College group NCG reports sound finances despite funding clawback

Major college group NCG says its finances are in good shape having boosted turnover and returned a surplus, despite having to pay back millions in Government funding.

The Newcastle-based group, which includes seven colleges catering for more than 35,000 learners, has reported a £9.57m surplus in the year to the end of July 2024, having turned around a loss of £3.69m in the year before. But the improvement was thanks to the £12.58m sale of a "surplus asset" during the year. Meanwhile Ebitda was £5.5m, down from £6.2m.

Growth in the group's 16-19 contract, driven by a significant rise in learner numbers, meant turnover increased to £172.28m during the year - of which £131m came from funding body grants - up from £146.81m. Having exceeded its budget, NCG also gave its staff a pay rise and all of its non-management staff a £500 bonus.

The documents show provision of £9.2m for a funding clawback agreement with the Educations Skills Funding Agency - the Government body from which the group gets most of its funding. During the year, £3m of the agreement was repaid with the rest transferred to creditors.

Despite the sum clawed back, and what it described as continued pressure on funding in recent years, NCG invested extensively across IT and equipment, work on curriculum improvement and upgrades to its large estate. About £16.2m was ploughed into a range of projects including the delivery of new teaching facilities at Kidderminster, Carlisle and Newcastle Colleges and proof of concept work focussed on 'smart campuses' including digital tools and analytics capabilities designed to create more intuitive learning spaces while reducing costs and environmental impact.

Meanwhile funding from the Office for Students, HESkills Injection Fund, the Local Skills Improvement Fund and T-Level money allowed for investment of more than £11.3m, including NCG match funding contributions, into curriculum equipment and facilities.

A new financial plan - covering the period to 2026 - was signed off by NCG governors last year with a focus on retaining the 'good' financial health status using Education and Skills Funding Agency calculations. The group said: "We will see continued growth in all areas of delivery and if recruitment aligns to our plan further funding will be realised in year. We will continue to develop and seek out new funding opportunities for both capital and revenue programmes to allow further capital investment across our colleges.

"Additional funding will also help with the ongoing challenge NCG, together with the entire FE sector faces in recruiting and retaining qualified and appropriately qualified staff."