Fearful principals sought mergers

Most college mergers over the past five years were pushed through by principals fearing for the future of their own establishments, a study by leading management consultants reveals.

A study of a 10 per cent sample of colleges by consultants KPMG urges them to take a more dispassionate view of the future and review all post-16 provision in their area - including school sixth forms. The report's publication is timely given the Government's call for closer co-operation between colleges and schools.

The report says: "At least half of the colleges in the sample identified their merger as partly defensive. That is to say, it was done to avoid the possibility of a partner college merging with another potential competitor."

In some of the 29 mergers in further education since incorporation in 1993, the partners might not necessarily have been the right ones, according to the study undertaken for the Further Education Funding Council. In some cases alternative options would have involved three, rather than two institutions. Further mergers among colleges which have already linked up cannot be ruled out, KPMG says.

In some cases the colleges themselves said a "complete solution" would have been a merger of all the FE providers at the same time, in order to eliminate competition and gain the maximum efficiency savings. But if some other providers had not been interested, the merged institutions at least felt they were in a strong position in future negotiations on the issue.

Overall, mergers have been successful, leading to improvements in the quality and range of curriculum offered and cost savings. In most cases the reason for merging was not to make cost-cuts but to preserve high-quality provision in the locality and protect courses which might be at risk.

Some smaller colleges were concerned that the risk to their identity and that applicants might be discouraged from applying to the merged college. They used extensive marketing in the run up to the merger to overcome such a risk.

Savings in full-time teaching posts following merger had been minimal. In several colleges teaching staff numbers had been substantially cut as part of restructuring, or posts had been left vacant because of the impending merger.

"There was a clear indication that, in order to provide for a smooth merger and to maintain staff morale, some colleges had not addressed the issue of teaching staff costs as robustly as they might. Such colleges believed that in the years ahead merger would put them in a position where they would be able to achieve considerable reductions in teaching staff through natural wastage with consequent staff savings. Savings would not have been achievable without merger," says KPMG.

The Financial Benefits of Merger of Further Education Colleges is published by the FEFC, Cheylesmore House, Quinton Road, Coventry

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