Review of further education governance in Scotland

F. National Guidelines and Policies

In terms of national guidelines and policies these will need to be created in areas such as

• Financial and funding guidelines.
• Levels and use of surpluses and reserves.
• Things that will be decided nationally e.g. eLearning etc.

We will need to take a different approach to how we decide each of these. The first will depend on the type of funding (be this from Scottish Government through SFC, from the EU, Local Authorities, other public agencies like Skills Development Scotland etc.) which is provided. We will make recommendations on this later.

In terms of surpluses and reserves, as we discussed earlier in this review we believe that these have created inconsistencies and inequalities across Scotland which in many cases are to do with geography rather than management. We have two recommendations in this area.

There should be a limit of initially 10% of annual revenue on the surpluses a College is allowed to create for its own use.

All reserves held that exceed 10% of annual revenue have to be used for the betterment of the sector overall. That could be either within that region or elsewhere, but priority and allocation would be decided by the new FE Strategic Forum at a national level.

The limit of 10% is what we believe should apply, which is based on what we know today. However like much else that we recommend it could and indeed should evolve. Therefore one of the tasks for the new FE Strategic Forum should be to relook at the percentage and review if a different or better formula should be used. We would not wish the basic premise of a cap to be removed but there could be other ways of establishing what it should be.

The latter distribution of funding should be done by a new body consisting of the Chairs of all the regions plus others, which we set out later in this review.

Our basic premise in all of this is that extra resource which could be made available in the sector, by using current College reserves which exceeded the 10% limit, should be used to enhance the experience and the value given to the learner. We believe this to be of the highest priority in Scotland but regret that this has not always been the case to date. We do not think that the experience of the learner has always been the key priority at a national level, nor have decisions about the level of experience we want learners to have in terms of physical learning access points ( LAPs).

This approach may be seen by some as discouraging Boards from being entrepreneurial but there is no evidence to suggest that is the case. Northern Ireland has had an agreed limit in place for some years and there is no evidence that it stops innovative thinking, or indeed Colleges generating extra income as well. Indeed it could be argued that not having the ability to generate surpluses in some Colleges has made them more risk averse and conservative whereas opening up the possibility that funding may be available from elsewhere in the sector for good innovation will encourage we hope more to be brave.

We also recommend, if the above recommendation is accepted, that

All current College liquid reserves in excess of 10% of annual revenue are frozen (unless already specifically allocated to projects already underway physically) and central Government uses any excess nationally for the sole purpose of funding the costs of the changes we are recommending and any other changes which may come from the current overall review of post 16 education. This residual sum should be focussed on added benefit for the learner in the most appropriate manner.

This is a specific recommendation which would support the change process and the sums in question should be used to fund whatever 'strains' may be challenging that process, but nothing else. In the section below on the future strategic management of the sector we recommend how excess reserves might be used once we have completed this change process.

What this would release is difficult to be precise about, as SFC is not in a position to provide 'real time' data on current College cash reserves or to indicate in every case the purposes for which they might be held. However our conversations with the sector's external auditors lead us to believe that the majority, other than what is held for revaluation purposes, is 'rainy day' reserve rather than for anything specific.

We understand that the total reserves as 31 ^st July 2010 (the most recent figures held by SFC) were over £400 million albeit that most of that sum had been allocated by Colleges for revaluation purposes. 10% of total revenue of Colleges at the same time equates to about £75 million. Even if we took over half the reserves out of the equation this would still leave something which could make a significant contribution to supporting all the inevitable changes in the sector and further support learner enhancement. While we have not ourselves been able to calculate what those change costs will be we understand that an estimate of £60 million has been put to these costs.

In terms of what we say above relating to what issues should be considered at a national level, we believe that work is already underway on issues such as eLearning etc. As part of the transition to this proposed new model which we set out below in the 'Transition' section, we recommend that

By the end of 2012 decisions on what should be undertaken by Colleges nationally, and consistently across all regions, should be taken. By the end of 2013 further decisions should be taken on how the sector should contribute to national priorities for the coming 5 years.

Within the above we have made reference to eLearning and items around the curriculum that are already being discussed elsewhere. We believe though that consideration of these should go wider and should include such issues as recruitment of learners for example, where is it sustainable to have different methodologies across Scotland.

