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Proposal for merger between Carlisle College and NCG: Initial Outline Proposal

Contents Page no

1. Executive Summary 2

2. Background 5

3. The Geographic Area Impacted by Merger 8

4. Carlisle College 14

5. NCG 17

6. Strategic Objectives for the Merged College 26

7. Brand and Quality Arrangements 33

8. Financial and Legal Update 35

9. Property and Estates Strategy 38

10. Governance Arrangements 41

11. People Arrangements 43

12. Consultation Process and Next Steps 45

Appendix 1 – NCG Structure Incorporating Carlisle College 46

Purpose

Carlisle College and NCG propose to merge to form a single institution. This proposal document explains how the merger will take place, and how it will improve the future range and quality of training and education in Carlisle and Cumbria. Your views are sought on the merger as part of a transparent consultation process.

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1. Executive Summary

Carlisle College

Carlisle College is a small general further Education College, serving the post 16 education and training needs of North Cumbria. The college campus, located in Carlisle, is the only GFE College within a 35 mile radius of Carlisle. It has cross- border arrangements with Scotland for learners living within the travel to learn area. To this end it provides a broad range of learning programmes delivered in a variety of ways. The college offers mainly vocational programmes on a full-time, part-time and evening basis. The college also offers apprenticeship programmes as well as subcontracted "off the job" training and provides higher education programmes. The quality of provision is good and the College is a key player in the local community.

NCG

NCG is one of the largest education and training groups in the UK, with an annual turnover over the last three years of just under £180m. NCG has expanded over several years into one of the largest providers of high quality education, training, employability and work-based learning solutions in the UK. There are currently six operating divisions of NCG: Newcastle College, West Lancashire College, Kidderminster College, Intraining, Rathbone Training and Newcastle Sixth Form College. NCG is recognised for its strong leadership and management, excellent governance, and is one of the most financially robust organisations in the sector. It has a good reputation regionally and nationally, and a commitment to the highest standards of delivery.

Why Carlisle College should merge with NCG

The strategic review conducted by Carlisle College concluded that joining a national college group was its preferred option for future development; it also identified that NCG was the only college group with a national reach. A merger with NCG will allow Carlisle College to fulfil the next stage of its strategic objectives, whilst retaining its own brand, identity and presence in the local area. The proposal is that Carlisle College will form a distinct operating unit of NCG, and will operate with a high degree of agreed autonomy within the NCG structure. Carlisle College will retain its full local identity, current sites and provision, with local leadership provided by the Principal and Senior Team. Local governance will be put in place with accountability through to the NCG Board.

The merger has the potential to be extremely beneficial to both organisations. Carlisle College will be able to retain its successful local identity and realise its ambitions for future stability and growth through the support of NCG. NCG will be

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2 www.ncgrp.co.uk | www.carlisle.ac.uk able to utilise the specific expertise and specialisms in Carlisle to benefit the wider group.

Merger Method and Date

It is proposed that Carlisle College1 will merge with NCG under a model B merger arrangement, i.e. with the corporation of Carlisle College being dissolved and its assets and liabilities being transferred to NCG. The date of the merger is planned to be 1 August 2016.

Finance

Carlisle College has experienced some challenges managing its finances in a difficult funding environment, but has shown a significant resilience in stabilising the situation. At 31 July 2015, Carlisle College had an income of £12.5m but generated an operating deficit in the year of £780,189. Of this deficit the majority (£585k) was related to exceptional restructuring costs for that year. The current SFA financial health rating is ‘Satisfactory’.

The cash position has been weak recently, largely as a result of the significant investment made in the estate over the last few years and then by the one-off restructuring costs; these were exacerbated by low points in the funding payments for the year. The college has drawn down a short term loan from Cumbria County Council which will bridge the funding gap.

Post-merger, Carlisle College will become a full partner in the NCG family with 100% commitment to securing its future and building on its existing financial health. NCG will assist Carlisle College to improve profitability through income growth and achievement of cost efficiencies.

NCG will provide Carlisle College with back-office support through its Corporate Services model, realising cost efficiencies for Carlisle College and freeing up resource to focus on curriculum expansion and income growth.

Post-Merger Arrangements

NCG will ensure that there are robust local governance arrangements in place for Carlisle once the merger is completed. For West Lancashire and Kidderminster Colleges this is currently delivered through a local Advisory Committee. NCG

1 When the term “Carlisle College” is used in this document in relation to arrangements after 1 August 2016 it refers to a Division of NCG operating in Carlisle and Cumbria with a distinctive remit to serve the needs of Carlisle and Cumbria

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3 www.ncgrp.co.uk | www.carlisle.ac.uk governors are currently reviewing these arrangements with a view to enhancing local governance and make sure they are fit for purpose for the larger group.

The Principal of Carlisle College will continue to have the responsibilities of an Executive leader and be charged with developing and delivering effective relationships with learners, employers, partners and communities.

Consultation

The two parties to the merger fully intend to undertake an open and transparent approach to consultation. To this end: • The consultation will comply fully with statutory requirements for the proposed dissolution of FE college corporations • This Initial Outline Proposal (IOP) will be made available to all relevant stakeholders, and made available publicly via the websites of both Carlisle College and NCG • All stakeholders will be invited to respond to the consultation questions relating to the merger proposal • Carlisle College and NCG will publish a summary of consultation responses received and, where relevant, their shared intentions to address the nature of those responses • Carlisle College will consult with its recognised trade unions over the transfer of its employees to NCG, to meaningfully satisfy its obligations under TUPE.

Delivering the Merger

The experiences of NCG’s successful mergers with Kidderminster College and West Lancashire College will inform the process of merger between NCG and Carlisle College. A Merger Project Team has been established comprising key people from NCG to plan and deliver the merger; they will be joined by key counterparts from Carlisle. The process is being overseen by a Merger Project Board comprising empowered governors and leaders from both organisations.

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2. Background

Carlisle College is a small sized general further Education College, serving the post 16 education and training needs of North Cumbria. The college campus, located in Carlisle, is the only GFE College within a 35 mile radius of Carlisle. It has cross- border arrangements with Scotland for learners living within the travel to learn area. To this end it provides a broad range of learning programmes delivered in a variety of ways. The college offers mainly vocational programmes on a full-time, part-time and evening basis. The college also offers apprenticeship programmes as well as subcontracted "off the job" training and provides higher education programmes.

The Further Education Sector has been subject to five successive years of funding cuts and fiscal restraints, which has weakened the financial stability of Colleges across the sector. No college has been immune to this impact and many smaller colleges have already sought to mitigate the impact by exploring different structural arrangements such as federation, merger or shared services.

In Autumn 2015, the governors of Carlisle College identified that the future financial position of their own institution was looking increasingly difficult and decided to undertake a strategic assessment of their future options, formally known as a ‘Structure and Prospects Appraisal’ (SPA).

Through the SPA a series of options were developed. The options for consideration included: • Continuing with status quo • Shared services with one or more other Colleges • Merger/ Federation with all four Cumbrian FE Colleges • Merger with other individual Cumbrian institutions • Merge/join with a national college group structure.

An evaluation system was adopted with a set of criteria based on those used by other colleges undergoing a similar exercise and adapted to Carlisle’s situation. The proposed criteria were: • Financial strength and future sustainability • Strengthened quality of provision in FE, HE and Apprenticeships • Increase capacity/strength in corporate services (e.g. IT, MIS etc.) • Maintenance of Carlisle College identity • Ability to shape curriculum offer to meet local need

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• Ability to align the cultures of the merged organisations • Enhanced opportunities for staff • Enhanced opportunities for learners • Feasibility and Speed at which resolution can be reached • Acceptability to local stakeholders.

A Scoring System was then to be applied to the criteria, based on that used in the published Area Review of North East Norfolk and North Suffolk.

The scores were: 1. Potentially damaging outcomes 2. Potentially poor outcomes that do not meet local need 3. Positive and negative aspects fairly even 4. Positive impact overall but with some reservations 5. Potential for excellent outcomes that address local need.

A special Board meeting was convened to discuss the SPA, where the proposed options and criteria were considered. It was decided the options of status quo and Shared services with one or more colleges should be ruled out as they were either not feasible or would deliver limited benefits. The option to merge with a national college group was amended to merge with NCG due to proximity, the governance model of operation and the natural affinity of Carlisle with Newcastle. It was also decided to weight the scores for financial strength and feasibility and speed.

After careful consideration the scoring was completed with the result that a merger with NCG was the preferred option and that the Board should formally approach NCG to propose the merger.

This document therefore constitutes NCG and Carlisle College’s initial outline proposal and has been written with due regard to key documents and guidance regarding delivery models and mergers in the FE sector, specifically the Department for Business Innovation and Skills (DBIS) publication New Challenges, New Choices and the Further Education Minister’s letter of 13 February 2013.

