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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1201-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE THE COMMITTEE OF PUBLIC ACCOUNTS
renewing the physical infrastructure of English further education colleges
MR IAN WATMORE, MR MARK HAYSOM and MS SUSAN PEMBER, OBE
Evidence heard in Public Questions 1 - 63
USE OF THE TRANSCRIPT
Oral evidence Taken before the Committee of Public Accounts on Members present: Mr Edward Leigh, in the Chair Mr Richard Bacon Mr David Curry Nigel Griffiths Keith Hill ________________ Mr Tim Burr, Comptroller & Auditor General, Mr Michael Whitehouse, Assistant Auditor General, and Mr Paul Wright-Anderson, Director, National Audit Office, gave evidence. Ms Paula Diggle, Treasury Officer of Accounts, HM Treasury, gave evidence. REPORT BY THE COMPTROLLER AND AUDITOR GENERAL renewing the physical infrastructure of English further education colleges (HC 924) Examination of Witnesses Witnesses: Mr Ian Watmore, Permanent Secretary, and Ms Susan Pember, OBE, Director, Further Education and Skills Performance Group, Department for Innovation, Universities and Skills, and Mr Mark Haysom, Chief Executive, Learning and Skills Council, gave evidence. Q1 Chairman: Good afternoon. Welcome to the Public Accounts Committee, where today we are considering the Comptroller and Auditor General's Report on renewing the physical infrastructure of English further education colleges. We welcome back to our Committee Ian Watmore, who is Permanent Secretary, and Susan Pember, who is Director from the Department for Innovation, Universities and Skills, and Mark Haysom, who is Chief Executive of the Learning and Skills Council. I will start, if I may, Mr Watmore, by asking a couple of questions of you, and say of course, generally this is a fairly positive Report. These schemes generally seem to have provided value for money, they seem to come in on budget and it is not our remit in any way to have any quarrel with the policy behind what is going on. Now that you have done about half the work, would you say that you have concentrated on what I could term the low-hanging fruit and left the more challenging projects to later, and will this not be a problem for you? Mr Watmore: I do not think we have done that because, as the Report points out, now we are about halfway through. Perhaps at the beginning, on the very first few projects, they tended to be the simpler ones but for some time now we have been on the bigger, more complex projects. What we are finding is that we are doing more of those large projects simultaneously rather than that the projects are getting more difficult. I think the portfolio as a whole is now really well up to speed and the progress is remaining positive on the newer projects. Q2 Chairman: Thank you. Can I ask about debt and borrowings now? When the National Audit Office published their Report there was quite a lot of emphasis on this and the challenges and threats that this posed. This is mentioned in paragraph 21 of the Report, where we read that "The programme has entailed an increase in the sector's long term indebtedness, to £731 million. For the sector as a whole, interest payable remains affordable, at around one per cent of college income but a small proportion of colleges" - and this is what I want to ask you about, Mr Watmore - "now have large debts and could be at risk if they experience a reduction in demand for their courses." How are we going to protect local education provision if some of these colleges cannot service their debts? What is going to happen? Without having to go through all the list now orally, you may have to send a note to us on what actually is going on on the ground and what colleges are particularly at risk. Mr Watmore: That is obviously, in the current climate, a very relevant question indeed. The sector as a whole is quite low on its indebtedness relative, for example, to the higher education sector, which I think in the Report is pointed out to be 19% of income as opposed to about 12% for the sector that we are dealing with. Some colleges go up to 40-50% of their earnings as their borrowings but even at that level, the annual repayments for those colleges are only about 4% of earnings per annum. Were a particular college to lose some of its revenue, a relatively small percentage of that revenue is actually going into servicing the debt each year and if the college got into more severe difficulties, the Learning and Skills Council has quite well-established--- Q3 Chairman: You would step in. We read that 19 colleges had long-term borrowings of more than 40% of their income in 2006-07. It seems to me very high but I am sure you can reassure me. Mr Watmore: I do not think at that level it is particularly high because, as I say, the debt is quite often over 20 years and therefore it averages out at about 4% per annum repayment but should they get into difficulties, the Learning and Skills Council has a good, well-established procedure for helping colleges through with a financial recovery plan and I think we are on top of the game with that one. Q4 Chairman: Thank you, Mr Watmore. May I ask a few questions of you now, Mr Haysom. Thank you for coming. Can we look first at procurement strategy, which is dealt with in paragraph 2.18. What I want to ask you, Mr Haysom, is why have you not used private finance or public-private