Efficiency crackdown could save FE up to pound;230 million a year

16th April 2010 at 01:00
Services company's plans to narrow savings gap between best and worst colleges may offset the sector's frontline cuts

Hundreds of colleges may be able to make efficiency savings worth millions of pounds that could make significant frontline cuts unnecessary.

Tribal, a public-sector services company that holds data on spending in about 750 separate categories at more than 100 colleges, said that the majority of colleges spend an average of 5 per cent more than the most efficient performers to carry out the same activities.

This gap, based on information from general FE colleges and tertiary colleges only, suggests that if the bottom three-quarters of colleges could spend as efficiently as the top performers, savings of up to pound;230 million a year could be realised, compared to cuts to adult education budgets next year of pound;200 million.

That upper limit for savings assumes an even spread of college size and turnover through the range of efficiency performance, although larger colleges usually achieve greater economies of scale. But it also assumes that top performers are not able to achieve any further efficiencies without cutting provision.

Martin Owen, director of consulting, education and training services at Tribal, said: "We think there's in the way of 5 per cent efficiency savings on their core income."

But he said the benchmarks needed to be applied carefully to take individual circumstances into account. Heavy reliance on engineering courses might inflate teaching costs and some colleges in London spend heavily on student services, for example, to attract students from across the city.

Colleges are already pursuing efficiency drives, and Mr Owen said the gap between the most and least efficient had closed considerably over the 15 years Tribal has been measuring spending. A National Audit Office report more than three years ago criticised profligate spending, such as pound;14,500 on artificial pot plants at one college.

Lynne Sedgmore, executive director of the 157 Group of leading colleges, said funding reductions needed to be phased in over time if colleges were to soften the blow with improved efficiency.

"In FE, frontline services are being affected too much in this first round of cuts," she said. "What we are asking for is a strategic, long-term, sustainable stepped efficiency programme that we can work on together in the interests of learners."

Ms Sedgmore said funding decisions should take more account of how efficient colleges are, because streamlined institutions facing funding cuts will find it harder to avoid damaging frontline services.

"There comes a point where you can't cut any more without causing damage," she said.

Rather than targeting smaller, less efficient colleges for cuts, however, she said more attention should be paid to other parts of the system that were a greater drain on resources, such as small school sixth forms and FE's large number of Government bodies.

The 157 Group has proposed saving pound;80 million by funding school sixth forms at the same rate as more efficient colleges, for example.

Ms Sedgemore said: "We should not look at colleges in isolation but we should look for efficiencies in the whole of the system."

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