The WKCIC Group

FINANCE AND RESOURCES COMMITTEE

Minutes of a meeting held on27thSeptember 2016

PRESENT / Alastair Da Costa, Simon Pitkeathley (Chair), Anthony Smith, Kay Willis, Andy Wilson.
IN ATTENDANCE / Claire Collins (Group Director, HR and OD), Graham Drummond (Clerk), Caireen Mitchell (Group Director, Planning and Performance), Paul Stephen (Group Finance Director), Graham Cooper (Deputy Clerk)
DECLARATIONS OF INTEREST / None

Action

1. / APOLOGIES FOR ABSENCE
There were no apologies.
2. / TERMS OF REFERENCE
This being its first meeting, the Committee reviewed its draft Terms of Reference, which would then go forward to the Board for approval, along with an annual schedule of the Committee’s business. The Committee noted that:
  • The Terms of Reference were based upon the terms formerly used by City and Islington College.
  • The Committee will have an oversight remit with respect to the planning of large strategic projects.
  • The financial limitations of the Committee had been amended in line with the revised financial regulations which are within the remit of the Audit Committee.
The Committee agreed to recommend adoption of the Terms of Reference to the Board, but advised that the Terms of Reference should also specify the members of the Executive who are expected to be in regular attendance at meetings of the Committee. Additionally, the Committee noted that there was currently a vacancy amongst its membership and advised that it was its expectation that when the Corporation recruits new members, one new member, preferably with a financial/accounting background, would join the Committee. / GD
3. / HUMAN RESOURCES UPDATE
A report was received and considered. The Committee noted that:
  • A comprehensive annual HR report would be provided to the November meeting of the Committee.
  • The key focus of the HR team from February 2016 had been the TUPE consultation and the migration of the WKC and HR payroll system to i-Trent.
  • A number of milestones had been reached as part of the process:
  • Successful conclusion of consultation with the Unions and staff at both colleges, particularly around which CIC policies were contractual
  • Gaining agreement that any new starters should be employed on WKC contracts
  • Change in paydate agreed for CIC staff
  • Successful integration of the HR systems
  • Movement of both HR and OD teams to accommodation in Centre for Business Arts and Technology (CBAT)
  • Appointment of third tier group roles
  • Appointment of an interim Head of HR.
One of the main priorities for 2016-17 would be to restructure the HR and OD teams in order to deliver a high quality service across the Group. Other priorities for the year were:
  • Staff engagement project around vision, values and strategic plan
  • Develop and agree Key Performance Indicators (KPIs) and Service Level Agreements (SLAs)
  • Develop systems and processes across the Group which are fit for purpose including recruitment and selection, employee relations, Learning and Development, succession planning and talent management
  • Review differences in policies and procedures and consult with the Trade Unions on any revisions
  • Review Pay and Reward including benefits, commencing with an equal pay audit
  • Identify and implement appropriate automated systems across HR processes
  • Develop a transparent timeline on any restructuring by area or service provision
  • Support staff teams with team building initiatives and cross-college engagement and knowledge sharing
  • Carry out Investors in People (IIP) readiness audit for WKC as the first step to IIP Gold accreditation
  • Carry out UKIED (Equality & Diversity) readiness audit for WKC as a first step to UKIED Gold accreditation.
The Group Director, HR and OD explained that the overall approach in each area was to identify the best practice across the two colleges and to take steps to bring practice across the Group up to that level. The Committee noted the significant amount of work involved and questioned whether staff capacity and budget were sufficient. The Group Director of HR and OD assured the Committee that she considered both to be manageable.
4. / MANAGEMENT ACCOUNTS AT APRIL 2016
The management accounts for the ninemonths to the end of April 2016were received and considered.The Committee noted that:
  • Both Colleges had exceeded their final forecast Operating surplus for 2015-16. The actual operating surplus for CIC was £226k and for WKC £646k, both of which were after a number of exceptional items including due diligence and restructuring costs relating to the merger and, for WKC, receipt of a significant insurance claim relating to a fire at the Victoria Centre.
  • Cash reserves of both colleges were in line with expectations and the Group was starting 2016-17 with £20.2m in cash or short term deposits.
  • The published financial statements for both colleges would, however, show deficits, owing to the actuarial calculation of the notional pension cost. There had been a six-fold increase in the London Pension Funds Authority (LPFA) charge from £165k in 2014-15 to £1m in 2015-16 for CIC, and a doubling of the charge for WKC from £439k to £953k. This level of increase was unprecedented, and represented a sector-wide spike in pension charge adjustments, reflecting the poor trading performance and macroeconomic conditions affecting public sector pensions.
In considering the implications of the increased pension charge, the Committee noted that:
  • FRS102 adjustments are notional and do not affect cash or an ability to meet short term commitments.
  • The Skills Funding Agency (SFA) excludes the impact of pension adjustments in its calculation of financial health.
  • Banks generally exclude FRS102 from their assessment of lending decisions.
  • The actuarial assumptions for 2015-16 are unprecedented in the sector, affecting colleges sector-wide.
  • In July 2016, the Group had negotiated an extension of the legal charge to cover the CIC pension deficits. This had had the effect of reducing actual cash payments to LPFA in 2016-17 by £286k including reducing the Employers’ contributions rates from 15% (CIC) and 13.8% (WKC) to 13.7%.
  • Whilst there was a balance sheet impact of the increased pension charges, the Group had revalued its properties and the balance sheet remained strong.
  • Whilst the Executive did not consider the current position cause for alarm, the situation with regard to pension contributions would be monitored and the Committee would be informed of any significant developments.
The Committee also reviewed and approved a format for the reporting of future management accounts.
5. / ESTATES UPDATE
A report was considered and received. The Committee noted that:
  • The summer works capital budgets had been approved under the governance arrangements for each college. These programmes had been largely focused on routine maintenance and repairs. Progress had been good. All projects scheduled for the summer had been completed.
  • The significant project for the current year was the work at the Regent’s Park Centre in order to provide Executive suites and Group training facilities. This was due for completion by mid- November.
  • At the Victoria Centre, there remained an outstanding issue in relation to inadequate air handling in one kitchen and a review was being undertaken of outstanding issues in order to manage the project through to completion.
  • The Executive considered it premature at this stage to develop an Estates strategy in advance of the emerging Group priorities for curriculum development. Work on a new strategy was likely to commence early in 2017 and would be brought to the Committee for consideration later in the year.

