The Further Education sector in England – governance and finances, enhancing provision, and priorities for the FE White Paper

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Improving the oversight of colleges and adapting to the new insolvency regime – mergers, restructuring and sources of funding

I’ve spent over 40 years in the education sector, as student, employee, trainer and consultant. It’s a sector I love and want to prosper. But I think it has lost its way.

When I was a student, and even when I was first employed by a college, there were no online courses, in fact, we had no internet as we know it today. Many people still worked for no more than 1-2 employers during their working life and they went to an office or factory to do so.

Today the internet is a fact of life and globally 4.57million people are online with 4 million using social media. And Covid has meant Working From Home (WFH) is now common, with all the unintended consequences that brings.

A recent survey indicated that many of the UK’s biggest employers had no intention of returning employees to the office. And many are downsizing their physical estate and taking the capital it releases. 

In other parts of the world, we see the advent of micro-certifications and the growth of education competitors, many sole traders or SMEs, that recruit hundreds of thousands of students whilst working from their bedroom. 

Several years ago a friend launched a short online course that grossed over $1million in its first month. Another competitor launched a series of simple online iPhone camera courses via a Facebook group. Group membership is restricted to his students and now stands at 74,000. Many have taken several courses with him. 

So the world has changed and colleges and other FE providers need to recognise that the world will never be the same again. 

We now have a new FE White Paper on the horizon and insolvency has already claimed several victims. 

Sadly in addition to this, we have a sector that, though many don’t recognise it, doesn’t always bathe itself in glory. Insolvencies, fraud allegations, expenses scandals and more have tarnished its reputation. 

The sector has lost its way.

So what must the sector do to survive and thrive? How can boards support colleges against the tsunami of change and political rhetoric that the last decade has brought and the promise of even more radical change consequent to a White Paper?

College Board Structure & Priorities

The best oversight of colleges is undoubtedly by its board. However membership of a college board has for years been a voluntary role with attendance at monthly or termly board meetings and a limited number of specific committees. This has usually been around a full-time role elsewhere.  

Today the role of chair in particular, and often some other members, now devours several days a week and I would argue needs to be a salaried position. Chairs need to be totally independent, appointed by the board and not, as has happened in too many colleges, in the gift of the principal. 

The role of independent salaried chairs is well established in other sectors and I suggest the Pensions industry is looked to as an exemplar. Post-Maxwell it has leapt forward and is now very enlightened. 

Board members also need to be carefully selected and their expertise needs to closely fit the challenges that colleges face. 

The first priority for the board must be to examine the financial position the college finds itself in. I frequently see mention of the need to let new measures bed in after which utopia is promised. I’ve been hearing this for over 40 years. 

The reality is we have been on a very slippery slope for over a decade and I have yet to see a college with a plan B.

Members of the board have a fiduciary duty and where the college complains that they are underfunded they have admitted to the prospect of their financial position worsening. With the FE Commissioner reporting to the Education Select Committee that “30-40 colleges are at risk” we can get a sense of the plight of all colleges. 

Therefore to proceed as before, in the hope that the government will increase funding, is shortsighted at the very least. If it’s accepted that courses are underfunded then insolvency is surely the ultimate outcome and foreseen.  To ignore this financial predicament is a dereliction of the fiduciary duty of every board member. 

Colleges often talk of their civic and societal duties, of wanting to serve the local community and being global players. But unless they focus on finances as their major priority they cannot satisfy these other concerns.

Questions Boards Must Be Asking

  1. Why are we running unviable/underfunded courses? 

If a course is underfunded then we need to examine other delivery modes, other funding mechanisms and other cost structures. If it cannot be run economically then we need to consider closing the course, as to continue running it risks the viability of the whole organisation. 

  1. Since Covid, many courses have run online. What are the implications for the future?

Across the age spectrum, many students have taken to online delivery as have staff. Colleges are to be congratulated on the way that they have rolled out online delivery in weeks where such projects would have otherwise taken years or even decades. It seems a waste of this effort and success not to continue with this. 

Online delivery doesn’t of course suit all students. But neither does sitting in a classroom! And vocational courses do need an element of workshop time (though the innovation brought to many teaching situations found ways around this to an extent). 

It could well be a hybrid attendance model is the answer to future course attendance. This would need to be supported by the provision of online coffee and break out rooms where students can mix and share ideas and gossip! Those providers that have provided this find it very effective.

  1. What income creation opportunities exist?

Many private providers run without relying on government funding. Market forces are embraced and significant incomes realised. It also means they are able to forgo Ofsted inspections and be truly independent. So boards need to examine how colleges can become less dependent on government funding .. and perhaps forgo it totally. 

This isn’t going to be simple, but some colleges are already much further along this road than others. If they were to ask some of the questions being posed here it could well be they could make progress in cutting the dangerous reliance they currently have with government funding. 

  1. Are traditional attendance patterns viable?

Attendance times no longer need to be tied to classroom availability and a timetable.  With more flexible delivery that online offers, we can utilise AI to assist the teacher/lecturer, record video sessions for later use and run small real-time tutorial groups that give students more personal attention and support. Courses can now be accessed 24/7 and if we also embed microcredentials we can make learning a truly lifetime experience. 

