THE MANAGEMENT OF GROWTH IN THE ENGLISH
FURTHER EDUCATION SECTOR
INTRODUCTION
AND
SUMMARY
OF
CONCLUSIONS
AND
RECOMMENDATIONS
1. The colleges that comprise the further education
sector in England provide a wide range of education and training
programmes to over four million students from school leaving age
upwards. The colleges were removed from local education authority
control from 1 April 1993 and established as independent corporate
bodies, free to attract students from different and wider catchment
areas, in competition with schools, other colleges and private
training providers. There are currently 443 colleges with a total
annual income of around £4 billion, three quarters of which
is provided by the Further Education Funding Council for England
. The Funding Council administer the grant from the Department
for Education and Employment (the Department) for further education.[1]
2. The Department's role is to set the policy framework
for the further education sector, issue grants to the Funding
Council and monitor their performance. The Funding Council's role
is to distribute funds to colleges in accordance with the policy
framework and monitor the value for money provided by the sector.
The responsibilities of the Chief Executive of the Funding Council
include satisfying himself that colleges have appropriate arrangements
for financial management and accounting.[2]
The governing body of each college is responsible for determining
the educational character and mission of the college and for oversight
of its activities. Since incorporation, a significant element
of the strategies of many colleges has been to grow. This reflects
their response to the incentives for growth contained in the funding
methodology introduced by the Funding Council from academic year
1994-95.[3]
3. On the basis of a report by the Comptroller and
Auditor General,[4] the
Committee examined the management and funding of growth in the
further education sector, and the financial health of the sector.
We also looked at patterns of growth by programme area, and colleges'
progress towards improving levels of student retention and achievement.
4. In 1992 the Department set four main objectives
for the further education sector: to increase growth in student
numbers and participation; improve levels of student retention;
raise levels of student achievement; and improve efficiency. Overall
the sector has responded well in terms of increasing the numbers
of students and securing efficiency improvements, but more needs
to be done to raise the levels of student retention and achievement.
Four main points emerge from our examination:
There is a need for a clearer
strategy for the management of growth in further education with
more systematic arrangements for forecasting and monitoring the
growth in student numbers, for targeting alternative sources of
funds from outside the public sector, and for promoting greater
collaboration within the further education sector.
The Funding Council assess
around one-fifth of colleges as being in poor financial health
and in many cases this can be attributed to weak management at
local level. Colleges and the Funding Council must between them
promote higher standards of administration.
- Patterns of growth in further education
The Funding Council should
review the responsiveness of colleges to the needs of local employers,
and take steps to ensure that colleges address these. In particular,
the Council should review the adequacy and sufficiency of construction
and engineering training.
Rates of student achievement
in the sector are very variable. At 10 per cent of colleges, under
half of students achieve their qualification aims. This is not
an acceptable level of achievement and needs to be addressed.
5. We look to the Department and the Funding Council
to work closely with the colleges, other sector bodies, employers
and others in seeking ways to tackle these problems.
6. Our more specific conclusions and recommendations
are as follows:
On the management and funding of growth
(i) The Committee
recognise the considerable achievement of colleges in achieving
growth in full-time equivalent student numbers of around 26 per
cent between academic years 1992-93 and 1996-97. We note that
this level of growth was achieved two years ahead of the Department's
projection (paragraph 18).
(ii) We recognise that the funding system
is intended to reward colleges for providing a better service
to students, but we are concerned that colleges may have been
seeking to maximise their income without necessarily providing
more and better education. We note that the Department did not
set specific targets for growth, and recommend that clear targets
be established both nationally and at local level (paragraph 18).
(iii) We observe that the Department's procedures
for forecasting growth in student numbers were not sufficiently
rigorous, but that steps are now being taken by the Department
and the Funding Council to improve their monitoring and forecasting.
These steps, which we view as important, include the Funding Council's
development of the Individualised Student Record as a means of
monitoring the levels of student activity (paragraph 19).
(iv) We recognise that colleges have been
active in seeking to generate funding from outside the public
sector but note that there remains significant untapped potential
for developing such sources of income. We urge the sector to exploit
this potential to the full (paragraph 19).
(v) We consider it worrying that competition
for students has led to a lack of co-ordination between colleges
and the post-16 schools sector and that this may have led to colleges
incurring unnecessary expenditure. We welcome the steps now in
hand to promote greater collaboration within the further education
sector and between further education colleges and schools offering
16-18 provision, and so improve local value for money. We urge
the Department and the Funding Council to take forward the agenda
for greater collaboration as quickly as possible (paragraph 20).
