Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)



  80. Considering all of these bad audits, you are not trying to recover money from any of them?
  (Professor Melville) The issue is loss and, of course, the cost of the litigation. In the case of Bilston College there is a clear loss to the public purse and, therefore, monies to be recovered. Generally when things go wrong in colleges we have a retrospective claw-back system, whereby the money that was overclaimed by a college or inappropriately claimed is actually paid back, we claw it back largely by reducing the payments we make to colleges, so there is no loss to the public purse.

  81. It is a considerable worry to me, and I have no doubt to some of my colleagues, that the external auditing has been so poor. Do you think if the C&AG and the NAO were appointed as the external auditors for all these colleges that your auditing would improve?
  (Professor Melville) I think the C&AG knows my view on this and I would answer yes. I should add, that is a personal view. It is a matter for the Learning and Skills Council. I do believe there is some merit in the arrangements that are operated currently by Audit Scotland in Scotland.

  82. Can I go on to the position of the lack of improvement which has been noted in the current year in the numbers in Category C, what targets did you set for the next few years for that figure?
  (Professor Melville) I have to say that we have not set any targets, that will be a matter for the Learning and Skills Council. It is a matter for their decision as to whether they continue with the same kind of monitoring process.

  83. Would it not be helpful to them, they are going to come in, after all, next year?
  (Professor Melville) They are present in shadow form. Their Chief Executive was appointed at the beginning of October.

  84. The Chief Executive is?
  (Professor Melville) John Harwood.

  85. Can I go on to a number of questions about governors, you said that you are doing some training for principals in financial matters, what training are you giving to governors?
  (Professor Melville) First of all, we have produced a new guide for governors, which came out of a joint review, that came out in March 2000, and in the first section of that there is an induction section that is designed for new governors. We also introduced a requirement that within six months of appointment all new governors should be trained. We have developed governor training materials that go alongside the College Governor, which is the name of the document I referred to. Those materials have now been distributed to all colleges. We have trainers who will train governors and we have provided each governing body with £2,000, in order to buy training from these trainers. We have put together a fairly comprehensive package. In addition we are, of course, continuing our review of the quality of governance as part of our inspection process, so we will be monitoring the improvement we hope to see from the training. In the last year we have seen some improvement in the quality of governors.

  86. I am glad to hear it. I think you said in answer to the Chairman at the beginning that it was difficult to prevent colleges going into Category C, that your main work was involved in getting them out of it afterwards, which seems a rather pessimistic viewpoint. Would you agree with me that it as much the governors' job as the principal's job to make sure that the college is not going into the Category C?
  (Professor Melville) It is very centrally a responsibility of governors. Within the financial memorandum one of their requirements is the solvency of the college.

  87. That being so, what proportion of the governors being appointed currently have any prior knowledge of the education system, apart from their own education?
  (Professor Melville) I do not think that is something that I could answer, even with notice. I suspect it is not something that we collect[10].

  88. Do you think it is important?
  (Professor Melville) Let me answer slightly differently. We have introduced a requirement that there is financial expertise amongst governors. That, I think, was an important step forward. We have also introduced a requirement that there are audit committees and a member of the audit committee has financial expertise.

  89. How much time are governors expected to spend on the job?
  (Professor Melville) It has never been defined. It is an unpaid responsibility. Governors usually meet between three and six times a year. I have heard it suggested that governors might spend something of the order of a day a month.

  90. Between three and six times a year. If they are only meeting three times a year it could be four months before they get the new financial update. That does not give us much of a chance of picking this sort of thing up quickly.
  (Professor Melville) The vast majority of governing bodies have finance committees.

  91. The whole body meets three to six times a year, the sub-committees will meet more often.
  (Professor Melville) Yes.

  92. They receive no remuneration, as you say, what happens to them if something goes wrong?
  (Professor Melville) As far as governors are concerned they are indemnified, provided they have acted in good faith. There are a number of instances where things have gone wrong seriously with governors and the governance have actually resigned. The Secretary of State currently has powers on our recommendation to dismiss governors. Those powers are being increased. That is a wider basis on which the Secretary of State can dismiss governors and also require them, that is directly, to take particular steps in the new Learning and Skills Act.

  93. Since you agreed with my point a moment ago, that governors are very important in terms of preventing colleges going into Category C, and since they are not remunerated and may end up with egg on their faces and loss of face in the local community, do you think there is anything to be said for trying to reward governors a bit more and getting a better quality and working a bit longer on colleges?
  (Professor Melville) I think there is a case for better quality governors and this may well be one of the reasons behind the small towns effect that is noted in the report. Small towns notably have more colleges that are Category C and colleges in small towns tend to have more difficulty getting good governors. There is an important issue there, and through The College Governors we have tried to suggest ways in which colleges might recruit better governors.

  94. How do you think they could recruit better governors?
  (Professor Melville) We provide local support through our regional offices and encourage colleges to work directly with local professions and to approach some of the larger audit firms who have partners who live in rural locations and also to advertise. There is also a requirement that was introduced in 1999 that all governing bodies have search committees, they have a specific committee which is charged to search for new governors. We encourage good practice, and that they keep a number of people in reserve. On the issue of remuneration, the Government have considered this on a number of occasions and decided against remunerating governors, although I believe the College Associations are in favour of this. The key argument is that school governors are not remunerated and there is a parallel drawn with them.

  95. Do you think you would get a better quality of governor in general if schools or further educational colleges were remunerated?
  (Professor Melville) I must say I am agnostic on that issue. I do not think it has been proven that it would follow for the level of remuneration that might be made. Expenses are paid to governors. I do not think there is any strong evidence either way.

  96. Do you think it is worth researching—pilot studies?
  (Professor Melville) I think it is rather difficult in terms of a pilot to pay some governors and not others and then monitor their performance on quality.

  97. You might pay the ones in small towns.
  (Professor Melville) I think the key issue is that this is the Government's decision. The governance of colleges is something which is reserved within the Education Act to the Government. Both the previous Government and the current Government have looked at the issue as has been drawn to their attention on a number of occasions and decided against that.

  98. Can I go on to the cancellation of courses. There are problems, I know, in some colleges, because of the financial difficulties that they are in, and they are inclined to, perhaps, propose an awful lot of courses and then cancel some of them rather at the last minute when they are not getting sufficient students to make it worthwhile. Is that a problem that you are particularly aware of and, if so, what is being done about it?
  (Professor Melville) It is something that we are concerned about, and we do occasionally get complaints from students. We have a complaints procedure where we deal with individual cases, so it is an issue. We do not regard it as good practice for colleges to withdraw at the last moment, although, of course, one of the important issues—and we have seen one of the case studies in the report—is that course costing is an important issue. In one of the examples that is commended by the NAO report, the college has a rule that it does not run courses where there are less than 12 students. Colleges always have to balance. The key issue is that proper notice is given and students are helped to find alternative programmes either in that college or in another college. Certainly we do not condone the issue of courses being withdrawn at the last moment. Where we have complaints we take this up with the college and try to get the college to recompense in some way.

  99. Are you taking active steps to make sure that they do combine courses with nearby colleges in that sort of situation?
  (Professor Melville) That is precisely what I am saying. The issue of collaboration and the issue of trying to run courses between colleges and sharing recruitment processes is something that has increased in the climate of collaboration introduced from 1997 onwards.

10   Note by Witness: On 23 November 2000 the Council's inspectorate published the findings of a survey on governance and raising standards in further education. There was a reported increase in the number of colleges that have recruited governors with expertise in education and training. Back

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