Hitches of getting hitched

June 26, 1998

To merge or not to merge, that is the question. THES reporters ponder the pitfalls

Governors at Imperial College, London, are meeting today to discuss merging with Wye College, also part of the University of London, writes Phil Baty. Over the past few years a number of colleges and universities have considered merging but many plans foundered on the way. In part, this is due to a lack of clarity by government.

At first the message from government seemed unequivocal. Secretary of state David Blunkett was clear he wanted to see "a more proactive approach to mergers", in his guidance letter to the Further Education Funding Council in November 1997. Mergers would lead to the "improvement and extension of provision", and make colleges "better placed" to cope with limited resources.

Consequently, most merger activity since has been in the further education sector, although Dearing talked about regionalism and collaboration and the Higher Education Funding Council for England is encouraging collaboration in its eight newly designated regions.

The FEFC took Mr Blunkett's message to heart and established a Pounds 10 million "collaboration fund" to promote rationalisation and mergers between colleges and even with universities. It is consulting on plans to simplify the criteria it uses to assess proposed mergers. The message has also been heeded by colleges. In Wales the pressure to merge started in the early 1990s and there have already been two mergers with one in the pipeline.

But the bandwagon has hit some potholes. A number of mergers have fallen through and earlier this month the Commons' education subcommittee reported concerns that money-saving mergers "will usually involve site closures" and hinder widening participation by making travel more unavoidable. The FEFC told the committee that the dramatic increase in merger plans over the past year was "undoubtedly a response to funding pressures" and little else.

In its submission to the select committee, the Association of Principals of Colleges said it was not convinced "mergers and amalgamations per se should ever be supported on the basis of alleged cost savings".

Chris Hughes, designate chief executive of the Further Education Development Agency and principal of Gateshead College, knows how easy it is for a merger to go wrong. Last year Gateshead was in advanced stages of merging with Newcastle College to form one of Europe's largest FE institutions. But all went sour.

"It is clear that there are dis-economies of scale as well as economies," he said. "There is the enormous time spent restructuring, trying to marry different cultures and different structures. With hindsight I believe it is no bad thing that our merger failed."

The education select committee felt concerned enough about poorly developed mergers that it has called for urgent guidance from the FEFC.

The key problem, believes Mr Hughes, is that the government's lumped-together messages about promoting collaboration and encouraging mergers have blurred what should have been two separate messages.

"Mergers, takeovers and acquisitions are a different agenda to collaboration," he said. "The trouble with mergers is that they are very aggressive - it is a highly competitive commercial model."

It is a model Mr Hughes believes has had its day. "There has been a flurry of mergers, but it may be those that needed to happen have happened."

"Strategic alliances" are the real way forward, he says. "The real agenda now is how do independent colleges forge a mature partnership with each other?" Even ministers appear to have softened their line. In stark contrast to David Blunkett's message less than five months earlier, higher education minister Baroness Blackstone told the select committee the sector would "probably" benefit from "some" mergers, where "they are geographically close to each other, where they complement each other, and provide the economies of scale that can be obtained from sensible mergers of that sort".

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