, is the

perception that STEM-subjects and fields of work are a ‘boys-only- club’. By encouraging girls to recognise the exciting opportunities that STEM subjects can offer, we will effectively be helping to eradicate not just the digital skills gap, but also the gender disparity issues that are still a concerning issue in STEM fields-of-work. Also, it must be mentioned that plugging the skills gap is a task

which is not solely reserved for the education sector. Businesses and organisations can do a lot to assist in the development of young people and students interested in STEM careers by working closely with colleges, universities and schools. By offering apprenticeships and assisting students of all ages into selected fields of work through close collaboration with the aforementioned education institutions; business and education can assist each other in driving our digital economy forward and opening up new opportunities for future generations of digitally capable workers and business leaders. 21

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