We have also considered how we manage scarce resource in specific sectors. For example as renewables have become highlighted as a key economic driver for Scotland, many Colleges have striven to become 'Centres' for this area in the absence of a strategic approach. There should be a better and more nationally strategic way of deciding who we want, as a nation, to be our centres of knowledge and excellence in this area and also where funding should be directed. We understand that there will be winners and losers in all these allocations but believe there is scope for better focus and value for money for these initiatives.

Looking further to the future as the new sector which we propose evolves, and its structures with it, we could envisage national back office functions such as HR and Finance being likely areas for discussions, plus perhaps also, for example, after detailed research and consultation, whether the strategy, and marketing for international students would be better done on a national basis. We have no real views on these currently but can see why they might be part of more long term discussions on how the sector might evolve.

Finally, for the outcomes we propose to be achieved, other ways of working will need to be put in place. As we have already stated above, the larger regions and entities we propose will allow larger, better resourced and more significant Students Associations to be established, such as the one at City of Glasgow College. These should give the learner a stronger voice. Therefore we recommend that

Student participation and representation become a commitment across the College Sector. Student Associations should be strengthened and become appropriately funded, autonomous and sustainable.

We would expect the new Regional Boards and College senior management to work with NUS Scotland to look at how best practice can be exchanged and used in this area, as well as ensuring that there is a consistent approach and commitment to strengthening student associations. To facilitate this we also recommend that

A specific sum per learner-head, to mirror the process currently used by some Universities, should be allocated from the regional budget to fund the above recommendation.

We believe that both the above recommendations will require the NUS to work more closely with both the FE Strategic Forum and Regional Boards to establish and guarantee best practice in this area, while also establishing what the national sum per learner should be, or at least a national way of calculating it.

Given our recommendations on the Regional Board being the entity solely responsible for the use of overall funding within the region, then we see the same being the case for funding controlled by a Students Association for that region, with the strengthened Association also being capable of enhancing representation at a campus level. This will provide a critical mass of independent resource for student representation. Officers of the Association would then be elected within the region to satisfy its 'estate'. NUS Scotland will need to play a key role in this, providing support for the processes and individuals who will operate at regional level.

Both the 1992 Further and Higher Education Act and 1994 Education Act state

' That Colleges must have a Student Association to represent students' interests to the College and that Student Associations must operate in a fair and democratic manner'

We would hope that the new regional approach not only allows strong and participative Student Associations to become the norm but would see student participation and representation generally become an even more meaningful part of the sector.

We suggest each Regional Board will need to work out a way of working closer with all the above, and in a way which involve learners and the Student Association far more fully in what the organisation does. This will be the same for staff and again the new Boards need to establish wider and better engagement with staff beyond just membership of the Board.

In the section of this report that set out the inequalities that we currently see in the College Sector today there were other issues around the learner and staff which we feel will need to be addressed so recommend that

The FE Strategic Forum [see page 41] examines each inequality set out in this report and proposes a solution to each.

The reason that we are not making our own recommendations on each of the inequalities returns to a key theme from this report in that it is the outcome that is important and there could be variations on how that is achieved. Therefore while we believe that many of the inequalities that we have identified need to be addressed that should be done in the context of the new Regional Board structure and governance that we recommend is put in place.

In terms of other partners the successful achievement of the outcomes required of the Board demands that they must have in place processes and ways of working with each of its key stakeholders, including those in the school and HE sector. Specifically though we would want the FE sector to be more formally part of the development of the community so would recommend that

The regional College becomes a statutory member of the appropriate Community Planning Partnership ( CPP) to allow the contribution of the College, in line with Government policy on lifelong learning, to be a fundamental part of community planning.

While some Colleges are members, albeit on a non statutory basis, in other parts of Scotland this is not always the case. We believe regionalisation allows them now to take a much wider view on the one hand, but a more specific view on the other of their responsibilities in this area. So we suggest that Colleges need to be a formal part of this.

This though should not be the sole answer to the Board outcome of ensuring community involvement and participation. Colleges must continue to be at the heart of the community they serve and need to ensure therefore that communities have that input into what they do. Therefore we recommend

That either through a 'Partnership Group' as recommended to us by EIS in its submission or through another similar structure put in place by the Regional Board groups are created to give local communities an input into their strategy.