FURTHER education is in “financial meltdown” with scores of colleges doubling their deficit since 2010, the National Audit Office (NAO) warned yesterday.
A “rapid decline” was found in the positions of the 244 institutions in England following deep cuts to their budgets by the government.
The government spending watchdog revealed that the number of colleges running a deficit had more than doubled between 2010-11 and 2013-14 from 52 to 110.
Some 29 were assessed as “financially inadequate” by the Skills Funding Agency (SFA), meaning they were at “significant risk” of failing to meet contractual duties.
That figure could rise to 70 by the end of this year, the report predicted.
“The further education college sector is experiencing rapidly declining financial health and lacks a clear process to inform decisions about local provision,” said NAO head Amyas Morse.
The auditors said that the Department for Business, Innovation and Skills and the SFA had been relying on unrealistic financial forecasts produced by the institutions, which receive a total of £7 billion a year in public funding.
It also argued that oversight bodies needed to better analyse risks and intervene earlier to stop problems mounting.
“The Department for Business, Innovation and Skills and the Skills Funding Agency have taken steps to improve their analysis of risk in the sector and to intervene more effectively in the colleges in most difficulty,” said Mr Morse.
“But there needs to be more than a college-by-college approach. Until then, the oversight and intervention arrangements cannot be regarded as value for money.”
Commons public accounts committee chairwoman Meg Hillier called the findings deeply alarming.
“I do not believe it is any exaggeration to say the future sustainability of the further education sector is at risk of financial meltdown,” she said.
Further education union UCU has conducted a wave of action at colleges across England in protest at the cuts.
“At a time when the government has set out its stall to create a high-skilled economy, the financial stability of the FE sector is worryingly uncertain.
“The independence of FE colleges doesn’t mean the department and the SFA can abdicate their responsibility to get best value for the taxpayer from the public funding to colleges.”