partnerships as much as they are used, for instance, in school building? Is there some reason? Is it because they are fairly small projects? I suppose a lot of schools are quite small too. Mr Haysom: Yes, I think it is to do with the size and the nature of the projects. Just to be absolutely clear, it is not us that uses that kind of financing. The colleges make their own choices and they have the full range of options that they can go to. We invite them to have a look at all the funding routes and to make their own judgments, and they tend overwhelmingly to judge that they come through the grant-based routes. I think it is to do with the size of the projects and the fact that the FE projects tend not to be for the development of a new college; they tend to be part of a campus being developed and therefore I do not think lend themselves necessarily to private projects. Q5 Chairman: Will the funding model that you used earlier be appropriate later on if credit becomes more difficult? I do not want to mix my metaphors. I have already mentioned low hanging fruit. I can now talk about early frosts and all the rest of it. I will not get into that territory but clearly, credit is going to become more difficult so will the funding fall through? Mr Haysom: Actually, we are not seeing that credit is becoming difficult in this sector because of course, this is a very low-risk approach for lenders to actually come to the public sector. There is not that risk there. We have two main lenders in the sector and we are delighted to say that others are expressing an interest in taking part in the sector as well. Q6 Chairman: I am looking at figure 16. I
do not know why there is so much variation in progress. Mr Haysom: I think you just have to bear in mind that the information here is a snapshot in time. If you look at all the applications that have been approved, so not just those approved in detail but those approved in principle, and you look to date, Chairman, you actually see a much more even spread across the regions and I think that is what you would expect. You are right to pinpoint Greater London as being a particular challenge. The challenge there is not just cost; it is more that they do tend to be very complex capital projects. Any project in a major urban area, as you can imagine, is more difficult and takes longer, the planning issues are greater and so on, but we are now seeing some very substantial Greater London projects coming through as well. Q7 Chairman: Mr Haysom, I rather thought that you were the man who was supposed to make things happen. Why is it that we see in figure 14 on page 24: "The reasons for delays in getting detailed approval for projects"? They cite local authority planning issues - that would be a common complaint when you are trying to build things -design changes. Your organisation comes third when actually you should be a facilitator rather than a delayer, surely? Mr Haysom: Absolutely. It is nice of you to recognise that we are the organisation that does make things happen. Q8 Chairman: I said you are the organisation which is supposed to make things happen. Let us not be too positive. Mr Haysom: Okay. We do make things happen and I think that is evident from this Report. I was interested to see this as well and, reflecting on it, I suppose you would expect colleges to say this, would you not? There are some very stiff tests that we apply for parting with money, and also stiff tests to apply in terms of testing whether colleges can manage their indebtedness and can actually return to good financial health within a very good period. So you would expect us, I think, to make a very careful assessment of what is possible. I think you would also expect that colleges would be pretty ambitious and would want to get on with things. Sometimes you just see a little bit of tension there. We do, as I think I have said in previous hearings, constantly keep our processes under review and constantly challenge ourselves on bureaucracy, and I think at the moment we are content, given the scale and nature of this project, that we are in good shape. Q9 Chairman: My last question is this. We read in paragraph 2.40 that the colleges' estimates of their own running costs are often not reliable. Why is this? Is there a lack of expertise? What is going on? Mr Haysom: I think what we are saying is that when colleges look forward and make estimations as to what the running costs will be, they are not always 100% accurate and I do not think it is an absolutely precise science. We are trying to make it more precise by the introduction of a database which is called eMandate which allows sharing of data between different colleges so they can get better at understanding what is going to happen as they go forward. It is a hugely important part of rebuilding, as you know. Q10 Nigel Griffiths: On page 16, table 7 is a table of the funding approved for projects by region between 2001 and 2008. What does that tell me? Mr Watmore: Shall I just amplify Mr Haysom's answer? This particular snapshot is of the projects that have reached the detailed stage of approval. There are many more projects in the stage before that and if you add those projects in, you get a much more even spread across the country. Q11 Nigel Griffiths: So what do I read from South West at the bottom at £147 per square metre and the North East at £311 per square metre? Mr Haysom: If I may, Ian's point is absolutely right, that you need to take into account all the applications but you also need to take into account that this is a slightly strange number that we are looking at here. What we are doing is dividing the total amount of capital spend by the square metreage of the overall estate in that region, so it is giving a strange kind of measurement and it is only when you have done a significant portion of work that you start to see that balancing out. Ian's point is exactly that, that as you go forwards, you will actually see those numbers coming much more closely together. Q12 Nigel
