My teenage years were spent in Stockport and for the past 20 years, my office has been 20 miles north of Luton. They are both sizeable towns whose FE colleges were once large and outstanding. Both are now a shadow of their former selves. They became the subject of intervention a decade ago and have remained in difficulty for much of the period since.
Neither is now an independent entity, both merged into bigger, better colleges. Thankfully, there has been an upturn in the fortunes of both in the past few years but it would be difficult to conclude that intervention led to swift recovery.
Background: Four secrets to a successful college merger
The approach to monitoring and intervening in the college sector has changed remarkably over the past two decades. The current approach puts huge faith in spotting danger remotely using data. When I worked at the Further Education Funding Council immediately after incorporation, we were required to visit every one of our colleges once a year, and weaker ones once a term, and expected never to miss a problem. As someone responsible for two regions, Catholic colleges and specialist colleges, I had a portfolio of about 150 colleges, which meant a lot of time on the road.
We had to create a model for assessing risk, especially financial risk. While most expected us to devise a clever set of arcane accounting ratios to do this, we found the best indicators were qualitative and behavioural: does the principal get on with the chair and FD? Is the principal out more than in?
Does the chair have an office? (definite warning bell!) Does the FD have a handle on student numbers? We reported any big problems (we had a “three blobby” scale) to our big boss, Sir Bill Stubbs, who would call in a principal for a chat and the problem was quickly addressed and shortly disappeared.
The reliance on data
We now live in a more transparent age, and one where the volume of providers is much larger, so there has to be much greater reliance on data, but data is often of very limited use. Most of the data that colleges submit is either current or historic. Forecasts are unreliable because we tend to forecast what we know a recipient wants to hear. As a result, much intervention now has three common outcomes: the principal goes, the chair goes, the college goes (through merger). Often, sadly, these are accompanied by a fourth: lots of staff go, too.
Data can be a powerful predictor of problems but not the data we submit. Google can predict flu epidemics better than any health service from analysing searches for symptoms or medicines. It can predict whether you are thinking of leaving your partner or planning a family. Amazon knows which books you’ll buy before you do. Tesco could probably pack your weekly shopping even before you order it. If the Education and Skills Funding Agency had access to all our search histories, I suspect it could predict colleges in trouble as people start looking up things like insolvency rules or redundancy entitlement or tackling high blood pressure. Information in accounts a year out of date can’t predict very much at all.
I would suggest that the only data that should cause alarm is any downward trend in student numbers. A lot of students stay in college for more than one year, so any decline is likely to continue a while, and initially the full scale of the downturn is masked by this progression. Colleges are largely fixed-cost operations in the short and medium term. It is very difficult quickly to reduce staff costs, even more difficult to reduce premises costs and impossible to reduce depreciation costs. In contrast, income quickly reflects reality. Elastic income and inelastic expenditure is a wonderful combination when you grow, a nightmare if you shrink.
A financial mess
Given that we have been going through a long period that might be termed “Honey I Shrunk the Sector”, it is no surprise we go barely a week without a bad news story about a college in a financial mess, even before you factor in the real-terms cuts to our funding rates.
If we want to grasp the issues before they become ones that mean a decade of low numbers, and avoid the costs of years of intensive scrutiny and poorer service to the communities affected, we need to go back to a more human, face-to-face relationship between regulators and colleges that supplements the data scrutiny.
Even if you are not in trouble, or don’t think you are, an annual meeting is good for everyone’s wellbeing and acts as a natural balm to potential uncivil emails that tend to develop if you don’t know the person you are emailing. And if you are in trouble, or on the road to trouble, intervention with a human face will produce more honesty and better outcomes and will be identified much earlier.
As always, Bruce Springsteen puts it far better than me:
“I ain’t lookin’ for prayers or pity
I ain’t comin’ round searching for a crutch
I just want someone to talk to
And a little of that human touch”
Ian Pryce is chief executive of Bedford College