College of Social Work faced £240,000 annual deficit before closure, leaked report reveals

The College of Social Work faced a deficit of more than £240,000 this year before a decision was taken to shut the organisation down, a report leaked to Community Care reveals.

The report, which was drawn up by College leaders last month and led to last week’s decision to wind down the organisation, found that the pressure on the College to drive up its membership numbers had led to it developing financially unsustainable policies.

Significant loss from corporate member scheme

The most serious concerns surrounded the corporate membership scheme introduced in 2012 offering social work employers discounted rates to sign-up their staff as College members. The scheme made “a significant loss”, almost equal to the £225,000 gap between income and expenditure in 2014-15. The problems with the scheme had been masked by some corporate members paying two or three years in advance, providing the College with cash flow that disguised the lack of annual income the scheme was providing, said the report.

At the same time the College also faced some “relatively high” operating costs and bills for expensive IT systems that “were not fit for purpose”, the report found. It revealed that the College’s website crashed if more than 50 of its 17,000 members logged in at the same time.

The review of the College’s functions, on which the report was based, was initiated by the College and officials from the Department of Health (DH) and Department for Education (DfE) in March.

Three options for the College’s future

The report, written by College chair Jo Cleary and chief executive Annie Hudson, presented three options for the College’s future:

1. Option one, the College’s preferred option, was for the government to make an “unambiguous public signal of support” for the College by handing it responsibility for undertaking the accreditation of social workers in all specialisms, including the new advanced children and families practitioner status. The extra functions, combined with an improved membership offer, would create a compelling reason for social workers to join the College and help the organisation make “transformative” change within months, the report said.
2. Option two was for the College to reduce its services to a core membership offer and build membership and credibility over time so that it could in future take on the role envisaged in option one. While not its preferred option, the College said it recognised its value, and said it would seek government recognition and support in delivering it.
3. If ministers were not prepared to support option one or two then the College said it would have to consider a third option – closure – though this would have an “extremely negative” impact on the profession.

‘No longer wanted or needed’

A Whitehall source said that after seeing the results of the review, the government concluded that the College was an organisation “that was no longer wanted or needed”.

The findings may also go some way to explaining some of the wider reaction to the College’s closure.

After news that the organisation would shut down broke last week, Isabelle Trowler, the chief social worker for children, posted on social media that the College’s financial position was such that it was “not tenable” for the government to keep “ploughing in” funds. Meanwhile, when a Twitter user asked Labour MP Steve McCabe for Labour’s view on the demise of the College, he replied: “Sad to hear about closure. Not sure I’m that surprised. Seemed to have very shaky financial foundations.”

In 2013-14, funding from the Department of Health and Department for Education accounted for two-thirds of The College’s revenues of £1.86m, though government funding for the organisation dropped significantly in 2014-15.

In a statement for Community Care, Cleary and Hudson said: “The Board acknowledged that there needed to be major changes in how TCSW operated. We were therefore extremely disappointed that government subsequently decided not to support TCSW financially, especially as the first proposals to set up the College recognised the need for improved standards and development in the social work profession.”

A wind-up process is now underway. The review estimated that the closure would cost around £250,000.

Why the review was carried out

In their statement, Cleary and Hudson said the review was initiated for two reasons:

“Firstly it was clear that the creation of a strong and sustainable college, with a compelling reason for social workers to join, required TCSW to take on additional functions. As the strategic review highlighted, other professional colleges have such functions and have moreover taken many years to grow and develop. Secondly, the review was necessary because in 2014/15 TCSW experienced major financial pressures, resulting largely from shortfalls in anticipated income. As such, from the start of this new financial year, we faced major financial challenges.”

The College faced a gap between income and expenditure in 2014-15 of £225,000, said the report, entitled The College of Social Work: functions review.

But though this could be covered by a surplus from previous years, the report said the College faced a further funding gap for 2015-16. Initial analysis put this deficit at £143,000 as of 6 May, but this was then revised upwards to £243,000 following further analysis. This was because the initial estimate was based on assumptions about income “which were not based upon a sound business plan” and income from member subscriptions based upon a fee increase.

