In a recent article entitled ‘Demographics is Destiny … But,’ I argued that the key to the financial health of most FE Colleges would depend upon them maintaining their market share of 16-18 year old students.  This was in the context of an increasing number of 16-18 year olds in the next 5 years as the demographic trough of the early 2000s reverses.

Implicit in this assessment is the existence of a market in which colleges and schools compete to enrol young people.  However, recent developments in FE appear to reflect a view that we are moving away from a market that is red in tooth and claw and towards a more managed market (1). The process of area reviews initiated in 2015 was, in effect, a direct refutation of free market economics which would have argued for financially stressed and failing colleges to have been allowed to dissolve, with the market re-providing what would be lost through their demise.  Likewise, the apprenticeship levy, through which Government takes money off employers as a hypothecated tax, and hands it back to them to spend on a set of controlled and regulated products is hardly the epitome of Milton Friedman’s thinking.

The recent FE White Paper takes this thinking even further, requiring colleges to collaborate in order to meet skills needs identified in a Local Skills Improvement Plan (LSIP) and in envisaging colleges being judged on shared outcomes.  But even if the market in FE was never pristine, the instinct toward competition is deeply embedded. Moreover, a range of performance metrics and funding opportunities will continue to encourage competition between colleges, and between colleges, independent providers and universities.  In fact, the Government seems, in this and so many other ways, to want to have their cake and eat it.   

How then can colleges respond to the apparently contradictory demands of both competing and collaborating?

When I was asked recently by a group of West Midlands Colleges – the Further Education Productivity Skills Group – to look with them at how greater collaboration, that went beyond the synthetic and superficial, could develop between the colleges and with their shared partners, we considered 5 propositions:  

  1. Collaboration is easiest when funds are plentiful, but is most necessary when funds are scarce.
  2. Collaboration needs focus (and/or an external threat) to engender commitment.
  3. Collaboration is most likely between partners with differentiated functions, or where overlaps are well understood.
  4. Collaboration prospers in conditions of trust and reciprocity.
  5. Collaboration in complex systems is best incentivized rather than directed.                                                 

As to the first of the propositions, funding in further education has clearly been under enormous pressure over the in the past decade, but with the 2015 spending settlement, the decline in FE funding was at least arrested.  It remains to be seen if the forthcoming spending review will bring about increased funding, but even if it doesn’t, the increased nos of 16-18 will, at least, provide some respite for hard-pressed colleges.  If the funding pressures do recede, it remains to be seen if colleges continue to compete, or if they see an opportunity to collaborate.  

This is where proposition two may come into play and where the accountability proposals in the White Paper may kick in; but only if they are carefully constructed and intelligently applied. In being judged collectively, the imperative for colleges may shift in recruitment from one of ‘any bum on any seat, to one of the right bum on the right seat.’  

Such an approach would require collaboration between colleges over the curriculum offer across an area and perhaps also collective recruitment, which takes us on to propositions 3 and 4.  Of these, proposition 3 is hard to achieve without a measure of top-down action, preferably incentivization (as per proposition 5). rather than direction.  So far as proposition 4 is concerned, writers like Binmore and Cialdini have emphasized that trust and reciprocity are built incrementally over time; this then argues for more stability in policymaking in FE policy and funding; the jury is out if the latest White Paper will usher in such stability and constancy of purpose.


(1) As Ewart Keep and others have pointed out, it is a moot point as to how ‘free’ the market in FE has been since 1992. The best description is in Ewart’s words is that there has been a‘quasi-market.’  

Author: mo