Association of Scottish Colleges
Updating Governance in Scotland's Colleges
This paper:
- Summarises recent and current developments with governance and accountability in Scotland's Colleges
- puts forward ASC's suggestions for the governance and accountability workstream of the Review of Scotland's Colleges
- suggests possible research topics to be commissioned for the review
BACKGROUND
Scotland's Colleges of further education were incorporated as independent corporate bodies in 1993. Each incorporated college has its own Board of Management consisting of twelve to sixteen members, four of whom come from the college (the Principal ex-officio, and one representative each of students, academic staff, and support staff).
Non-college members of the Boards of Management are appointed by the Board itself for a term of four years and a maximum of three terms (or a total of twelve years). Service is voluntary and unpaid. Boards also appoint one of their members as Chairman (usually for a term of four years).
Principles of Governance and Accountability
Governance and accountability of Scotland's Colleges has been the subject of a Report by the Audit Committee of the Scottish Parliament in December 2001 and a Review - and subsequent consultation on proposals - by the Scottish Executive in 2002 and 2003. Colleges are also expected to implement standards of conduct in public life (the so-called "Nolan" principles) and Codes of Conduct now have to be agreed by the Standards Commission for Scotland under legislation enacted by the Scottish Parliament in 2000.
Association of Scottish Colleges
Within ASC, member colleges have one vote each and are represented by the Chairperson of the Board of Management and the Principal. ASC Board of Directors has six Chairperson and six Principal places. ASC has plenary sessions for both Chairpersons and Principals at both its annual conference (in June) and AGM (in October).
Chairpersons' Forum
From its inception in 1996 ASC has had a Forum for the Chairpersons' of Boards of Management. This meets at least three times each year. It discusses policy specifically on governance and accountability, and other issues concerning Boards of Management.
Boards of Management
From early origins as "advisory" college Councils, Boards of Management have developed much greater responsibilities, and awareness of these, for managing their own affairs. The 450 or so Board members of Scotland's Colleges represent our largest single contribution to unpaid public services. Colleges continue to operate today on very tight financial margins against the background of increasing volume and complexity of demands. So far, governance and accountability has met these challenges well and with very few exceptions.
Current Developments
The Scottish Executive is currently considering changes in the legislation governing the constitution and role of Boards of Management.
The main changes now proposed are:
- Removal of the current bar on Councillors and Council employees serving as Chairs of Boards of Management
- Reduction from twelve years to eight years (two terms of four years) for continuous service on a Board of Management
- Lifting of age restrictions (the current ceiling is age seventy on appointment)
Non-Legislative Changes
There is a general acceptance that Boards of Management should make appointments of new members in accordance with current best practice for public appointments. Following discussion in ASC's Chairpersons' Forum, the following general principles are now applied by its member colleges:
- Advertisement of vacancies inviting interested people to put their own (or others) names forward
- Clear person and job specifications for the role as member and any specific vacancies (including Committee responsibilities) which are to be filled
- A selection or appointments committee of the Board of Management which uses formal processes of selection including interviews and, in some instances, external expert advisers
- Notification to other colleges of strong candidates for whom an appointment could not be offered by the college to which they first applied
ASC encourages colleges to follow guidance given in A Simple Step Guide to Recruitment, published by the Office of the Commissioner for Public Appointments.
Induction and Training
Boards of Management are encouraged to have well-structured and sustained processes of initial induction and subsequent training for their members. Some colleges now have introduction and familiarisation programmes for prospective applicants.
Most colleges now have in place:
- formal induction and familiarisation for newly appointed members
- regular board sessions for advance planning, self-evaluation, and reflection (including away-day programmes) on a regular basis or for specific projects and tasks
- engagement with familiarisation and training offered by others (in particular ASC for colleges, and other local or national organisations for other public bodies)
Support at Sector Level
ASC has worked closely with the Scottish Executive (and its predecessor) and Scottish Further Education Funding Council (SFEFC) to support development and training for Boards of Management. ASC produces the Guide for College Board members with financial support from SFEFC and professional input by the Scottish Further Education Unit (SFEU). Copies are made available to every member of Boards of Management. The current edition of the guide was issued in November 2003. ASC is currently working to produce an updated version of the document taking into account recent legislative and corporate governance developments.
ASC also has a programme of national training events, the two main components of which are:
- induction seminars for new members from different colleges
- specialised seminars or workshops on topics such as capital building projects and audit
The ASC national programme aims to supplement local training by college Boards themselves.
In March 2005 ASC arranged - again with financial support from SFEFC - the first ever National Conference for College Boards of Management members in Glasgow. Over 150 delegates - including Board members, College Principals, Board Secretaries and other advisers - took part in the conference. This event will be repeated but it has not yet been decided whether an annual conference would be sustainable.