Griffiths: I am picking two areas which are
not the most overcrowded parts of Mr Haysom: I think it might be helpful, rather than try to keep demonstrating the same thing, if we provide you with information on the current position. You will be able to see the numbers have equalised to a great extent and if you look at those numbers on a per learner basis, you will see that there is much more consistency and if you look at those numbers in terms of square metreage, you will see there is more consistency too. Q13 Nigel Griffiths: I was not particularly arguing whether it was narrowing. I was asking for an explanation of £311 as against £147. Mr Haysom: I am sorry. The explanation is that this is a moment in time and it is a slightly strange measurement because you are taking what is spent at that moment in that particular region against another one, and then you are dividing it by two different numbers, which is the square metreage. What I am saying is that, with the passage of time and looking at the applications approved in principle as well, you will see a very different picture. Q14 Nigel Griffiths: Yes, but what I am not quite grasping is what is this moment in time showing me? Mr Haysom: I think it is showing you that at that moment in time those applications that were approved in detail were greater in some regions than others. Q15 Nigel Griffiths: Why? Mr Haysom: They came through in that way. The way the whole programme has worked is that--- Q16 Nigel Griffiths: This is not a trick question. Are you telling me that the properties in the North East were in a dreadful condition but they have been better maintained in the South West? Mr Watmore: No, I do not think you can conclude that from this. Q17 Nigel Griffiths: What can you conclude? Mr Watmore: I think you can conclude that the North East got out of the blocks faster with its projects and its projects got to the more detailed phase sooner and therefore--- Q18 Nigel Griffiths: They committed more spend. Mr Watmore: Earlier in the programme cycle.
If you were to take Q19 Nigel
Griffiths: Is that the same in the South
West, which is not Mr Watmore: The South West is also significantly higher upwards in numbers than it was at the time of this chart. I suspect, again, you will also reflect maybe, especially with one or two regions, the historical estate that was inherited as well because obviously, the worse it was, the more urgent it was to update. Ms Pember: The other difference on table 7 is that some of the facilities are far more complex in the more expensive areas so you are going to get more construction, more engineering and more classroom-based activity. So there is a mix. Paragraph 2.9 explains that in a bit more depth. Q20 Nigel Griffiths: On page 5, paragraph 7, it appears that some of the colleges which have the greatest need are not receiving the highest priority. Do you accept that and why is that so? Mr Haysom: I think this is the same point. The way that this works is that it is the colleges who elect to come forward with their capital proposals. We encourage them to do so and we have our own specialist team supporting them, inviting them to develop their own strategies for their estate and so on, but it is the colleges themselves that come forward and, as Ian was just saying, a number of colleges came forward quickly, others have taken a bit longer. That is the way it has worked. We had no requirement early on to try and prioritise because we were able to fund all of the applications that were coming forward. Q21 Nigel Griffiths: Is a fair summary of what you are saying that it has been of the race to the swift? Mr Haysom: In the early days, what we were trying to do when we started this programme was to get a build-up of momentum very quickly with this to make sure that we were tackling as many colleges as we could and to encourage those that were going to be more difficult and more complex to come forward and start developing their plans. That is exactly what has happened and I have to say it has worked very well. It is working to the extent that we have huge applications coming through in huge numbers now, and we are having to make sure that we are balancing those very carefully. Q22 Nigel Griffiths: This Report was signed off on 7 July so that is the snapshot then. You are implying in your evidence to the Committee that there has been a dramatic shift since then. Mr Watmore: No. Can I just be clear on
what I said earlier? The snapshot at
that time, which is here, is the projects that had reached the detailed
stage. If you add in the projects that
are at the stage before but will become detailed in the next year or two, you
get a much more even spread. So the
