The Education Act 2011 has been widely heralded as a positive move for the FE sector, providing colleges with significant new freedoms to develop and deliver more learner-focused services.

But, like any new legislation, the Act has brought with it a range of new challenges. Elizabeth Delaney, associate at business law firm DWF, looks at how to make the most of the Act’s new freedoms.

Greater autonomy
With the government seeking to put FE and sixth-form colleges on a similar footing to charities operating within the independent / private sector, the Act has reduced the financial restrictions and controls faced by FE institutions. This financial autonomy will allow colleges to be more creative in how they initiate new training schemes to meet the needs of employers and learners. Direct central government oversight will also be reduced, allowing colleges to dedicate more time and resources to supporting learners.

By exempting high performing colleges from routine Ofsted inspections, for example, the Act will allow teachers to focus on the needs of their students, rather than on meeting targets.
Constitutional reform. The Act will allow colleges to change their constitutional structures and governance procedures. They now have the right to modify and replace their constitutional instruments and articles without seeking permission.

This will allow them to introduce more flexible structures and develop more effective ways of working. They can dissolve and move to more flexible legal forms if considered appropriate. This is a major step, and will allow FE institutions to look at adopting innovative business structures – such as social enterprise models or joint venture companies – or to develop strategic alliances with other educational institutions so that they can share best practice.

A bright future
The changes have been introduced to create a more transparent marketplace in which colleges are accountable directly to their stakeholders – their learners and local community – rather than central government. This will be reinforced by the introduction of student funding streams which are easier to access, and to find out about.

Stakeholder engagement will take on a new level of importance as colleges strive to use their increased powers to develop new and better services. As recent Department of Business, Innovation and Skills draft regulation has made clear, the government intends for stakeholder consultation to be a central element in implementing structural and / or constitutional changes.

The government’s ultimate ambition is that the changes to FE will help to support a virtuous circle, where colleges compete to attract learners by developing more innovative services and delivery methods that meet local demand and improve quality. This, in turn, is expected to create a more diverse sector.

Getting on board
The immediate impact of the Act will differ between institutions. Some colleges will feel that their existing structures do not prevent them from achieving their objectives, while others may feel that they can deliver better results if they implement a radically new business model. However, before coming to any conclusions on which path to take, decision-makers – governors or chief executives – need to review their institution’s existing constitutional documents and consider whether or not they provide the flexibility needed to deliver the college’s strategic objectives.

It is important not to go through the upheaval of changing legal form purely because of the apparent attractiveness of alternative models; in many cases colleges may well be able to achieve their aims through much more subtle methods. Partnerships are likely to become a more important aspect of the FE sector as accountability is devolved to local stakeholders. Colleges may find that the most effective way to support their learners and wider community is to work with a local academy, university or employer.