Ministers have ordered the appointment of an FE commissioner to troubleshoot failing colleges, potentially breaking them up and dividing their provision between free schools, university technical colleges (UTCs) and other providers.
The new skills strategy, published this week in a document titled Rigour and Responsiveness in Skills, sets out plans to appoint the commissioner, who will report directly to ministers and have responsibility for colleges that are graded inadequate, or fail on minimum standards of performance or financial management. Private training providers will continue to have their contracts terminated under the same circumstances.
Once called in, the commissioner will be expected to give a rapid response, reviewing the position of the college with the governors, principal and the local community within two weeks before deciding on one of three interventions: a new "administered college" status, the replacement of some or all of the governing body, or dissolving the college.
"It is wholly unacceptable that nearly 1.5 million learners are not receiving teaching that is rated as good," FE minister Matthew Hancock said. "Where colleges are failing learners we will be knocking on their doors and taking swift and effective action. It is a dereliction of duty to let failing colleges teach young people. We will not fail in our duty to act."
Under "administered college" status, the college will lose the freedoms and flexibilities that release institutions from targets set by the Skills Funding Agency (SFA) so they can respond to local economic need.
It will be prevented from changing staff and spending or transferring assets and liabilities without the commissioner's approval, and the process could result in restructuring or putting the college's provision out to competition for new providers.
The process resembles the rescue plan for K College in Kent, which ran up debts of more than pound;11.7 million after a failed merger and is now being split into two once again and offered to bidders at other colleges or private training providers from September 2014.
Under the intervention plans set out in the skills strategy, if a college is dissolved, provision could be transferred to free schools, UTCs, sixth- form colleges or other provision from the SFA. Although private providers are not explicitly mentioned, the document states that the SFA and the Education Funding Agency "will be expected to look creatively to identify sustainable, high-quality solutions".
"This another welcome step towards creating a level playing field between colleges and independent providers," said a spokesman for the Association of Employment and Learning Providers. "In recent years, we have seen several colleges buy local, work-based learning providers in order to get a better foothold in the employer-facing market, so there is no reason why investment can't flow both ways."
The new intervention regime comes as Ofsted is increasingly criticising teaching in colleges and downgrading them.
In 2011-12, 13 colleges were rated inadequate compared with just four the year before. However, in this academic year only two out of 36 colleges inspected have so far received the lowest grade.
Lynne Sedgmore, executive director of the 157 Group, whose former member Liverpool Community College dropped from outstanding to inadequate last month, said colleges had nothing to fear. "We think a fair and transparent process being put in place is something that we would welcome," she said.
But Ms Sedgmore raised concerns about whether local communities would have sufficient opportunity to register their support for continuing general FE ahead of free schools or UTCs. "I'm absolutely clear that general FE has the most vital, critical role in the locality," she said. "If this is a mechanism for the end of general FE, that's a huge mistake."
The Association of Colleges said that persistent college failure was very rare, with only one college in the past five years judged inadequate on successive inspections. Others, such as Kirklees College in West Yorkshire, improved from inadequate to good in about 18 months.
"The vast majority resolve their difficulties on their own," said Gill Clipson, deputy chief executive of the Association of Colleges. "The commissioner will have to deal with very few organisations, fewer than two or three a year. It feels slightly heavy-handed."
But the strategy states that colleges will only be allowed time to improve without government intervention where there is "exceptional" reason to believe that existing management can make the necessary adjustments. In those circumstances, the college will be expected to complete its turnaround in 12 months, with a six-month review.
Six aims of the skills strategy:
Raising standards through a faster, tougher regime of intervention in failing colleges.
Reforming apprenticeships with employer-set standards and external assessment at the end of training.
Creating traineeships, with work preparation and experience, English and maths, to help young people into jobs and apprenticeships.
Qualifications reform, reducing the number of vocational options for young people and adults, eliminating those with little uptake, lack of rigour or weak employer support.
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