Former hairdressing apprentice Jodie Whitemore (pictured right) is running her own salon at the age of 20 while completing a foundation degree at West Nottinghamshire College.

Just four years ago, she started her NVQ with no school-leaver qualifications and looked destined to add to the growing bank of NEET statistics. But Asha Khemka, her college principal, had other ideas with the creation of the Ashfield Centre aimed at capturing the likes of Jodie.

Nineteen-year-old Joseph Johnson (also pictured) is a similar entrepreneurial success story. While studying professional cookery at the college, he helped create the Forest Ferret company, producing and selling jams and preserves.

When Khemka launched the Ashfield Centre, she discovered that public funding would never meet the centre’s needs and so founded the Inspire and Achieve Foundation — a charity separate from the college — to fund it.

Based in former South Yorkshire coal-mining communities with severe cycles of inter-generational deprivation, the college had to act, she says.

In September, Khemka launches Vision Entrepreneur — a programme designed to support the job-creators of tomorrow — where enterprising students from the college and local sixth-forms will learn what it takes to succeed in business while hearing from inspirational guest speakers.

Similar initiatives can be seen springing up elsewhere, and not just for NEETs.

Among them is the Gazelle Group of 20 colleges, launched in April 2011, which its chief executive, Fintan Donohue, describes as “subversive” in intent.

“The group promotes the idea of entrepreneurial colleges as a disruptive influence for positive change in the purpose of colleges and the nature of their offer,” he says.

Technological change is rapidly replacing colleges and classrooms as the route to knowledge and skill”

Colleges have been striving for a more enterprising approach ever since incorporation — reaching out to the community, creating arms-length college companies which reinvest profits in learning, and franchising courses to reach people in the workplace, but they too often came to grief for overstepping the mark or being accused of using public funds for private training. But, more recently, it has been seen as quite respectable for colleges have come to the rescue of collapsed or failed enterprises, such as the Newcastle College Group takeover of Carter & Carter and Khemka’s own college appropriation of training company Pearson in Practice.

Several factors are forcing a change of attitude and approach, says Donohue.

“Traditional colleges and qualifications no longer provide the career opportunities they once did,” he explains.

“Young people are more open to the sort of entrepreneurship already established in countries like India and Africa. Technological change is rapidly replacing colleges and classrooms as the route to knowledge and skill. And the recent European Commission report makes entrepreneurial education its number one priority.”

This constitutes a far more generalised rather than utilitarian view of students being enterprising and entrepreneurial, he says.

“We need people who are ‘enterprising’ in all the dimensions of their life, not just about their career paths and financial investments,” explains Donohue.

For Sally Dicketts, principal of Oxford & Cherwell Valley College (a Gazelle member) the way to bring the best of the past and present together is through the creation of a learning company, where students are employed in real commercial operations as a significant part of their college experience. From September, business students will work in administration and marketing, media students will make films for local businesses, motor vehicle students will provide MOTs to paying customers and art students will develop community art projects.

A tutor-led and assessed programme taking 30 hours a week will combining work experience and individual study.

“At the end of their programme they can choose to work permanently in the learning company or with our own employment agency to gain employment or progress into higher education,” she says.

Successful changes to how FE institutions are governed in New Zealand should prompt scrutiny of governance in British institutions, says Janice Shiner

New Challenges, New Chances completes what was started in 1993, when colleges were taken out of local education authority control and given a degree of independence. The sector is now in a very different place, with colleges having almost all the freedoms and flexibilities they need to determine their own destiny.

It feels much more like my New Zealand experience where equivalent organisations were run by chief executives with an eye on the next opportunity and their position in the local and global education market. They had for some time worked in a fees and loans regime for much of adult provision, but with the freedom to develop new programmes and take them to market.

There are no awarding bodies in New Zealand: polytechnics (college equivalents) can award their own qualifications, including degrees. Nobody questions whether a degree from, say, the Bay of Plenty Polytechnic [an institution in a small city] is credible.

It is clear the freedom created the space for innovation. It carried risks, of course, and needed a fast, high-quality response to failure — by the institution and, if not successful, by the Tertiary Education Commission [the body responsible for funding tertiary education in New Zealand].

There are no awarding bodies in New Zealand

An appointed commissioner provided a communication link between the funder and the polytechnic’s board, and made independent recommendations to the government on the best way forward.