This analysis led to a re-ordering of The College’s accounts and a revision of its accounting processes to allow for greater accuracy.

Capability gaps

The College had always been “very stretched” as an organisation and it did not have adequate resources or skills in-house to develop parts of the business that would bring in significant new income, the review found. Several specific “capability gaps” were also identified, including expertise in contract management, business development, financial management and “recent practice knowledge of adult social work”, with a post having been deleted to cut costs.

The review also found that the College board lacked enough members who possessed a series of skills that were “critical” to an organisation at the college’s stage of development. These included business development, finance and legal expertise.

The report also claimed that “significant contracts for digital platform and IT services” awarded as part of a £5m government-commissioned project to develop the College’s from 2010-12 had saddled the organisation with online systems that were “expensive to maintain” and  “unsuitable for service provision”.

Those contracts, the report said, were awarded by the Social Care Institute for Excellence (Scie). Scie was asked by government to develop the College and manage the £5m in seed funding from 2010 to March 2012, when the College became an independent body.

Scie statement

However, in a statement, Scie said: “Scie hosted the development of the College of Social Work from 2010 until it became a separate legal entity at the end of March 2012. We provided office accommodation and back office support including IT and finance support during this period.

“The College interim co-chairs and interim board (established in 2010) supported by an interim director, were responsible for all decisions relating to the set up of the College, including the use of its funding.

“Prior to establishing itself as an independent legal entity, The College was unable to employ staff or sign contracts. SCIE carried out these functions for The College on the basis of decisions made by the College’s interim co-chairs and board.”

Failure to win accreditation contract

One factor that significantly affected the College’s finances was its failure to win the contract – worth an estimated £2m – to the deliver the new accreditation and assessment scheme for the advanced child and family practitioner status. This was awarded by the Department for Education to a joint-bid from consultancy firm KPMG and Morning Lane Associates, the former company of children’s chief social worker Trowler, a move reported first by Community Care in March.

Cleary and Hudson said: “This was not the only factor affecting TCSW’s finances, but it remained a significant one, and raised questions about the government’s future support of TCSW. “

The review recognised the “commitment” of the College’s staff team and found some strengths in the organisation. The College, the report said, had delivered some well-received reports, practice resources, training events and conferences. It had also built three credible member-led faculties covering adults, children’s and mental health social work and, in some key areas, “has punched above its weight”, the report added.

However, the review also gives some insight into how the financial pressures facing the College had impacted on its services.

The quality of the College’s output in terms of its membership offer, policy and practice work was uneven with some resources “not being the highest quality they can be”, the review conceded.

Social worker buy-in

The report also acknowledged that the College had struggled to get enough social workers to buy in to the idea that a professional college was needed. It argued that the extra functions the College was seeking around accreditation and post-qualifying training – functions that the medical royal colleges provide – would give a clear incentive for social workers to join and help secure “ownership”” from the profession.

“Although an increasing number of social workers do ‘get it’, too many remain unclear about why a strong professional college is needed, what it offers and generally why membership is intrinsic to being a ‘good’ professional,” the review found.

In addition to the call for additional accreditation functions, the review also set out a number of other recommendations to improve the College’s position. These included that annual membership fees should be raised from £60 to £90 per member; and corporate subscriptions offered at a “sustainable level”, with maximum discounts on individual membership of 15%, compared with between 17% and 66% currently.

The report also recommended that the College should revisit the potential for a merger or partnership with a trade union. A potential partnership between the College and Unison was abandoned in 2011 due to ministerial concerns about risk to the independence of both organisations.

Additional functions or higher fees

Cleary and Hudson said: “We knew that we would need to take on new functions and/or increase membership fees very significantly. The latter would have created additional barriers for individual social workers joining TCSW, particularly given that social work salaries have not seen significant increases.”

Last week’s withdrawal of support from ministers means no-one will know whether the blueprint to save social work’s first ever professional college from extinction after less than four years in operation would, or even could, have worked.

However, Cleary and Hudson added: “Our view remains that there were clearly feasible and appropriate ways of reinvigorating and sustaining a much needed professional college for social work.”