In July 2015 the new government announced that FE Colleges would be subject to a series of ‘Area Reviews’ The aim is to carry out a systematic, area by area, review of the colleges across England with an objective of creating a network of stronger, more resilient institutions. Each area is also to consider the formation of Institutes of Technology and ministers anticipate that this will result in fewer, larger colleges across the country.

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Carlisle College is actively collaborating with the three other Cumbrian colleges on their response to area reviews. This has included exploring a range of options for FE provision across the county. The consistent theme from this work is that each college needs to strengthen its own position whilst increasing collaboration with the other three. The merger with NCG would fully support this approach, with the Principal remaining a key member of the group.

The Area Review process is being overseen by the FE Commissioner, the individual appointed by DBIS to manage intervention in failing colleges. The review guidance clearly states that Colleges should not enter into new structural arrangements without the consent of the Commissioner. Through discussion with the FE Commissioner’s office, it has been indicated that there would be no objection to NCG and Carlisle College proceeding to public consultation.

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3. The Geographic Area Impacted by Merger

It is not anticipated that there will be any impact on NCG operations or activity outside of the Carlisle and Cumbria region. The current divisional structure of NCG means that the only potential impact will be on the Corporate Services that are currently located in Newcastle. There is also no anticipated impact on the education services that NCG delivers via the national contracts in Intraining or Rathbone. This section will therefore focus on the Carlisle and Cumbria region alone.

Geography and Demography

Cumbria is England’s most northerly county on the west bordering Scotland to the North, Northumberland and Durham to the East. Cumbria acts as a gateway between Scotland and England with key road transport routes including the M6 running north south through the county and the A69 and A66 providing east west routes.

Cumbria’s population of just under half a million people is concentrated in pockets around towns, large villages and Carlisle which is the county’s only city. The population is ageing more quickly in Cumbria than in other parts of the country and the county also has a high proportion of people of retirement age with 22.2% of residents aged 65+.

Carlisle is the most northerly of Cumbria's six districts, stretching from the Scottish and Northumbrian borders in the north and east, to the Solway Firth in the west and the Lake District in the south. The population of the district is approximately 108,000. In line with the County’s overall trends Carlisle will see a steady decline of the working age population in the coming years and an increase in the number of people aged 65+.

Economy and the Labour Market

Cumbria LEP will have an important role in assisting companies in achieving their growth ambitions over the next 10 years and overcoming the constraints identified. The LEP’s Strategic Economic Plan (SEP) has four priority themes – Advanced manufacturing, Nuclear & energy excellence, Vibrant rural & visitor economy, and the Strategic connectivity of the M6 corridor. Intervention will be focussed on the four economic drivers of business support, skills development, infrastructure improvements and environmental sustainability. Much of the new growth potential is focussed on the west and south of the County but there is recognition however that Cumbria is diverse in its economic and social profile and that each area of the County needs to develop and grow in line with its own local opportunities and

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8 www.ncgrp.co.uk | www.carlisle.ac.uk challenges. Carlisle City Council are also developing a refreshed economic strategy and then a Skills Plan that will be more focussed on the immediate locality.

Carlisle is the principal commercial administrative, retail and cultural centre for much of Cumbria and large parts of South and West Scotland and as such the area is home to a diverse range of companies and has some 16,500 people employed in administrative secretarial and skilled trades occupations. Some of the key employers in the area are Pirelli, McVities, Carr's of Carlisle, Eddie Stobart Limited, Two Sisters Foods and Nestle. Manufacturing is relatively higher in the Carlisle economy than the national average and is dominated by food production.

Carlisle’s Economic Review has also identified further growth potential in new developments including new employment sites on the M6 corridor, an Enterprise Zone north of the City and enhanced rail connectivity.A particularly important development for the Carlisle area is Stobart’s development of Carlisle Airport, “The Airport of the Lakes”. Together with logistics developments at the Airport this signals a major change to the strategic connectivity of Carlisle as the gateway to Cumbria via air, rail and motorway for business as well as tourism. A major potential skills initiative is in development that the College is involved in to mirror developments at Stobarts airport at Southend (near London), at the new airport site at Carlisle.

Carlisle is characterised as a low wage economy with high levels of employment. This already poses challenges to employers looking to recruit.

Skills Needs

Alongside the Strategic Economic Plan, Cumbria LEP has published a new Skills Investment Plan in collaboration with employers, business organisations and the network of colleges, universities and other education providers which articulates the strategic employment and skills priorities for Cumbria. The plan also sets out the strategic priorities for public sector investment in skills/employability programmes that will drive the economic growth of the area.

Cumbria Employment and Skills Commission (ESC) has set the following six targets for skills to be achieved by 2020: • 76% of the working age population will be qualified to Level 2 or above • 58% of 19-year-olds will be qualified to Level 3 or above • 32% of the working age population will be qualified to Level 4 or above • The number of apprentices in Cumbria will have increased by 20% from 2015 • The proportion of businesses in Cumbria reporting skills gaps will be below the national average

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• The county-wide employment rate will be at least 78%.

The current skills profile of the working age population suggests that the County is not especially well placed to respond to the replacement demand challenge (less than a third of Cumbria’s current working age population is qualified to Level 4, but more than 40% of vacancies expected through replacement demand over the next five years will be at Level 4 or above). Specific skills gaps affecting employers in Cumbria have also been identified in advanced manufacturing and engineering, transportation and logistics, construction, agriculture, and health and social care.

Alongside sector specific skills gaps, employers have identified a series of more generic or ‘enabling skills’ where gaps exist and are limiting the performance and growth potential of their businesses. These include Leadership and management, Project and programme management, Customer service skills, and English and maths/skills for sustained employment.

For Carlisle there is a concern that the demand for higher level technical skills in local firms will be made more difficult as individuals are drawn to the nuclear developments in the west of the County.

Carlisle College Activity in the Region

Carlisle College draws learners from a wide area of up to 45 miles from the City. This catchment area stretches from the edge of Northumberland, the South West of Scotland and into West Cumbria. The majority of learners however come from Carlisle City and the rural villages and towns of the Carlisle district.

There is a wide range of provision from pre entry through to Higher Education in some specialist areas (e.g. engineering and computing). The College offers a predominantly vocational and technical offer with excellent progression for learners to employment, apprenticeships and further study.

The College has at least one third of its 16-18 population from the three most deprived wards in Carlisle, tackling some severe barriers to learning and achievement.

Carlisle College is funded by the Educational Funding Agency (EFA) and Skills Funding Agency (SFA) with around 67.71% of provision government funded. Carlisle College provides EFA funded 16-18 learning and SFA funded adult learning and apprenticeships at 16-18 and 19+.

Some of the college's provision is delivered through franchise partnerships. These partnerships are seen as an additional means of reaching communities with limited access to further education and also in broadening the range of provision offered.

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In 2014/15 the College acted as lead on the ESF Skills Support for the Workforce (Edge Project) for business related skills. This work was recognised in the LEP Skills Plan as a groundbreaking collaboration between colleges, training providers, the University of Cumbria and the Chamber of Commerce.

The college works collaboratively with schools and independent training providers to broaden vocational opportunities for learners aged 14-19 years. The College is a member of the Carlisle Secondary Learning Consortium (CSLC Ltd) and the Principal chairs the Cumbria Work Based Learning Provider Forum (WBLP). The four General FE Colleges in Cumbria also work collaboratively under the banner of Cumbria Colleges (FE4).

Type of Provision Number of Number of Number of enrolled learners enrolled learners enrolled learners in 2012/13 in 2013/14 in 2014/15 Apprenticeships Starts* aged 16-18 107 77 139 Starts* aged 19-24 47 64 88 Starts* aged 25+ 59 95 47 Classroom Based Learning Learner Numbers 16-18 1034 1156 1112 Learner Numbers 19+ 931 789 711 High needs learners 27

* ’Starts’ refers to the number of learners starting a programme in that year

NCG Activity in the Region

Each Division of NCG retains its distinct character and position in the marketplace. This is determined by geography, core business markets and funding streams. In terms of curriculum and location of operation, suitable arrangements are made to avoid overlap of provision between NCG Divisions. A similar arrangement will be agreed with Carlisle College. On initial review there does not appear to be a significant overlap with any current NCG activity. Therefore Carlisle College is well placed to further develop and expand its provision, complete with the full support of NCG.

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There is little current NCG activity in the area apart from some peripatetic apprenticeship provision run through Intraining in the North West and Cumbria. Rathbone Training has historically delivered some youth engagement provision in Workington and Barrow but this has now largely ended, with a small volume of subcontracted activity remaining.

