As a result of the global pandemic, many, if not all, further education establishments are expected to see a decrease in revenue, with one estimating revenue losses of up to £60 million and another college being advertised for sale for breaching loan conditions with possible insolvency looming.
Whilst cost savings are predicted, there is still expected to be a downturn in overall results.
However, to aid funding during these difficult times, there is additional support available from DfE.
Core Government Funding
It has been announced that the core funding will continue as normal, however there is an expectation that services will also continue to be provided as far as allowed.
Coronavirus (COVID-19) Business Interruption Loan Scheme
As a further education provider, the business is permitted to apply for various loans. This would include the Coronavirus Business Interruption Loan Scheme (‘CBILS’). The CBILS allows for establishments to obtain loans on more favourable terms than a typical commercial loan to assist during the current period.
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme (‘CJRS’) allows for members of staff to be furloughed and continue to receive 80% of their pay, up to £2,500 and the associated on-costs. The scheme was first introduced during the first lockdown in March 2020. It was announced in December 2020 that the CJRS will continue to the end of April 2021.
Public sector entities, including further education establishments, are not expected to access the scheme in large numbers as their core funding is continuing and most staff are expected to be remunerated from this funding.
However, further education establishments (and other government funded entities) can access the scheme in respect of those employees who undertake activities which are not funded from public monies. These staff should only be furloughed if the following conditions are met:
- The employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
- The employee would otherwise be made redundant or laid off
- The employee is not involved in delivering provision that has already been funded
- The employee is not required to deliver provision for an attending child
- The grant from the CJRS would not lead to financial reserves being created
This therefore allows for further education establishments to furlough staff however, they must be mindful of the overall position of the establishment.
The CJRS is also available on a flexible basis so employees could be working part time and furloughed part time.
The message from the government to further education establishments is to first look to reduce operating costs and access the CBILS and other loan options available before looking to other schemes such as CJRS.
As lockdown restrictions are lifted and we return to the tier system, there is hope that some of the private income generated will return, which will aid in ensuring continuous employment for those employees previously furloughed.
For further information, please contact one of our team: