Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



  20. Yes, how much more do you allow for a unit of education in London?
  (Professor Melville) In Inner London it is 18 per cent and that goes in Outer London to 12 per cent. In the London periphery it is 6 per cent and we also give some allowance for parts of some counties around London of three per cent.

  21. Has that changed in the last three years? Has that reduced?
  (Professor Melville) Yes, we have reviewed the London weighting on a regular basis in 1997 and in 1999, and it has actually been increased since the most recent review[4].

  22. So does it reflect the increases in rent and wages?
  (Professor Melville) Yes. What we actually did was we set up a working group to look at this and they commissioned external consultants to look at comparative costs over a whole range of issues associated with staff costs, but also fixed costs, premises costs and so on.

  23. That is wages. What about issues like the costs of multi-cultural education and mobility?
  (Professor Melville) We take account of the costs of what might be called educating particular types of students who may be prevalent in larger numbers in London and also, for example, in some parts of Birmingham, by applying an additional weighting to the student, that is what we call the widening participation factor.

  24. That is presumably a weighting linked to multi-cultural and multi-lingual?
  (Professor Melville) Not specifically multi-cultural, multi-lingual. We do it by post-coding. We also apply it to students who are studying English as a second language. It averages eight per cent currently, planned to go up to ten per cent.

  25. The problem I have locally—this is slightly anecdotal—is that in Croydon there is a view there that the extra costs of multi-cultural teaching and the costs of actually being a student or being a teacher in a college are much greater and are not properly compensated for. Do you think that is a reasonable position?
  (Professor Melville) One of the complications is just how we might focus specific funds related to specific students. Certainly all adult students who are on basic education courses are regarded as in some way being educationally deprived and, therefore, would attract this uplift—anyone studying basic literacy and numeracy, for example.

  26. In Croydon, which is one of the average places, it is regarded as deprived per se, and it clearly faces all these costs, namely the cost of multi-cultural delivery, the higher levels of wages, the costs of retaining staff. Do you feel they are adequately compensated for doing this?
  (Professor Melville) The review indicated, subject to checking, that I believe Croydon lies in the three per cent area as far the uplift is concerned[5]. Certainly individual students attract a premium should they be studying English as a second language or basic education or, for example, if they came out of care or where they had been in hostels. All of those situations attract a premium, so they are regarded as being more difficult to recruit and, of course, requiring greater input.

  27. I am thinking of more normal run-of-the mill average people who just happen to live, say, in Croydon and happen to be black as opposed to coming out of care or anything like that.
  (Professor Melville) Yes.

  28. Can I ask about recruitment which you mentioned when you said that recruitment and retention were big issues in terms of financial difficulties in terms of stability of staff numbers. Would I be right to say that retention problems in terms of staff are much greater in London basically because young teachers in colleges may do their training in London and find that their family cannot afford a house, so they go to Birmingham or to some nice place in Yorkshire where they can buy a house and get a similar wage and have a much more comfortable lifestyle? Are you seeing a trend of an exodus which is making difficulties for London because of housing prices?
  (Professor Melville) I do not have any specific figures, certainly we have not gathered them, I have not seen them, specifically as far as further education in London is concerned[6]. I have to have say that there is a general problem of teachers' pay in further education that has been recognised as one of the consequences when in this Committee we discussed the issues surrounding the management of the growth that had taken place very rapidly in most of the colleges, and along with that there has been a relative depression of teachers' salaries in further education relative to schools, for example. The Government has recently addressed this and announced a further £50 million which will be applied to improving conditions for teachers. I have not seen it specifically at the moment. Certainly one of the reasons why we have a higher weighting associated with London is that generally staff in London have to be appointed higher up the scales in order to attract them at all or let them subsist.

  29. Would it be possible to ask either the NAO or Professor Melville whether there are some statistics available to confirm or otherwise, or to paint a picture of how this situation is changing in terms of the level of people leaving London to go to similar jobs elsewhere with similar pay, bigger houses and all the rest of it? That would be very useful.
  (Professor Melville) Yes, there is work going on in the Department at the moment reviewing the whole of the teachers' pay issue.

  30. On the demand side, on the student side—this is something we have already touched upon—do you again find particularly in London, where there are more job opportunities, the opportunity costs of going to college are more and the actual cost of living without any income in digs is much higher, that there is a real problem with students sticking around in college or even coming along, that instead they go to the job market and remain uneducated and on long-term lower wages as an example?
  (Professor Melville) I think I probably need notice of the question, but as far as I am aware there are not huge variations in retention or recruitment in London.

