Spectacular failures could be the cost for a more innovative FE sector, says Mick Fletcher. But is it a price worth paying?

Hadlow College is the first to experience the Department for Education’s new college bankruptcy regime, but we can be fairly certain that it won’t be the last.

After all, the government wouldn’t have bothered to develop the regime were it not convinced that others will find themselves in similar circumstances.

Nor is it an issue confined to FE; there is considerable speculation over which university is likely to be the first to fail financially, with unofficial lists of those most at risk circulating privately around the higher education sector.

Why has it come to this? Why in the world’s fifth largest economy are we contemplating the financial collapse of major public institutions for the first time? It simply cannot be an outbreak of incompetence among senior education managers, but a conscious political choice.

The systematic underfunding of the FE sector is only partly to blame. A “well run” institution in our present world can always shrink its offer to students to match its income.

It may call it “increasing efficiency”, but the truth is that it is only achieved by reducing choice and services, which is why part-time and adult learning have collapsed and full-time students receive a scandalously low number of taught hours.

The fact that some colleges will ‘crash and burn’ is seen as a price worth paying

Underfunding leaves less room for error or for too sentimental an approach to marginal provision – but ultimately most colleges will not go bankrupt, despite all being subject to the same funding regime.

The real reason for increased bankruptcy is simply that we have chosen to run our public services this way. The belief is that the spur of competition and the threat of bankruptcy serve to discipline public institutions and encourage them to innovate and focus relentlessly on efficiency and customer service. The fact that some colleges will “crash and burn” is seen as a price worth paying for a more dynamic and creative college sector. That’s how markets are said to work.

There is some truth to be found in this analysis. Colleges have certainly been innovative, although perhaps not to the extent that sector leaders like to claim. Constant assertions that colleges are “revising their business models” and “becoming more commercial” often feel more like ritual incantations than practical proposals.

Perhaps the most egregious example of this was the hype of the ill-fated Gazelle Group, which was founded in 2011 to promote enterprise in colleges only to collapse five years later in financial confusion.

Risky ventures such as investing in delivery overseas have been at least as common as genuine innovation, and in a few cases innovation has shaded into fraud.

Nevertheless most incorporated colleges have proved to be responsive and resilient institutions, investing creatively in new facilities, forming new alliances and in some cases, like Hadlow, going far beyond merely running classes.

Inevitably, and as Hadlow has shown, this freedom to innovate has led to some overreaching themselves and bankruptcy or bailout will be the choice. Ministers prefer the stern discipline of bankruptcy.

This works as a discipline in the private sector because it is a sanction on the owners; they lose control of their businesses and assets in favour of their creditors. There is no equivalent body of owners in the case of public services.

It is true that well-paid (and in some cases excessively well-paid) senior executives lose their jobs, but the real price is paid by communities that lose access to a public service when their local college closes. 

If a retail store such as BHS closes the shareholders lose, but we can shop elsewhere; if the only college in town closes, then it is the students that lose out. An underfunded FE sector may need to shrink, but the random consequences of managerial miscalculation are not a good basis for determining where.

Many of the recommendations in the long-awaited report from Philip Augar should be implemented now to protect the future of FE, says Sam Parrett

FE Week billed it the “biggest FE story of the decade” (May 23), but the news that Hadlow College had been put into administration is also one of the saddest the sector has seen for some time.

These have been dark times for further education recently, so the publication of the long-awaited report by Philip Augar could not have come along at a better moment.

The report is the first government-backed review into FE and higher education across all post-18 education. It shines a light on many important issues, making welcome recommendations for ministers to take forward to enable FE to thrive.

It’s clear that every college in the country is operating in tough financial conditions and it’s certainly not an easy time for any of us. Yet we all work hard to find ways round the challenges because we all know that FE matters, so the call for a re-balancing of spending between further and higher education should give us all reasons to cheer.

Augar’s recognition of the huge economic and social benefits that our sector delivers is also welcome. FE, after all, gives opportunities to people of all ages and from all walks of life to meet their learning and career goals. This in turn benefits social mobility and economic growth, so it’s encouraging to see Augar noting FE’s impact on wider society.

It’s also right that the government should not provide access to an unlimited pot of money to continuously bail out poorly run organisations. That said, the implications of an FE college being put into education administration are huge and go way behind the financial, as Hadlow painfully illustrates.

