FINANCE and GENERAL PURPOSES COMMITTEE

Minutes of a Meeting

11.00am Thursday 17th September 2015

Thomas Mawson Room

Present: / Mr Edward Keene (Chair)(EK)
Ms Ingrid Barker (IB)
Mr Jim Hickman (JH)
Mr Russell Marchant (RM)
Mr Chris Moody (CM)
Mr Graham van der Lely (GvdL)
Mr Charles Whitehouse (CW)
In Attendance / Mr Graham Ledden (GL)
Mr Luke Rake (LR)
Mrs Rosie Scott-Ward (RSW)
Mrs Lesley Worsfold (LW)
Apologies:
Minutes: / Mr Rob Lee
/ ACTION / ACTION
DATE /
1.  / Apologies
All Members were present.
The Chair welcomed Ms I Barker to her first meeting.
2.  / Declaration of Interest –FGPC02/09/15
The Clerk advised that members’ interests would be taken as those disclosed in the Register of Members Interests. There were no declarations of members interests for agenda items.
3.  / Minutes of the Last Meeting – Paper FGPC03/09/15
Minutes of the meeting held on the 16th June 2015 were agreed to be a true and accurate record and signed by the Chair.
4.  / Matters Arising
There are no matters arising.
5.  / Discuss and Approve monthly accounts for July 2015. Paper FGPC05/09/15
GL presented the end of year accounts which he explained were subject to audit and before FRS 17 adjustments for pension liabilities. GL advised that the operating result for the year ending 31st July 2015 is a surplus of £839K compared to a budgeted surplus of £443K and a May reforecast of £571K. GL outlined the headline results with income exceeding budget by just over £1m but direct costs exceeding budget by £342K and pay costs exceeding budget by £381K. GL outlined the outcomes of the Key Performance Indicators. In response to CW GL advised that cash generated was £1m less than budgeted due to the opening position being different than expected and how capital expenditure has been phased. GL outlined the major variances in income including the better than expected results in Residential, Catering, Conferencing and Equine. GL also confirmed that Adult Skills income includes £200k revised allocation mostly used on the RFU subcontract of which 70% has gone to the RFU. GL explained that the adverse direct costs are the result of three areas. FE delivery £90K adverse which is the additional cost of the RFU subcontract explained earlier; £121K adverse in Catering due to meal packages not in line with budgeted margin and this had been flagged earlier in the year and £138K adverse at the Farm due to higher feed and forage costs and higher arable farming production costs. GL outlined the major areas of variance in pay costs. RSW explained that the higher costs in HE were down to learning support but this was offset by additional income. In response to GvdL GL confirmed that more costs had been spent on the delivery of Maths and English, which had to be done as this was an area for improvement highlighted in the Ofsted Report. GL outlined the performance of our commercial activities and advised that the Farms performance of making a loss of £220K was very disappointing and was majorly due to stock adjustments. CW advised that at the Farm Meeting on the 24th June 2015 there was no mention of this. RM advised that the end of year valuation process was very poor and he has asked Velcourt for a report. GvdL advised that at the June Farm Meeting the inference was that the budget would be met and that stock could be positive. GL advised that the figures are always late and very often wrong. CM advised that Velcourt should be reducing the risk to us. EK questioned the £25K Single Farm Payment which was in the budget but not receivable and should this not be received in December. EK believes that after this result we need an urgent strategic review both from an estate and academic perspective and questioned why we are still taking on land. EK noted that if the Farm had achieved budget we could have made over a £1m surplus and whilst this was good it was a surprise and wondered if we could have a surprise that sent it the other way. GL advised that he had been conservative but there was a lot that always happens at the end of the year and gave the £200K for the RFU subcontract as an example. CW questioned the £218K deficit on the Principal’s Capital Fund and RM advised that this was part due the underspend from the previous year not being carried forward and GL advised that it also included costs for the Student Zone, Laboratories and Student Management System which should be transferred out. GL explained that the cash flow forecast for 2015/2016 reflects the increased turnover and the strategy to accumulate more cash for capital projects. The Chair thanked GL and his staff for an excellent result.
The Chair advised that he would like to have an update on student numbers.
RSW advised that we are still in enrolment week but would expect to be very close to the 513 new student target. RSW advised that 456 had enrolled on the welcome day and this figure had now risen to 485. In response to EK GL confirmed that he takes consideration of withdrawals in the budget. RSW advised that we are attracting an increasing percentage of honours students against foundation students and the new curriculum is attracting students in the right subject areas. We need confirmation, therefore, from HEFCE of Band B Funding which could lead to a positive result but GL advised that there were huge leads and lags in the system. RSW believed that the HEFCE funding cuts, which were to be announced in the Autumn, would be in areas that may have little effect on us.
LW advised that current figures showed 1522 students had enrolled against 1630 last year a drop of 108 and this will have a financial impact on next year not this due to lagged funding. LR explained that there does seem to be a move away from 19+ and this may go some way to mitigate the drop in funding. LW advised that we currently have 18 FE beds available and there has been a dramatic change to the waiting list which has disappeared. In response to GvdL LR advised that between 50 and 70 generally drop out over the next 6 weeks due to a range of circumstances and in response to JH LR advised that we would be looking at ways to mitigate these numbers. In response to GvdL LR agreed that we had an increased number of 2nd Years so the 1st Year shortfall was 150. CW also noted that this did not take account of the Governor KPI target where we expecting a 10% increase. EK gave examples of how difficult some parents had found it to get their children in to the College and this led him to believe that our processes had