College governors should consider merger only as a last resort, says Matthew Hancock. He explains why

There have been far-reaching changes in the 20 years since colleges in England were incorporated. Since 2010 we have striven to create a more diverse sector that is open and transparent to its users, and that delivers higher standards of provision and choice to learners, employers and their local communities.

As a result, governing bodies are more directly accountable to their communities than at any other time. This fact should be the main driver for any changes to their delivery model.

The unprecedented freedom that the current government has given colleges has set a direction for the sector from which there can be no turning back. As part of their strategic thinking, colleges can consider changes to their business models at any time.

It is important that they are open and transparent whenever they do so, recognising that openness offers all sorts of new types of partnership opportunities that could benefit learners and employers. The recent case of K College, where a prospectus has been published, shows how an open and competitive approach can lead to significant interest from those that might not have been considered otherwise.

The starting point for change therefore should be an assessment of need and consideration of the full range of models that might best meet that need.

Merger, one of the most extreme options, has too often been the knee-jerk reaction.

The thinking behind such decisions is quite easy to understand; for example, where a weaker college has merged with a stronger one or a small college has joined a larger competitor. The same process happens in business all the time, on the assumption that larger organisations are more resilient than smaller ones, as well as better able to realise economies of scale. But in the case of colleges, the evidence that larger institutions are more efficient or of higher quality is, at best, equivocal.

The starting point for change should be an assessment of need and consideration of
the full range of models that might best meet that need”

What is undoubted is that the result of one college serving an area previously served by two often reduces learner choice and the challenge that flows from competition.

When I wrote to chairs of governors in February I made clear that merger should be an option of last resort.

Indeed, before embarking on structural change, colleges must undertake a structure and prospects appraisal to ensure that the needs of learners, employers and the community are considered, as are all the options for meeting them in new ways.

Where change is contemplated, it is not unreasonable to expect colleges to consult early to hear views of stakeholders and customers, including bodies such as local authorities and local enterprise partnerships.

If a particular partnership model is clearly the preferred alternative, it follows that any actions to find a new partner should be undertaken openly and competitively, allowing the best option to be identified. It is not acceptable for colleges only to think of merger.

The new freedoms and flexibilities open exciting options to colleges, allowing innovative solutions to local needs. The range of opportunities for colleges have become wider and wider in recent years.  For example, many colleges are now providing higher education, sponsoring university technical colleges and academies, or considering enrolling students from the age of 14.

As part of encouraging greater diversity and innovation, the government is always keen to explore how new entrants might enter markets. The Department for Business, Innovation and Skills is currently looking at whether there is a case for encouraging different types of provider to secure incorporated status in FE.

Matthew Hancock, Skills Minister

Want to read more? Chris Henwood looks at the broader picture on college mergers here