Put your heads together
Colleges could find themselves sharing resources on a scale not seen since they became independent of local government under radical plans to reduce their running costs.
The savings could be used to speed up the national building-improvement programme aimed at smartening up the environment students work in.
A task force set up as part of the Learning and Skills Council's Agenda for Change is examining ways of saving money by using further education's combined purchasing power.
It is likely to recommend that colleges collaborate and share resources to negotiate better deals for goods and services.
Henry Ball, the LSC's south-east regional director, who is leading the quango's efficiency drive, said: "Instead of spending money on smoke going up the chimney, we can spend it on frontline services. It is about colleges deciding to come together to be more efficient and potentially improve the quality of service in their joint best interests.
"If three or more colleges get together to have a joint payroll service, they may find they can have a more sophisticated system they cannot afford themselves.
"There are already colleges engaging in all sorts of collaborative dialogue. The fact that they agree to have a joint service should not restrict their independence."
He estimates that colleges spend pound;700 million a year on goods and services. A one per cent efficiency saving would yield pound;7m, he said.
"There are huge savings to be made in IT procurement," he said. "Whatever you buy, paper and computers, tables and chairs, gas and electricity, if you go for the bigger deal you have the potential to get costs down."
Colleges which have merged have already discovered the benefits of economy of scale. Mr Ball stresses that such co-operation should not be seen as a step to merger, although this has happened.
Crawley college merged with Haywards Heath sixth-form college to form Central Sussex college in August.
Russell Strutt, the principal designate of the new college, calculates that this will save the college up to pound;300,000 a year in terms of spending on goods and services.
He said: "We had been collaborating to create combined back office functions, and that was why we merged. There are tremendous efficiency gains to be made."
He said the college will save up to pound;60,000 a year by having one joint management information system instead, halving costs at a stroke. An additional pound;60,000 will be saved in software licence fees and support.
The savings will help to finance a pound;24m rebuilding and refurbishment programme, which will in turn lead to even greater savings.
The recent completion of two new pound;9m buildings at Crawley college is already saving pound;60,000 a year in heating, cleaning and maintenance costs, he said.
Mr Ball believes that, if colleges can stop burning money unnecessarily, FE can save enough to bring forward its target to renew its estate in five years.
The current target is for all colleges to have improved or replaced their buildings by 2015. He wants that target to be reached by 2010 through effective use of efficiency savings.
Efficiency and business excellence is one of the six themes on the agenda for change, alongside skills, quality, funding, data and reputation.
Before incorporation, in 1993, the efficiency of a college was measured solely by staff-student ratios, taking into account the average class size, and the average lecturer hours compared with student hours.