Colleges could be allowed to keep the proceeds from selling off campuses to invest in learning technology, the chief executive of the funding agencies has revealed.

In an exclusive interview this week with TES, Peter Lauener said that the Skills Funding Agency (SFA) would consider forgoing the revenue owed from property sales to support colleges that were “thinking creatively” about rationalising their assets.

Currently, colleges that sell off buildings originally funded through capital grants must return a fixed proportion of the proceeds to the SFA. While institutions may be permitted to reinvest capital funding in new physical assets, spending such money on digital technology for distance learning has, until now, been largely off limits.

But, as colleges across the country look to merge and create partnerships to find efficiency savings under the area reviews, the comments from Mr Lauener have been welcomed by sector leaders. They claim that the move could enable the development of colleges “fit for the digital future”.

In a rare interview, Mr Lauener, who also heads up the Education Funding Agency (EFA), told TES that he expected the financial health of the FE sector to worsen, and refused to rule out a future merger between the SFA and the EFA.

On the issue of colleges selling off assets funded by the SFA, Mr Lauener said that, while under “normal circumstances” the body would claw back a “significant” part of the proceeds, he was willing to consider waiving this.

“If that [funding] were to be reinvested in something, perhaps as part of a wider restructuring, we might well be happy to look at giving up our right to recover our asset, if it was creating something new,” Mr Lauener said. “We need to look at propositions as they emerge. But I think we will see that kind of site rationalisation. There’s bound to be [more].

“Thinking creatively about good use of sites is really important, and the nature of training and education has changed. You don’t need the large buildings always.

“We’re not in a virtual world where everyone’s going to learn on Moocs [massive open online courses] and things like that, but there are certainly opportunities around the country to realise the value of assets.”

Mr Lauener’s comments about funding were welcomed by Bob Harrison, a member of the Further Education Learning Technology Action Group (Feltag).

“I see this as an opportunity for us to take the assets currently trapped in land and buildings, and reinvest them in a differently skilled workforce and a digital infrastructure that allows us to take learning to where the learners are, rather than expect them to travel,” said Mr Harrison, who is also education adviser for Toshiba Information Systems and chair of governors at Northern College. “We need a realignment of assets from an industrial base to one fit for the digital future.”

The 2014 Feltag report called on the government to ensure that colleges seeking grants for new buildings had explored “alternative delivery methods”.

Julian Gravatt, assistant chief executive of the Association of Colleges, said that it was “really good news” for colleges that the SFA was open to different approaches towards land sales. He added: “There needs to be some flexibility on this, because quite often people have built buildings on assumptions that turn out not to be true several years down the line.

“There might be opportunities to do something different, and the assets that some colleges have can help in that process.”

Peter Lauener on…

Area reviews

“I think it’s unleashed a willingness to change. People think actually this is an opportunity to take stock and see if there are better ways of doing things. There are lots of discussions around the country even in advance of the area review timetable; people saying, ‘Can we do this better? Shall we start working together? Should we think about a merger?’ I think that’s good. What’s really important about the area reviews is that we’re not laying down the law from the centre.”

Subcontracting

“There are all kinds of circumstances in which subcontracting can be a good thing with benefits on both sides. Where we’ve received information that calls into question whether [subcontracting arrangements] are working or not, we will investigate. I think that any corporation should have a regular look at its subcontracting. What are the benefits to the community? The benefits to individuals? They should seek their own assurance it’s not being done just as a money-maker.”

Funding pressures

“We do expect the situation to worsen. We’ve obviously seen a much better financial settlement for 2016-17 onwards so there’s some relief for colleges, but I think the situation is that colleges will still need to address financial weakness. The sector is not in a strong financial position, which is why the government has undertaken the area reviews around the country. We’re not in a position where there can be any easing up of the financial restructuring that individual colleges undertake, and the pressure to look for more efficient, more effective restructuring and mergers.”

An EFA/SFA merger

“I never took the job on the basis that there would be a merger. People in the sector say, ‘Of course you should join up - if you could have one person attending a meeting rather than two or three, then go for it. And if you can save on your finance operation then go for it’. Because that’s what they’re all doing. Who knows? There are certainly no plans for [a merger], and the things I’m doing, I’m not doing because of that. I’m just getting on with making sensible changes. I wouldn’t rule it out, but it’s not something I’m planning for.”

This article is from the 5 February issue of TES. Pick up a copy of this week’s TES magazine from all good newsagents. To download the digital edition, Android users can click here and iOS users can click here.  

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