Tony Allen, CEO, AAS Ltd

An uncomfortable juxtaposition

We are all very familiar with the sector’s case for more funding.

On the one side, there is disparity compared with what schools receive per pupil. On the other side equally variability with what HEIs receive.

The FE Sector is firmly in the middle, like a thin piece of cheese wedged between two thick slices of bread!

Cheese sandwich

There is a real effort to persuade politicians that the sector needs more money. The #LoveOurColleges being an example of the campaign for greater funding.

On the face of it all of this lobbying and campaigning represents a well-made case, often powerfully put.

However it ignores an issue that in my view completely undermines the credibility of the sector, namely:

  • High profile cases of financial failings
  • Mismanagement of funds
  • College’s just not being able to manage within their budgets.

If social media is to be believed, then many people disagree with my assertion, claiming that the case for more funding is supported by college financial failures.

Many people argue that it is because there is not enough money that many colleges are failing.

I do not support this view. Indeed, I take the opposite view. I believe that the sector needs to get its financial house in order, before it can be taken seriously in arguing for more funding.

The latest in a line of alleged financial failings in colleges is at Hadlow College Group. I know Hadlow and its history well. The alleged financial mismanagement that has happened there if true, is not unique, and sadly just as we have seen it before, I worry that we will see it again.

It is absolutely true that there are huge financial pressures on the sector, and it needs more money to cope….but that is not the point!

That is not an excuse for poor and sometimes irresponsible financial mismanagement.

Before I am accused of ‘college bashing’, I am a firm supporter of the sector. I have worked with colleges for 20 years. I am a College governor, and chair of the Audit Committee. I feel strongly that what has happened in the last few years simply reflects badly on the sector.

I say so for the following reasons:

  1. Financial management is about effectively managing the resources that you have, not those you would like to have! Too often we hear of those who fail to demonstrate that they can manage within their resources, and over commit, or fail to cut costs
  2. Governance (or lack of it) lies at the route of failure. Time and again we hear of Governors not challenging the executive. They are too timid, they too easily accept what they are told, and they don’t challenge.
  3. Big egos are also a sometimes a problem. The ideology of building empires by expanding either locally, nationally, or internationally without the financial resources, or an adequate assessment of the financial risk is not uncommon.
  4. You cannot hide from high profile mismanagement cases. They do undermine the amount of great work done in the vast majority of colleges. The regularity of financial failings proves to my mind that there is a real problem, that is not being adequately tackled.
  5. Like it or not some senior people in government think that sector is bad at managing money. A former senior civil service colleague of mine put it simply. “Why would we give them more money, when they can’t manage what they already have?”

I accept that it is easy to focus on the negative and ignore the majority of colleges who do manage within their resources.

However, high-profile cases seriously affect the perception of the ability of the sector to manage its finances. When does perception become reality?  

The sector needs to do more to improve its financial management.

None of us should underestimate the impact on the image of the sector that every single report of a failing college has.

It impacts negatively on learners, employers, the local community, and creates, bit by bit, an image of a sector incapable of prudent financial management, and reliant upon additional bailouts from government to survive.

This is not a new problem, but the introduction of the new insolvency regulations makes it more acute.

The time to do something about this is now and not wait until insolvency hits.

Tony Allen, CEO, AAS Ltd

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