At Cricklade College, Hampshire, the latest to be hit by financial scandal, the chair of governors resigned six years ago, explaining: “Sadly, I found that increasingly the board’s work was rubber stamping managerial decisions.” It had not “played a significant role in determining strategic direction, nor has it had a major influence on the setting of key objectives or academic goals”.

In nearly all college scandals, this one common factor has been the failure of governing boards to exercise real supervision over the senior management team: they were not sufficiently vigilant; or there was too close and incest-uous a relationship between chairs of governors and principals; or they could not get proper information from their management teams; or all three.

Incorporation in 1993, when colleges were cut loose from local-authority control, gave governors far greater responsibilities. They became the ultimate in free-standing institutions operating on public money. At the same time, the Conservative government encouraged the idea that they did not represent anyone or anything. Staff, student, and local authority governors were all seen as symptoms of the flabby old-fashioned public-sector way. The way forward was business governors encouraging principals to run their colleges along commercial lines. The result should have been predicted. Some colleges appeared to forget that, as David Melville, head of the Further Education Funding Council, puts it, “there is a difference between public and private money and how it can be spent”.

The scandal at Derby Wilmorton College in 1995 resulted in dismissal of all the governors - a step which has only been taken once since, at Wirral Metropolitan College last year. The lawyer who conducted the inquiry into Wilmorton, Michael Shattock, was strongly critical of principals - or chief executives as they then were starting to be called - who wanted governors to rubber-stamp decisions, and wanted staff to do what they were told and keep quiet. At Wilmorton, “the staff, understandably, reacted against a confrontationist management style”. As scandal followed scandal, the pattern became set: weak governors, bullying senior management, bullied and demoralised staff.

Governors, it is now recognised, have to be a real force in college affairs. The days when the principal could just get a few chums from local business to prop him up are gone. Achieving this requires changes in the composition of governing bodies, their powers, their approach to the work and the way they are informed and resourced.

Under new constitutions being phased in, the local community is being brought back in from the cold. The proportion of business governors goes down from a half to a third; there must be at least one governor to represent each of these constituencies: the local authority, staff, student, community, and (in sixth form colleges) parents.

Governing bodies must have a search committee - gone are the days when the principal could issue an invitation to join the governors over a good lunch. The role of the clerk has been strengthened, so that governors have a source of information independent of the management team they supervise. And the Learning and Skills Bill will give the Secretary of State power to remove, appoint and direct governing bodies where there are serious problems.

A great deal is being asked of and a great deal of responsibility given to governors but, unlike members of health authorities and trusts, they will continue to be unpaid. Jim Scrimshaw, chairman of the Association of Colleges and chair of governors at Barking College in north east London, says there is a crisis looming over recruiting and retaining effective governors. “It really is a demanding job: there’s a lot of information to digest and, if you get it wrong, you are named and shamed.”

He would not want payment for governors like himself - his company gives him time off so that he does not lose income - but he thinks those who run small businesses ought to be paid - “their time costs them money”.

He thinks the outstanding problem is governors’ liability. Are they personally responsible if things go badly wrong? If they are corrupt or grossly negligent, the answer is Yes, but he says: “What about a situation like Halton (which overclaimed pound;14 million) - the auditors have signed off the accounts, there seem to be good systems in place, but then you find something was going on behind the systems.” Unless they are crossing the line that separates governors from managers, they could fail to spot this and yet not be really culpable.

DANGERS OF BEING MATEY.

Derby Wilmorton is one of only two colleges where the Secretary of State has fired the whole governing body. In February 1995, Gillian Shepherd personally appointed a new group, and the result was “a very high calibre set of governors”, according to David Croll, who was appointed that summer as the new principal. This meant that, at a difficult time for staff relati2ons, when the college had to make staff redundant, he had the support of the Rolls Royce Aerospace board member responsible for human resources. “Governors are like non-executive directors in a PLC” says Mr Croll. “They are there as a resource, to test and to challenge. A sensible principal encourages them to question, for his own protection.”

Wilmorton has learned thelessons from its embarrassing past. Mr Croll says: “I have tocarry them (the governors) with me, not use them as a rubber stamp. I welcome their more interventionist approach.”

The relationship between the principal and the chair of governors needs careful handling, he says. “You should record your meetings and attempt to set upa formal structure to therelationship. Colleges fall into problems where it becomes a matey relationship between the two. A sensible principal will encourage governors to keep a close watch, for the principal’s own protection. You have tomaintain some formality in that relationship. It must not be too friendly.”

When colleges were told they must have student governors, Wilmorton was ahead of the game, with a well organised and resourced student union and two student governors, one of whom is the union president and who is paid a small salary by the college. But apart from that, Wilmorton is not keen on the idea of paying governors. “The consensus on my governing body is against payment,” says Mr Croll. “They do it as a public service. Payment would damage the nature of the relationship between thegoverning body and the seniormanagement team.”

BENEFITS OF A CLEAN SWEEP.

In January last year, the Wirral Metropolitan College board resigned en masse except for the staff governor. The following week there was a complete new board. David Blunkett, the Secretary of State, directly appointed eight of the new governors. They in turn appointed Ray Dowd as principal, so they were predisposed to trust him.

That was fortunate, because the new governing body and principal inherited debts of pound;9.7 million. They have focused firmly on recovery, and there has not been time for proper training as yet - but they are now starting to look at their training needs.

The Wirral board meets every month, which is more often than most, perhaps because they only have two sub-committees - the search committee and the audit committee. Other governing bodies tend to meet quarterly and have several sub-committees, which Mr Dowd thinks works against the development of a sense of teamwork and corporate responsibility. The Wirral system also prevents the chairman and principal forming a cabal and excluding other governors. But meetings do last five hours.

There is an independent clerk, but he is not full time. He is a former FE college vice principal who now clerks for four colleges. Dowd says that the clerk’s independence makes him lesssusceptible to pressure frommanagement. Because he does not hold another post in the college, there is no conflict of interest.

Mr Dowd gives a monthly report on finances and student numbers which, he says, ensures that governors have an effective checking mechanism, but also avoids potential areas of conflict between managers and governors. He is concerned to ensure governors do not act as executives, and to avoid staff being able to form a group that can lobby governors directly.

There is a programme of curriculum meetings with staff in the different departments, in the absence of management. About half of the 17 governors attend.

YOU GET WHAT YOU PAY FOR.

Colleges can learn from governance in the private sector, and in other parts of thepublic sector, says Adrian Davies, former chairman of the Strategic Planning Society. If there is any difficulty in getting and keeping the right people, colleges should consider paying them, he says.

Davies sees governors as being like non-executive directors in a company. He advises companies to have a special committee to find the right people - which the FEFC now insists on for colleges.

“You want to look for people with specific competencies who can bring an independent and flexible view,” he says.

Davies, author of A Strategic Approach to CorporateGovernance (Gower, 1999), has advised some private schools on governors. He suggests they look for people who run businesses, not to keep the institution close to business, but simply because they tend to be good at administration. “If they are experts in running businesses, they are better able to define the information they want. They can put themselves in the chair of the chief executive.”

Once governors are appointed, Mr Davies advises them to walk round the institution from time to time. “You need to know what’s going on on the shop floor.”