Policy

PAC – Managing College’s Financial Sustainability – Hitting the Nail on the Head!

Financial Health ESFA

Waking up this week to the latest cross party PAC report, titled: ‘Managing College’s Financial Sustainability’ I thought, here we go, another bland report that says little and doesn’t get to the heart of the issues. 

I am known to be highly critical and indeed controversial but I applaud the PAC for their concise report which gets to the heart of some of the key issues facing our valuable College sector. 

Colleges have a significant part to play, indeed they should be the hub in the wheel but the PAC does hit home some of the core issues that lead to financial weakness – and the answer isn’t always throwing more money at the problem!.

The final sentence of the summary is key ‘This committee has been raising concerns about the lack of strategy for over five years. A proper plan for further education is vital and overdue’

Add that to the fact that ‘government was intervening in nearly half of Colleges for financial health reasons at February 2020’the position is stark. I am sure the Government will argue the new White Paper provides such a plan – but there is not one mention of strengthening the sectors financial health. So how on earth will we get there?

The report has a theme of ‘lack of pace’ by the Department. That is certainly true. The ESFA need an injection of something to drive forward reforms, meet the deadlines they set which is expected of providers and have the strength of character to deal with the difficult issues with Colleges. Whilst I am not naïve enough to believe there are significant political considerations when dealing with College issues, there is far too much evidence – as clearly articulated in the report that the intervention regime is far too slow to be effective and in many occasions does not create any sustainable improvement at all. 

It’s not about money, there has been plenty of that thrown at the problem, it’s addressing the core of the problem and an administrator or turnaround specialist would not work at the pace of the Commissioner and his team. Furthermore, what makes the Commissioner qualified to turn around a large complex College. I feel sorry for the Governors and more particular Chairs who end up carrying the can – the Principal disappears with a pay off and pension and the Chair is exposed, naked with little or no support – Who would want the role?

The report talks about T Levels and the risk of lack of work placements. I recall talking to the advisor to the former SoS in Westminster when T Levels were being developed and his passion that work placements will be in their millions. I politely challenged his evidence to support that claim and he gave me evidence that ‘it works for Nursery Nursing, so it will work for every other occupation’. A debate ensued about why indeed it worked for Nursery Nursing and why there were so few Apprenticeships in this occupational area. 

We now have the overlay of Kick-start and drive for Apprenticeships and Traineeships – I will wait for the Departments response on how they will be able to guarantee the level of placements – hope it takes less than the two years it took to respond to Auger. 

Finally, and high on the list of the 7 recommendations is the comment about ‘the rising pension costs are putting significant pressure on colleges’. What a surprise that is to those of us in the private sector and indeed those of us who have previously worked in the Public Sector. It took me to the Commissioners annual reports – NOT one mention anywhere that one of the biggest strains on a College finances is the cost of pensions – WHY? – Because they simply don’t understand and after all the Commissioner and his team in the main are sitting on Million Pound Pension Pots. Staff costs as a percentage of revenue in some Colleges will soon be approaching the same levels of some football teams – and we know the financial issues in that sector. 

Every time a College recruits a new member of staff, there is a commitment to fund their pension for the next 40 years – do Governors really consider that strategically – NO – why because the CEO and colleagues are unlikely to present such a report for consideration. 

No-one is advocating stopping pensions for existing participants of Schemes but other areas of the Public Sector have addressed this issue – Why not the DFE? – Unless we deal with this, the financial health of the sector will continue to deteriorate and there will be less available to fund learning. The Government cannot continue to simply fund more and more deficits.

I applaud the PAC – I hope action is taken rapidly to address some of the core issues to support and enhance the valuable contribution Colleges do and will make to the revitalisation of our economy – and it’s not about simply throwing more money at it!

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