  31. If it is the case that we are seeing a regional disparity due to factors of cost and wage opportunities, it will be interesting to know. Now schools versus colleges. It is the case, is it not, that if you did an A Level, for argument's sake, in a school versus a college, the amount of subsidy going to the school is much greater, is it not?
  (Professor Melville) Yes, the funding to pay for a typical three-A-level student is higher currently in schools than in colleges.

  32. Is there an argument to change that in terms of the behaviour of students? Is it the case that students in school get better results, other things being equal, as it were?
  (Professor Melville) Generally not. If we take sixth-form colleges, for example, the 103 sixth-form colleges, often produce better results than schools even though there is a discrepancy in terms of their funding. If we take added value, the distance travelled from their GCSE entry to A-level, or ENVQs then we find all colleges compare well with schools.

  33. Can I ask about whether the imperative of keeping costs down is inadvertently closing down courses that are needed in the market place? I am being anecdotal, in Croydon where we have the May Day University Hospital on tap, as it were, Croydon College closed down its course on nursing because of the cost. Indeed, in the building support area—we have some building companies in Croydon—Croydon College is closing all those courses down because they cost too much to run. Is that not financial management gone mad?
  (Professor Melville) It is very interesting. The discussion in this report, which is on course-costing, is one of the clear recommendations that we are following up, to encourage colleges to be more careful about their course-costing and what they subsequently do when they discover a particular course is costing more than they are receiving in terms of income for it, because there are fixed costs. Those two examples, as you say, are courses which have very significant costs in terms of space and facilities.

  34. What can be done if we want more people building houses and curing patients? The Government want to put more money into house building and into patient care yet because of the way the Funding Council operates all of these colleges are simply closing down their courses to save money and to avoid a bad report from the Public Accounts Committee.
  (Professor Melville) It is not true to say that this is happening in a lot of colleges. I was aware that the MP for Croydon raised the issue at the previous Public Accounts Committee when the construction programme had closed. This coincided with a general downturn in the construction industry, where we attempted to try to ensure there was some consolidation so there were centres of excellence that remained. A lot of colleges are now going into construction because it is a boom area.

  35. What would be done if they were closing engineering down, for instance?
  (Professor Melville) I think the important issue is that courses which are not viable should not be continued. It is not a sensible use of public money to have a small course here and a small course there. We encourage colleges to work together, so we make sure there is provision within a reasonable distance. You may find that a particular college may not have all provision.

  36. Will the Learning and Skills Council help?
  (Professor Melville) Let me make a point, the Funding Council's main duty is the adequacy and sufficiency of further education, not simply providing funding, therefore, every year we review the provision. They are required to report it to us where they pull out of programmes. I suspect that nursing is not one of our programmes, as I was not aware of that. That may be funded by the Higher Education Funding Council. We are aware of what is going on. We review carefully to see if it causes a problem locally in terms of there being un-met demand.

  37. If you do find that in what you are looking at and what you are talking about there is chronic and systemic reduction and certain high cost provision, what will you do about it?
  (Professor Melville) We will obviously review whether we have the cost weighting factor right. Generally that has been in response to industry downturn. We have something similar in agriculture at the moment. For example, if we found that it was essential to continue construction in Croydon because there was a demand that was not being met elsewhere then we would apply a premium to that college to continue. We have applied that in other parts of the country, particularly in more isolated communities where we saw provision disappearing. It may not have been economic but it was essential that it continued. We do have powers to vary. You asked about the Learning and Skills Council. It is a much more local body, it will have an office in Croydon, the South London office will be in Croydon and it will have 90 or so staff there. That will be one of its responsibilities, to ensure that there is local provision, not just in colleges but also in private training providers.

Mr Leigh

  38. If one looks at the graph and the proportion of colleges in poor financial health, you see there are not any less than they were in 1996, 1997 and 1998 but there are more, a higher percentage, in poor financial health than in 1999, 1995 and 1994. This is a pretty mixed record. There is no particular sign that you have managed to get a grip on this or improve matters.
  (Professor Melville) This is precisely the variation. If you talk about poor financial health, it went up and it peaked roundabout 1996/1997, that was a period from incorporation, where colleges dealing with the inheritance they had, were subject to efficiency squeezes that added up to a 26 per cent reduction by that year and, therefore, they had very severe financial problems from a poor base. The turnaround only took place when that squeeze was raised from 1998/1999 onwards.

  39. It is now going up again?
  (Professor Melville) In terms of the graph you had there or in the terms of the figures?

4   Note of Witness: The most recent review included the London Weighting for Inner London. Back

5   Note by Witness: Croydon is in the area receiving 6 per cent London Weighting. Back

6   Note by Witness: Published figures (Staff Statistics 1996-97 and 1997-98) showed an increase of 1,100 teaching staff in London colleges against a slight decline nationally. Back

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