What has been your greatest achievement at the SFA?
“The biggest thrill for me and the greatest intellectual high is to be able to see one of your ideas implemented – and find that it works. The shift to outcomes, and how I wanted to introduce more competition around price, the simplifications in the sector, these were all very complicated ideas.”
But these policies are a long way from implementation. Are you disappointed?
“Stick around. We will be publishing shortly the document with the guidance that will put the meat on the very bare bones that we’ve put out. We’ve still got to work with the existing funding system, but the year after we’ll start moving money, both in-year and annually, to bias it towards people who deliver outcomes.”
What will job outcomes achieve?
“The first one is – all things being equal between providers – the one that delivers outcomes more effectively will be more likely to get money. It doesn’t mean to say the other provider will get nothing, but over time the ones that are better at delivering outcomes will attract more funding.
The second thing is we’ll move it to – all things being equal between providers – the one who has the highest quality. This will motivate people to not just bump along the bottom at the minimum levels.
The third thing – and this is a little tougher, if you’re a private provider- if you invest more of your profits back into your business you’ll be more likely to get money from us.”
How would that work? If you’re a private provider taking out large dividends, could it affect the size of your contract?
“I have nothing against taking dividends and nothing against making a reasonable return. But in a system where you pay one price for everything, by definition you’re going to be overpaying in some cases and underpaying in others.
Our system doesn’t take account for the economies of scale, and you know what can happen when you benefit from the economies of scale.
So one way of dealing with this is to say to people, you should make sure that you’re investing enough in your quality and in your facilities.
The other way is to move away from a model that says we will pay this amount for that qualification and move towards saying how much would you be willing to do this for?”
Do you think there’s a chance any FE colleges might go to the wall?
“We’ve threatened to do it twice. We wrote letters to two colleges in December saying give us a plan that persuades us in a month, or we’re going to put your funding up for auction.”
The SFA said that wasn’t the case . . .
“Well it’s because the colleges came back in a month with some rather good plans. Our intervention strategy makes very clear that you get a notice of concern and then you get a notice of withdrawal of funding. After that, if it doesn’t work out, we will auction your funding.”
Are high prime provider management fees an issue for you?
“I’m asking the primes to do two things. Demonstrate that they have the processes and the controls to be able to properly oversee a subcontract – which is going to discourage people from doing it quickly
– and show me that the only fee you’re charging is what you incur by way of
Subcontracting plays an important role. But what I don’t want is for it to become permanent, unless both the prime and the subcontractor are happy with that relationship… That they’re each adding something that neither wishes to get into, and they’re doing it for a reasonable fee that isn’t basically to give someone a business of selling SFA contracts and keeping a slice.”
What’s next? Can we expect Mr Russell CBE?
“I think it’s highly unlikely that I will have any letters after my name.”
So what will you be doing next?
But you’ve retired before…
“I‘m only 54, so I’m not quite dead. But equally, as Steve Jobs said, there’s no point being the richest man in the cemetery. It’s about recognising that there’s more to life than paid employment.
However, if as before someone called me and said ‘here’s something really interesting to do’, then I might consider it.”
Final thoughts on you time at the top?
“This has been one of the most difficult and challenging things that I have ever done in my life, but it’s also been fantastic. FE is amazing and it’s been a pleasure that people have been willing to share it with me.Finally, I think I’m pretty safe in saying that a lot of the things that we’ve talked about today, that I and others wanted to have happen, will happen.”
Will you still have an interest in FE?
Yes, that’s why you have to send me a copy of your rag every week, that’s the best way I’ll find out what’s going on, won’t I!