pipeline of projects is more skewed towards Mr Haysom: It is also true that since this Report was signed off, because the Report captures data up to March, there has been a significant move forward. If I refer you to paragraph 4 on the same page, it talks about £4.2 billion worth of applications. That is now £5.3 billion. It talks about £1.7 billion worth of grants. That is £2.45 billion now. That now equates to 693 capital projects since the beginning of this. That is why I was talking about momentum. We have built momentum very fast and it has been maintained, and there are huge numbers of applications still flowing through the system. That is why these regional variations, frankly, are a little bit of a red herring. The greater issue in the regions Ian has already referred to, and that is that it is the estate that we inherited did vary between regions so some regions have more to do. Q23 Nigel Griffiths: Can you do a paper bringing the Committee up to date? Mr Haysom: Absolutely. I will be delighted to do that. Q24 Nigel Griffiths: On page 26 it appears, according to figure 15, that only one major project has been completed in the East of England and only one in the East Midlands. Can you update us on that? Mr Haysom: Forgive me; I did not bring me the updated picture by different region but again, we will be happy to provide that. Ms Pember: That map on page 26 is major projects, not every area of the country needed that sort of investment, over £20 million. All told in the country, there are only 42 institutions that really have not had any major capital work done on them, which I think is quite remarkable in that time we have had to work on this activity. Q25 Mr
Bacon: While we are on the subject of the
East of England, I cannot resist, Mr Haysom. It does look rather a large hole in your map
with not a lot going on in it. I happen
to know, because I was with them quite recently, that Mr Haysom: Yes, indeed. No problem at all there. As Susan has just said, the chart there reflects just projects over £20 million. There are a number, as you will know from your own constituency, where we have smaller projects than that which, when you add them all up, amount to something very significant. As Mr Watmore is just showing me, in the chart on page 27, table 16, you will see that East of England is doing rather well by that measure. I hesitate to share that too much because that is shifting all the time, as we said earlier, and all of the regions have performed pretty well. Q26 Mr
Bacon: The only FE within my constituency is
Mr Haysom: No. Q27 Mr Bacon: What do you do about that? Mr Haysom: We have invested very heavily in this and it is something that I think we became particularly aware of just shortly after I joined the organisation, and we are trying very hard to build confidence and capacity right across the system, and real ambition. A lot of colleges at that stage were expressing some concerns, so what we have done is a great deal. We have, as I have already said, a very expert team of our own people, 22 people, out there in the regions. That number is going to be grown because the project is still growing very fast. We have supported that team with a whole range of initiatives, ranging from a framework for drawing down consultancy support to training for the project managers in the college. In every college where there is a major project they have to appoint one of their senior people to run the project. We will then offer training in conjunction with RIBA and so on, so there are a whole range of initiatives to support them through this. However, you are right to flag it because this is a hugely significant role that these people are taking on, and I have to say that the experience that the NAO has reflected in here and is the experience that we see all round the country is that they do a fantastic job, and it is great to have the opportunity of saying that. Q28 Mr Bacon: You mentioned framework contracts. I used to represent the management consultancy industry a long time ago in the mid Nineties; I worked for the trade association representing the big firms, and framework contracts had already become quite standard both in central government and in local government, yet it says here in paragraph 2.27 that some colleges are unhappy that they are now barred from using firms outside the framework which have given them good service in the past. Surely there is a simple answer to that: that those firms get inside the framework. "In April 2008, following a competition, the Learning and Skills Council introduced framework contracts for consultants." It is quite recent. Framework contracts are known to be a better way of doing it. Why has it taken this long to get to the point where you are giving out advice about framework contracts? Mr Haysom: I think it comes back to what we were saying about trying to build on the momentum across the whole sector. We were keen where colleges did have existing relationships that they should continue to work with those people if it meant that the projects could get off the ground quite quickly but then, if you look at the very rapid growth in scale of the whole programme, I think it has reached a point where we are saying we now need a more systematic approach. We now need to help colleges in the way that we have just described through this. I think it has worked. You could argue that we could have done it a bit quicker. Q29 Mr Bacon: You may give the same answer - I do not know - in relation to the use of traditional