Education in Carlisle and Cumbria

Carlisle College is the only GFE College within a 35 mile radius of Carlisle and has cross-border arrangements with Scotland for learners living within the travel to learn area. There are three other FE colleges in Cumbria: • Furness College: located in Barrow-in-Furness on the southwest coast of Cumbria • Kendal College: located in Kendal on the edge of the Lake District in the south east of Cumbria • Lakes College: located between Workington and Whitehaven on the west coast of Cumbria.

Askham Bryan College, which specialises in land-based provision, also has a centre at Newton Rigg near Penrith in the centre of Cumbria.

Distances and travel time by road from Carlisle for each college are: • Furness College – 86 miles, 1 hour 40 minutes • Kendal College – 50 miles, 1 hour • Lakes College – 34 miles, 1 hour • Newton Rigg – 20 miles, 30 minutes

Distance to Newcastle upon Tyne is 58 miles, 1 hour 20 minutes.

Within the City there are three academies and one secondary school and there are a further two academies within a nine mile radius. All institutions have sixth forms. These are:

Within the City of Carlisle: • Richard Rose Central Academy (11-18 Academy – current Ofsted grade Requires Improvement) • Richard Rose Morton Academy (11-18 Academy – current Ofsted grade Requires Improvement) • Trinity School (11-18 Academy – current Ofsted grade Good)

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• Newman Catholic School (11-18 Secondary, Voluntary Aided Catholic – current Ofsted grade Requires Improvement) Outside Carlisle: • Caldew School, Dalston (11-18 Academy – current Ofsted grade Good) • William Howard School, Brampton (11-18 Academy – current Ofsted grade Good)

The district also has a Pupil Referral Unit, a special school for learners with complex needs and two independent schools.

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4. Carlisle College

Carlisle College’s Funding

The College holds a £5.1m contract with the Education Funding Agency (EFA) in 2015/16 for delivery to 1,117 young learners. The College holds a £1.9m contract with the Skills Funding Agency (SFA) in 2015/16 for delivery to adults and apprentices.

Higher Education Income from HEFCE is £87k. Fees from Adult Learners including FE, 24+ Loans and HE is budgeted as £714k in 2015/16. The College delivers a range of technical skills on behalf of other training providers budgeted at £315k in 2015/16.

The College has previously led on ESF Skills Support for Redundancy (SSfR), Unemployed (SSfU) and Workforce (SSfW) projects. The most recent project ceased in July 2015, valued at circa £2.6m. The College is well placed to bid for and deliver ESF projects as and when they are issued for tender.

2014/15 resulted in a significant deficit of £732k, but this included on-off restructuring costs of £585k, leaving an underlying deficit of £147k. The restructuring undertaken and alignment of costs to core income have allowed the College to budget a surplus of £134k in 2015/16.

Taking into account the restructuring costs the Colleges financial health grade was moderated to ‘Satisfactory’. The most recent financial plan shows the ‘Satisfactory’ grade being maintained with an improving points score.

Investment in the College estate since 2004 has topped £30m, with a complete transformation of buildings and teaching resources. The College anticipates a further £1m investment, predominantly funded through LEP Growth Fund, for an Advanced Manufacturing Centre, to be housed within existing buildings.

Carlisle College’s People

Carlisle College employs 206 staff. The College communicates effectively with staff through a range of channels, examples of which are Principal’s weekly briefing, staff briefings, management team meetings, departmental meetings and discussions with trade unions.

The College recognises three trade unions, UCU and ATL for teaching staff and Unison for support staff. Good relationships are maintained with the unions through local and regional officials, with only UCU currently having local representation.

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Carlisle College has identified some key messages in regards to ethos and culture such as working together and looking for efficient ways of working. There is a good sense of people understanding their contribution to the success of the College with a clear thread from the Strategic Plan, Quality Improvement Plan (QIP) and individual targets through performance management. The Colleges’ core value of ‘Students are at the heart of what we do’ is well understood by staff.

The Investors in People (IIP) review concluded in November 2015 made specific comment about consistent messages regarding an open culture with many staff speaking about ‘working together’.

Staff Continuous Professional Development (CPD) sessions have been held around the values of the College linked to the theme of working together. Management training sessions have been held on ‘Tracking the learner journey’ through consideration of attending a course at College, to starting and then leaving at the end of their programme of study. This has led to smaller workshops to seek more efficient ways of working and is inclusive of key people involved at every stage of the process. The purpose of this is to seek more efficient working methods and improvements to customer service. Further sessions are planned to continue this stream of work.

Performance management reviews provide all staff with the opportunity to identify their aims and aspirations in the short, medium and longer term. The review process assists the College in identifying staff development opportunities to enhance staff knowledge, skills and experience. Recent developments in performance management reviews have provided a clear link to ‘Professional Standards’ for academic staff.

A number of staff have benefitted from staff development opportunities through a range of opportunities such as attendance at internal/external seminars or courses, professional and higher level qualifications. There is also an in-house comprehensive plan for weekly teaching and learning CPD sessions.

The quality of teaching, learning and assessment is a high priority for Carlisle College with over 95% of staff identified as being in a teaching role either qualified or part qualified. The College works in partnership with UCLAN to deliver teacher training courses ranging from the ‘Preparatory Certificate’ in teaching to PGCE at Level 7. Teaching staff also have access to ‘Advanced Teaching Practitioner’ (ATP) support within College and regular CPD activity is run throughout the year.

Ensuring new employees are welcomed into the College was identified by IIP as an area of good practice. The effectiveness of the induction process is monitored by the

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HR department and follow up meetings are conducted with all new employees after a 3 month period.

Carlisle College’s Quality

Carlisle College was last inspected by Ofsted in December 2009 and received an overall grade of 2 (Good) with some outstanding features.

Main aspect areas were graded as follows: Capacity to improve 2 Outcomes for learners 2 Quality of provision 2 Leadership and management 2 Safeguarding 2 Equality and diversity 2

Subject Areas were graded as follows: Construction 2 Engineering 2 Hairdressing and beauty therapy 2

Inspectors identified that learners make a significant contribution to the College and to the local community. The report also stated that the College prepares learners well for the next stage in their career.

Carlisle College has consistently self assessed as Good since the 2009 inspection, including the most recent report for 2014/15.

The College also holds the Matrix Award for Independent Advice and Guidance and the Buttle Trust Award for looked after children.

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5. NCG

NCG’s Structure

NCG is one of the largest education and training groups in the UK, with an annual turnover that regularly exceeds £150m. NCG has evolved over several years through a process of growth, merger and acquisition, into one of the largest providers of high quality education, training, employability and work-based learning solutions in the UK. There are currently six divisions of NCG: Newcastle College, West Lancashire College, Kidderminster College, Intraining, Rathbone Training and Newcastle Sixth Form College. NCG is recognised for its strong leadership and management, excellent governance, and is a sector leader in respect of its financial performance. It has a first rate reputation regionally and nationally, and a commitment to the highest standards of delivery.

The growth of Newcastle College to become one of the largest and most successful further and higher education colleges in the country provided the foundation for the development of NCG. Following a successful merger in 2007 with Skelmersdale and Ormskirk College (now West Lancashire College), a smaller, failing college in West Lancashire, NCG acquired TWL, a private training provider also based in West Lancashire. This was followed in 2008 by the acquisition of a substantial part of Carter and Carter plc, which had gone into administration. The activity of these two training providers was combined to create the national provider, Intraining.

In 2012 NCG acquired Rathbone Training, a youth charity specialising in delivery to disengaged 14-23 year olds. Since then expansion has been through the successful tendering for and implementation of national contracts in the welfare to work and skills sectors. In 2012 NCG split off the A-level provision in Newcastle College to create a fifth division in a state of the art new building – Newcastle Sixth Form College.

In 2013 Kidderminster College, a small but financially sound institution with improving quality, decided to seek merger into a stronger organisation. Following a competitive process the Kidderminster board selected NCG as their preferred partner and the merger was accomplished in August 2014.

The six divisions operate from over one hundred locations throughout the UK with their main activities as follows:

• Newcastle College is a further and higher education college based in Newcastle upon Tyne. The college is led by the Principal and Senior Leadership Team. It has a main campus at Rye Hill and operates a number of Specialist Skills Academies around the city. It has a turnover of around £65

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million and offers a wide range of high quality academic and vocational courses ranging from entry level to post-graduate qualifications. Newcastle College is one of the largest HE providers in FE as well as one of the UK’s largest FE Colleges.

• West Lancashire College is a further education college based in Skelmersdale which offers some higher education courses. The college is led by the Principal and Senior Leadership Team. Whilst provision primarily ranges from Levels 1-3, provision is also offered at Entry Level and at Levels 4 and 5. West Lancashire College offers a number of programmes specifically designed to meet the needs of disadvantaged and disengaged learners (the NEET group) and discrete courses for students with learning difficulties and/or disabilities. At the same time, supported by NCG, WLC offers Foundation Degrees in Computing, Business Information Systems, Sport Rehabilitation, Children and Young Persons and in Social Care.

