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Market-makers run the gauntlet of rivals

A vocational centre, set up in secret, has become a test-bed for management strategies. College principal Chris Hughes regards himself as a persuader not a poacher - yet describes the hundreds of students successfully enrolled from under the noses of his college's rivals as "apples ripe for the picking".

It is an apt description, though perhaps one with which his neighbouring colleges in Wearside might disagree.

For this summer, out of the blue, Mr Hughes, principal of Gateshead college, and his governors opened a satellite vocational education and training centre in Washington, a new town and suburb of Sunderland. Planning permission was given on the former headquarters of sports-shoe manufacturers Nike on the last Thursday of August. The following Tuesday staff moved in and the following Monday pupils started to enrol. The speed of the development, carried out in total secrecy, stunned local competitors.

Though partly prompted by financial pressure from the Further Education Funding Council for institutions in the post-16 sector greatly to increase student numbers over the next three years - the move sent tremors through the local colleges. There was an immediate response.

Mr Hughes says: "For years the Sunderland colleges had said they provided post-16 education to the people of Washington, but within weeks of our opening the annexe one of them, Monkwearmouth College, opened up a Washington Centre. "

It would be easy - but foolish - to dismiss the situation as simply a local dispute. With institutions under tremendous pressure to improve staying-on rates in order to increase budgets the tactics employed by Gateshead college have attracted significant attention from within the sector. Since the launch of the annexe Mr Hughes has received requests for information and visits from other FE institutions.

The idea for the annexe was born at Easter when the directors of Gateshead were working on the college's accommodation strategy and noticed a sizable number of students came from the Washington area. Having spotted a possible gap in the market, the college hired a team of market researchers to interview more than 400 local residents and find out their educational background and requirements for further training.

They discovered many young adults in their 20s and 30s who were receptive to the idea of returning to college and who wanted somewhere on their doorstep where they could study IT and business-based courses.

They wanted to learn in a supportive no-fuss environment, gaining qualifications which would help them get a job in an area where approximately 15 per cent of adults are out of work. An agent was hired to negotiate a Pounds 1 million deal for a 10-year lease on the first floor of the former Nike building which the college can sever at the end of the second or fifth year if needed.

"This significantly cut the risks involved when setting up a new college in a specially-built centre," explains Jeff Glasgow, director of finance and administration at Gateshead College.

"At first they were offering us a get-out clause at the end of our first year, but it is enrolment figures for next September which will be most significant. Our target for this academic year was 2,000 enrolments - it is going to be increased for next September because we have already exceeded our expectations. "

As a result of the enormous demand for places at the centre its directors are now talking in terms of funding units - the new way of calculating costs, devised by the FEFC. "Units" of cash are paid for enrolment and retention of students and for their results. Values are also weighted in line with costs of teaching and supporting different students. It is seen as more equitable than the old method of student headcounts.

The Washington annexe managers were originally pitching for 10,500 units now the forecast stands at 23,000 units for year one - the original target for year two-and by year three they are aiming for 50,000.

Though delighted by the response, Chris Hughes says minimising the financial risks involved was a key to the college's drive to find new ways of expanding, since no centre could guarantee the students would be there even though a market niche had been identified.

He says: "This is the sort of balancing act which colleges need to know for the future how to 'out-source' and 'in-source' and how to make education cost-effective.

"We then started to look at flexible staffing, keeping numbers down to about 50 and the costs down to about Pounds 250,000 and running the centre on the back of the main college using networking of information technology.

"Washington has become our test-bed for some new ways of managing and running a learning environment and we are now looking at other possible satellite centres".

As the students settle down to courses which include GCSEs, A-levels, teacher training, business studies, computing and IT, and care and counselling, Chris Hughes is anxious that the real issue sparked by the expansion of Gateshead college should not be overlooked.

"If you are not moving forward in today's educational environment then you are moving backwards," he says. "Colleges need to be looking at meeting needs and there is so much not being done in the post-16 sector in this country."

And so though the college originally aimed at recruiting adult learners back to education it would now be looking at meeting the needs of school-leavers in response to local demand, he says.

Jeff Glasgow agrees: "What we are really trying to do is to increase participation generally, so this has not been about the so-called 'poaching' of 1,000 students from neighbouring colleges, but about persuading 1,000 people who would otherwise have not entered FE to come here".

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