Efficiency must not inhibit enterprise
Have you noticed our national obsession with value for money? Woolworths prides itself on it. Supermarkets go to war over it. Politicians back detailed investigations into it. And, with the Learning and Skills Bill, inspection will routinely report on it. Or, more fully, the Bill places a duty on inspectors to keep the Secretary of State informed about the quality, standards and value for money of post-16 education and training.
Value for money embraces the three Es: economy, efficiency and effectiveness. But, textbooks suggest that studies of the concept focus on performance.
No 1 is managerial systems and procedures. This is based on a review of the processes by which needs analysis is carried out, objectives set and performances measured.
No 2 is economy. Economy of delivery is straightforward and usually linked to a unit - cost analysis over time and between similar organisations. It is a simple measure of whether or not you are getting the best return for each pound spent.
With No 3, efficiency and effectiveness, things get trickier. Efficiency is difficult to assess and often centres on checklists of good practice, which we certainly are not short of. But assessing effectiveness is the most difficult part, involving a study to determine if objectives are being achieved.
The big question is how far can a value-for-money assessment consider the full range of institutional responses to learners' complex needs? A study by the Further Education Development Agency showed how varied our customers are. Students are differentiated by age, gender, class, ethnicity, level and type of study, and colleges offer a mixed economy of vocational, academic, higher, adult an basic education.
Can any measure realistically consider all of these? How do you compare the "value" of weaning someone from drug addiction to a regular job and getting a middle-class kid through A-levels?
Measuring value for money in individual institutions is a minefield. But, it will also be measured across an area. Any process will have to cope with the range of provision at an institutional level and in a given area. Which gives weight to the view that local learning and skills councils will be increasingly drawn into creating centres for excellence. Or, as Chris Woodhead, the Ofsted boss, put it in his recent controversial address to the Royal Society for the Arts, "We certainly need to take a strategic overview, both of the pattern of institutional provision area by area and of the nature of the contribution each institution is making to meeting local needs."
It is early days and we don't have any real indications of how the inspectorate is going to handle value for money. But one thing is clear: flexibility is the key. It is encouraging that the Public Audit Committee recognises the importance of flexibility and gives this advice to its auditors. It remains important to ensure proper accountability, but this must not be approached in a rigid way which might mean missing opportunities to deliver better value for money.
The arguments for value for money are too compelling to ignore. As Adrian Perry, principal of Lambeth College, said, it is "difficult to oppose the concept of value for money without seeming to advocate or, at least defend, waste and inefficiency".
However, we must preserve innovation and enterprise in post-16 education and training at all costs.
Chris Hughes is chief executive of the Further Education Development Agency