Colleges face cuts while academies cash in

With growing rumours that around 50 FE colleges are in financial difficulty, Lynne Sedgmore considers why the sector has been is so badly troubled while schools appear to be unaffected

Politicians of all parties regularly commit themselves to closing the academic-vocational divide or to raising the status of technical education to the level enjoyed by academic programmes.

They are no doubt sincere, but discrimination against the vocational route is so deeply ingrained that, without intending to they constantly act to reinforce it.

Two items of recent news illustrate the indirect discrimination that so often undermines our leaders’ fine aspirations.

The first piece of evidence is a rumour circulating in the sector that around 50 FE colleges are in serious financial difficulty.

If it were five colleges the responsibility would, in all probability, lie at the door of local management — for 50 colleges to experience serious problems at the same time, however, suggests a systemic problem.

College management has not suddenly deteriorated in dozens of colleges; something has gone wrong with the strategic leadership of the sector; leadership beyond colleges.

It is not difficult to find the major cause. Many colleges were encouraged by the Skills Funding Agency’s predecessor body, the Learning and Skills Council, to take on ambitious capital redevelopment programmes.

The very competitive environment set for the sector has been another spur to invest in improved buildings in order to maintain recruitment.

Since colleges have to finance a major part of their capital development themselves many have high borrowings and now face a ‘perfect storm’ as funding rates have been repeatedly cut for 16 to 19-year-olds in recent years and funding numbers slashed for adult provision.

It is the very students following the technical and vocational programmes that politicians say they want to promote who will bear the toughest consequences.

The second piece of evidence is that academy schools have been stashing away billions of pounds building up their financial reserves — £2.5bn that could have been spent on education according to the Guardian (Guardian online January 18).

School budgets are protected by a ring-fence which does not apply to those aged 16 and over and of course schools don’t have to contribute to capital development in the same way colleges do

Once again this is not a criticism of individual schools, but a system failure. For a local authority to hold a reserve in case one of its schools faces a catastrophe is prudent policy. For every single school to hold a reserve in case it is the one where the catastrophe happens is a gross waste of resources.

Such waste is of course only possible because of the more generous funding received for pupils under the age of 16 — some £5,600 for 15-year-olds compared to only £4,600 for 16 and 17-year-olds and £3,800 for those aged 18 according to the Association of Colleges.

School budgets are protected by a ring-fence which does not apply to those aged 16 and over and of course schools don’t have to contribute to capital development in the same way colleges do.

They also receive favourable VAT treatment denied to sixth form colleges for teaching exactly the same age group.

A common refrain from the political class is that the British public (though not they themselves of course) has a long standing cultural prejudice against the vocational route.

It could of course be that the public takes its cue from the politicians noting where they put their investment and which institutions they starve of resources as an indication of their true values.

Or it could be as simple as a canny preference for sending your children to a school that has cash in the bank rather than a college where the bailiffs are just around the corner.

If politicians and leaders of the skills and education system are genuinely serious about the importance of vocational education, we in FE want to see real evidence of sensible investment, within limited resources, for colleges.

Nothing can justify, other than ideology, billions of pounds effectively being stashed away from the students most in need.


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  1. I totally respect lynne but to place the blame on someone else is typical of the sector. Its like saying i cant afford to live because my salary has not gone up – well get off your backside and get a 2nd job

    All these capital developments were approved by independent boards, were predicated on growth or improved utilisation and neither has hapoened. Colleges could grow themselves out of the problem by converting lr provision into traineeships followed by apps but they dont bother

    Totally self inflicted – close them down

    • Mike Motley

      It is hard to understand how boards predicted growth when they knew the birth rate 16 years before their intake enrolled and utilisation in college is a nonsense and ignored by boards (and the SFA). I worked in three FE colleges who all carried out utilisation surveys each year (used to be an SFA requirement). These college boards (and the SFA) knew that all of their campuses were less than 30% utilised. This situation would not be allowed to continue in business.

  2. I would not put the argument in the terms Peter has used but I do agree with his essence of his argument – although I don’t agree with his stark solution.

    There needs to be fundamental and radical change in the nature, size, confiruration and core purpose of FE colleges and we need to work in partnership with the employers, the private sector, industrial sectors, LEPs and independent training provers to reform and recalibrate the entire post 16 system – as suggested in th paper on FE which forms part of the Husbands report in the Labour Party’s skills task force work

  3. Dan Shelley

    Think that Florida sun might have affected your reasoning Peter… colleges are not all the same and do flex funding to meet local and regional needs.

    Some have however been basing their capital requirements on the ‘never,never’ – a consistent growth in 16-18 numbers when demographics simply don’t match those expectations. That is obviously a management issue in those colleges, linked to a capital strategy under the building colleges for the future programme that encouraged large scale ‘vanity’ projects.

    I’m all for competition and freedoms but without the plant driven FE sector the country would be even more unable to meet the STEM requirements, hand in glove with employers of course.

    The sector needs to learn from more nimble ptoviders in other sectors but throwaway comments like your last are not overly helpful in the debate. Its like suggesting that post 16 education providers should not make profits?!… but I guess that’s a different debate?

  4. There seem to be quite a few issues and nuances here; bottom line (no financial surplus/deficit pun intended) it does seem like there is a growing volume of financially unstable FE Colleges and Independent Training Providers. There are quite a few contributing factors to this, some (I’d suggest) are legacy, some systemic and some due to poor decisions.

    There are a few things that providers could do, with a bit of time and not much financial investment:
    1. Classroom/space utilisation. The cost of space is incurred irrespective of its utilisation, to run any business on occupancy levels in their 20/30% has a heavy price on the financial health of any business. If space was planned and utilised with improved efficacy, how much floor space would be needed?
    2. Optimising the curriculum offer. How often do providers review their entire offer against demand from business and learners and cost of delivery?
    3. Structure learning around pathways to a destination, rather than solely on participation in a qualification. Yes Study Programmes have started to do this and connecting Traineeship through Apprenticeship makes sense, but these are not yet positively affecting the many. Learners would have a clearer purpose of their engagement with their provider, are likely to be retained for longer and institutions can start to manage their resources more strategically than they currently do with the ‘stop/start’ approach.

    As far as capital investment and capacity is concerned, surely the current landscape is going to compound the situation as we see growth in additional UTC’s, Colleges and Academies developing federation/governance structures and high volumes of Apprenticeships. Where the learner pool is finite, greater choice available to them will mean that some institutions will lose out.

    Funding parity continues to be fraught with issues, there do appear to be some monumental examples of generosity as far as some academies are concerned, however this is not the case for all and national ring fencing doesn’t necessarily translate into equal funding within each school itself.

    When times are tough, clear leadership, pragmatic tactics and financial prudence will help all providers weather the storm a little better.