In July 2004 the Welsh government announced that it would be absorbing the independent further education funding body, Education and Learning Wales (ELWa), into the Education division of the Welsh Assembly. Why is this restructuring taking place, and what are the implications for colleges and further education students in Wales? As ELWa releases its final business plan, FE News takes a look at the rise and fall of this much-maligned public organisation.
A Difficult Birth
Was ELWa doomed from the start? It certainly had the odds stacked against it. During the devolution referendum campaign in Wales in 1997, Welsh Secretary Ron Davies promised “yes” voters a “bonfire of the quangos”. Although they voted narrowly in favour of a National Assembly, the Welsh people didn”t get a chance to see whether he ever intended to keep his promise. In 1998 he was forced to resign after a “moment of madness” on Clapham Common, and his replacement by New Labour favourite Alun Michael paved the way for ELWa – the biggest quango in Wales – to be created.
Michael was controversially elected as Labour leader in the new Welsh Assembly through the use of secret union block votes, after most rank and file party members had voted for a rival candidate, Rhodri Morgan. Morgan was considered too radical and too independent by the New Labour government in London, which was determined to parachute its own man in to push through its agenda for Wales. The generally unpopular Alun Michael duly became First Secretary of Wales after the first Welsh election in May 1999, but Labour’s poor performance at the polls saddled him with a weak minority administration.
The Learning and Skills Act
In 2000, a piece of legislation crafted by New Labour in Westminster – the Learning and Skills Act – created the Learning and Skills Council (LSC) in England and ELWa in Wales. ELWa was approved by a Welsh Assembly led by Alun Michael on the 1st February 2000. Eight days later he was forced to resign after a vote of no confidence, and Rhodri Morgan, much to the annoyance of New Labour, stepped in as his replacement.
There was a school of thought that decided to portray Morgan’s victory as a triumph for old Labour. But for the moment – whatever his intentions – he was stuck leading a minority administration in the Assembly and had little room to manoeuvre. There was no “bonfire of the quangos”, and New Labour’s fears of a disastrous reversal of policy seemed unfounded.
ELWa took over from the old Training and Enterprise Council in October 2000, inheriting four funding streams – for further education; work-based learning; community learning; and school sixth forms. The board finally accepted full responsibilities on April 1st 2001, and for some – considering that the word “elwa” means “to better or to profit” in the Welsh language – its performance since then has seemed like a particularly bad and long-running April fools joke.
For Better or for Worse?
The first signs of trouble came in 2002 when ELWa launched an internal audit into its own procurement practices. This was quickly followed by another audit, this time carried out by an independent firm of accountants, and an investigation by the Audit Office of the Welsh Assembly. These investigations into ELWa’s finances revealed 37 irregular contracts with private companies worth millions of pounds.
Although these financial irregularities were serious, all three investigations stopped short of alleging that any fraud had taken place. The problem cited was a lack of competence and the absence of correct procedures and checks, and ELWa announced that it had disciplined the staff responsible. But in fact, those disciplined were its four most senior staff members: the chief executive officer; the finance director; the operations director; and the human resources director.
BBC ExposÃ© in Rhondda
The dust had barely settled on this affair when, in February 2003, the BBC current affairs programme Week In Week Out ran an embarrassing exposÃ© on an ELWa sponsored training initiative in Rhondda. It transpired that ELWa had given a company called Avanti £4 million up front to provide e-learning modules for young people at a brand new media facility known as The Pop Factory. ELWa had broken key rules in making the payment and, to make matters worse, not a single student had been educated by the programme.
A month later, in March 2003, it was announced that a restructure would effectively split ELWa in two, with one arm responsible for funding FE colleges and the other given responsibility for sixth form colleges and universities. This reorganisation involved employing a chief executive and finance officer for each arm, doubling the number of senior staff at ELWa at a cost of tens of thousands of pounds. An Audit Office report later that year heaped on further criticism by revealing that ELWa had spent half a million pounds on marketing and paid a consultancy firm a similar amount to help it reduce its running costs. In reality, ELWa’s spiralling running costs had forced it to divert £3 million away from its education and training budget to compensate.
