Colleges sitting on £44m surplus

There were failings at Fermanagh College before reorganisation

The six new further education colleges in Northern Ireland are sitting on a surplus of cash amounting to £44m, it has been revealed.

The figure is more than twice the amount allowed under current public sector guidelines.

The committee said it was concerned the cash was "lying idle in bank accounts".

Employment and Learning Minister Sir Reg Empey said it was "legitimate and indeed necessary for colleges to retain a certain level of cash reserves".

Sir Reg said these helped colleges to invest in building and equipment upgrades and to cope with occasional annual deficits.

The minister said his department had been working with colleges "over the past few years" to reduce their cash reserves.

"It has been agreed with colleges that they can retain cash balances of 10% of income for working capital, which equates to around £24m across the sector," he said.

If there is no current need for this cash in further education, then it should be transferred to other areas requiring additional funding in the public sector Paul Maskey Public Accounts Committee

The findings follow a review of financial management in the further education sector by the Assembly's Public Accounts Committee.

Committee chairman Paul Maskey said: "It has been a longstanding and sound principle of public finance that public bodies should not hold more cash than they need.

"In this sector, these surpluses should be used to develop the skills of students.

"If there is no current need for this cash in further education, then it should be transferred to other areas requiring additional funding in the public sector."

In 2007, 16 further education colleges were reorganised into six new regional colleges.

'Disturbing'

The report found there were "serious failings in financial management" at the pre-reorganisation Fermanagh College.

Nine reports on the college identified breaches in basic financial management which meant it had to repay more than £1m on improperly claimed funding.

"The committee was astonished at the level of failure in Fermanagh College. We found that one of the underlying problems was that the senior management team did not have the necessary leadership and management skills to deal appropriately with the problems at the college," said Mr Maskey.

"What is even more disturbing is that lessons seem not to have been learned by the department.

"In the new Belfast Metropolitan College, there are continuing financial problems and the Department for Employment and Learning was unable to give even a basic explanation of what has gone wrong."

"This situation should and must be resolved."