• The Intraining Group Ltd is a wholly owned subsidiary company with its head office in Sheffield. It delivers a wide range of skills and employability programmes throughout the UK. It operates through two operational units; Employment Related Services (ERS), and the Skills division. Intraining is led by a Managing Director and Senior Leadership Team, which are shared with Rathbone Training.

o ERS operates out of thirty locations from Blackpool in the North to Luton in the South including delivery of a prime contract on the DWP Work Programme in Birmingham and the Black Country. Alongside this ERS runs numerous complementary contracts from a range of funders both direct and sub-contracted; these include DWP, SFA and ESF.

o The Skills Division delivers a range of Apprenticeships and work-based learning to employers through national SFA contracts. It also runs a number of traineeship programmes. In addition there is a small amount of commercial income generated by delivery of bespoke training courses to a number of customers.

• Rathbone is a UK-wide voluntary youth sector organisation and registered charity which merged with NCG in January 2012. It has a turnover of around £25m and works primarily with 14-24 year olds currently not in education, employment and training (NEETs). Rathbone creates life-changing opportunities for thousands of young people at risk of long-term social and economic exclusion by engaging or re-engaging them in learning.

• Newcastle Sixth Form College is a purpose built sixth form college which offers an academic and pastoral experience to young people. It delivers AS and A-levels to young people whose aim is to go to university or Level 3 employment. This is the first dedicated sixth form college in the city and aims

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to be the leading deliverer of A-levels in the region. Newcastle Sixth Form College is led by a Principal with a sixth form background, supported by a Senior Leadership Team.

• Kidderminster College is a further education college operating across Kidderminster and the Wyre Forest in the West Midlands which merged with NCG in August 2014. It is based from a town centre campus rebuilt in 2003 and extensively renovated in 2011 and 2012 and with a range of outreach provision in local community centres. It is led by the Principal and Senior Leadership Team. It offers a wide range of vocational programmes from level 1 to 4, including innovative MAS records provision, and has particular vocational specialisms in Creative Industries and Technology, Hairdressing, Beauty and Holistic Therapies, Care, Support, Public Services and programmes for learners with learning difficulties and disabilities (LLDD). It also offers a small range of higher education programmes.

Each of the NCG divisions has its own character and position in the marketplace, determined by geography, core business, markets and funding streams.

NCG’s Head Office and Corporate Services operations are based in Newcastle upon Tyne. Corporate Services provide the strategic overview and specialist expertise across the divisions in areas such as Human Resources, Finance, IT, MIS and Property. Back office transactional support services are provided centrally to all divisions where this makes financial sense and high quality support can be offered, for example in Finance and People Services. Many support services remain in the operating divisions, especially those related to student support, registration, marketing and recruitment and onsite facilities such as catering and estates management.

NCG’s Strategy

Over the last 24 months NCG has undertaken a complete review of its strategy. This project has engaged with over 2,000 colleagues and learners from across the business in establishing the purpose, strategy and values of the organisation. The process has been led by the Executive Board and outcomes approved by Governors.

The initial outcomes of the work have been the identification of a new purpose: “Unlocking Potential Through Learning”, along with establishing the strategy of creating a national group of colleges supported by profitable training providers.

These are used throughout the organisation whenever strategic or operational decisions are made. Initially they have been used to identify the key markets in which NCG will operate in the future, along with those that it will not. The key markets are:

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• Further Education, including A levels • Vocational Higher Education • Training for Large Employers • Training for SMEs • Welfare to Work • Youth Engagement

NCG has also identified how it will test every new business opportunity: • Is it consistent with NCG’s Purpose? • Can we meet the customer’s needs & expectations? • Is it financially sustainable? • Is there a strategic fit - is value created through:

o Skills and expertise o Operational synergies o Financial capacity

If the opportunity does not pass these four tests then it will not proceed. Over the past 18 months these tests have been used extensively to filter opportunities, for example major bids, new partnerships or potential acquisitions.

NCG has also identified the six business priorities that need to be right for the organisation to be successful and meet its purpose. This will create the platform for NCG’s strategy.

People Embedding our values & become a Great Place to Work Decision making and the role of NCG How and where we make decisions IT Making it business led and effective Product and R&D Innovation and great customer insight incorporating high quality and best practice Finance Maintaining our strength Branding & Marketing Creating a national presence

Quality has not been isolated as a specific business priority as high levels of quality must permeate every element of what NCG does.

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NCG’s Funding

NCG holds contracts with most of the UK’s education funding bodies. In 2015-16 this includes: • A contract of £53m with the Education Funding Agency (EFA) for delivery to young people • A contract of £40m with the Skills Funding Agency (SFA) for delivery to adults on a variety of classroom, workplace and apprenticeship programmes • Higher education income from the Higher Education Funding Council (HEFCE) and Student Loans Company (SLC) of £17m • Delivery a Work Programme prime contracts for the Department for Work and Pensions (DWP) with income to the value of £9m per annum • Contracts with the devolved authorities in Scotland and Wales with a combined value of £8.5m

Currently these funding contracts are held as single contracts for the Group. NCG is working with EFA and SFA to put in place separate contracts for each operating division, whilst retaining the ability to move funding around the group to where it is needed. This will allow for greater transparency on local performance, full local ownership of contract performance and in time will lead to separate Ofsted inspection for each operating division.

NCG’s People

NCG employs around 3,000 staff. A key objective in implementing the NCG purpose and strategy is to fully value and involve staff. NCG achieves this by working closely with managers, trade unions, Employee Forums and staff.

Recent developments with UCU have led to a partnership agreement being signed by NCG and UCU to ensure that the relationship is strengthened and maintained. This approach is also being considered positively by UNISON and the Employee Forums.

For NCG its staff are its priority so ensuring that the right framework is in place is to employ, deploy, develop and retain staff with the required skills, knowledge, qualifications, experience and competencies in the right place, at the right time, and at the right cost is crucial.

To support this NCG’s structures are regularly reviewed to ensure that they continue to be responsive to internal and external demands and that the workforce is positioned to respond to current and future needs.

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Ensuring that staff reach their potential is important and NCG actively supports staff to attain professionally qualified status. Currently 80% of staff identified as being in a teaching role are either qualified or part qualified. The remainder are enrolled on relevant courses to become qualified or enhance their current status. Figures are monitored on a monthly basis.

A range of resources on teaching and learning and links to other sites are available through the intranet. Development activities are available through direct delivery and ILT solutions providing a blended learning approach to ensure colleagues are supported and developed.

Excellence in teaching and learning is recognised through the NCG Teaching and Learning Awards which are held annually.

Since 2013 NCG has participated in the Great Place to Work employee survey and is committed to engaging with staff fully on the outcomes of this. Managers are supported and encouraged to work with their staff on the outcomes to develop action plans to address areas of concern and improve colleague staff engagement. In addition examples of good practice are shared across the business.

Communicating with staff is important and this is carried out through via a variety of channels which include CEO Roadshows, Staff Conferences, Management team events, online publications and Team briefs.

Involving and consulting with Unions and Employee Forums on all issues which affect our staff is also important to NCG in ensuring effective communication, staff engagement and involvement.

NCG’s Values

Recently NCG has worked with over 2,000 colleagues, 450 learners, Governors, Unions and Employee Forums to define the organisation’s values. These are the beliefs and principles which guide the behaviour of all staff and support decision making. As well as making the values clear behaviours have been defined which support those values – this includes both the behaviours that will be encouraged and those that will not be tolerated.

The values that have been collectively chosen are: 1. Ownership: being responsible for what we do 2. Valuing our People: it all starts with our people 3. Being Open and Honest: the truth builds trust and respect

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Further work is now underway involving colleagues across NCG to weave the values and behaviours through the way colleagues are selected, managed, recognised, rewarded and promoted.

NCG’s Quality

NCG has an excellent record of growing as an organisation whilst retaining high levels of quality over the past 10 years. The success rates of its further education learners have improved significantly since 2000 and retention rates remain high. Teaching, training and learning are good, while learners have access to excellent resources across the organisation, including many ‘world class’ facilities.