contracting. Paragraph 2.19 talks about this, and the fact that design and build is the preferred choice but it has not always been the approach that has been taken. Why are colleges still using traditional contracting rather than design and build? Mr Haysom: Very few are now for major projects. Q30 Mr Bacon: It has improved? Mr Haysom: It has changed quite significantly over the years. Ms Pember: Also, in local areas, where you have listed areas, you live in a conservation area, your colleges have special requirements, it is often the local architect, who knows that council better than others, that will give the college the best advice. The best project is when they dovetail that local knowledge with the design and build project. Q31 Mr Bacon: What about the use of whole life costs as an assessment tool? It says in paragraph 2.39 that "Construction project decisions should be based on the optimum combination of whole life costs and quality." Nobody could really argue with that but at the bottom of that paragraph it continues: "Colleges assessed their main property strategy options using a net present value calculation over 20 years, but the whole life costs of buildings were not included." Why is there still so little emphasis on whole life costs? You do not have to go down the PFI route to take account of whole life costs, and the notion of whole life costs has been around, to some extent because of PFI, for a very long time. Mr Haysom: I think where we are now is that we have a new assessment approach which does include whole life costs. I think it is wrong to say that we were not interested in long-term running costs for our colleges prior to that. We would have been looking at an assessment there over I think a 25-year span but we have taken the step now to build in a whole life cost assessment. Q32 Mr Bacon: Could I turn to figure 4 on page 12. It talks about the main reasons for undertaking projects. Why is it that only about half of the projects are actually about providing more places for learners? Mr Haysom: It is important to remember what we are trying to achieve here, which is a renewal of the estate after many years of neglect. There is an urgent requirement to replace what currently exists. What we are replacing it with is a much more efficient use of space, so we are reducing the overall square metreage of the estate and getting a significant efficiency gain as a result of that. What we are also doing as a consequence of this programme is that, by investing in buildings, we are actually increasing participation. So there is a very positive outcome that comes from this. I think it is important that the story is told that way. It is about renewal and modernisation, which is urgent. Then there are a whole load of very positive benefits that flow from that. So you build great buildings - and we do have some very significant buildings around the country, buildings which are something that our communities are very proud of. You build great buildings, more learners come, they stay longer and they achieve more. I think that is a real positive benefit, so more learners are benefiting as a consequence. Q33 Mr Bacon: Instinctively, intuitively, one would imagine that, if you have nicer, smarter, more spacious buildings, people are going to call it a success and you are going to have more students. Mr Haysom: Absolutely. Q34 Mr Bacon: That brings me neatly on to my next question. It says on page 29 that the survey that you do does not include questions relating to the quality of college buildings. If you do not collate the results coming in from different parts of the country, and the survey does not ask questions about the quality of buildings, how do you know that you are actually being successful? Mr Haysom: We do know, because we have done some comprehensive work which examines the effectiveness of the programme. The work referred to in the Report has actually been updated by Frontier Economics and that demonstrates very clearly that we are growing student numbers as a direct result of the level of investment. If you are interested we can provide you--- Q35 Mr Bacon: It says in paragraph 3.11 that the "Frontier Economics' work was based on an analysis of a sample of early projects, the largest of which cost only £13 million. Its findings may not therefore be replicated on the same scale for the larger projects that have since become more common." Mr Haysom: I am delighted to be able to update you on information that has now been received, which takes projects right up to 2006, I think, which not only validates that but shows a better outcome than is reflected here. Q36 Mr Bacon: So you are confident in saying there is a very visible correlation between improvement in buildings and improvement in numbers and performance? Mr Haysom: There is. We are seeing that very clearly indeed, yes. Mr Watmore: It is about 100 students per £1 million invested. Q37 Keith
Hill: People in further education used to
regard themselves as the Cinderella of the education service and I think
actually this positive Report indicates that that notion is now a little
antiquated, with 50% of the infrastructure renewed but, as a London member,
perhaps I ought to ask a few more questions about progress in London, which has
already been referred to by the Chairman and Mr Griffiths. Only 32% of the infrastructure was renewed by
2008 in comparison with 50% nationwide.