But it is perhaps two other changes that have made the biggest difference in recent times, first, the introduction of an investment plan where institutions agree in advance what they will deliver in return for government funds (at a reasonable level of detail and in response to robust analysis of local need confirmed by stakeholders) and second, changes to governance.

Each polytechnic governing body has up to eight members. The chair and three others are appointed by the government and four by the community. There are no staff or student members (institutions are expected to put in place ways of consulting with key stakeholders). Early evaluation confirms the benefits, not least greater strategic understanding of the issues facing the polytechnic and more robust monitoring, including greater performance management of the chief executive.

For me, governance in English colleges is the one area that has not been subject to the sort of scrutiny and challenge that is needed in the new environment. Perhaps some governing bodies are too big, too fragmented, too focused on the wrong things. In the colleges that are getting into trouble, either through financial mismanagement or poor quality, governing bodies cannot possibly be asking the right questions and robustly monitoring the outcomes of actions taken. A commission on governance is long overdue.

Incorporation has been a long, slow and sometimes frustrating journey and, at times, has felt like two steps forward and one step back. But if incorporation in 1993 was a big step change for the sector, then the challenge this time feels bigger. We have a sector that is mature and ready to take it on.

Janice Shiner, former principal Leicester College and director general of lifelong learning at the DfES, spent three years in New Zealand as chief executive of the Tertiary Education Commission

Incorporation may have been a challenge too far for many, but it has left colleges free to meet the needs of their local areas, says Matthew Hancock

I must admit that Incorporation was an event that rather passed me by in 1993 — I was rather more occupied preparing to take GCSEs. It was, nevertheless, an event that profoundly influenced my life because I went on to take an A-level at the newly-incorporated West Cheshire College and, in due course, to take on my current role as minister.

At the time, many people in the sector and in Parliament saw the 1992 Further and Higher Education Act as an intensely ideological, centralising measure, as it took colleges and polytechnics — and the money that went with them — out of local education authority (LEA) control and made principals accountable.

So, too, the remit of the new Further Education Funding Council that made clear that colleges’ main purpose was to provide courses leading to a list of vocational qualifications specified by the Secretary of State.

Many feared this would be the death knell for both the study of humanities in FE and informal adult education.

Yet the incorporation of colleges as free-standing legal entities has led to professionalisation of their leadership.

For a very few colleges, Incorporation was a challenge too far, leading to risky business plans, failed enterprises and poor financial control.

With freedom comes greater need for colleges to demonstrate they are working in the best interests of their learners”

The knee-jerk reaction of the last government to this handful of cases was to introduce new controls across the board on governance and funding, to tie leaders up in knots, to restrict both their freedom to act and the incentives that come from being held robustly to account.

Our changes since 2010 have freed colleges from this mass of restrictions so that they can once again take charge of their own destinies.

Free colleges are able to develop a wider and healthier relationship with local partners — including communities, local enterprise partnerships and, crucially, directly with employers — than they had in the days of LEA control. They can develop to meet the needs of their local areas.

With freedom comes greater need for colleges to demonstrate they are working in the best interests of their learners, employers and broader communities.

Accountability matters, so more data on student outcomes is necessary. And strengthened governance matters too, to hold principals’ feet to the fire on behalf of students.

The government’s efforts to secure greater transparency and accountability continue, but to an increasing extent with colleges as willing partners.

That is the best way to preserve colleges’ freedom — and to help ensure everyone in the UK is given the chance to reach their potential.

Skills Minister Matthew Hancock

Incorporation in 1993 gave colleges the welcome ability to respond quickly and flexibly to changing circumstances.

Colleges became legally free to adjust their staffing, to reshape delivery methods and remodel their estates as needed, without unnecessary restraint from local bureaucracy.

By itself however, this operational autonomy would have been insufficient to guarantee responsiveness to the demands of students.

The single most important step in ensuring such a focus was the introduction of a standard national funding system that reflected student numbers and necessary differences in the cost of provision.

In effect, the funding system introduced by the Further Education Funding Council and carried on by the Learning and Skills Council, created the level playing field necessary for the operation of a free and open market.

It contained incentives for efficiency, but in general did not seek to distort the market in one direction or another, reflecting variations in the cost of teaching different subjects, working in different areas and supporting different types of students.

It is important to keep this simple point in mind because over the past 20 years there has been a constant temptation to use the funding system in a more manipulative way, usually with damaging results.