REMIT OF GOVERNANCE AND ACCOUNTABILITY WORKING GROUP
ASC's response to the remit of the workstreams as suggested by the Scottish Executive is as follows:
Whether Boards should be responsible for appointing their own membership, including the Chair of the Board
The College Review presents an important opportunity to examine the corporate governance arrangements of Scotland's Colleges in the round. It is important to ensure that the system by which colleges are ultimately directed and controlled continues to deliver well-run and efficient institutions in the future.
It is appropriate for the group to consider examples of best practice from other public service providers both in Scotland and the rest of the UK. There may be elements of best practice that, if introduced to college governance procedures, could improve the service they offer to communities and Scotland as a whole.
Scottish Ministers looked closely at the practice of Boards filling their own vacancies as part of the Review of Governance and Accountability in the FE sector that reported in March 2003. The then Minister took the view that the ability of Boards to have a central role in appointing their own members does not jeopardise standards of governance and accountability.
ASC considers that the responsibility of Boards for filling their own vacancies of non-executive members is a defining element of incorporated status and autonomy of Scotland's Colleges. If College Boards were to be made up of a mix of appointed members and locally recruited, there is a danger of divided rather than collective or corporate responsibility. Accountability would be confused - does the Board "report to" those (such as Scottish Ministers) who might make appointments rather than take responsibility itself for the curriculum, resources and quality of the institution.
Loss of independence could also make it more difficult:
- for colleges to retain charitable status under the Charities and Trustee Investment (Scotland) Act 2005; and
- to ensure parity of treatment for colleges alongside universities or other institutions funded by the new Scottish Further and Higher Education Funding Council (SFHEFC).
ASC's view is that the incorporated status of colleges should be taken as given in view of the current legislation and previous consultations and decisions of Scottish Ministers on this issue.
Strengthening learner participation
The Further and Higher Education (Scotland) Act 1992 provides for students to have a voice on the College's Board. The Board also has a formal role in ensuring the proper conduct of the College's Student Association.
ASC accepts that the job of ensuring the voice of students is heard on a Board is challenging. ASC is committed to working with NUS Scotland and other partner to consider and bring forward ways in which the student voice can be strengthened.
ASC is a partner organisation in SPARQS (student participation in quality Scotland) and supports its important work to improve the effectiveness and engagement of students in quality assurance and enhancement in colleges and universities across Scotland.
ASC considers that current statutory arrangements for student representation on boards strike the right balance in terms of the overall board composition.
Boards could be encouraged to have more than one student representative on committees of key importance to students where co option is possible e.g. student services committee. ASC also considers that arrangements for Board meetings can be flexible so that, for example, students' representatives can be accompanied by other students to Board meetings.
ASC suggests that the Review might usefully consider whether more can be done to ensure all colleges are made aware of examples of good practice in student representation.
Enhancing the capacity of Board members?
Current arrangements for both local and national induction and training programmes are detailed earlier in this paper. As detailed earlier ASC is also taking forward work to update the Guide for College Board members to take into account recent legislative and corporate governance developments.
ASC suggests that the Review should record range and progress of activity so far and consider what specific improvements might be made in the future.
Whether the Chair and other Board members should be remunerated
Although a number of sectors now remunerate their non-executive directors for their services, in Scotland's Colleges current practice is to pay only incidental travelling and subsistence expenses or other allowances to lay members of the Board of Management.
ASC notes that the issue of remuneration was considered during the Review of College Governance in 2002/2003. At the time Scottish Ministers decided that no change should be made to current arrangements, on the basis that there was no substantial call from consultation respondents for the introduction of remuneration for the normal activities of Board members.'
At present ASC does not support a change to the long standing policy that Board members are unremunerated for their services. The voluntary, public service ethos of Boards of Management is an asset in terms of impartiality and a safeguard in terms of accountability
However ASC suggests that the Review might consider whether there are circumstances where a College Board may deem it appropriate to compensate lay members of the Board for exceptional effort, time or cost incurred on college business.
The issue of remuneration for lay members of governing bodies is also being kept under Review by the Higher Education sector. In light of the merger of the two funding councils it is desirable for governance arrangement in colleges and universities to be convergent.
ASC would also wish the Review to ensure that any proposed changes to the current system would not bring colleges into conflict with sections governing remuneration of trustees in the Charities and Trustee Investment (Scotland) Act 2005.
The relationship between the Chair, Board and principal to ensure maximum quality oversight, including the Board's ability to obtain independent advice
ASC agrees that it is important for Boards to have access to independent advice on the conduct of Board business.
ASC recognises that the position of Secretary/Clerk to the Board is one of the keys to good governance in Scotland's Colleges, and suggests the Review should consider how the independent role of the Secretary to the Board is best undertaken.
