Mission impossible begs big answers

January 27, 1995

Survival is not guaranteed in the college sector any more. There are known to have been at-risk lists in higher education for well over a decade. Indeed last week the Public Accounts Committee was supplied in private with the names of the six universities which have been causing concern recently because of severe financial pressure.

But for further education colleges the cold winds of independence are a new experience. And it is not just independence. Coupled with new freedoms have come unprecendented demands for rapid expansion, new qualifications and 5 per cent cuts in per capita funding year after year. It is not altogether surprising then that a number of colleges are facing difficulties. But the scale of those difficulties suggested recently by accountants and management consultants KPMG took people by surprise -- alarming even seasoned observers. The consultants' warning that as many as one in five colleges may be at risk made the university risk list pale into insignificance and produced rapid -- perhaps too rapid -- denials.

Some dismissed the figures as a cynical business exercise. For what was KPMG's motive in peddling such doom if not to attract business? But in order to have credibility the management consultants' crystal ball-gazing must contain some truth, and this week's news of trouble at Chelmsford College, triggered by a string of redundancies to meet a projected Pounds 330,000 deficit, provides another example.

Chelmsford will not be alone. There are rumblings that this or that college is struggling with near impossible recruitment targets; that nearby universities or sixth form colleges are poaching significant numbers of FE college students, leaving them with empty desks; that deficits in some colleges are running into millions of pounds. Merger talks are certainly going on behind the scenes in a number of institutions. And, as jobs come under threat, no one should be surprised when unions reach for any cause of grievance they can find. College managements, like those in some of the new universities (see below), seem sometimes to go out of their way to help them find such causes.

What is to be done? Principals, using their new independence, could take a ruthless market approach to their difficulties, instigating an urgent review of their business portfolio, scrapping loss-making products (and the employees who produce them), stepping up those activities seen to be making a profit and stepping up the marketing to match. The review part of this exercise is something they might all profitably undertake: such information is always useful not least for bargaining. Some will be keener to act aggressively on the information than others. Their reaction may depend on personalities. It will also depend on the opportunities locally, the attitudes of staff and the college's relations with the local business community and training and enterprise council. Not all of the latter, as has been seen recently in south London, are in too healthy a condition themselves. As colleges wrestle with such possibilities they will be wise if they too pay attention to the guidance on governance now circulating among the universities.

But even if the opportunity is there, and if the adaptation can be handled without too much disruption, is a market model helpful? This is not anything even approaching a true market. Colleges can and do attract fee-paying students but even courses for which they charge are subsidised and many courses do not bring in fees at all. The funding council is the main "customer" and can rig the market.

And it chooses to rig it as least partly in favour of planning. When he addressed the Association for Colleges meeting in November last year, Sir William Stubbs, chief executive of the Further Education Funding Council for England, was discouraging to those who might be planning to go into cut-throat competition with their neighbours and made it clear that the good of the sector and the perceived needs of the region would be important criteria for the council in deciding whether or not to intervene to modify colleges' use of their freedom. Such criteria raise the question of how far planning should go and by whom it should be done. The funding council may be an important player but it is not the only one. Discussion of who should decide what, moves rapidly into the heart of current political argument about devolution, local democratic accountability, quangos and the future of local democracy. Crucial questions in this area seem to be miles from any useful answers. The Labour Party's ideas for regional devolution are extremely vague. Statements about, for example, bringing grant-maintained schools into a locally accountable framework lack substance. Meanwhile the Government is apparently unwilling to see the beam in its own eye on the matter of accountability even as it delivers tirades about accountability in universities. The many quangos which have been set up to act locally are far too unaccountable.

The questions often look trivial: who, for example, is to decide whether or not publicly supported schools may open their own sixth forms in areas where there are colleges willing to provide the full range of courses? Who is to set up and organise credit accumulation and transfer schemes to enable students to move between providers? Such details are not however trivial, they are part of big constitutional questions in need of attention. Subsidiarity -- what is decided at what level and by whom -- is a national as much as an international issue. Until that is addressed, the incoherence dogging the colleges will continue.

This matters. If the colleges underperform because they are driven by inappropriate pressures, or are driven out of business by inappropriate competition, they will not provide the crucial skills training needed for continued economic recovery and reduction of unemployment. The majority of young people now, at last, stay on in education after the compulsory years. In 1993/94 just over 80 per cent of 16-year-olds stayed on. This is a remarkable achievement even if the drop to 46 per cent by 18 is still disappointing. National education and training targets are being revised upwards by the Government to make sure their enthusiasm is not wasted. Those providing vocational qualifications are beginning to work more closely to make sure what they offer is worth having. But Britain still trails behind some of its international competitors and further improvement will be difficult if colleges are distracted by the threat of going broke. Many colleges, sceptical about their prospects of even maintaining the rate of participation in their sector, have sought to solve their problems -- and gain prestige and challenge to their work by developing higher level courses. At least 70 FE colleges are paid by the Higher Education Funding Council to provide degree and sub-degree courses. They do so in many cases more cheaply than universities and perhaps more attractively to some students. But money is short and the Higher Education Funding Council has many clients. Once again we are back to the need for strategic decisions, and to the need for decision-making structures which can broker those decisions locally. It is hard to see how the decisions that are needed will be taken while the big questions are ducked. That unfortunately suggests a prolonged period of planning blight which will make running colleges harder.

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