Ofsted has judged that NCG’s quality assurance arrangements are sophisticated and rigorous. In 2008, inspectors observed that the merger with West Lancashire College had been managed exceptionally well, and that there had been rapid improvements in the quality of provision offered. NCG was last inspected in May 2012 under the revised Common Inspection Framework and was graded Good for Overall Effectiveness of Provision, Outcomes for Learners, Quality of Provision, Leadership and Management and Equality and Diversity; and Outstanding for Safeguarding. The subject area grades were:

Subject Area Grade Health, Social Care and Early Years (work-based) 2 Hairdressing and Beauty Therapy (college-based) 2 Visual Arts (college-based) 1 Literacy (college-based) 1 Business Administration (work-based) 2 Business Administration and Law (college-based) 2

Ofsted acknowledges that NCG’s “leaders are extremely ambitious for the organisation” and that its clear vision has led to a rapid and successful expansion of NCG in a relatively short period of time. They confirm that “management structures created by NCG have ensured that the different Divisions focus well on ensuring that learners succeed”. Through these robust structures “NCG provides good quality education and training both in its Colleges and through Intraining”. This allows NCG to help realise its mission and vision with Ofsted noting “The organisation makes a significant contribution to improving the life chances of a large number of young people and adult learners, both in the communities served by the Colleges and nationally”.

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Rathbone’s work-based learning provision was inspected by Ofsted in July 2014 and was graded Good for Overall Effectiveness, Outcomes for Learners, Quality of Teaching, Learning and Assessment, and for Effectiveness of Leadership and Management.

Further indicators of NCG’s quality include: • Centre for Excellence in Teacher Training • Matrix Excellence Awards • Quality Assurance Agency for Higher Education Confidence judgements • ‘Excellent’ Merlin rating for supply chain management.

NCG rigorously monitors performance at Quarterly Quality Reviews and through monthly SLT reports. Through previous mergers, acquisitions and contract wins, NCG has continually adapted the scope of the quality system to ensure that it continues to meet the needs of all users.

In response to the increasing size and scale of the group NCG has recently introduced a new quality sub-group of Executive Board. The purpose of this new group is to separate the scrutiny of business performance and quality in order to allow additional time for oversight of divisional performance.

The HE Quality function for the group is operated by the HE Directorate in Newcastle College, with oversight by the HE Academic Board, which in itself reports through to Executive Board. Reports on HE Development and performance are standing items for both Executive Board and Corporation.

The Role of Group

Following the review of NCG’s strategy the ‘role of the group’ has been clearly identified – i.e. the purpose of the central function outside of the college and training provider divisions. This can be defined as: • Providing financial stability – effectively acting as the group banker • Providing governance and assurance • Undertaking performance management of the operating divisions • Delivering high quality, value for money corporate services • Facilitating sharing of best practice across the group

It is our proposal that NCG takes on these specific functions in relation to Carlisle College as a result of the merger. The benefits of this for the College are explored further in section 6.

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Experience of Managing Mergers

NCG has considerable experience of managing mergers, along with the subsequent integration of people, systems and processes. This was evidenced during the successful 2014 merger with Kidderminster College, which was managed by an experienced Executive lead with professional project management support. The merger with Carlisle College will be led by the same team to an identical time scale. A full ‘lessons learned’ review was undertaken at the end of the Kidderminster merger process. This document has been reviewed and will be used to further improve the process this time around.

The key features of the merger process with Kidderminster were: • Process underpinned by professional project management methodology • No impact, as a result of merger, to learners, learning or colleagues in learner facing roles • People changes were closely managed and impacts minimised by careful management of vacancies and redeployment opportunities • Detailed, clear communication plans were in place for learners, colleagues and external stakeholders • The merger process governance was defined early in the process with clear sign-off stages.

As the local Area Review process proceeds NCG is receiving enquiries from other Colleges to enter discussions about closer working arrangements. Any developments that arise out of these discussions will be subject to the same oversight as the current work between NCG and Carlisle, and they would also be properly resourced.

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6. Strategic Objectives for the Merged College

The strategic review conducted by Carlisle College concluded unanimously that their best strategic option was to merge into a national college group. NCG was then chosen as the preferred partner for merger on the basis of being the only current college group that had sufficient scale and geographic reach.

The ten key requirements that Carlisle College assessed when making this decision were: • Financial strength and future sustainability • Strengthened quality of provision in FE, HE and Apprenticeships • Increased capacity/ strength in corporate services • Maintenance of Carlisle College identity • Ability to shape curriculum offer to meet local need • Ability to align the cultures of the merged organisations • Enhanced opportunities for staff • Enhanced opportunities for (local) learners • Feasibility and speed at which a resolution can be reached • Acceptability to local stakeholders

The structure and prospects appraisal identified that joining a national group, such as NCG, would be the option that best met these criteria and enabled the college to fulfil its clear ambition to be an excellent local provider retaining its own brand, identity and presence in the local area.

The proposal is that Carlisle College will become a new division of NCG, and will operate with a high degree of agreed autonomy within the NCG structure. It will retain its full local identity, current sites and provision with local leadership provided by the Principal and Senior Management Team.

Following the assessment of strategic options Carlisle College identified that the ten requirements used for assessment of options distilled down to seven key objectives for a merger with NCG. These are to: • Secure financial strength and sustainability • Further strengthen the range and quality of provision • Access strengthened, high quality, corporate services • Maintain the Carlisle College local presence, culture and identity

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• Retain flexibility to shape the future curriculum offer to meet local need • Provide enhanced opportunities for staff and local learners • Deliver a solution for FE in Carlisle that is acceptable to local stakeholders.

Creating the Carlisle College of the Future

From the perspective of NCG the merger with Carlisle College has a very clear alignment to the current NCG Strategy. Carlisle College operates entirely within four of the six key markets that NCG has identified, namely: • Further Education • Vocational Higher Education • Training for Large Employers, and • Training for SMEs

Carlisle College also has some experience in the remaining two key markets – Welfare to Work and Youth Engagement.

When we test the potential merger with Carlisle College against the strategic criteria that NCG has identified for assessing new business opportunities, there is a clear and positive response in each case: • Is it consistent with NCG’s Purpose? The current mission of Carlisle College – ‘To be recognised as an outstanding and inclusive College providing life changing skills and experiences’ is entirely complementary to the NCG purpose of ‘Unlocking potential through learning’. Both are targeted at improving the life chances and opportunities of our learners. • Can we meet the customer’s needs & expectations? The recent merger with Kidderminster College demonstrates clearly that NCG can meet the needs and expectations of a small to medium sized, geographically remote college joining the group. The work carried out by the governors of Carlisle College confirms that joining NCG provides the best fit with their own needs and expectations. • Is it financially sustainable? The work carried out through financial due diligence has demonstrated that the addition of Carlisle College to the group provides stability for them and does not impact on the financial stability or viability of NCG. • Is there a strategic fit - is value created through skills and expertise, operational synergies or financial capacity?

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There is a good strategic fit with the Group as demonstrated through the alignment to the Key Markets and there are demonstrable operational synergies with the existing FE colleges in the Group. As part of NCG, Carlisle College will be able to access financial expertise and support to respond to any compelling new opportunities.

Other benefits of the merger for NCG One of the key features of the merger with Kidderminster College has been that the benefits have most definitely been two-way. NCG has gained significantly from expertise that Kidderminster has brought into the Group, ranging from their focussed approach to quality improvement to curriculum expertise in performing arts and game development. The merger with Carlisle College will bring equal benefits to NCG. The recent Ofsted Inspector experience of Carlisle Managers has already been identified as a valuable asset and there are clearly outstanding curriculum strengths that can be shared more widely.

Meeting the merger objectives of Carlisle College

When Carlisle College governors assessed the strategic options there were seven key objectives identified. How these will be addressed in joining NCG is set out below.

• Secure financial strength and future sustainability The strength of NCG’s financial position provides both strength and sustainability for Carlisle College, particularly in addressing the current cash flow issues. As part of NCG Carlisle College, like the other NCG Divisions, will be able to work with the group to assess and respond to new opportunities.

• Strengthened quality of provision in FE, HE and Apprenticeships On joining NCG Carlisle College will have access to best practice in these areas across the Group; we would also anticipate that the wider Group will benefit from many of the areas of excellent practice in Carlisle. Development of HE, in particular, can be facilitated through stronger links to Newcastle College and Carlisle will be able to benefit from the NCG degree awarding powers.

• Access to strengthened, high quality corporate services NCG has had a central corporate services offer to its operating divisions since 2009. This offer has been refined and improved over that period to ensure that it is of a high quality and offers value for money. The corporate services offer will be extended to Carlisle College as part of the merger and will provide

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considerable benefits in this respect. This will not only deliver cost savings to Carlisle, for example in licencing costs, but will also provide access to more robust systems.

• Maintenance of Carlisle College local presence, culture and identity A key feature of NCG’s colleges is that they completely retain their local culture and identity. The detail on this is set out in the section of this document on marketing and branding. The future development of this brand and identity will be led by the Principal overseen by the local governance arrangements. Visitors to the NCG college sites regularly comment positively on how they each have their own individual identities that align closely to the needs of their local communities.

• Retain flexibility to shape the curriculum offer to meet local need Through merger with NCG local autonomy will be retained around how the college shapes to meet current and future skills needs across Carlisle and Cumbria. Managers and curriculum experts at Carlisle will also be able to build peer relationships with colleagues in similar positions across the group, as well as accessing specialist resources and facilities. An early example of this is the potential for applying Newcastle College’s experience and expertise in their aviation academy to address a similar need in Carlisle.

