Under the area review process, some college corporations will remain independent, some will form new groups and some will join existing groups. As the biggest college group in the country, we want to take the opportunity to share our experience in the hope that it may be useful to others.
Two years ago NCG (which was previously known as the Newcastle College Group) established a clear purpose and strategy which delineates responsibilities between the group centre and divisions, brings together cash flows and balance sheets, maximises efficiencies and maintains local operational effectiveness and accountability.
NCG consists of six operating divisions: three general FE colleges, two training providers – Intraining and Rathbone – and a sixth-form college. Three of the divisions were effectively taken over at the point of financial failure. Kidderminster College joining NCG was very different, however, and it is the lessons from that process that I hope are helpful.
A group needs to do at least two things to function. It needs to be able to move money around and gather together cash flows and balance sheets – to act as “the bank”. Money flows to divisions to respond to different recruitment trends, for example. A group must also performance-manage its divisions, and this is pretty straightforward.
A third policy – which is optional – is to provide certain functions centrally where scale or volume allows efficiencies.
The benefits of this are best demonstrated by Kidderminster College. The college was generating small but regular surpluses on a turnover of just under £10 million and it had been improving. However, the college was operating in a very competitive local environment and funding cuts were limiting its ability to develop further. It was a small boat in a rough sea.
So in spring 2013, the board of Kidderminster decided to undertake a full structure and prospects appraisal. The board concluded that joining a larger group would be the best option to preserve quality education in Kidderminster and, after a formal selection process, chose to join NCG.
From NCG’s point of view, we always set out to treat this new addition to the group as a merger. Culturally and ethically, we wanted to ensure that colleagues felt like equals, creating benefit to pursue a common purpose: to unlock potential through learning.
The basic benefits are clear. In its last year as a standalone college, Kidderminster made a surplus of £150,000. In its first year after joining NCG it made £600,000 of savings – £400,000 in back office cost reductions and £200,000 in procurement savings. Crucially, not a single learner-facing role was affected.
However, the current regulatory framework for FE does not support the creation of groups and could act as a barrier to their establishment.
To act as “bank”, NCG operates under single funding contracts with the agencies. This allows movement of money across divisions but comes at a cost. NCG, as the parent FE corporation, has a single Ofsted inspection, with a single Ofsted grade. The single grading applies to all provision within NCG, but, of course, is useless to a learner thinking about studying construction in Kidderminster or business at West Lancashire College, or to an apprentice in Southampton.
Officials in the Department for Business, Innovation and Skills (Bis); the Department for Education; and Ofsted recognise this barrier. For this year, the Skills Funding Agency has agreed to provide six funding contracts to NCG, including a protocol that allows us to move some money between contracts.
The Education Funding Agency plans to follow suit from 1 August. This means that data is captured and held at division level and this allows me, as chief executive and accounting officer, to delegate genuine responsibility for the quality of teaching and the curriculum to principals.
Governance where a local board of governors has delegated responsibility for overseeing quality and curriculum, and that can ensure that local stakeholders are genuinely engaged, will follow.
Currently, data management is held centrally, which creates inefficiency and bureaucracy, and blurs ownership. From 1 August next year, this will be held in divisions.
So NCG will become a national platform from which its operating divisions hang. Its purpose is to drive up efficiencies and act as the bank and performance-manage each of our colleges and training providers.
However, final responsibility for each college’s curriculum and the quality of teaching will rightly sit with the institution’s principal, who will be supported by a board with delegated responsibility to ensure local oversight.
A transparent Ofsted regime needs to follow – and we are assured by colleagues in Bis and in Ofsted that this will happen. This is no doubt why others have expressed interest in joining our group.
Joe Docherty is chief executive of NCG
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