Although Mr Watmore: Could I answer that initially and others can chip in. I have two comments. One, it is absolutely right that the
challenge in London is significant, for all the reasons you list, which has
tended to mean that projects have taken longer to get to the current
point. The Report talks about £165
million having been invested in Mr Haysom: If I could just add to that, City and Islington is a very good
example of what can be achieved. It is
actually three great buildings which have been developed over a number of
years, and it does, as I said earlier, take longer in Q38 Keith Hill: I want to say something nice about that in due course, if I may, but in the mean time this £760 million in the pipeline - did I hear you earlier say that was the third highest level of investment by region in the country? Mr Watmore: If you were to do the dividing of that amount by the square metreage, then you would find, I think, that Greater London becomes the third highest region, yes. Q39 Keith
Hill: Can we just unpack this business about
the complexity of this work in Mr Haysom: It is not just Ms Pember: There is more land to build on.
Several colleges have space to build a new college; they can put their
existing students into that. In Q40 Keith Hill: Why does that make it slower? I do not quite understand. Obviously, you can achieve it. Ms Pember: Yes. Q41 Keith Hill: You have to achieve it and you have to achieve it. Why does it make it slower? Ms Pember: Because you can only build at a certain rate. If you are actually building on a site when you still have students on that site, your actual building rate is going to be slower. The planning is often more complicated. Q42 Keith
Hill: So it is not that management in the Ms Pember: Absolutely not, no. Some of
the most innovative schemes are in Q43 Keith
Hill: So you could show us that actually,
the Mr Haysom: Yes, in individual products we can demonstrate that. Q44 Keith Hill: Could you give us a note to that effect? Mr Haysom: Yes, by all means. Q45 Keith
Hill: Have there been external problems
about Mr Haysom: Inevitably, there will have been issues with planning in Mr Watmore: You are more likely to come across listed building problems in London; certainly a lot of institutions in London struggle with that but I think in general we find the urban construction projects up and down the land are the ones that are more complicated, for the reasons explained. Keith Hill: Naturally, I have to rely on your analysis, which is that the
physical process of construction is slower in Chairman: They are about to get a new MP! Keith Hill: The particularly good news is, of course, that at the Clapham Centre, which overlooks the Common, a part of my constituency, we are about to get our wonderful new sixth form centre, which I believe is going to be opened by the sitting Member. Mr Bacon: After you have been elevated to the Lords and they have had a by-election! Q46 Keith Hill: I cannot possibly comment on that but I have warned them that I may not be the sitting Member at that point. That is a problem they will have to take on board. Also, of course, we now have the prospect of the Brixton site, of the Brixton Centre being redeveloped. There, you see, work is going to be very rapid. Only two weeks ago we saw the plans. It is a lovely development and it is going to start towards the end of 2009 and it is going to be finished in two years. This is quite fast going, is it not? Mr Haysom: It is, which is why you should never generalise, is it not? Yes, some projects can move very fast. In fact, one of the things that we are seeing very clearly at the moment is that, because developers are freer to concentrate on public sector initiatives than they are on private sector, is an acceleration in terms of the development, so they are getting on site more quickly and getting cracking more quickly. Q47 Mr Bacon: You mean plumbers are turning up when they say they will? Mr Watmore: Colleges are the Olympics, Mr Bacon! Mr Haysom: No, what I mean is that, because there is very little private sector development going on at the moment, they are able to turn their attention more quickly to college building. It is actually a little bit of an issue for us in trying to manage our way through that, as you can imagine. Keith Hill: It is good news in Streatham, Mr Chairman. I want to pay tribute to the work of the Principal of Lambeth College, Richard Chambers, and to the excellent work of the long-term Chair of Governors, Dame Lorna Boreland-Kelly. Chairman: Thank you, Lord Streatham! Q48 Mr