• Provide enhanced opportunities for staff and local learners There will be opportunities for staff in Carlisle both to engage with colleagues across the Group and to access new opportunities within the Group structure. Staff within NCG Divisions come together regularly – both in cross-functional meetings (e.g. Quality Managers) and through best practice projects. Vacancies are posted across the group to enable colleagues to access career progression opportunities. Local learners will benefit from the increased stability of the college and the improved ability to develop new curriculum, for example in aviation, to meet emerging demands.

• Deliver a solution that is acceptable to local stakeholders The main benefit to local stakeholders is that Carlisle will retain an FE college that will be responsive to needs of both the local Carlisle and wider Cumbria economies. The local governance arrangements will ensure that there is local oversight of that curriculum offer and educational ethos. The College, its Principal and other representatives will continue to engage in all the external activities and local forums that they do currently. The consultation process will be a very important aspect of ensuring direct stakeholder views are gathered and factored into the final decision making on this proposal.

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Benefits for Learners

Under the proposed arrangements there are considerable benefits for learners in Carlisle, not least of which will be the continuation of an excellent local college that is aligned to local needs. The College will look and feel as the College does now. Key benefits have been identified as: • Staff expertise in highly specialist areas will be available to enhance existing programmes. • Access to specialist facilities to enhance and enrich the learning experience at Carlisle College e.g. Newcastle College’s Rail Academy at Gateshead and the Aviation Training Centre at Newcastle Airport. • Investment in College facilities and growth of new curriculum areas in line with employer needs in Carlisle and the surrounding area. • Sharing of online and offline resources • Access to a range of NCG’s learner facing systems • Opportunities for progression will be enhanced through development of new higher level provision and clear progression routes to other NCG divisions where this does not exist locally • Access to a wider range of apprenticeship provision

Planning and Quality Arrangements

Performance Management of the operating divisions to ensure excellent quality and financial outcomes remains a core purpose of any Group. The Planning and performance monitoring in the merged college will be through a cyclical planning and quality review framework that integrates self-assessment processes with strategic planning and business planning, including budget setting. Through this framework, the merged college will continue with a culture of improvement which is at the heart of any successful college. The process of planning and performance monitoring and quality review involves staff at all levels of the college organisation. Strategic direction and headline targets are determined by the CEO and are approved by NCG Corporation.

Working within these parameters the college will develop a business plan that is agreed with the Executive and is delivered through delegated budgets and performance targets. Through self-assessment, performance monitoring and quality review processes, the college accounts for its progress and puts in place measures to enhance performance and delivery.

The public documents that are developed through this process include the Self- Assessment Report, Development Plan, Finance Plan, Accommodation Plan, and

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Risk Management Plan. The process delivers a culture of continuous improvement and an appetite for growth and enterprise that is supported through clear accountabilities. Through this framework, Carlisle College and NCG will work together to grow and improve its joint success.

The sustained outstanding performance in subject areas at NCG where Carlisle College has ambitions to improve will be shared with the college through access to and best practice sharing with successful curriculum management teams elsewhere in the group, and will be supported by sharing best practice activities. This will support the college to further improve its outcomes for learners, achieve future growth and strengthen its position as a leading provider of further education.

Stakeholder and partnership working

A key feature of colleges within NCG is that there are clear lines of responsibility for arrangements relating to working with local partnerships and stakeholders. The primary responsibility sits entirely with the local Principal and Senior Team, under the oversight of the local governance arrangements.

Carlisle College is actively collaborating with the three other Cumbrian colleges on their response to area reviews. This has included exploring a range of options for FE provision across the county. The consistent theme from this work is that each college needs to strengthen its own position whilst increasing collaboration with the other three. The merger with NCG would fully support this approach, with the Principal remaining a key member of the group.

Carlisle College, through its Principal and Senior Leaders, has developed an excellent network of engagement with local stakeholders including: • Proactive working with the other Cumbrian Colleges and University • Leading on joint delivery of ESF programmes with colleges and training providers • Engagement in local authority 14-19 partnerships • Serving on the LEP Boards and sub-committees • Chairing the network of local training providers • Delivery of HE programmes via the UCLAN partnership.

This is a college that is firmly embedded in the civic infrastructure of both the city and county. Post-merger NCG would wish to see these activities continued and strengthened, sharing this good practice with the other NCG colleges as well as learning from any different approaches elsewhere in the group. We would also

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In Kidderminster, for example, the Principal has remained as a Director of the local Academy Trust, continues to represent the college regionally on the Greater Birmingham Principal’s group and is a member of the Worcestershire LEP Employment and Skills Board. In fact, being part of NCG has strengthened local influence in many instances.

Additional opportunities will also arise to benefit from existing NCG ties into Cumbria. For example, Newcastle College has a very good strategic relationship with Askham Bryan College, which enables Newcastle learners to access their specialist land based facilities in Penrith and York. There may also be synergies with the work that Rathbone undertakes in Youth Engagement to address the needs of young people that are not in education, employment or training (NEET) in the region. Finally, Carlisle has always enjoyed close links with Newcastle, which can be extended to closer partnership working between the two respective colleges.

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7. Brand and Quality Arrangements

Carlisle College Brand and Identity Retention

As part of NCG ‘Carlisle College’ will continue to be used as the name for the college in Carlisle and Cumbria. Marketing, along with local communications and PR will remain entirely under management of the local Principal and Senior Team.

NCG has an excellent track record of supporting its divisions to develop and successfully promote their brands, enabling expansion into new areas and markets. For example: • The merger with Kidderminster College in 2012 has been extremely successful and is substantially meeting the key objectives set out by Kidderminster when they agreed to merge. Kidderminster College have improved their surplus by £0.6m in the first year of being part of NCG and continues to develop and grow provision independently. The Kidderminster College brand has been retained entirely and the college continues to operate its own local marketing function. During the first year as an NCG College local management were assisted to undertake a full baseline review of its activities and relative market positions; this has helped the college to refocus its offer to ensure that local skills needs and priorities are fully met. The college is also starting to take advantage of some of the best practice relating to social media and web development from other areas of the group to improve its reach to young people. • West Lancashire College was originally known as Skelmersdale and Ormskirk College (SOC) at the point of merger. As the business plan to extend the role and offer of the college was developed by the Principal, it became clear to the Principal and the college’s SMT that the college needed a new brand that matched its post-merger growth plans. The college developed and consulted locally on a new name, with the full backing of NCG. The Principal then led the successful rebranding of the college from SOC to West Lancashire College upon launch of its new £42.8m building in September 2011. The new build completed the promises that NCG made in the merger agreement with SOC and was jointly funded through a combination of government grant and NCG capital support. • The development of a dedicated, purpose built Newcastle Sixth Form College at a cost of £23.9m and funded entirely from NCG reserves. Established as a distinct brand aimed at those seeking to study A-levels or the International Baccalaureate, this project saw investment in a new website, bespoke marketing campaigns, and the development of a social media audience to ensure competitive advantage. The results have seen a significant expansion in student numbers rising from just under 800 to over 1,200 today. Moreover,

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the work of promoting the new Newcastle Sixth Form College brand was recently recognised with a Chartered Institute of Public Relations NE Silver Award.

The proposal is to enable Carlisle College to access support and best practice from across the group, as well as contributing through its own local strengths. This will build on the advantages of the current brand, and also allow the college to assess how the Carlisle College brand can be developed, expanded and subsequently promoted to ensure it remains competitive.

Plans for extending the brand will be integral to the business plan for Carlisle College and will look to take advantage of gaps in the existing local and regional market. NCG has the right experience and expertise to successfully retain the Carlisle College brand and develop and progress it to the next level.

Supporting Carlisle College’s Market Ambitions

NCG’s size and scale has resulted in investment in a national IT infrastructure capable of supporting data and compliance, e-learning and communications anywhere in the country. This will be deployed to support developments at Carlisle College to help realise market ambitions. In addition to the tools and content already in place, an online learning support model, which ensures learners gain the support they need whilst working at distance from the campus, has been developed. This model, together with the technology already in place, will offer learners an excellent online experience and provide them with the flexibility they need. Learners will benefit from the advantages of NCG’s online offer and allow Carlisle College to focus on developing content and curriculum, rather than systems and services.

NCG will work with Carlisle College to support the vision of the Cumbria Local Enterprise Partnership (LEP). This knowledge and these relationships will be used to strengthen Carlisle College’s position whilst helping to shape a sustainable curriculum offer.

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8. Financial and Legal Update

Current Position of Carlisle College

Carlisle College has experienced some challenges managing its finances in a difficult funding environment, but has shown a significant resilience in stabilising the situation.

