1

Minutes of the Sixth Meeting of the Resources Committee of the City of Sunderland College held at 2.30pm on Tuesday 30 November 2010 in Room 614 at the Shiney Row Centre PRESENT: Mr R Edmonds, Mr I Forster (Chairman), Mrs A Inkson,

Mrs A Lawson-McLean, Ms A O’Donoghue, Mr M Ridley. IN ATTENDANCE: Mr D Howells, Mr P Wyness, Ms S Duncan, Ms S Gelder,

Mr D Hall, Mrs J Ridley. CLERK: Mr C Crossman. Due to the later arrival of Mr I Forster the Committee appointed Mrs A Lawson-McLean to take the Chair in his absence. R/10/59 APOLOGIES FOR ABSENCE Apologies for absence were received from Mr M Holmes and Mr P

Murray; apologies for lateness were received from Mr I Forster and Ms A O’Donoghue.

R/10/60 MINUTES OF THE PREVIOUS MEETING OF 5 OCTOBER 2010 The minutes were accepted as an accurate record. R/10/61 MATTERS ARISING THEREFROM R/10/52 – Proposed Pay Award In response to a question from Governors, the Vice Principal Corporate

Services explained that the pay award had been accepted by Unison but not by UCU; therefore it had gone ahead for support staff only.

R/10/53ii – Apprenticeship Work It was noted that the reporting process would be formalised by the Clerk

and the new Vice Principal Finance following the next round of announcements regarding minimum contract values.

R/10/55 – Health & Safety Minutes of 25 May 2010 Mike Ridley confirmed that the overheating problem in the staff room at

St Peter’s had been resolved.

2

R/10/62 AUDIT HIGHLIGHTS AND MANAGEMENT LETTER The Vice Principal Finance presented the Audit Highlights and

Management Letter released by KPMG. The Committee noted the conclusion set out in section 3 of the report that audit work on the financial statements was complete and regularity was now largely complete and KPMG anticipated issuing unqualified audit opinions for the year ended 31 July 2009 following approval of the accounts.

Governors asked a question about the Accelerating College Efficiencies

diagnostic tool used by KPMG mentioned on page 6 of the Highlights Memorandum. It was noted that the Vice Principal Finance would be attending a meeting of the 157 Group at KPMG in January to receive a demonstration of this tool. He was also collecting details on how this was supplied to other Colleges.

Governors asked a number of questions and the following points were

noted: External Audit would review the latest forecasts prior to signing off

the accounts as well as assessing the going concern assumption. The reason for this was that an estimated 75% of Colleges in the region could be “at risk” if the cuts were as anticipated over the next 3-4 years. However, it was not seen to be the case for this College.

There was a risk that the sector would face higher interest rates as banks were taking a business risk approach to lending to the sector.

The existing funding arrangements were about to be removed, reverting to a single funder which would be the Skills Funding Agency for Further Education.

The Committee:

i. received the report noting the clean opinion given by KPMG ii. recommended the report to the Board

I Forster and A O’Donoghue joined the meeting at 2.55pm I Forster took the Chair at the invitation of Mrs A Lawson-McLean R/10/63 DRAFT ANNUAL REPORT AND FINANCIAL STATEMENTS The Vice Principal Finance presented the report outlining the key points

detailed in sections 2 and 3 of the report. Governors noted that the operating surplus of £4.092m shown in the accounts was due to an FRS17 technical adjustment which was reflected as a credit in the accounts, the real position was less at £923k.

The Committee noted the significant elements of the 2009/10 outturn

shown in paragraph 3.12 of the report.

3

In response to questions raised on future funding it was explained that a later paper covered the Comprehensive Spending Review, setting out different scenarios.

The Committee:

i. received the draft report and financial statements for 2009/10; ii. recommended the report and financial statements to the Corporation

for its approval without amendment; iii. noted the financial position of Blue Square Trading Limited and City of

Sunderland College Supplies Limited and agreed, in the general interests of the College, to provide financial and other support to enable them to continue to trade.

R/10/64 BUDGETARY CONTROL STATEMENTS TO 31 OCTOBER 2010

The Vice Principal Finance presented the budgetary control statements explaining that the College was on track to achieve an underlying operating surplus in line with budget. It was noted that the College, having completed a large restructuring exercise this year, must now prepare for a further large reduction in funding in 2011/12.

In response to questions from governors it was noted that Train to Gain programmes will finish at the end of July 2011. As the College would not receive its Adult allocation until March, a significant proportion of Train to Gain North East work was at risk until confirmation was received. The College was still awaiting information from the DWP on The Work Programme contract. It was noted that some payment to the College could be linked to Adults gaining employment. Committee members were assured that the College would adopt a prudent approach in the preparation of its budgetary control statements, and the revised budget for 2010/11, to deal with the anticipated funding changes.

The Committee: received the report. R/10/65 BUDGETARY UPDATE

Confidential The Committee deemed the report and its minute as confidential from public scrutiny for reasons of commercial sensitivity.

4

R/10/66 ANNUAL REPORT ON TREASURY MANAGEMENT The Vice Principal Finance presented the annual report detailing

compliance against the Treasury Management Policy of investments held over the year and investment income received.

