As another difficult year looms for colleges, governors and managers may be soothed by a comment in a recent Breakfast with Frost programme that “93 per cent of worries are not realised”.

The effects of the last Budget are now beginning to sink in. The public was reassured to find that educational expenditure was to increase in 199697 by almost Pounds 800 million. Few noticed the unexpected cut in further education spending.

In 199596, FE colleges achieved efficiency gains of 11 per cent, reported in The TES to be a record in the public sector. Their reward? After three years of growth, funds allocated by the Further Education Funding Council in England are being cut by Pounds 53 million next yearwhile over the same period student numbers will be expected to increase by 50,000.

The squeeze is to be achieved by “continuing efficiency gains” of 5 per cent a year, a code for job losses, bigger classes, worsening pay and conditions. A key challenge for governors is to ensure that their colleges remain financially viable with high standards of teaching and learning.

Any business dependent for most of its income on one customer is vulnerable. Colleges are highly vulnerable if FEFC funds are reduced or allocated under a new method. This year governors might consider setting annual targets to increase the amount of income earned elsewhere.

Governors, particularly those from the business world, can actively promote the services of their college within the local business community. Business trips abroad can be used to raise the profile of their college and help in generating more students from overseas, particularly as technical and vocational education is crucial to emerging countries. The public relations part of the governor’s job is often overlooked.

Governors must also seriously consider mergers with other colleges if long-term financial health is uncertain and if there are too many institutions in the area chasing too few students.

Lurking in the wings is the report of the Committee on Standards in Public Life chaired by Lord Nolan, soon due to report on the conduct of FE corporations. Evidence has been sought and obtained from a wide range of sources (no doubt from many with an axe to grind) on the accountability of governing bodies.

Governors unexpectedly find themselves swept along by public concern about the standards of conduct of public servants - all because two members of Parliament accepted cash for questions in the House of Commons.

Nolan will look to strengthen lines of accountability from college corporations to the taxpayer through parliament. But its bark may be worse than its bite.

The report is likely to recommend what many governing bodies already have in place - a code of conduct and register of interests, an annual meeting open to the public, a transparent process for appointing members and staff and student governors to make up, what FEFC chief executive Sir William Stubbs calls, the “democratic deficit”.

Nolan’s recommendations - which will not have legal force - will I hope balance the need for accountability and openness with a recognition of the key role that governors play as unpaid public servants and the importance of not having red tape constraining what they can and can’t do.

Every governing body should carefully review its own operation, especially the appointment of members and its composition, to ensure procedures are squeaky clean. Governors need to act now rather than waiting to respond to the Committee’s recommendations.

The early part of 1996 will see much speculation on the successor to Sir William Stubbs as chief executive of the FEFC. He will be a hard man to replace. Of central concern to governors is whether the appointment - by open competition - of the new chief executive will mark a change in the policy and operation of FEFC and its relationship with colleges. Will the council become less centralist and more regionally focused? Will the funding methodology be radically altered? Will its consultation procedures change?

At about the same time that FEFC’s chief executive is being announced, a new body may be rising from the ashes of the Association for Colleges and the Colleges’ Employers’ Forum. A calm has descended as representatives of both organisations (almost) speak nicely of each other and difficult negotiations take place to agree the aims and overall political stance of the new association and the method of electing governors and chief executives to its board.

Never can the creation of a new body have so much support. The vast majority of colleges and indeed civil servants, exasperated by having to deal with so many representative organisations, want it. A crucial element is the attitude of sixth-form colleges. If they fall in with the new body, we will at last have a formidable organisation speaking for the whole sector and ensuring the voice of FE is heard at policy level by the government and FEFC.

So, towards the end of 1996 we will have a new FEFC chief executive and a new association representing the interests of all colleges. The cutbacks in FE funding will have begun to bite. Nolan will have been and gone. Other important reports such as the recent Higginson Report on learning and technology and the Sir Ron Dearing Review of 16-19 qualifications will begin to have an impact. The general election will be drawing nearer.

Governors and senior managers should aim in 1996 to set their own agenda rather than respond to the dictates of others. Maybe a belated New Year resolution for governors might be always to “act rather than react” and to take up the real challenge of making their colleges truly independent and accountable.

John Graystone is chief executive of the Association of Colleges in the eastern region.