Curry: It has all been very genial up to
now, has it not? I am sure we are
grateful for the tour of the nooks and crannies of old Mr Haysom: That is right. Q49 Mr Curry: Who rides shotgun on them? Mr Haysom: Riding shotgun? I am not sure I would quite put it like that but what we would do is subject all of their proposals to very vigorous scrutiny. We will have very vigorous criteria of affordability, we will look at their plans in infinite detail, and we have a team of experts to do that and the colleges will be supported by their own experts. Q50 Mr Curry: You would expect, I assume, over the next two years to be forcing down prices from contractors, would you not? They are shedding thousands and thousands of workers. You have just said there is no private sector work so they are desperate for work. I hope you are going to screw them to the wall over the next few years. Mr Watmore: It is interesting because we have been doing right across the public sector a lot of thinking about the implications of the current economic cycle. Obviously, one thing that we are looking at is whether there is better value for money to be gained from existing contractors. We would probably be looking to get more result from the same money rather than less money. For example, weaved through the Report is the building in of sustainability into our projects. Q51 Mr Curry: You get a better building - is that what you are saying? Mr Watmore: Yes, exactly. I think this is an era in which right across the public sector in all sorts of different ways we want to be extracting the maximum value for money. Q52 Mr Curry: A better building in terms of what? More environmentally sustainable? Not just looking nice, but you are getting a material, calculable, quantifiable - if you bite it, you know it is gold? Mr Watmore: If I could do what Mr Hill has just done and talk about my local
college, which is Macclesfield in Q53 Mr Curry: To what extent are you able to bulk up projects, invite somebody to tender for more than one? There are so many colleges, there must be projects which are relatively similar. Is there some system which is common to them all? Mr Watmore: The Report touches on this and I am sure Mark and Susan will be able to amplify. The generality of schools projects is that it is much easier to bulk them up. With these college projects, they are not huge in money terms so they do not attract the PFI investor in droves but they are--- Q54 Mr Curry: The taxpayer is very grateful for that, if I may say so. Mr Watmore: You might say that; I could not possibly comment, as they say. The point about these buildings is that they are very important to that local community and it is therefore important that we get the right building for that community, and the aggregation of purchasing could lead you to a more "one size fits all" philosophy, which I do not think we would want in this sort of environment. Ms Pember: For the schemes of building a whole new college, to do four or five
across the country at the same time, using the same builder, might be quite
possible but parts of the country have clubbed together and shared
procurement. In the South East, for
instance, the Q55 Mr Curry: What about shared sites? You touched upon that when you talked about Macclesfield. Are you generally aiming to try to bring institutions together on a single site where that is possible? Mr Watmore: Where it makes sense, I think. I do not think we would want it to go out that it is a general principle but where it makes sense. Mr Haysom: It is exactly that, and where there are real opportunities to create that kind of learning environment, we are doing it. Macclesfield, I think, is a great example. It is a shame that Austin Mitchell is not here because we could have talked about what is happening in his constituency, which will be an even bigger example of exactly that same thing happening. Q56 Mr
Curry: Since we are doing a tour of the
constituencies, perhaps we may come to mine.