ASC considers that the Review should consider how to improve the independent sources of advice available to Board members.
ASC recognises that whilst there are a number of sources of advice on good governance in the private and public sectors there is not one clear governance guide for colleges against which governance can be adequately audited e.g. The Scottish Executive publication 'On Board' for Board members of public bodies in Scotland.
ASC aims for its revised Guide for College Board members to fulfil much of this role. The workstream should give consideration to the audit regime for college governance including the possibility that colleges should be required to make a governance statement in their annual audit statement.
Whether there is a continuing need for powers of Ministerial Direction
ASC does not consider there is overwhelming need at this time to remove the existing Ministerial powers of direction. If, however, the existence of Ministerial powers of direction are a bar to the retention of charitable status by Scotland's Colleges under the terms of the Charities and Trustee Investment (Scotland) Act 2005 then these should be removed.
The Scottish Executive will however have to ensure that other mechanisms are in place for colleges to make bursary payments and other actions that have previously been sanctioned under section 21 of the Further and Higher Education (Scotland) Act 1992.
To ensure the continued charitable status of Scotland's Colleges a decision regarding Ministerial powers of direction will have to be taken before the end of 2005.
The composition of the Boards, including whether more needs to be done to ensure diversity and the current statutory requirement for 50% of Board members to have capacity in "industrial, commercial or employment matters or the practice of any profession".
ASC supports the easing of restrictions on Board membership such as removal of the current bar on Councillors and Council employees serving as Chairs of Boards of Management.
Removing restrictions on board membership recognises the maturity of governance arrangements in Scotland's Colleges twelve years after incorporation.
There are now stringent, and statutory, requirements to avoid conflicts of interest that must now be observed by all Board members (in particular the colleges' Codes of Conduct and procedures for the declaration and registration of interests). Board members are appointed on the basis of experience or expected contribution and serve in an individual not representative capacity.
ASC considers that college board membership criteria should be brought in line with those of other similar organisations in the education sector e.g. Higher Education Institutions and the new Funding Council.
ASC acknowledges the expectation that the current statutory requirement for 50% of Board members to have capacity in "industrial, commercial or employment matters or the practice of any profession" should be reviewed. But in doing so, the Review should note that the definition is a broad one and that it has enabled Boards to appoint as members trade unionists and persons with experience in the public services.
Similarly - and in the light of recent press reports regarding the future shape of the enterprise network - ASC agrees that the Review should also consider the need for each College Board to include a representative from the Local Enterprise Company.
OTHER ISSUES
Accountable Officers
ASC considers that college Principals should once again start to receive 'Dear Accountable Officer' letters from HM Treasury. This comment was also made in the context of the consultation process on revision of the Financial Memorandum.
There is also a need for the Scottish Executive and Scottish Further Education Funding Council (SFEFC) to accept their responsibility for the induction of new college Principals to the role of Accountable Officer.
RESEARCH TOPICS TO BE COMMISSIONED FOR THE REVIEW
Evidence base
Policy on college governance should be founded on a sound evidence base. ASC suggests the Scottish Executive should commission research into governance practices in a representative sample of colleges as a basis for the work of the Accountability & Governance workstream of the Review.
Effective regulation
ASC would also like the Review to consider the issue of multiple accountability of colleges to a number of different regulators. The overlap in responsibility between regulators such as the Scottish Public Services Ombudsman, the Standards Commission for Scotland and the Office of the Scottish Charities Regulator has to be clarified.
Sir Andrew Foster's Review of the future role of Further Education colleges in England has acknowledged that the 'overheavy regulatory & accountability structure' is a feature of concern to the sector. This is also a theme highlighted in the National Audit Office report Securing strategic leadership for the learning and skills sector in England (May 2005). ASC suggests the Review should commission research and analysis into the governance issues highlighted in the National Audit Office report to see if there are similar concerns amongst Board members in Scotland.
ASC is concerned that there have been recent examples of instances where the Scottish Executive and SFEFC have become involved in investigations of colleges practices before internal procedures have been exhausted first. Consideration should be given to how to ensure that internal procedures are allowed to run their course before external agencies become involved. The Review should also clarify the legal basis, and consequence, of interventions which have no explicit statutory basis.
Attracting and developing Board members
The workstream may wish to consider how college Boards and other educational institutions can work together to attract new Board members and generate interest in this important part of the public service. Consideration should be given to existing initiatives designed to help charities attract Board members e.g. Arts & Business Scotland ( http://www.aandb.org.uk/scotland/).
Arts & Business Scotland was established in 1986 and as well as income from business and arts members, receives support from the Scottish Executive, Scottish Arts Council, Scottish Museums Council and Scottish Screen.
ASC Executive
September 2005