Is there life after debt?

27th June 1997 at 01:00
How does a college get into, and out of, a financial crisis? Neil Munro reports

Clydebank College has such a proliferation of promoted staff that the hours they have free from teaching are the equivalent of 35 full-time posts - almost exactly the number which the management said it had to shed to wipe out a deficit of Pounds 826,000.

This is only part of the inheritance with which Hugh Walker, the new principal, and Stuart Niven, the new board chairman, are having to wrestle to bring their costs into line with the rest of further education. Spending on staff was Pounds 1.2 million above the national average in 1995-96.

The college was this week engaged in a race to strike a deal with the unions representing its 344 academic staff before the end of the session today. The College Lecturers' Association, with 200 members at Clydebank, narrowly rejected a package which would have increased their weekly class contact from 21 to 24 hours.

The management has now dropped that change - but at a price. The money it had set aside for a salary increase in the current year is being used to help clear the deficit. This leaves a Pounds 66,000 shortfall which means only six posts have to go, hopefully by retraining, redeployment and secondments. It is quite a contrast to the 33 potential redundancies signalled to the staff only a month ago.

The unions are not happy at having to choose between their conditions and a salary increase. "If people were pushed into a corner they would probably choose to retain their conditions," says Alan Ferguson, the CLA branch secretary. "But these problems are not of our making and we don't see why we should be expected to pay the price for their existence."

It is a familiar scenario of colleges having to rebalance their books although, in Clydebank's case, it is being played out against the rigours of a funding formula which rewards college growth in an area hit by what Mr Walker describes as "total social and economic collapse".

This deprivation is acknowledged in the Scottish Office decision to designate West Dunbartonshire as a priority partnership area. "It would be impossible for us to go on to the streets of Drumchapel and expect to recruit to any significant extent," Mr Niven says. The availability of student bursaries is another key factor in a college's ability to expand.

Clydebank, which has had to borrow from the banks to keep itself afloat, has been particularly badly hit this year because government funding is based on statistics for student numbers from two years ago when the college was underperforming, a problem which the Scottish Office acknowledges. This means that it suffered the worst grant settlement this year of all the colleges, apart from the 11 which were financially cushioned to restrict their losses to 6 per cent.

But Clydebank has no safety net and lost Pounds 372,000, which is 5.7 per cent of its grant, on top of a reduction in 1995-96 of Pounds 300,000. This is the college's punishment for student growth of only 2.9 per cent between 1994-5 and 1995-6 when others were achieving some 15 per cent.

Mr Niven, who was formerly vice-chairman of the board and is the retired principal of the Scottish School of Further Education, admits that the board did not have the full picture at the time. "We had no data on relative performance," he says. "The assumption we made was that we were growing, which was correct, but what we did not know was that the growth was nowhere near the expansion in the rest of the sector."

Mr Ferguson does not spare the college board and senior management who were in place when the crisis began. "The only person who can really claim to be squeaky clean is Hugh Walker because he is a new principal," he says.

Mr Walker acknowledges that he found a troubled, isolated college whose staff were sceptical and distrustful at least on the reporting of financial matters.

He set in train changes such as intensive consultations, surgeries, and simple moves such as putting the papers for board meetings in the college library. Consultants were called in to help devise a "corporate, all-through communication strategy" based on team briefings down the chain of command.

The college has also been trying to diversify away from its historic reliance on engineering into areas such as beauty therapy, theatre arts and music. Old customers such as Singer, John Brown's and United Biscuits are no more.

Mr Walker says they are now going "full-speed ahead for a commercial, income-raising strategy accompanied by a strong lifelong learning strategy". But old friends will not be forgotten as links are kept with local schools and evening classes are developed (the college runs all the evening classes for East Dunbartonshire Council).

"We have been doing a lot of constructive work such as internal redeployment and voluntary severance alongside the harder-nosed activity," Mr Walker stresses, "which means we have been able to avoid compulsory redundancies to date." Some 39 staff have taken early retirement over the past three years, although Mr Niven says that route is now well-nigh exhausted. Greater productivity from the existing staff is the only solution left.

Clydebank faces a formidable challenge of bringing its costs into line in a five-year recovery plan agreed with the Scottish Office. It is forecasting 5-6 per cent growth for each of the next three years.

Mr Niven says: "We cannot assume we will be able to continue at that rate after three years, but I have to hope that we can grow faster than some others who may have peaked."

But Mr Walker points to the perils of "forecasting through a period when the funding mechanism is being reviewed and when we now hear that a new system may not be in place for 1998-99".

Another uncertainty will arise from the much more intense competition for European money when bidding is opened up from 1998. Hitherto cash was paid out to colleges serving the most deprived areas on an historic basis. Clydebank was one of the most successful at accessing European funds, the total now stands at Pounds 900,000.

Mr Walker says that, despite these imponderables, "we have no option but to plan for growth. Such a strategy is essential for us".

It is also an essential strategy for Clydebank: the college is the town's third-largest employer.

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