FE mergers and acquisitions are logical steps towards increasing educational sophistication

Forget egos and government indecision: mergers and acquisitions are logical steps towards increasing educational sophistication, says David Sherlock.

I’ve come at merger from all ends. As a college principal I fought off an inappropriate merger and ended chairing a subject-based consortium.

As head of Central Saint Martin’s I was part of a federation that seemed to have pulled off the unenviable trick of creating a whole that was less than the sum of the parts.

In 10 years as chief inspector of the Adult Learning Inspectorate I saw more than my share of thriving and busted mergers, and absorbed the sobering lesson in  the University of Warwick’s classic study: most mergers fail to satisfy the hopes of those who promote them.

And I have spent a rewarding day during the Lingfield review of staff professionalism listening to Jackie Fisher and her staff talking about the scope for learning from the good practice found in every new organisation acquired by a £200m turnover outfit such as the Newcastle College Group.

That doesn’t make me an expert but it does mean that my views are seasoned by personal experience.

The motives for combining organisations range from an inability to compete with a more powerful neighbour in breadth of curricula, to inherited financial or academic weakness, to inability to build capital from the diminishing margins available from government funding to keep buildings and plant up-to-date, to the kind of vanity projects sponsored by vainglorious chief executives or funding body managers that Phil Frier, interim principal of K College, mentioned in his FE Week Expert piece of Monday, June 24 [edition 71].

The structures that might save the business are just as various. They include developing vertically integrated services from nursery school through University Technical College to university on a single campus; formal or informal consortia that give the members access to anything from a limited number of shared, efficiently procured, services, to a common contract with Education Funding Agency and the Skills Funding Agency; to retained operational independence within a local plan developed with other providers, a local enterprise partnership, local employers and the local authority, as Richard and Heseltine might recommend; to corporate merger.

The mistake is to wait until market forces propel one organisation so close to collapse that a rescue has to be cobbled together in haste.”

The varied reputation of merger in FE rests on a piece of public-sector doublespeak. The distinction between Type A and Type B ‘mergers’ is not, as Mr Frier suggests, meaningless bureaucracy associated with the Treasury’s evaluation model.

It is the difference between acquisition of one organisation by another, resulting in total absorption, and the willing combination of equals to form something new and better.

If we talked openly about mergers and acquisitions in FE, instead of just mergers, we would gain a clearer understanding of both the process and its social dynamics.

Most of the ‘mergers’ in FE are, in fact, the acquisition of an organisation teetering on the brink of failure by another that is healthier, usually prompted by a government agency anxious to avoid embarrassment.

There are good reasons for sensible merger. The mistake is to wait until market forces propel one organisation so close to collapse that a rescue has to be cobbled together in haste.

Make no mistake, the ‘terms of trade’ change when you create fewer, bigger, providers. If you admire the example of Australian TAFE (technical and further education), rationalise English FE so that each college serves a similar proportion of the national population as does a TAFE institute and you would end up with around 120 to 150 FE colleges, each with sufficient turnover to sustain its own needs for capital formation.

In the past 40 years, mergers and acquisitions have taken universities from an average of 5,000 students to more than 20,000. They are controversial in FE only because of their entanglement with individual ego and governmental indecision.

David Sherlock, director of Beyond Standards Ltd