broken down. RM agreed that the whole process has caused great concern and there is an urgent review of what went wrong. CM advised that our recruitment profile is unusual in the sector where most colleges recruit a high percentage of their students late in the year and we need to look at the way we recruit. RM advised that we had first noticed the sign of a potential shortfall in April and started to make offers. RM believed it was dangerous to conjecture the reasons and we need to have a serious look and that still remains to be done. In response to IB LR advised that Animal Management and Outdoor Adventure accounts for 84 of the 108 shortfall. EK questioned the reason why Animal Management was going down and whether we needed investment. CM advised that this would have an even greater financial impact as these areas carried an academic weighting in funding. GvdL was concerned that this was obviously a problem since April but had not been articulated to the Board and questioned why it did not become apparent in the reporting of the Governor KPIs.
6.  / Update on Capital projects. Paper FGPC06/09/15
6.1.  Courtyard Refurbishment and Laboratory Project.
GL advised that the Courtyard, Veterinary Nursing and phase 1 of Animal Science Building are complete. Phase 2 of the Animal Science Building is on time. The project is on budget. LW advised that there had been positive feedback on the new student services area.
6.2.  Rider Performance Centre.
GL advised that the building works are now complete and awaiting the final account.
6.3.  Gloucester Rowing Club.
GL advised the Corporation had approved an investment of £100K in new rowing facilities in Gloucester subject to appropriate guarantees and contractual arrangements in return for representation on the new Board, guaranteed racking at reduced cost and reduced membership fees. GL advised that one of the original backers has dropped out and at a recent meeting he attended he had been informed that they were unable to offer discounted racking and membership but they could now offer membership of the Boat Club, appoint a trustee and management of utilisation of racking allocated to ourselves. RM confirmed that we will be able to identify the amount of racking we require and will be able to sub-let. GL also advised that they are 50K short in funding and the Boat Club have asked if we can increase our investment from £100K to £125K. In response to EK GL advised there were no further grants but they could take out a loan which he believed was a risk as there income would come under pressure. I response to EK GL confirmed that they would be responsible for maintaining the building. In response to CW LR advised that our rowing students were mainly studying A Level and RM advised that the number of elite rowers was in the teens but there was an increasing second tier. In response to CW RM confirmed that the new proposal would be able to support a social boating club.
An investment of £125K was approved on the basis of being given Membership of the Boating Club, the ability to appoint a Trustee and the management of allocated racking and the receipt of appropriate guarantees.
6.4.  College Learning Centre.
GL advised that practical completion of this building was in February but the main contractor has now gone into administration and we are currently holding a retention of £83K against any snagging defects until February 2016. This has impacted on a number of the sub-contractors particularly as they had to do some work twice due to the fire. The mechanical engineer has informed us that he will not honour the warranties unless we pay his outstanding bill and we are taking legal advice. In response to CM GL advised that there was no bond in place. On earlier contracts with this contractor we had taken out bonds but did not feel it necessary in the later contracts as there had been no problems up until this time. CM believed that we should never go into a major contract without a bond. In response to EK and JH GL needed to check if sub-contractors retained title over the products they had installed until they were paid and whether they could come and take them out although this was unlikely. EK wondered if in future we should only pay main contractor when he has confirmed that he has paid the sub-contractors. We have now received the final insurance payment of £170K and now awaiting final £30K contractor’s payment but this is open to discussion due to contractor going into administration and their insurers trying to avoid the claim.
The Principal left the meeting.
7.  / Discuss and approve change to Financial Regulations. Paper FGPC07/09/15
GL advised that this change had been proposed to clarify levels of authority for major projects.
The change to the Financial Regulations was approved.
8.  / Discuss the finances of the Innovation, Careers and Enterprise Centre (ICE) and how they should be reported. Paper FGPC08/09/15
GL advised that this was a request from the last Corporation Meeting. GL outlined how he proposes to present the finances of ICE in the management accounts. There was some discussion whether FE and HE should be split but decided to keep for the time being as described in the paper.
It was agreed that financial details of ICE as outlined in the paper will appear in the Management Accounts. / GL / 09/15 Accounts
9.  / Approve Shared Parental Leave Policy and Procedures. Paper FGPC09/09/15
The Shared Parental Leave Policy and Procedures was approved.
10. / Approve amendments to the ICT Acceptable Use Policy. Paper FGPC10/09/15
IB questioned whether we should give examples of radicalisation and instead of just terrorism look at areas with a more local context such as animal rights and outline a policy around these. In response to EK concerning universities monitoring computer grades through IT usage RSW confirmed that we were looking at this.
The policy would be amended after consideration of the above points.
11. / Any Other Business
There was no other business.
12. / Dates of future meetings all at 11.00am. Changes in red
Thursday 14th January 2016
Thursday 28th April 2016 (extra meeting)
Wednesday 22nd June 2016 (change from 23rd June 2016 as it clashes with FE Prize Day)
Thursday 15th September 2016
Thursday 12th January 2017
Thursday 27th April 2017
Wednesday 21st June 2017
Thursday 21st September 2017

Mr Edward Keene 14th January 2016

Chair Finance and General Purposes Committee

Minutes of the Finance and General Purposes Committee Page 1 of 6