We should name, but not shame, the colleges that are getting bailouts

15 Nov 2020, 5:00

The sector is shooting itself in the foot if we don’t argue that colleges getting financial help should be transparently listed, writes Stuart Rimmer

Should the names of colleges getting bailouts be made public? Well, the simple answer to that simple question is – yes! Of course they should.

Towards the end of last month, details of the revised college oversight policy were amended. We were told colleges that apply for government bailouts will now not automatically fall into formal intervention, although it is unclear why. 

That, of course, means their names won’t be published online. Here’s why that’s a bad idea… 

1.   Values 

This is the most compelling reason to publish college names. Simply put, public funds should be a matter of public record. Earlier in the year FE Week calculated that £725.8 million has been spent on bailouts and restructuring funding, based on National Audit Office figures. This is not just loose change down the back of the sofa. We cannot just ignore it because it may cause embarrassment.

2.   Funding 

The size of bailouts is not always reflective of poor management, as some would try to make us believe. Actually, it often points to chronic underfunding of our sector.

Colleges under intervention rose by two-thirds in 2018-19. Meg Hillier, chair of the influential commons public accounts committee, recently said this situation “paints a stark picture of the college sector’s plight”.  

The scale of intervention and bailouts needs to be known in order to form part of the evidence base for colleges to argue for greater funding. 

3.   Institutional equity

At East Coast College I led one of the first deals in 2017, through the ESFA’s fledgling Transaction Unit, latterly the Provider Market Oversight (PMO), which leads on college financial health in high-risk and complex cases. While I’m not allowed under disclosure to talk directly about it, I can say that we got a weak deal in comparison to many “fresh start” colleges that followed, as the system became more sophisticated, knowledgeable and generous.  

If deals for bailout funding are now permitted behind closed doors – with colleges and agencies hiding behind the nonsense “commercial sensitivity” argument – then the system is not transparent about whether it is treating everyone who passes through it fairly. More importantly, the situation leaves the power dynamic resting unhelpfully with the centre. 

4.   Institutions, not individuals 

One of the big problems with the dialogue around bailout is that individuals often get stigmatised. This must stop. We need to shift the narrative towards “how can we help a college in need?”. As of February 2020, the government was intervening in 48 per cent of all open colleges – with more than one-tenth in formal intervention. This is clearly not an individual personality issue. 

5.   Flattered accounts

Bailouts flatter financial performance reporting. It is a huge injection of cash that can reduce debt gearing, increase cash holding and improve performance ratios, such as earnings before interest, tax, depreciation and amortisation (EBITDA). Not being transparent about them can stifle the public’s understanding of how a college is really performing. 

6.   Details, details, details

More contentiously, I think that not only should the bailout figure be made public but also how it is spent. Currently this relies on freedom of information requests and journalistic wrangling.  

We should know: is the bailout used to reduce debt and create long-term sustainability and drive rapid improvement of student experience? Or is it spent to excess on consultant fees servicing the various machineries of intervention?

The vast majority of colleges spend bailouts wisely. Good consultants no doubt can add huge value, but the rise of ameliorating banks and reporting back to the centre means too many pound notes flutter away from the sector. We should at least start to be honest about this.   

Less backstairs intrigue should make the jobs of the ESFA, Project Management Office and FE Commissioner office easier too.  So win, win, win, win. 

Your thoughts

Leave a Reply

Your email address will not be published. Required fields are marked *

One comment

  1. They should absolutely be named and shamed. There are huge amounts of tax payers money being thrown at failing providers. They deserve to know who is spending it and on what. Leadership and governance is generally poor across FE but in some colleges it is dire. Bailouts should only be provided where leadership and governance are outstanding and where every penny can be accounted for and measured in terms of the impact on students. Anything else is a waste as it will simply be mis-managed along with the original allocation.