What is needed going forward is more such fine-tuning and less wholesale redesign”

The competition between institutions introduced by a demand-led funding model has been generally healthy — it has encouraged innovation and helped high quality provision to expand.

However, perverse outcomes are certain to follow where funding levers are pulled too hard and too sharply, or there are crude attempts to steer provision according to prevailing political fashion, as was the case in the franchising debacle of the mid-1990s, in programmes that simply assessed existing competence under Train to Gain or in the recruitment of longstanding employees to adult apprenticeships.

It is good that in their recent reports both Professor Alison Wolf and Sir Michael Wilshaw spoke out about the dangers posed by ill-thought financial incentives.

As well as supporting a well-functioning market, the FE funding model has had other successes.

The convergence process removed unjustified differences between those institutions that had always been generously funded and those that had been starved of cash.

Interestingly, it has taken nearly 20 years more for similar unjustified differences between college and sixth-form funding to be properly addressed.

FE funding incorporated the disadvantage uplift over a decade before politicians started to talk about a pupil premium in schools, and the mechanism for additional learning support (ALS) was key to driving up the extent and quality of provision for learners with learning difficulties or disabilities.

The sector has learned from the weaknesses of both models.

The lack of evidence on how the disadvantage uplift was spent makes it hard to assess its impact, while the excessive requirements for accountability around ALS led ultimately to wholesale gaming. The new arrangements seek to strike a better balance.

What is needed going forward is more such fine-tuning and less wholesale redesign.

Every three or four years government seeks to introduce fundamental reform, always described as simplification and usually also as making the system more responsive — and on most occasions neither description has been true.

Currently, two different departments are developing increasingly divergent models for young people and adults — a move that will certainly complicate planning and increase overheads — and at the same time there are suggestions that funding for adult skills should go directly to employers, while others argue that it should go into a single funding pot administered by local enterprise partnerships.

Now is a good time to remember the very real benefits brought about by a single national funding methodology and the damage done to learners when we have got it wrong.

Lynne Sedgmore is executive director of the 157 Group

Julian Gravatt remembers the first week of Incorporation. The reforms may be a distant memory, but they still pack a punch to this day

For someone like me, who joined a college in 1992 to help it with self-government, Incorporation was a big deal. All the staff at Lewisham College had a letter to tell them they had a new employer.

Ruth Silver, then principal, held an event for local stakeholders to persuade them the college was on the turn.

Meanwhile, in the finance office, we switched off the council’s computer system.

The college started life with no cash, but a week later a cheque for £1.8m arrived in an envelope from the Further Education Funding Council.

If it hadn’t come, we’d have had to delay the payroll beyond Easter . . . but all’s well that ends well.

Within a year or so, we had survived the bankruptcy of our training and enterprise council, secured an excellent inspection grade and were negotiating a £10m loan to fund a new building.

Twenty years on, Incorporation is a distant memory, but the reforms it brought still have an impact.

Incorporation was a collective experience for colleges that introduced a degree of standardisation to a diverse sector.

If [the cheque] hadn’t come, we’d have had to delay the payroll beyond Easter”

A small and ambitious funding council introduced far-reaching changes that are still with us today: national prices and rules, an emphasis on qualifications, a comprehensive data collection and a process for merging institutions.

In the years that followed, standardisation has allowed other sector organisations to operate and has given the English college sector a strength it might otherwise lack.

Incorporation gave colleges their freedom, but funding realities forced them to make quick changes. After years of relative neglect, they found themselves in a relentless annual cycle of policy and budget reform. Although it is easy to count the costs and the losses, the sector has become more flexible and able to manage change.

Colleges have successfully tackled adult basic skills, worked with employers on apprenticeships and helped millions of young people move from school to work.

One rarely noticed the legacy of Incorporation was charitable status for colleges. The Major government boldly privatised the railways, but when it came to further education it made a large gift to charity.

The 1993 settlement ensured colleges remained non-profit making and gave their governing bodies long-term duties. Competition has forced them to be business-like but they avoided the follies of the UK’s millennial debt binge and retained a local presence in places poorly served by private companies.

The past five years in the UK have been so extraordinary it’s impossible to predict the next 20. If you work in a college, you face a tough present and an uncertain future. But I am confident the progress and experience of the recent past mean that we’re as well-placed as anyone for the next steps.

Julian Gravatt, assistant chief executive Association of Colleges