By Harry Mottram: news that the famous drama school Read College is set to shut this summer has reminded the sector that education establishments can go bust. Every year colleges do go out of business in the UK although in recent years the numbers have increased as fewer students enrol.
Unlike state schools, colleges and universities are private institutions even though they are regulated and in many cases subsidised by the state. There are numerous small colleges in the UK and these are most at risk of falling into administration or simply closing with a long list of unpaid bills. In the past there have been examples of colleges shutting their doors having banked their students’ fees which are not refunded.
Read College made a statement saying they were ‘heartbroken’ but Ian Carrotte of ICSM said those words would be of little comfort if they left a long list of creditors out of pocket. The college follows the collapse of other drama schools including CPA Studios and the Merchant Taylors’ School and the The Academy of Live & Recorded Arts last year.
The news of the college’s closure means that it will join the likes of CPA Studios, which closed in 2018, and the MTA and ALRA, which both closed in 2022.
Further Education Week reported today (Thursday, March 9, 2023) that St Mary’s College in Blackburn has gone bust owing around £8 million pounds. Barclays bank are in hock for nearly £3m while The Department for Education is owed £62,000.
The publications said: “The Catholic-run college, which had been open for almost 100 years, became financially unsustainable due to repeated years of falling student numbers, and has been propped up by emergency government funding since 2020. Accounting firm RSM UK has been appointed to handle the insolvency and published its first report on the process last month.
A “statement of affairs” revealed that the college owes £8.2 million to six creditors. The Local Government Pension Scheme is owed most of the debt – £5 million – while Barclays Bank is owed £2.8 million. The Department for Education is also one of the creditors, owed £62,000.
Hadlow College collapsed last year which led to claims of financial irregularities which led to investigations while another Further Education College went to the wall when Hadlow’s sister college West Kent and Ashford College hit the rocks with unpaid invoices hitting the £150 figure.
Ian Carrotte of ICSM said colleges will have a huge range of creditors as they buy anything from printed brochures and prospectus’ plus books, computers, food and drink, and a hundred and one items needed to run a college. “There’s also the heating and energy costs,” he said, “as colleges have multiple rooms to service – like hotels – but if the numbers of students drop then their viability collapses. My advice is to be careful when supplying colleges as they will use the old line that they cannot fail. That is clearly not the case.”
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.email@example.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk