Colleges should be forced to surrender their powers to decide what courses they run to new, local FE directors, a report published today from a former adviser to education ministers has said.

Think tank EDSK’s director Tom Richmond has today launched ‘Further consideration: Creating a new role, purpose and direction for the FE sector’, which says new FE directors should arrange provision “in line with local social and economic needs, as well as eliminating duplication of courses and promoting specialisation among nearby colleges”.

Colleges would retain responsibility for their day-to-day running, but would have to hand FE directors, based in every local enterprise partnership or mayoral combined authority, final say on “important strategic decisions such as the courses and specialisms that each college offers”.

The directors would also decide how the adult education budget is distributed among their colleges.

Writing for FE Week, Richmond, who is a former senior adviser to previous skills ministers Nick Boles and Matt Hancock, said: “Ultimately, this is not about what is best for colleges – it’s about what is best for learners. With this prize in mind, the loss of some autonomy for individual colleges is a step in the right direction.”

EDSK’s report has been funded by the Further Education Trust for Leadership, and a trust spokesperson said: “We think the time has come for a fresh and open discussion about the state of the sector alongside the pros and cons of college autonomy.”

It comes ahead of the FE White Paper due for publication this autumn, with one option of giving the government greater control over colleges being considered.

Other recommendations in Richmond’s report include splitting colleges into separate institutions (community, sixth-form and technology colleges) focused on different qualification levels, increasing the base rate of funding for 16 to 19-year-olds to £5,000 by 2024/25, and giving learners a new “lifetime loan limit” of £75,000 to spend on education and training.

Colleges have chosen to focus on what is best for them rather than what is best for their learners

‘Further Consideration’ seeks to build on findings and recommendations made in last year’s post-18 education Augar Review, which found examples of both over-capacity and a lack of specialism in colleges.

The review recommended the government use capital funding to create partnerships, group structures and specialisation to deliver a “national network of colleges”.

EDSK’s new report’s recommendations were drawn up after interviews with 21 academics, policy experts and stakeholders, including Hartlepool College principal Darren Hankey, HOLEX policy director Sue Pember, and Bedford College chief executive Ian Pryce.

It found that “excessive competition” among colleges has done “more harm than good”.

“Often in response to financial pressures, colleges have chosen to focus on what is best for them rather than what is best for their learners, employers and their local area,” Richmond says.

“This has resulted in duplicated courses, a lack of specialisation among colleges and unnecessary confusion for learners and employers – all of which make the sector less financially secure.”

Colleges have previously come in for high-profile criticism for how the courses they provide do not tally with their areas’ economic needs or students’ job prospects.

Earlier this year Ofsted chief inspector Amanda Spielman called out a number of colleges for “flooding a local job market with young people with low-level arts and media qualifications,” while there is a large demand for skills in areas such as green energy.

And last week, skills minister Gillian Keegan and Association of Colleges chief executive David Hughes both said colleges ought to be judged, and funded according to Hughes, on the outcomes for their learners, rather than their enrolment.

FE Week asked the AoC whether they supported the idea of final course decisions being taken by an FE director, which would result in the “loss of some autonomy for individual colleges” as Richmond says, but they dodged the question.

Instead, AoC deputy chief executive Julian Gravatt said it “isn’t that colleges should lose their autonomy to decide what courses they should run, but rather have a collective responsibility and autonomy to agree a coherent strategy across the local system”.

“This sort of collective approach allows for much more strategic interventions – which if we get right should see colleges feel empowered and able to act more freely together than they do currently alone,” he added.

One key option being considered by the government in its upcoming FE White Paper is taking back greater control over colleges, and in February it handed £2.7 million to 36 skills advisory panels to identify and tackle local skills gaps.

This intelligence, the EDSK says, will be useful for FE directors as they arrange provision to meet the needs of small and large employers.

A Department for Education spokesperson said EDSK’s report “outlines a range of interesting recommendations to achieve our aims”, and their White Paper will detail plans to “build a high-quality further education system”.

A union has threatened to “name and shame” colleges that are “not doing enough” to keep staff and students safe from Covid-19.

The University and College Union has today launched a new system to allow its members to directly relay their fears about institutions’ “failings”.

The union said the action was prompted after it was revealed that the Department for Education does not hold information on the number of confirmed cases of coronavirus in schools.

While a “lack of clear guidance” from the government had not helped matters, UCU insisted that colleges could not “hide behind the failings of ministers” and had to “demonstrate their commitment to keeping people safe”.

The union cited data released by Downing Street last week which showed the infection rate among 17 to 21 year olds – the main age group found in colleges – is at 50 in 100,000 and increasing sharply.

UCU members will now be encouraged to complete questionnaires about their college’s plans if someone is taken ill on campus or how a college would shut down in the event of an outbreak.

The union will also seek greater information about testing systems in place and will also demand to know what support there will be for staff and students who need to self-isolate.

Earlier this week, ministers were warned that a lack of testing could force schools in England to grind to a halt because students and staff would have to stay at home following a suspected case.

UCU general secretary Jo Grady said: “The evidence suggests that colleges and universities will be hit with further Covid outbreaks and any institution not preparing for how it deals with one is in denial and failing staff, students and the wider community.

“We have already seen warnings that schools could be brought to a halt due to a lack of testing. We want to know what plans colleges and universities have for testing, details of their risk assessments and how they will protect people in the event of an outbreak.

“We accept that guidance from the government has not been up to scratch, but colleges and universities cannot hide behind the failings of ministers. They must step up and do the right things to protect their communities.

“We will be monitoring what comes in from members and will name and shame institutions that are not up to scratch. Our main objective is to help avert a preventable public health crisis. But if our members are concerned with how their college or university is behaving we will back them if they vote to move into dispute, which could result in ballots for industrial action.”

The eye-watering £26.6 million cost of the first two education insolvencies, and how five colleges were bailed out by the government to avoid the same fate, has been revealed by a new report. 

The National Audit Office today published a report into ‘Financial sustainability of colleges in England’, which revealed colleges in or close to being in education administration have cost taxpayers over £40 million in total. 

Since Hadlow College and West Kent and Ashford College (WKAC) became the first to be placed into education administration, in mid-2019, the government has spent £26.6 million on keeping the doors open and “facilitating a long term solution”.

The government does expect to receive some money from the sale of assets which are no longer required for educational provision, however. 

The figure includes £18.1 million spent on financial support related to secured creditors and £2.3 million in payments to administrators BDO. 

FE Week reported in May BDO had come under increasing pressure from the Education and Skills Funding Agency to keep their costs down, as they had been running the colleges for far longer than had originally been planned. 

The NAO has also reported the Education and Skills Funding Agency (ESFA) has provided £14.4 million in emergency funding to five other colleges in “serious financial difficulty”, which the agency wanted to keep out of the insolvency regime. 

The agency, the report reads, has recognised that the cost and effort of handling colleges in education administration means “it may need to limit the number of colleges in the insolvency regime at any one time,” depending on each case. 

The Department for Education said protecting students is “the over-riding priority for colleges that have entered education administration,” and the “most significant costs” from the two insolvency cases were related to “supporting the operation of the colleges while they were in administration and in facilitating a long-term solution by enabling the transfer of the provision to other local providers”.

The department declined to name the five colleges on the grounds of commercial confidentiality.

It is expected the department’s upcoming FE White Paper will include changes to legislation to enable the government to take ownership of failing colleges rather than force them into insolvency. 

Hadlow and WKAC became the first FE colleges to become insolvent after, as revealed by FE Commissioner Richard Atkins, it fell into an “extremely serious financial situation”. 

Both colleges’ boards, Atkins reported, failed in their fiduciary duty and put “the sustainability of both colleges and learners at risk”, having only found out about the financial situation at the college shortly before Atkins arrived to intervene in the colleges, despite the situation being so dire the college had to ask the ESFA for exceptional financial support. 

The commissioner also found the colleges’ principal and deputy principal, Paul Hannan and Lumsdon-Taylor, had cut the boards out of decision-making, and Hadlow College’s financial health score was only ‘good’ because it did not take information about loans into account.  

Hannan and Lumsdon-Taylor, as well as a swathe of governors at both colleges, resigned after the college was placed into intervention. 

Hadlow and WKAC’s provision has now been split between three neighbouring colleges, with North Kent College, Capel Manor College and EKC Group each taking a slice. 

Betteshanger Park, a country and business park owned by Hadlow College, was also sold off for an undisclosed sum last December. 

The National Audit Office report also revealed how the government is intervening in nearly half of all open colleges, and had spent nearly three-quarters of a billion pounds on bailing out and restructuring colleges.

Nearly three-quarters of a billion pounds in public funds has been spent on bailing out and restructuring colleges, while the government is intervening in nearly half of them, a new report has revealed. 

The National Audit Office has today released its ‘Financial sustainability of colleges in England’ report, which details how the Department for Education has spent “significant amounts” on keeping colleges open, while core funding for the sector has fallen. 

As of February 2020, the government was intervening in 48 per cent of all open colleges – with more than a tenth being in formal intervention. 

FE Week has also calculated that £725.8 million has been spent on bailouts and restructuring funding, based on NAO figures – with £431 million alone being provided to 45 colleges for mergers and other structural changes. 

The chair of the influential Commons Public Accounts Committee, Meg Hillier, said the report “paints a stark picture of the college sector’s plight”. 

“The government has propped up some colleges at great expense, but this has only papered over the cracks in the system,” she continued. 

The Department for Education has promised its “forthcoming White Paper will strengthen our colleges” but refused to reveal how.  

As first reported by FE Week in May, it is believed changes to legislation will enable the government to take ownership of failing colleges rather than force them into insolvency. 

The government also spent £253 million on 36 colleges which had “serious cashflow options” under the Education and Skills Funding Agency’s ‘exceptional financial support’ scheme.  

However, the NAO has now found the ESFA has given up on getting back almost half – £99.9 million – of the funding, which was originally meant to be repayable. The scheme was discontinued in March 2019. 

