Salaries of over £150,000 will need government sign-off and private sector borrowing for colleges will be highly restricted following their reclassification as public bodies, the Department for Education has announced.
College hopes of being exempt from VAT have also been squashed and while they will still retain the ability to operate their subsidiaries, those subsidiaries will now also be brought into the public sector and be subject to new constraints.
But there will be additional cash pumped into colleges this year to “eliminate the current deficit in funding” and to make up for their new inability to borrow commercially, and colleges will be allowed to retain surpluses and proceeds from sales of assets.
