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Independent Review of College Financial Oversight

Statement made on 15 July 2020

Statement UIN HCWS370


I am publishing today the report of the Independent Review of College Financial Oversight, conducted by Dame Mary Ney DBE.

At the heart of the report is recognition of the contribution of colleges to their local communities and economies– essential to meeting both the skills needs of business and enabling young people and adults to succeed and adapt to the changing economy. Colleges must be recognised as an integral part of each region’s growth strategy with a long-term role in raising productivity and living standards. They are vital to building skills to power our national economic recovery at this time.

The principal conclusion of the report, which I endorse, is that government must have a strategic relationship with FE Colleges. This means not just acting as a regulator, or intervening in the event of failure, but ensuring that every college is part of a coherent plan to meet local and regional need. There are many outstanding colleges, and exceptional college leaders, who are well placed to drive not just the success of their institutions, but wider prosperity working with local authorities, businesses, universities and schools.

The report supports a collaborative FE system. Colleges are critical infrastructure backed over time by substantial government capital investment. There is a place for competition, but it is also important that colleges work together to meet need and learn from the exceptional practice that exists in the sector. Dame Mary’s report highlights how this collaborative approach has driven improvement through the Strategic College Improvement Fund, and National Leaders of FE – work that is now been taken forward through the new College Collaboration Fund and the expansion of the National Leader programmes. I endorse this approach.

The FE Commissioner has played a critical role in bringing FE practitioner expertise into government and successfully working to strengthen the leadership and governance of colleges. I intend to maintain the role, reporting directly to ministers as a public appointment, but strengthening alignment with the Education and Skills Funding Agency (ESFA), and placing its civil service support team there. This change will further empower and develop the ESFA’s territorial teams and enable them to draw upon practitioner expertise. There will be a regular strategic dialogue with each college board around priorities. This will reduce the perception that support is only available to colleges in trouble, and focus not just on prevention but on building success and outstanding practice.

The review also recommends further action to improve the effectiveness of the financial data collected from colleges. In February, the ESFA took the first step towards adopting a new integrated single data return, working closely with the Association of Colleges. We have also commissioned a July financial collection to assess the financial impact of COVID-19 on the sector and individual colleges. This will enable us to continue to work with governing bodies to mitigate financial risks arising from COVID-19, avoid failure and help reduce intervention, while remaining ready to act decisively when necessary. This will be supported through additional requirements for colleges to be transparent – including protection for whistle blowers - through our Audit Code of Practice and grant conditions. Starting from 2020/21, they will require all colleges to publish their whistleblowing policy externally. We are also considering the link between the ESFA’s financial assessments and OFSTED judgements - in light of OFSTED’s plans to consider piloting of changes in schools. The report is also right to highlight the importance of funding simplification.

Inspirational leadership, overseen by strong governance, is the ultimate driving force in all our outstanding colleges – providing the structure and culture that supports outstanding teaching and develops exceptional teachers. We are investing in learning and development programmes for those in key governance and leadership roles in colleges through the Education and Training Foundation and Oxford SAID business school. We have allocated up to £4.5m for the current financial year, which will include a new programme of learning and development for governance professionals. Dame Mary was right to highlight the importance of this role. We will also strengthen the governance guide for college corporations.

Fundamentally, Dame Mary Ney’s report demonstrates that government must set out a long-term radical vision which places colleges where they belong – driving the success of regional economies and communities. This could not be more opportune. As we renew our economy and society following the historic challenge of Covid-19, our young people and adults must have the skills to succeed. The steps we are already taking, particularly with the launch of the first wave of our new, high status T levels this autumn, are a vital step. We must build on this to create a broad and bold strategy to elevate the role of Further Education and support our colleges in their vital and transformative mission. Our forthcoming White Paper will set out how we plan to do that.

Linked statements

This statement has also been made in the House of Lords

Department for Education
Independent Review of College Financial Oversight
Baroness Berridge
The Parliamentary Under Secretary of State for the School System
Conservative, Life peer
Statement made 15 July 2020