Nothing demonstrates the financial difficulties of the sector better than the recent Tes report showing that fewer than two-thirds of colleges were budgeting for a financial surplus next year (“College finances improve after ‘period of stability’”, 2 June). And this was a good news story because it was so much better than in the previous year.
Times are hard, with funding rates falling in real terms. Sadly, this coincides with a similar fall in the living standards of our staff because we equate flat funding with flat pay packets. It is a recipe for low morale, instability and low productivity. Why volunteer to do more if you know you will get nothing in return?
At the recent Association of Colleges’ Finance Conference, I spoke about improving the financial health of colleges. If we can’t do much about funding rates, it leaves us two options: increase income or cut expenditure. We are fortunate that many of our income streams are open-ended. Attract more 16- to 18-year-olds or HE students and you get more money. Apprenticeship growth, too, has generally been funded. But growth is not easy in the face of competition and demographics.
As a principal, I feel a moral obligation to try to at least maintain the living standards of my staff. In a flat-funding world, that means that we have to make productivity gains of at least 2.5 per cent per annum to achieve that end.
I believe our sector would be radically transformed if we introduced a “lock”, rather like the “triple lock” for state pensions, guaranteeing our staff pay rises - say, in line with inflation or a minimum of 2 per cent.
This would force a change to the organisational mindset and make cost-saving part of the institutional DNA. The lock would drive the productivity improvement.
To develop money-saving habits like this, you need a set of tools that can be understood and applied by all staff.
Fortunately, some years ago the Young Foundation identified 12 types of economies. All start by thinking not about money but about saving time or cutting activity. Here are some we’ve used.
Pure economies are one-off savings when you close a service or centre. Economies of scale are those you derive from being bigger. Merged colleges just need one principal, for instance.
Such savings are also common in economies of specialisation: 10 teachers each teaching a single unit 10 times is much more efficient than each teaching all 10 less often. Students will be better taught, too. There is a reason why hospital surgeons don’t perform a heart operation followed by an eye operation. Delay economies, where you just put off spending, are also well used.
At Bedford College, we found some of the other economies really stimulated our thinking. Trimming economies are those achieved by making small reductions to what we do. For instance, Ryanair found that removing tray tables allowed faster flight turnaround times. We saved a lot on our cleaning costs by simply removing the hundreds of waste bins we had in every office. Similarly, circuit economies, where you invest more upfront to save later, produced great ideas. Spending more on getting student data and behaviour right in September generated less rework, less litter and fewer disciplinaries later.
Three controversial models generated the most ideas. Economies of visibility are those that change people’s behaviour by virtue of making things known. Just as MPs won’t overclaim expenses now that they’ve been exposed, we found publishing printer use, teaching hours against contract, even team sickness levels, all led to sharp improvements in productivity and efficiency.
Economies of commitment are those where you test whether people will undertake activity for you. Many local charities and hospitals run shops using volunteers. Colleges are charities but have we ever tried to use volunteers to run canteens, be teaching assistants, tidy grounds, so the money we save can be spent on teaching or put into student support?
Economies of responsibility seem more acceptable. This is about transferring work to the customer to save you money. Ikea doesn’t make its furniture, you do. It just sells the bits of wood. Similarly, you book your own easyJet flights. Why do we need enrolment staff? Self-enrolment would save a fortune. Why is my college taking student ID photos rather than expecting students to upload their own, and then checking them? This is what festival-goers do when they buy tickets to Glastonbury.
At my college, we’ve come up with a mantra: “Community drives curriculum drives people drives money, never the reverse.” It sounds idealistic but it is based on my experience at the former Further Education Funding Council.
We noticed that colleges with the lowest levels of funding tended to get better inspection scores, which seemed counterintuitive. We worked out that, if money is tight, you spend it only on the right things. The mantra we adopted, therefore, is one that tends to eliminate waste. Every pound you spend and every person you employ can be directly related to what the community wants.
These tools generated many new ideas and could be used by every team. They may be equally useful for you. If you come up with great ones, just make sure you let me know.
Ian Pryce is principal of Bedford College. He tweets as @ipryce