Hadlow has been part of many people’s lives: from farming open-days, to the setting up of a free school to meet local rural demand for primary places to “outdoor classrooms” in its extensive rural setting. Students and staff are spread across campuses in Kent and southeast London, so the insolvency decision will reverberate far and wide.

Take this huge resource away and a gaping hole in the landscape will appear. I am a local resident and the college matters to many in my community, including my neighbours and the families of my children’s friends.

The Augar report could not have come along at a better time

Hadlow needs to become a beacon of success once again for the local community; I have high hopes of such an outcome from the FE commissioner as the guardian of all that is good and is to be celebrated about the sector.

Sadly, there is a danger that the Hadlow debacle puts FE at risk of returning to a more shackled existence after a decade in which it has enjoyed a certain amount of freedom and flexibility. Could the era of increased independence for colleges be at an end?

One can only hope not because while mistakes have clearly been made, we know that FE matters and that, in most regards, it works. Don’t take my word for it; read the Augar report and its recommendations, which should be implemented swiftly and efficiently.

This includes conferring a protected title on colleges, providing FE with dedicated capital investment and an increase in core funding for 18-year-olds.

We must also hope for a more streamlined strategy to be developed across HE and FE, which will protect our sector in the longer term. Perhaps then, the true value of a college like Hadlow and many others like it, will be fully understood and preserved.

As we contemplate the future of the skills system, let’s think in terms of devolution and localisation, says Ewart Keep

The Skills Commission is currently engaged in an inquiry into the future of the skills system. How do recent policy developments, such as the expansion of the apprenticeship scheme, the devolution of the Adult Education Budget (AEB) and the imminent introduction of T-levels, join up on the ground so that we build a system that responds to local needs and national  priorities?

The theme is a topical one, since combined authorities and some local enterprise partnerships (LEPs) are contemplating how to move away from competition and a fragmented marketplace of delivery towards local systems of education and training (E&T) that encourage collaboration, and perhaps elements of specialisation. For example, the North East LEP has set up an FE Careers Hub shared across all the colleges in its region.

Let’s think in terms of devolution and cooperation

Some are also starting to go one stage further and experiment with the notion of a skills ecosystem. The idea is to link up different policy areas such as economic development, business improvement and support, and efforts to improve job quality and in-work career progression for low-waged workers in order to find solutions to long-standing employment and skills problems.  An example would be efforts to develop new progression pathways for low-paid workers and support these through new packages of training. So what stands in the way of these developments?

The first and most obvious barrier is the flow of public funding, which sees resources largely following individual student choice via various ESFA tendering processes or via employer choice in the apprenticeship marketplace. This set-up stokes competition between providers to obtain students, a process which it is assumed will drive improved performance but also creates fragmented markets. Some combined authorities which are commissioning the devolved AEB are experimenting with a more cooperative and unified systems-led approach –  perhaps supported via some kind of block grant funding to providers.

Moreover, in some localities, FE and other E&T providers have chosen to work together and organise collectively rather than compete. The UK Innovation Corridor’s Regional Skills Concordat, for example, sees a group of colleges around Peterborough and Cambridgeshire working across local authority and LEP boundaries to map skill needs and build shared programmes that can aggregate skill demand and supply across institutions. They are generally acting despite of, not because of, nationally established incentives. 

A second set of problems is caused by the government’s tendency to draw up place-blind, one-size-fits-all national programmes without involving localities or providers in the design. The lack of input on the ground means that too often national priorities disrupt local priorities and relationships, yet ministers expect these solutions to be adopted whether localities want or need them. 

Changing the nature of dialogue with central government departments is a major objective for some of the combined authorities, LEPs, colleges and their representatives. They want to see national policy capable of being tailored to meet local circumstances and to have a more equal relationship with Whitehall, replacing the existing master-servant model. Given the culture of Whitehall and the constant turnover in civil servants as they move posts, this challenge is likely to take time.

A final problem is time: national and local politicians work on very short time-scales and want quick wins. There is the risk, for example, that central government may attempt to judge the results of the devolution of the AEB too swiftly, with the danger that transitional arrangements are given too little time to bear fruit. This danger is all the greater given that the devolved AEB is a relatively small pot of money that has to be stretched across a wide range of competing demands.

Devolution and localisation really matter.  Outside of city states, such as Singapore, there are almost no successful national E&T systems that do not incorporate a greater degree of local accountability, innovation and control than England.  We need to learn to make localism work for everyone.