Financial health is improving despite cuts

12th October 2012 at 01:00
Skills Funding Agency boss says colleges are rising to challenges

College finances are the healthiest they have been since the global economic crisis began, despite funding cuts, the chief executive of the Skills Funding Agency (SFA) has revealed.

Although staff at K College in Kent went on strike this week in a dispute over how to reduce an #163;11 million budget deficit, Kim Thorneywork (pictured right), whose appointment as interim chief executive of the SFA was announced in May, said that the overall financial position of colleges is improving.

"Where we are now is that we have fewer colleges in poor financial health than we had two years ago," she said, in her first interview in post, "because genuinely they've understood, responded to policy, restructured and got themselves in the right place for the future."

Four out of 10 colleges are now rated as outstanding for financial health, the agency said, compared with 29 per cent in 2008. The change has mostly come from colleges formerly rated as satisfactory improving their score: these have fallen from 37 per cent to 23 per cent of the total.

Ms Thorneywork believes that most colleges made cuts early so they would be less likely to need further restructuring despite more funding reductions ahead.

"The vast majority of colleges respond incredibly well and incredibly quickly to challenges," she said, adding: "I very rarely meet college principals who aren't very optimistic about the future. If you go back to 2010, there was a lot of gloom and doom and talk that 40 per cent of colleges would fall over and become inadequate. Well, that absolutely hasn't happened."

Some of that talk came from her predecessor, Geoff Russell, although it is worth noting that 80 colleges received additional support in 2010 to prevent them falling into financial difficulty.

But Ms Thorneywork - a former secondary school teacher, in contrast to Mr Russell's background in corporate accountancy - hopes the agency will embrace a new tone under her leadership.

"I hope they will feel that I do understand at quite a grass-roots level the day-to-day work of a college or training provider, interacting with and teaching young people and adults. And also understanding how to run an organisation, and having a passion for education and training," she said.

Ms Thorneywork said she would be adopting more of a collaborative approach with colleges and training providers, including testing out new funding rules and processes with volunteers before extending them to everyone. The SFA offered the results of its second annual survey of providers as evidence that the change was having an effect: 81.8 per cent said that the agency was effective in funding and promoting FE, up more than 18 percentage points on last year.

But Ms Thorneywork also acknowledged failings, such as the FE Choices website, which was intended to offer students and employers information about the quality of colleges and training providers, but which was riddled with errors and omissions, and largely ignored by the public.

"Is it perfect? At the moment it absolutely isn't. Will we be doing a lot more work on that going forward? Yes, we will," Ms Thorneywork said. "The information has sometimes looked a bit old and out of date. I think we can improve that."

Another challenge is maintaining the SFA's relevance as funding moves out of its control, with #163;250 million already committed to direct employer commissioning by the coalition and #163;1 billion promised by Labour should they come to power at the next election.

One way of measuring the SFA's achievement could be the fate of success rates: the agency may be forced to scrap them as the measure of FE quality if the Department for Education decides to abandon them at 16 to 19 because of claims that they encourage less challenging courses.

"They are potentially up for review across the board. But we want a single measure across the age groups - that would be the best position," Ms Thorneywork said.

She added that her focus is not on what the employer ownership pilot means for the SFA, but what it means for the skills system. "The prize would be a much bigger engagement and investment in skills. That's really important to the economy and growth, and really important to the current college and training provider base too, frankly," she said.

"But the trade-off against that is we just might not get those small- and medium-sized enterprises to come forward and be involved in training. I think that's the threat."

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