Failing the FE Students
This long running saga of scandal and incompetence led to the inevitable accusations that ELWa was failing further education students in Wales. Education Minister Jane Davidson tried to take refuge behind statistics, showing that ELWa had scored some successes and beaten inherited targets. But nothing could disguise the fact that the scandals had taken place against a backdrop of severe financial problems at Welsh further education colleges.
In 2004 it emerged that 13 out of 25 colleges were in debt, with the overall deficit running at around £3.5 million. The result was all too predictable: cutbacks that affected staff and students. One of the worst affected institutions was Coleg Gwent, the largest further education college in Wales, which was forced to close the engineering and catering departments at its Ebbw Vale campus. ELWa and Coleg Gwent’s principal caused outrage by suggesting that engineering students from the area could travel to an alternative campus in Newport ““ a round trip of 5 hours on public transport.
These closures occurred in one of Wales” most deprived areas, a place that was (and still is) receiving Objective 1 funding from the EU to aid economic regeneration. Local Labour MP Llew Smith, was furious: “How can communities such as ours concentrate on trying to attract high-skilled jobs when the people responsible for further education are closing the very departments that can deliver the training and education necessary for those jobs?” he said. He concluded that “further education in Wales is in chaos.”
A Funeral Pyre
On 14th July 2004, on the day that the Welsh Assembly was due to break for its summer recess, Rhodri Morgan announced that ELWa ““ along with several other quangos ““ was to be absorbed into the Welsh Assembly by April 1st 2006. This essentially means that ELWa’s board will lose all of it’s executive decision making powers to elected politicians, while most of its other staff will continue in their jobs.
Rhodri Morgan was able to take this decision because he had a mandate to do so. He had improved Labour’s electoral performance in the second Welsh Assembly elections in May 2003, and taking the bold decision to dismantle several quangos was what many of his supporters wanted from him. ELWa had done itself so few favours the result was almost inevitable. The policy was justified in terms of efficiency and streamlining, and in public at least, the Labour government in Westminster supported the move.
In some ways it was a radical departure from New Labour doctrine: the idea of the LSC and ELWa was always that they would be run like businesses and therefore be good for business. The move to give the responsibility for distributing further education funding back to politicians was described by some as “Stalinist”. It was also criticised by the Confederation of British Industry (CBI), which expressed concern that the ex-quangos would lose “commercial focus” and become subject to too much “political tinkering”.
In reality, you only have to listen to some of his statements to realise that, like any other politician, Rhodri Morgan has to court business in order to maintain a healthy economy and get himself re-elected. At the same time he has to try to keep the more traditional elements of the Welsh Labour Party happy, and the radical note he struck when he made the announcement was undoubtedly for their benefit: “The people of Wales will see that this announcement marks the beginning of the end of the quango state, and they will support that process”, he said. “This is only the beginning, and there will be no turning back”. Seven years on, Wales had finally got its “bonfire of the quangos”.
Post ““ mortem
Whatever the bigger political arguments going on in the background, ELWa really had no one but itself to blame for its own demise. In many ways it has been unlucky. It tried, for example, to sort out the funding gap between FE colleges and sixth forms in Wales, something the LSC in England is currently being criticised for. ELWa’s attempts to deal with the problem just led to new charges that it was under-funding sixth forms.
Like the LSC, many of ELWa’s difficulties have arisen because it has to work to government targets for a massive expansion in student numbers. There has been extra cash available ““ New Labour has injected more money into further education than any previous government ““ but in reality it has never been enough.
In the short term, despite the assurances of a smooth transition in ELWa’s business plan for 2005-8, the restructuring looks likely to cause even more problems for college finances. In September 2004 the Welsh Audit Office ““ citing the creation of ELWa in 2001 as an example – reported that from previous experience “¦any major restructuring of the machinery of government results in significant increased risks to the ongoing financial management of the organisations concerned and to the continuity of public service delivery.”
In the long term, only time will tell whether ELWa being absorbed into the Assembly will sort out the problems in Welsh further education and finally deliver the kind of service that students deserve.
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