Colleges' resilience is vital in recession

Sandra Malone & David Barnes

It is a truth universally acknowledged, as Jane Austen might have noted, that just as in life there are anomalies and inequities, so too they must exist in education.

Looking across this complex landscape, one of the most persistent causes of resentment and disquiet is that felt by further education colleges when considering their financial model compared with that of school sixth forms.

While the disparity in funding acknowledged by the Learning and Skills Council (LSC) in 2005 as being potentially as high as 14 per cent in schools' favour can be attributed to historical factors, different oversight and management arrangements, the fact remains that FE colleges have, with some justification, been able to claim that they are regarded as the "poor relations" in terms of delivering 16-19 programmes.

The creation of the LSC should perhaps have done something more to challenge and push back this anomalous position - with, in effect, one single funding body continuing to treat differentially two key delivery arms. But while there has been some progress, the commitment of Ruth Kelly, former Secretary of State, to reduce the funding gap to 5 per cent by 2008-09 now looks certain to be missed, and it is clear that colleges still find themselves in the position of feeling that school sixth forms are attracting an undeserved and unfair premium.

Taken alone, even a 5 per cent difference represents for colleges a significant loss of potential income that has an impact on their financial health and their ability to invest in facilities and teaching staff.

Add to this differences in VAT regimes that affect schools and FE in different ways, with FE estimated to have "lost" Pounds 200 million in irrecoverable VAT in 2005-06, and a clearer picture emerges of a sector that may indeed have cause to see itself as the Cinderella of the UK education portfolio.

While one would not wish to deny schools the capital investment that programmes such as Building Schools for the Future have brought, it would be a hard-hearted individual who did not look at FE and wonder why, given the major role it has played historically in 16-19 education, it too has not received similar levels of political concern and intervention.

Yet FE colleges in the UK remain largely vibrant and future-focused institutions. They have proven themselves adept at working with a range of policy and organisational challenges in the past decade, and many of them have shown great vision and ambition in harnessing opportunities to compete at a level of significant scale and reach. This strength of character is going to become even more vital in the coming years as the impact of the economic recession and government policy bites.

Not only will colleges have to be responsive to changes in the funding methodology, increasing cost base, declining student numbers and rising costs, but they will also have to ensure that they can continue to provide good financial management at a time when public finance settlements will become ever more difficult.

There is a real opportunity for colleges to have a key role in the re- skilling of a workforce hit hard by the recession. However, the dangers are real that FE will once again be required to take on board significant reductions in operating budgets and direct grants.

For a sector that has proved resilient, creative and capable of maintaining momentum even when feeling frustration and resentment about differential funding, the challenge will be to continue to work within the inequities of the system while potentially being called on to deliver more from a diminishing public purse.

Sandra Malone and David Barnes, Partners at Grant Thornton UK.

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Sandra Malone & David Barnes

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