At 31 July 2015, Carlisle College had an income of £12.5m, which is higher than normal as a result of a European Social Fund (“ESF”) ‘Skills Support for the Workforce’ programme, which did not occur in either of the two previous years (when income was approximately £10m). The ESF project was associated with a high level of expenditure as delivery was subcontracted and the college made a margin of 15%.

The College generated an operating deficit in 2014-15 of £780,189 which included FRS17 adjustments and restructuring costs, and was pre-profit/loss on asset disposals and exceptional items. Of this deficit the majority (£585k) was related to exceptional restructuring costs for that year. The current SFA financial health rating is ‘Satisfactory’.

The cash position has been weak recently due to a combination of cuts in funding, static learner numbers and significant capital investment in the estate, as well as the one-off restructuring costs; these were exacerbated by low points in the funding payments for the year. The college has drawn down a short term loan from Cumbria County Council which will bridge the funding gap.

Carlisle College is negotiating LEP support to construct a new Advanced Manufacturing Centre, which will house a manufacturing rig and processing line and is planned to be completed during Summer 2016. The media and arts centre, opened in September 2014, has the latest music/film production and editing technology but the investment in the estate has resulted in bank debt totalling £6.9m at September 2015, at relatively high interest rates.

Income Analysis and Commentary

The college is highly dependent on funding body income, which accounts for around 85% of total turnover. Excluding the ESF project, the forecast core funding is a 2.2% decrease in 2016, followed by a 1.3% increase in 2017. The largest movements in 2016, in value terms, are a £108k reduction in EFA income, a £236k reduction in SFA income and a £136k increase in managing agent delivery where the college are subcontracted by others for delivery. However the college applied for an £160k SFA growth funding request in November 2015, and this has not been included in the forecasts.

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In 2017, the college could apply for a similar sized SFA growth funding request and undertake a new £1m ESF project. These and other items totalling just over £150k have not been included in the forecasts.

NCG Financial Performance

NCG is one of the largest and most financially robust education, training and employability organisations in the UK, with an annual income over the last three years of just under £180m. The resultant organisation following a merger between NCG and Carlisle College will be financially sustainable for the foreseeable future.

Annual Revenues NCG’s profit and loss statement for the last three financial years is summarised below:

NCG G roup Income S tatement 2015 2014 2013

Y ear ended 31 J uly £'000 £'000 £'000

Inc o me 178,259 179,748 179,238

Expenditure

S taff C os ts 97,395 89,486 86,381 Other Operating Expenses 68,805 73,849 70,825 A mortis ation 495 540 2,538 Depreciation 10,087 9,617 11,030 Loss on Disposal of Assets 249 10 53 Interest Payable 1,115 790 1,407 Total E xpenditure 178,146 174,292 172,234

S urplus 113 5,456 7,004 S tat A c c ounts S tat A c c ounts S tat A c c ounts NCG continues to hold the largest cash reserves of any FE organisation in the country, based on publically available data. At the end of 2014-15 NCG had a cash balance of £27.4m.

NCG’s financial health over the past three years has been graded as good, although this became satisfactory at the end of 2014-15. During 2014-15 NCG has experienced a significant change to the contracting environment, particularly through the provision delivered by the Training Provider subsidiaries. This has included the continued run down of the Work Programme and, like Carlisle, the cessation of ESF funding in July.

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NCG is expecting that over the next three years a number of positive changes will materialise. 16-18 demographics start to improve after five years of reductions, the funding available for apprenticeships increases significantly with the introduction of the levy and ESF funding will be available again.

Post-Merger Financial Position

Post-merger, Carlisle College will become a full partner in the NCG family with 100% commitment to securing its future and building on its existing financial health. NCG will assist Carlisle College to improve profitability through income growth and achievement of cost efficiencies, whilst maintaining its impressive gearing and liquidity ratios.

NCG will provide Carlisle College with back-office support through its Corporate Services model and central procurement benefits that will free up resources to focus on curriculum expansion and income growth.

This model was successfully employed by NCG following the merger with Kidderminster College. Kidderminster increased its operating surplus by £0.6 million in the first year following merger, which generates a significant cash resource for reinvestment in learning resources.

NCG’s support will enable Carlisle College to strengthen the range, quality and accessibility of its training provision and in doing so secure growth in learner numbers. NCG has the scale and financial resource to directly fund its divisions for growth in EFA 16-18 numbers, instead of them being subject to the lagged funding methodology. It also has a strong track record of achieving additional SFA income growth and has capacity to accommodate additional HE students.

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9. Property and Estates Strategy

Estates Maintenance Analysis and Commentary

The Carlisle College Campus operates out of a modern city centre campus. There are no other locations or leased properties included in the estate holdings.

The campus includes: • Block A which fronts onto Victoria Place. It was newly opened in 2006 at a cost of £7.5m and is mainly dedicated to engineering, construction and motor vehicle training. A large learning centre extends over the top floor. • Block D (there is no block B or C) is a substantial building which has been almost wholly refurbished over the last five years with SFA Renewal Grant monies. Further small internal refurbishment is planned to complete the process. • A new central block which houses the main entrance to the College, on Compton Street, and includes concept classrooms, LDD activity, beauty therapy and hairdressing salons and central and social space. This facility opened in 2011 at a cost of £11m. This building is linked to Block D via an enclosed bridge over Strand Road and attached to Block A. • Carlisle College of Arts has its own building which is a façade retention project with new build wrapped around it to support performing arts and art and design curriculum. This was opened on 2014 at a cost of £5.5m. • St Pauls Hall, a former church hall dating back to the 1900’s has been skilfully refurbished and developed into a space for business curriculum activity. • Chatsworth House is a large Victorian residential property that has been updated to house some overflow art and design activity and houses business support areas such as HR, Finance and Estate.

All the accommodation at Carlisle College is in substantially good order and has been well maintained and cared for. The Estates Team is appropriate for the size of the institution and mandatory and regulatory compliance appears to be in order. There is very little upgrading left to be done (some mentioned above) and the general air is that the accommodation has been well thought out and developed to a good standard and is right sized for the activity of the College. There is a further development planned for Summer 2016 in the creation of an Advanced Manufacturing Centre within existing College buildings.

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NCG Estates Investment

NCG recognises that continual investment in estate and facilities is required in order to improve the learner experience and successfully compete for learners in the FE sector. Over the past ten years NCG has invested significantly in improving the estate and facilities of its divisions for the benefit of its learners and communities. As such NCG has a great reputation and significant experience of delivering large, multi- award winning buildings and capital projects to a very high standard, within budget and time constraints. NCG also has significant experience of successfully accessing capital grants in supports of these projects and Carlisle College will benefit from this experience and expertise in relation to any future investments in its estate.

Significant projects completed by NCG in the past ten years are summarised in the table below:

Project Division Cost (£m) Capital Grant (£m) Performance Academy Newcastle College 20.2 7.4 Lifestyle Academy Newcastle College 17.0 5.0 Aviation Academy Newcastle College 3.2 2.0 Sandyford Campus Newcastle College 8.6 0.9 Energy Academy Newcastle College 1.8 - Newcastle Sixth Form College Newcastle Sixth Form 23.9 0.3 Construction Academy West Lancashire College 2.2 1.9 West Lancashire Campus West Lancashire College 42.8 32.6 Wigan Head Office Rathbone Training 0.6 - North East Rail Academy Newcastle College 5.0 - Parsons Tower for Health & Newcastle College 18.5 - Enterprise 143.8 34.8

Proposals for Continuing Investment in Carlisle College’s Estate / Facilities

NCG will work with the senior team at Carlisle College to review the college’s accommodation portfolio and develop a coherent and affordable property strategy.

NCG operates a two-pronged capital investment process, comprising: • Routine Capital Investment: including small scale investments in building improvements and maintenance, equipment for curriculum provision, and IT

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infrastructure and equipment. A routine capital budget is allocated to each division and sub-division as part of the annual budgetary process and NCG’s total routine capital budget averages £5m per annum. • Project Capital Investment: which relates to large scale improvements and the provision of new buildings and facilities.

Post-merger, and in-line with the NCG Business Planning process a routine capital budget will be agreed with Carlisle College with relative autonomy thereafter on how it is invested. Any non-routine capital expenditure is subject to demonstration of an economically viable business case.

Carlisle College will have the full support of NCG in the identification of growth opportunities and the development of viable business cases in support of investment. For example, on merger with Skelmersdale and Ormskirk College in 2007, NCG identified an immediate deficiency in the provision of Engineering and Construction. Shortly after merger, The West Lancashire Construction Academy was rapidly developed on a site close to the college and remains a key element of the college’s provision to this day.