The Committee noted that:

the College had adopted a prudent and secure approach to the investment of temporary funds. Priority had been given to security and liquidity rather than yield but the highest rates of interest had been sought consistent with proper levels of security and liquidity;

the College had made repayments on all borrowings in accordance with the respective loan agreements;

There had been a downturn in interest rates over the past two years and this had significantly reduced the level of interest received.

In response to a question from Governors it was noted that the College’s loan with Allied Irish Bank was not likely to be affected by the Irish banking crisis. There were no breaches to the loan covenants in respect of any of the loans in 2009/10.

The Committee:

i. received the report and ii. agreed to recommend it to the Board for approval.

R/10/67 BARCLAYS LOAN – LETTER OF VARIATION

The Vice Principal Corporate Services explained that due to the withdrawal of LSC capital project support, the £4.6m loan facility for the purchase of land at Newcastle Road was no longer required. As a result Barclays had requested that a Letter of Variation (which had been circulated with the papers) be completed to confirm the total loan limit of £2.6m, which was the sum that the College had drawn down. It was noted that the College had been paying a non-utilisation fee which Barclays had agreed would cease. The Chair gave an update on the current position regarding the sale of the land at Newcastle Road. It was noted that the College was still in negotiations and when finalised, a full report would be brought to the Board.

5

The Committee agreed:

i. to the terms of the letter of variation from Barclays; ii. to adopt the resolution set out on page 4 of the letter of variation

from Barclays: 1. That the amendments set out in the Letter of Variation are in the

interests of and for the benefit of the College and are most likely to promote the success of the College for the benefit of the members as a whole and that such terms and conditions of the Letter of Variation be and are approved and accepted.

2. That Peter Wyness and David Howells are authorised to sign the Letter of Variation on behalf of the College.

3. That the Bank is authorised to act in all matters concerning the Facility as amended by the Letter of Variation upon instruction from the College, in its capacity as Borrower of the Facility, signed in accordance with the Bank’s mandate for any of the accounts of the College held with the Bank current from time to time.

R/10/68 GOVERNMENT PURCHASING CARD LIMITS – TRAVEL SHOP The Vice Principal Finance explained that the purpose of the report was to

ask for the Committee’s approval to vary the limit of the Government Purchasing Card connected to the Travel Agency. The reason was that two travel shop staff had each held a card with a collective monthly limit of £20k, however, one of the cardholders had subsequently left in the restructuring process and the remaining member of staff was the only person able to make bookings. This, together with the increase in international activities had placed extra pressure on the card limit.

In recognition of the spending constraints it is proposed to add a further

control where the Vice Principal (Quality and Business Support) or, in her absence the Vice Principal Finance would sign the monthly bill for this card.

The Committee: agreed to raise the Government Purchasing Card limits for the Travel Shop

card to £5k for an individual transaction and £20k for monthly expenditure.

R/10/69 CREATION OF A SOCIAL ENTERPRISE The Director of Employer Engagement presented the report proposing the

formation of a Social Enterprise in the form of a Community Interest Company. The main aims were to provide jobs and help people into the job market who would find it difficult.

6

Governors attention was drawn to the Business Plan provided as Appendix 2 to the report. It was noted that the enterprise would be used to track learners for external funding purposes for the College and would be able to bid for commercial work from other colleges and training providers.

Governors raised a number of questions and noted the following:

It was intended to utilise available space at Doxford Park.

There would be a need to draw upon central college services such as HR and payroll initially and once the business was operating at a profit it would contribute to the college overhead.

It was hoped that some external grant funding may be available. A O’Donoghue left the meeting at 4.00pm Governors felt that whilst they fully supported the initiative in principle,

further detailed information outlining the risks, governance issues, legal advice including advice on the College’s powers to undertake the scheme, and timescale was needed to enable a considered decision to be made.

The Committee: i. received the business plan and cash flow forecast; ii. agreed in principle to the concept of forming a Social Enterprise

aligned to the main college business and requested that a further report be brought to the Board outlining the risks, governance issues and legal advice obtained.

S Gelder and D Hall left the meeting at 4.15pm R/10/70 CHARGES TO BLUE SQUARE TRADING ANNUAL REPORT

The Committee: received the report on the charges to Blue Square Recruitment. R/10/71 COMPREHENSIVE SPENDING REVIEW UPDATE

The Committee noted:

i. the contents of the report together with the scenarios; ii. that further reports exploring the detail as it emerges will be brought

to future meetings; iii. that Management were looking into the implications of the funding

reductions.

7

R/10/72 HEALTH & SAFETY MINUTES OF 2 NOVEMBER 2010

The Committee:

received the Minutes. R/10/73 ANY OTHER BUSINESS

New College Network

Confidential The Committee deemed the report and its minute as confidential from public scrutiny for reasons of commercial sensitivity.

R/10/74 DATE, TIME AND VENUE OF NEXT MEETING

The next meeting will take place on Tuesday 15 March 2011 at 3.30pm in Room 614, Shiney Row Centre.

R/10/75 CHANGE PROCESS

There were no change issues to report. The meeting closed at 4.25pm