The assurance I seek is that you are aware of the need to put investment
into the rural areas. I have Mr Watmore: I do not have any specific information about your constituency but I absolutely agree with the general point. One of the reasons I gave the answer I gave a minute ago was, while we do not want to be too general on these things, you do want the college to become a centre not just of its own learning in communities but in terms of its local economy, and I think getting that blend right between them being good seats of learning for local people and participants in the local economy is part of the vision that we have for this, and obviously that varies in different parts of the country. Q57 Mr Curry: Do you have any actuarial figures in your mind of how many colleges you expect there to be a decade from now? Do you see a process of consolidation of colleges? This Report is quite clear about those it thinks are good performers and those it thinks are pretty grim. If they cannot manage their own tender, they may not give a very good education. Mr Watmore: We certainly do not have a philosophy that there are 372 or whatever today and by X it should be something else. I do not think that would be appropriate. What I do think is that a number in that range represents a sizeable "localness", if I can use that word. Whenever I have looked at this with other functions, banks and social security offices and so on, if you get 400-500 locations in the country, you have sizeable entities but sufficiently local to respond, so with a college estate of this number, it would feel right to me to be sufficiently local to be local, but sufficiently sizeable to have critical mass. That would be my answer to your question. Q58 Mr Curry: So we are likely, in the natural course of events, to see some process of at least management being taken over by other colleges, are we not? Mr Watmore: I think you will see colleges develop in the way I have just described. I would like to see colleges becoming much more integral to the local economy. They are already pretty good. I would like to see that more. Q59 Mr Curry: More closely integrated into the other educational institutions? Mr Watmore: I think that varies. I have
seen examples, for example, in Q60 Mr Curry: I read a paragraph on page 9 with a sinking feeling: "The Council's responsibility for adult education will therefore be taken over by the new Skills Funding Agency, and its responsibilities for young people's education and training will be shared between the 150 local authorities responsible for learning and a new national non-departmental public body, the Young People's Learning Agency." It then goes on to say, "...it will make its decision together with the Department for Children, Schools and Families." How many organisations do we need to change a light bulb? Mr Watmore: When the machinery of government changes were introduced by the current Prime Minister that created the new Department, they also created this broad decision. Susan is in fact the Director responsible from my Department for implementing that, but the concept is that the Learning and Skills Council will be morphed into an over-19s agency which is called the Skills Funding Agency, targeted at over-19s and for people under 19, that will become more integrated. It is a matter of political philosophy. Q61 Mr
Curry: That was not meant to be a political
question. I am simply saying that I am
slightly confused as to why, for example, regional development agencies, if we
must have them, do not do the work of the Learning and Skills Council because,
after all, that seems to be their prime task.
The development of learning and skills seems to me to be at the heart of
it. In my constituency Mr Watmore: That it is a political directive that it is for others to make. We have been asked to implement this particular structure. Q62 Mr Curry: I am sorry. I appreciate that. I simply want you to take home, as it were, that constant changing in choreography makes life difficult, particularly for a group of colleges which, as Mr Hill said, often has seen its itself as a Cinderella and has never in a sense managed to achieve the status, unfortunately, that the German and French equivalents have managed to achieve. Ms Pember: The Skills Funding Agency will be the sponsor of FE colleges, so FE colleges will be sponsored just by one Department. Although they will be implementing the curriculum of DCSF, DIUS will be the sponsor for the FE world, and therefore I think in the future it will work, and it will ensure that tie-up you were talking about with HE and the rest of the agenda of innovation, it will allow colleges - we do not use the word "Cinderella" in the FE world, and have not for about five years, because they are not the Cinderella service. Q63 Mr Curry: She did get the prince, of course, as you recall. Ms Pember: She did get the prince, yes. Mr Watmore: And a very good methodology it is too. Chairman: I think on that note we can draw this genial session to close. Mr Watmore, thank you very much for appearing in front of us. Obviously, it is encouraging that these colleges are getting much-needed investment but the debt in the sector has increased to £731 million, so I think we are going to have to keep a close eye on the smaller colleges and make sure they recruit well so their position is not put at risk. |