6. / FACILITIES MANAGEMENT UPDATE
A report was received and considered. The committee noted that:
  • There had been past differences in Facilities Management procurement at WKC and CIC. The Group had now appointed Mott MacDonald, through a competitive tender process, to advise on the options and timescales for implementation.
  • The recommendation from the Group Executive was to tender two Facilities Management packages, one for catering and one for all other Facilities management services. As existing contracts were overdue for renewal, continuing with these was not an option,
  • The timetable for approval did not fit with the timetable for meetings of the Committee, and the Group Finance Director would liaise with the Clerk at the stage that preferred bidders gave been selected in order to agree the approach to gaining Committee approval.
  • The Committee would consider further when making its decision the issue of whether contractors pay their staff the London Living Wage and the issues associated therewith.
/ PS/
GD
7. / ENROLMENT UPDATE
A report was considered and received. The Committee noted that:
  • The Group had performed well against its Education Funding Agency funding agreement.
  • There were increasing worries, however regarding HE enrolment, and additional advertising was not having a material impact in addressing this. CIC was currently at 31% of target and WKC better, but it was likely that several courses would not run due to poor enrolment. This was understood to be a common experience amongst London FE colleges, but swift action was needed to assess the implications, including the financial and staffing implications, which would need to be considered by Governors earlier than the next Finance & Resources Committee;
  • In due course, a strategic review of WKCIC’s HE provision would need to be undertaken.

8. / STRATEGIC PRIORITIES
A report was received and considered. The Committee noted that:
  • At the Board’s workshop in June, an initial draft of the strategic priorities for the Group had been considered, which had then been further refined and reviewed by the Group Leadership Team (GLT) and the Chairs Committee.
  • Key strategic themes were:
  • Providing students and other clients with courses and services of technical, professional and academic education and training which directly address their needs
  • Providing excellent teaching and learning
  • Providing an inspiring experience for all students
  • Ensuring financial strength to ensure the best resources are available to facilitate teaching, learning and student support
  • Responding to the needs of London and Londoners.
  • Consultation with management on these draft Strategic Objectives had commenced and a Governor workshop was planned for 30th November to further review these and to agree a form to go forward for external consultation.

9. / RISK AND OPERATIONAL PLAN
A report was received and considered. The Committee noted that:
  • The Operational Plan for 2016/17 set out the draft outcomes for the year.
  • It was expected that the Finance & Resources Committee shall be the primary committee where progress against the Operational Plan is monitored.
  • The format of a Risk Register, to sit alongside the Operational Plan, had been proposed and this would be populated and monitored in line with guidance from the Audit Committee.
  • Targets for 2016-17 as set out in the Operational Plan, would be reviewed as part of the annual Self-Assessment review process.

10. / BRANDING AND PR UPDATE
A report was received and noted.
11. / AREA REVIEW UPDATE
Andy Wilson, CEO, provided a verbal update. He advised that many colleges were now in discussion with a range of potential partners and that WKCIC had made a clear statement that it was open to discussion. A further update would be provided to the Corporation in due course.
12. / KEY FACTSHEET
A report was noted and received.

Signed as a correct record: ______

Simon Pitkeathley, Chair of the Committee

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