  1. Is the traditional term structure viable?

Terms are an artificial construct based around child labour availability during harvest times and to celebrate religious festivals.  Farming has changed and so should colleges. 

We no longer need three terms a year. We can easily operate 50/52 over whatever term structure we decide on. Doing so will enable us to timetable staff more efficiently and will allow them to take holidays outside the expensive “school holiday” period. 

The argument often given for maintaining terms is the exam timetable.  But if a sufficient number of colleges insisted on change it is not a surmountable problem. 

And we also need to ask ourselves about the long term viability of exams versus relevant credible assessments strategies that employers can embrace.

  1. College courses only run c 30 weeks a year. Why? 

And why are colleges normally open 9-5 day, five days a week? 

With more people working from home, more people needing to retrain and more people already embracing change can we run courses 7/7 and for longer hours each day? A lot of very successful private providers deliver courses 360/365. Why don’t all colleges? 

Extended opening hours would mean fewer students in college at any one time, making it easier to satisfy Covid spacing rules. 

  1. Capital Cost Reduction Strategies

If we extend opening hours, deliver more online and abolish terms why do we need such a large estate? College estates swallow huge capital sums with crippling interest rates that have to be serviced from underfunded courses. It makes no sense.

With large businesses leaving city centres, vowing never to run huge office complexes ever again and releasing vast capital sums tied up in property and rents why can’t colleges adopt the same strategy? 

  1. Could a merger deliver better quality courses and financial viability?

The 2019 Popov and Cattoretti report stated, “there is no strong statistical evidence of college mergers leading to an improvement or deterioration of college performance on average.”  

That’s not to say a well planned and executed merger will not work. But like all things FE, doing it the way we’ve always done it is unlikely to work.

Conclusion 

The major problem I see facing colleges at present is a reluctance to accept that when we admit to the possibility of insolvency we have to make drastic and dramatic changes. 

It would be better if we had the luxury to evolve over time, but we are at a tipping point, brought on by years of underfunding, and now Covid, that makes relying on the old ways no longer viable. 

Colleges seem to lack a plan B. The above seeks to start the process of formulating that plan. It’s not going to be easy. But shying away from it isn’t an option. 

My vision for the college of the future embraces building on reality and not relying on hope. 

Ten Questions College Boards Should Be Asking

A rough draft of my presentation is provided below.

Improving the oversight of colleges and adapting to the new insolvency regime – mergers, restructuring and sources of funding

When I was first asked to speak today there was no pandemic. 

It wasn’t even on college risk registers. And insolvency wasn’t a word used in FE.

Since then we’ve seen colleges adapt to online teaching in weeks .. not the years or even decades it might otherwise have taken.

Colleges are to be congratulated on this. And it is something we now need to build on.

We need to do this because Covid-19 isn’t going away some time soon. AND because FE has been failed  financially  … and in so many other ways … for decades.

It’s not that FE is poor. It’s brilliant. 

It’s an under-utilised power for community and economic good. 

But it needs a rethink .. especially at board level.

Ten Questions Boards Should Be Addressing

  1. College Board Structure

Roles at Board level are time consuming …. they are part time jobs in many cases. 

So we need to consider independent  …. salaried  …. professional chairs. 

The role of independent salaried chairs is well established in other sectors 

and I suggest the Pensions industry is looked to as an exemplar. 

Post-Maxwell it has leapt forward and is now very enlightened. 

  1. Board Priorities 

The first priority for the board must be to examine the financial position the college finds itself in. 

The reality is FE doesn’t seem to have a plan B.

To ignore this financial predicament is a dereliction of the fiduciary duty of every board member. 

3. Why are we running unviable/underfunded courses? 

If a course is underfunded then we need to examine other delivery modes, other funding mechanisms and other cost structures. 

If it cannot be run economically then we need to consider closing the course, as to continue running it risks insolvency. 

4. Since Covid, many courses have run online. What are the implications for the future?

Online delivery doesn’t of course suit all students. But neither does sitting in a classroom! And vocational courses do need an element of workshop time.

Maybe we need to consider a hybrid attendance model

5. What income creation opportunities exist?

Many private providers run without relying on government funding. 

And they argue that not being funded means no Ofsted. 

What viable courses could be run? 

What about  microcredentials for example? 

6. Are traditional attendance patterns viable?

Attendance times no longer need to be tied to classroom availability and a timetable.  

With more flexible delivery that online offers, we can utilise AI to assist the teacher/lecturer, 

record video sessions for later use 

and give students more personal attention and support. 

7. Is the traditional term structure viable?

Terms were an artificial construct based around child labour availability during harvest times

Farming has changed ….  why haven’t colleges?

8. College courses only run c 30 weeks a year. Why? 

And why are colleges normally only open 9-5 day, five days a week? 

A lot of very successful private providers deliver courses 360/365.

Why don’t all colleges? 

9. Capital Cost Reduction Strategies

If we extend opening hours, deliver more online and abolish terms why do we need such a large estate? 

College estates swallow huge capital sums with crippling interest rates that have to be serviced from underfunded courses. It makes no sense.

10. Could a merger deliver better quality courses and financial viability?

The 2019 Popov and Cattoretti report stated, “there is no strong statistical evidence of college mergers leading to an improvement or deterioration of college performance on average.”  

So let’s rethink FE  

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