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10. Governance Arrangements

The proposed timetable for implementation of the merger has been formulated to meet the expectations of DfE and DBIS and sets out a programme leading to a formal implementation date of 1 August 2016.

Planning for Carlisle College will ensure that there will be a minimum of disruption for students.

Throughout the process of planning there will inevitably be risk. The experience of the colleges in applying risk management processes and controls will be used at each step of the way in the preparations for the merger, thus negating or minimising any potentially adverse effects of any difficulties that might emerge.

Governance and Management: Current Arrangements

Currently NCG operates a College Advisory Committee structure that reports through to the NCG Corporation on behalf of each college. The current terms of reference of the committees are to advise the Corporation and relevant Principal on: • The educational character of the college • The needs of local stakeholders • Strategies to respond to local needs • Strategies to improve the performance of the college

The committees also receive planning and monitoring information on the colleges and provide stakeholder views on how to respond to local need. Advisory Committee members are external representatives who have an interest in the educational character of the college and are committed to making a difference in line with the college priorities.

The Advisory Committees normally meet twice in each term on dates decided by the Committee. Additional meetings may be called as necessary. Minutes of the Committee are presented to Corporation.

Proposed Governance Structure for Carlisle College

The Area Review process is triggering significant changes across the FE Sector and the likely consolidation of colleges is impacting the thinking around the approach to governance of a Group with multiple colleges.

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In parallel, the current NCG strategy involves devolving responsibility to the lowest appropriate level. This includes a project that NCG is undertaking with the funding agencies which will establish individual funding contracts and returns for each of the operating divisions, and which has as an explicit aim to have Ofsted inspect NCG at a Divisional as opposed to a ‘Whole Group’ level.

The current NCG strategy and the possibility of further colleges joining NCG brings our current governance arrangements into sharper relief. NCG Corporation has therefore commenced a formal review of its governance arrangements of existing and future divisions. The review will make proposals on the changes required to further strengthen the respective roles of the NCG Board and local Boards. The key areas under consideration include: • Deciding which responsibilities are formally devolved from the parent body – areas under consideration include curriculum development and challenge, quality of provision, engagement with local stakeholders, health and safety and safeguarding • What mechanisms are required to ensure that both the NCG Board and the local Board are fulfilling their obligations • Ensure clear and complementary delineation between the duties and responsibilities of the NCG Board and that of a College Board • Ensure that the governance arrangements for NCG and any College are capable of being understood by external inspectors and stakeholders • Demonstrate effective oversight of HE provision • Ensure that there is no cross-over into operational management or duplication of the role of NCG Executive or the College Principal • Ensure that effective arrangements remain in place for oversight of the NCG training subsidiaries, Intraining and Rathbone.

It is therefore anticipated that the outcome of the review will be a strengthened local College Board structure that will be fit for purpose for a larger group and to meet our desire to ensure more local accountability and oversight for key areas of operations.

The Principal of Carlisle College will continue to have the responsibilities of an Executive leader and be charged with developing and delivering effective relationships with learners, employers, partners and communities.

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11. People Arrangements The Principal and Senior Team will continue to manage Carlisle College. They will benefit from support from NCG specialists where this is needed and will join a peer network of similar professionals across NCG. NCG values very highly the development of all its managers. The Senior Team along with other college managers will, for example, have the opportunity to participate in NCG’s leadership development programmes.

A merger between NCG and Carlisle College will assist both parties in talent management and succession planning. The commitment of the key people who work in the college is impressive and will provide a strong foundation for the future. Carlisle College will be a full partner in the NCG community and will work with the governors and Executive on equal terms with other divisions in the group.

Continuity of People Arrangements

NCG ensures that structures within Divisions are designed to focus resources on front line delivery to learners and customers. Ofsted (2012) note “The management structure created by NCG has ensured that the different divisions focus well on ensuring that learners succeed”.

Compulsory redundancies would have a negative impact on perception of the merger by staff, learners, the local community and other key local stakeholders. Therefore, whilst NCG will seek to assist Carlisle College with ensuring it is operating efficiently, it will seek to avoid compulsory redundancies wherever possible.

NCG adopted this approach during the merger with Kidderminster process. No direct customer or learner facing staff in Kidderminster were made redundant as a result of the merger. During the transition period ahead of the merger Kidderminster College carefully managed vacancies in non-front line posts to ensure that redeployment opportunities were available. Vacant positions across the wider group were also opened up to anyone impacted.

In West Lancashire College staff numbers have risen from 194 at pre-merger, to over 300 today, with staff turnover falling from 45% to 14%. Any management capacity released at Carlisle College through the adoption of corporate services can then be utilised to focus on curriculum development, quality improvement and enhancing provision for learners. Where redeployment of staff within Carlisle College is not possible, the breadth and geographical spread of NCG’s operations will be utilised by offering alternatives within NCG.

At merger, all Carlisle College staff will be TUPE transferred into NCG on their current terms and conditions. Over a period of time, the policies and procedures of

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43 www.ncgrp.co.uk | www.carlisle.ac.uk the two organisations will be aligned. This does not necessarily mean wide-scale change. For example when both West Lancashire and Kidderminster Colleges merged with NCG, staff remained on their local terms and conditions as these best met local need. NCG divisions retain significant local autonomy over many organisational policies, in particular those related to learners and learning. Some corporation policies such as those related to finance would need to be introduced quickly; others would be consulted on over time.

NCG Corporate Services

NCG has significantly revised its central Corporate Service offer over the last 12 months, focussing on services that add real value. Back office transactional support services are provided centrally where this makes financial sense and high quality support can be offered, for example in Finance and People Services. Many support services remain in the colleges, especially those related to student support, registration, marketing and recruitment and onsite facilities such as catering and estates management. The main components of NCG’s Corporate Service are:

• People Services – including HR transactional services, payroll, HR support and Organisational Development. A local HR function is retained in each NCG college. • Financial Services – including accounts receivable and payable, management accounting, procurement, planning and contracts. The colleges retain responsibility for budget setting and monitoring progress towards financial targets • Information Services – including core IT system provision, data centre, backup and disaster recovery, business intelligence, project management and data support. Local IT staff responsible for desktop maintenance, ILT and local servers are managed by each college. • Business Assurance – including internal audit, funding assurance and quality support. NCG colleges remain entirely responsible for quality and local compliance arrangements. • Property Services – including estate management expertise, health & safety advice and building project management. The colleges retain responsibility for management of local estates and other support services.

It is anticipated that Carlisle College would transition to some core services, particularly those to meet statutory obligations (such as financial accounts and audit) immediately. Other services and systems would be assessed over an agreed transition period and changed where this is beneficial to the college. Access to expertise would be made available immediately.

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12. Consultation Process and Next Steps

The two parties to the merger fully intend to undertake an open and transparent approach to consultation. The next step will be to carry out a full public consultation to ensure that the views of learners, staff and key stakeholders are received and used to inform the final decision regarding the merger proposal. To this end: • The consultation will comply fully with statutory requirements for the proposed dissolution of FE college corporations • This Initial Outline Proposal (IOP) will be made available to all relevant stakeholders, and made available publicly via the websites of both Carlisle College and NCG • All stakeholders will be invited to respond to the consultation questions relating to the merger proposal • Carlisle College and NCG will publish a summary of consultation responses received and where relevant, its shared intentions to address the nature of those responses • Carlisle College will consult with its recognised trade unions over the transfer of its employees to NCG, to meaningfully satisfy its obligations under TUPE

Support from National Partners

At all stages of the process, Carlisle College will seek to involve, and be advised by, representatives of the Department of Business, Innovation and Skills along with officials from the Skills Funding Agency, Education Funding Agency and the FE Commissioner’s office. Whilst aware that decisions regarding merger and dissolution are now in the hands of college corporations, both Carlisle College and NCG fully recognise their responsibility to respond to government priorities and ministerial guidance. We are confident that the current proposal is the result of a process which reflects both the spirit and the letter of the relevant guidance.

The consultation on this plan will coincide with the initial stages of the Area Review in Cumbria. It is our intention to dovetail with that process and to take account of any feedback that emerges as a result.

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45 Appendix 1 – NCG Structure Incorporating Carlisle College

Governing Body

Clerk to the Corporation

Group Chief Executive

Group Director Group Director Group Director Group Director HR & Quality & Planning & Finance, Estates Organisational Standards Performance & IT Development

Principal Managing Principal Principal Principal West Principal Newcastle Director Carlisle Newcastle Lancashire Kidderminster Sixth Form Intraining & College College College College College Rathbone

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Notes:

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Carlisle College Victoria Place Carlisle Cumbria CA1 1HS

Tel: +44 (0) 122 882 2700 www.carlisle.ac.uk

NCG Rye Hill House Scotswood Road Newcastle upon Tyne NE4 7SA

Tel: +44 (0) 191 200 4000 www.ncgrp.co.uk

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