Colleges in, or near to being in, education administration swallowed £41.8 million of ESFA emergency funds, the NAO reports, with £26.6 million being spent on the insolvency of Hadlow College and West Kent and Ashford College, both of which were placed in administration in mid-2019. 

The report did say the DfE’s area review programme had “likely to have helped limit the financial deterioration of the sector”, citing DfE projections that a fifth of colleges would have inadequate financial health in 2020 without the reviews, as opposed to 11 per cent of colleges that are in that category. 

But while the DfE has been financially propping up colleges that would otherwise have been forced into education administration, funding for students has tumbled down. 

We recognise the issues facing colleges and other providers

Funding for 16 to 19-year-old students fell by seven per cent in real terms between 2013/14 and 2018/19, with the funding rate for 18-year-olds being directly cut in 2014/15 from £4,000 to £3,300. 

Adult education and support services (excluding apprenticeships) fell by 35 per cent between 2013/14 and 2018/19, says the NAO.

The NAO has recommended the government evaluate and improve the effectiveness of its intervention regime, which was also criticised by Dame Mary Ney’s 2019 report into government oversight of colleges. 

The government has also been urged to “learn lessons” from the two college insolvencies, and evaluate the cost, timeliness and impact of the education administration process. 

A DfE spokesperson highlighted how the report notes standards in the FE sector are high, with 82 per cent of colleges being ‘good’ or ‘outstanding’ in 2019, “but we recognise the issues facing colleges and other providers”. 

They pointed to the £400 million funding boost for 16-19 students which came into effect this academic year and actions taken to stabilise the sector during COVID-19, such as guaranteeing grant payments, providing extra investment through the 16-19 bursary fund. 

For the first time Ofsted is exploring a move to directly inspect all FE subcontractors, something until now it has ruled out.

Subcontracting in FE is big business, with 2,221 subcontracting arrangements at 856 subcontractors accounting for “around 14 per cent of the spending on apprenticeships and adult education” in 2018/19, according to Ofsted.

The inspectorate told FE Week that the Education and Skills Funding Agency has responded positively to resolving issues with the data they supply and discussions will now take place with the Department for Education to consider this major change.

The news comes alongside the publication of Ofsted research into FE subcontracting, which began in November last year.

Researchers found their own inspectors were being hampered by a lack of “access to timely and accurate data on the number and size of subcontracting arrangements held by a directly-funded provider”.

And “the current approach to inspection means that some subcontractors are visited more than once [as part of an inspection of a direct contract holder], while others are not visited at all.”

Ofsted is only funded to inspect the direct ESFA contract holder and will sometimes consider the quality of their subcontracted provision but even then, only if they have access to reliable data from the ESFA.

An Ofsted spokesperson told FE Week: “One of the best things to come out of the research report is the dialogue that researchers have had with the ESFA colleagues and the acknowledgement and understanding of how the data issues hamper inspection and the agreement to do whatever they can to improve and enhance the data.”

And the DfE told FE Week: “Better quality subcontracting data will provide a great range of benefits to the FE sector so we welcome Ofsted’s report. We are improving the data that we have about subcontracting and as part of our reforms, the ESFA will develop improved tools for collecting better and more timely data.

“We will continue to work with Ofsted about what data we can share with them to assist them in their work.”

This positive response from the DfE and ESFA appears to open the door to a major change to the inspection regime.

Amanda Spielman, the chief inspector said: “We are open to exploring how we could directly inspect subcontractors in the future, but that would need significantly more financial resource and better data.”

In the meantime, Ofsted has today also committed to:

• increasing awareness among inspectors of Ofsted’s available inspection resource, in order to investigate more subcontractors 
• changing the way evidence is recorded to systematically and consistently include information about all subcontractors visited
• where appropriate, highlighting more subcontractors in inspection reports.

The research does not appear to include any analysis of 16 to 18-year-old study programme subcontracting and invited 25 apprenticeship and adult education budget funded subcontractors to participate in interviews but only proceeded with the 14 that agreed to participate.

And the researchers do not pass judgement on the overall quality of subcontracted delivery compared to provision directly delivered.

A spokesperson for Ofsted told FE Week: “We found elements of good and poor practice, but what the report is not doing is giving a state of the nation report on subcontracting quality.”

The government has for many years been concerned about the lack of oversight, risk to public funds and the value for money of subcontracting.

Subcontractors typically pay the direct contract holder a significant management fee for the privilege of access to public funds and without direct inspection little is publicly known about the quality of what they deliver on the reduced funds.

There have also been high profile cases of colleges being caught up in multi-million pound subcontracting scandals.

In February 2018 the founders and owners of Luis Michael Training were sentenced to a total of over 25 years in prison for defrauding colleges out of £5 million in apprenticeship funding.

And in November 2018, FE Week revealed Brooklands College had paid close to £17 million to a mysterious subcontractor.

The principal subsequently resigned and an investigation into the relationship with SCL Security Ltd resulted in the ESFA demanding the college return millions of pounds.

FE subcontracting has been on the decline in recent year following a series of funding rule changes and in recent months the ESFA has been consulting with the sector to introduce further policies to shrink its use further.