DfE Regulatory Framework
Further education and sixth-form colleges are operated by statutory corporations which are responsible for the effective and efficient use of resources, the solvency of the college and the safeguarding of its assets. The DfE regulatory framework administered by ESFA, which includes the accountability agreement with colleges, the college accounts direction and the post-16 audit code of practice, underpins the statutory responsibilities of college corporations. The regulatory framework sets out expectations of governing bodies for oversight of regularity (i.e. what the college spends money on), propriety (i.e. the manner in which decisions are made), and value for money (i.e. the basis for making decisions).
Following the report into Bourneville College, the ESFA states that the commitment of college governors and executive teams to the highest standards of behaviour, and vigilance in identifying and challenging activity or conduct that appears inappropriate, are key to ensuring appropriate use of college resources. The recommendations below are provided by ESFA for consideration by all college governing bodies, and reiterate previous messages set out in letters to the sector from the FE Commissioner and in DfE and ESFA guidance:
governing bodies should not rely only on the flow of information provided by the Principal as this may restrict their ability to provide challenge as well as support. Governing bodies should ensure they have the right skills mix amongst their members to recognise financial deterioration and challenge the actions of the executive where a college is facing difficult financial circumstances. They should ensure that they have sufficient access to other members of staff and use external sources of data, such as the financial dashboards provided by ESFA, to triangulate the information that they receive
governing bodies should ensure there is a detailed cost-benefit analysis and board level scrutiny of new initiatives, before any such proposal is taken forward. This should include how the initiative contributes to the core mission of the college both financially and in terms of the curriculum. Once a new initiative is established it should continue to be reported separately until it regularly meets financial and performance indicators set by the governing body
governing bodies should use a range of information to ensure that expenditure provides value for money. ESFA provides access to a financial benchmarking tool for colleges in collaboration with the Association of Colleges which enables comparison of a large number of metrics by college size and region
governing bodies should ensure that their Audit Committee discharges its duties as required under the post-16 audit code of practice to advise the Corporation on the adequacy and effectiveness of assurance arrangements, framework of governance, risk management and control processes for the effective and efficient use of resources, solvency of the institution and the safeguarding of its assets. Governing bodies should consider whether a transaction is regular and proper using the tests set out in the post-16 audit code of practice
governing bodies should use the ESFA’s regularity self-assessment questionnaire to challenge their own practices in relation to regularity, propriety and compliance. They must share this with their external auditor to inform the regularity assurance engagement. External auditors should ensure the corporation’s self-assessment is supported by sufficient and relevant evidence
Secretary of State Statutory Intervention Powers
College Oversight: Support and Intervention
This document sets out how we will work with all colleges to identify, at an early stage, any financial and quality issues that might hinder their success. It sets out the support and advice available to colleges when they need it, including from the Department for Education (DfE), FE Commissioner, and Education and Skills Funding Agency (ESFA).
Statutory Intervention Powers in the FE sector
This guidance provides information about the circumstances in which the Secretary of State’s statutory intervention powers may be exercised. It also explains the processes that the Department for Education will follow when deciding whether use of the statutory intervention powers is appropriate and outlines what type of action the Secretary of State may take. The Secretary of State’s intervention powers are set out in sections 56A and 56E of the Further and Higher Education Act 1992 (FHEA 1992), as recently amended by the Skills and Post-16 Education Act 2022.
What are the statutory intervention powers?
The Secretary of State may exercise statutory intervention powers if satisfied that any of the following circumstances are met:
• the institution’s affairs have been or are being mismanaged by the governing body
• the governing body have failed to discharge any duty imposed on them by or for the purposes of any Act
• the governing body have acted or are proposing to act unreasonably with respect to the exercise of any power conferred or the performance of any duty imposed by or under any Act
• the institution is performing significantly less well than it might in all the circumstances reasonably be expected to perform, or is failing or likely to fail to give an acceptable standard of education or training
• the education or training provided by an institution did not, or does not, adequately meet local needs
Where one or more of the above circumstances apply, the Secretary of State may take the following actions:
• remove all or any members of the governing body
• appoint new members to the governing body if there are vacancies
• give the governing body a direction as the Secretary of State considers expedient relating to the exercise of their powers and performance of their duties. This may include a direction requiring the governing body to make collaboration arrangements
• make a resolution for the governing body to be dissolved on a specified date
• transfer property, rights, or liabilities specified in the direction, and take any other specified steps in connection with the transfer