On the financial health of the sector
(vi) We find it
worrying that over one-fifth of colleges are assessed as being
in poor financial health and that the number of colleges in poor
financial health may increase. Whilst we accept that the primary
responsibility for ensuring the solvency of individual colleges
lies with the college governing body, we look to the Department
and the Funding Council to give urgent attention to improving
the general financial health of the sector (paragraph 28).
(vii) An important factor in some colleges'
deteriorating financial health has been the reduction in unit
costs required of them since incorporation and the Department
intend to restrict future required efficiency gains to the rate
of inflation. We note that additional funding has recently been
provided to colleges for 1998-99 and that the funding of growth
in further education is to be addressed within the Department's
Comprehensive Spending Review (paragraph 28).
(viii) We are concerned that the financial
difficulties faced by many colleges can be attributed to weak
management at college level. We note the action being taken by
the Funding Council to identify those colleges in financial difficulties,
provide them with support and ensure that they take appropriate
remedial action. We urge the Funding Council to take a more pro-active
role regarding any college that they consider needs improvements
in its financial management. It is not acceptable that decisive
action has to wait until a college is in financial difficulties
(paragraph 29).
On patterns of growth
(ix) The Committee
observe that there are considerable variations in the patterns
and trends of growth in student numbers both across the sector
and across programme areas. This reflects student choice and response
to the demands of the market. We note that the outcomes of the
work by the new Skills Task Force will provide clearer information
on the specific needs of local industry. We recommend that the
Funding Council encourage colleges to make use of this information
in their strategic planning, thereby bringing colleges' provision
closer in line with local needs (paragraph 40).
(x) We are particularly concerned about
the low rates of growth nationally within the construction and
engineering programme areas and the doubts raised by a number
of the Funding Council's regional committees about the sufficiency
and adequacy of such provision. We recommend that the Funding
Council review the sufficiency and adequacy of construction and
engineering training provision and work with colleges to ensure
that industry's needs for trained personnel are fully met (paragraph
41).
(xi) We note the rapid expansion of franchised
provision to deliver off-site training and that franchising accounts
for a large proportion of the recent increase in student numbers.
We are concerned that franchising gives rise to serious risks
as regards regularity and financial control. We urge the Funding
Council to maintain tight oversight over franchised provision,
and ensure that the highest standard of financial control and
accountability are applied to expenditure incurred in this way
(paragraph 42).
(xii) Our concerns about the financial control
of franchised and out-reached programmes were brought into focus
by the situation that developed at Halton College subsequent to
our hearing. We will wish to be fully informed about the outcome
of the Funding Council's investigations into the funding claims
of that college as they relate to franchised programmes; and we
will wish to be assured that the lessons from this case have been
promulgated throughout the sector (paragraph 43).
On student retention and achievement
(xiii) We view the
significant variability in the levels of student achievement across
the sector as disturbing. We are particularly concerned that 10
per cent of colleges have student achievement rates of 50 per
cent or lower, although we accept that low levels of student achievement
may in part be due to factors outside the college's direct control,
such as local deprivation. We welcome the Funding Council's intention
to review the relationship between funding incentives and student
achievement (paragraph 50).
(xiv) We note the action being taken by
the Funding Council to assist the worst performing colleges as
regards students' achievements and the initiatives in hand to
identify successful strategies for student retention and achievement,
to examine and improve student support, and to improve the quality
of teaching. We support the Funding Council's decision to introduce
targets for colleges as regards rates of student retention and
achievement. We urge them to make these targets a searching challenge
for colleges, with a view to substantial improvement in student
retention and achievement being reached nationally over the next
few years (paragraph 51).
(xv) We believe that, whilst the relatively
low levels of achievement in National Vocational Qualifications
are a matter for concern, they may be misleading in relation to
the value of the training provided. This is because the modular
nature of vocational qualifications means that many students who
do not complete their course are nevertheless likely to have received
some practical benefit. Currently these students are recorded
as having not achieved their qualification. We recommend that
the Funding Council look at the case for modifying their data
capture arrangements on National Vocational Qualifications to
reflect partial completion of courses (paragraph 52).
1 C&AG's Report (HC 259 of Session 1997-98), Paras
1.1, 1.7-1.8; Evidence, Appendix 1, p19 Back
2
C&AG's Report, Appendix 1, p19 Back
3
ibid, paras 1.5, 1.7 Back
4
ibid, The Management of Growth in the English Further Education
Sector Back
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