How to manage further education risks

  • Our new study looks at the challenges and opportunities for further education over the next few years
  • Reduced funding, increased partnerships, and reputational damage are among the key risks identified
  • New strategies to cope with budget cuts can bring increased risk exposures

Further education (FE) faces an uncertain future, with the quality of provision under scrutiny, and urgent attention needed to address risks in funding, partnerships and reputation – according to our latest report on the sector.

1. Reduced funding

There are nearly five million further education students in the UK – the vast majority aged 18 and over – taking courses ranging from apprenticeships or skills training for the unemployed, to college courses.

FE students aged 18 and over are being targeted almost exclusively by the Government’s on-going
education cuts – with the Department of Education protecting 5-16 funding and school sixth forms.

The Department for Business, Innovation and Skills (BIS), said in February that funding through the Skills Funding Agency for adult skills in 2015-16 would be reduced by more than £249 million – an 11% cut – and the total BIS budget for adult FE and skills funding would be cut by 5% to £3.91 billion. Allied to this, overall teaching costs are rising for colleges, with increased pension and National Insurance contributions.

Savings and financial stability

To make the required savings, further education institutions will have to take tough decisions.
Up to 98% of FE respondents we interviewed in November and December 2014 were worried about budgetary pressures – making it by far the highest concern for the sector.

Fears for financial stability also ranked highly. Many FE institutions are now looking at new strategies to cope with reduced funding – including taking on more students, increasing class sizes, scrapping some courses and reducing staff costs.

These changes can bring with them new or increased risk exposures, including the risk of spending less time on safeguarding students’ welfare.

2. Mergers and partnerships

To save money, some FE colleges are looking to either outsource or share their services, creating a larger organisation, with greater financial resources and an increased service offering that can attract a wider range of students, from a larger area.

There are also risks. For a smaller college being submerged by a larger partner, there is a loss of autonomy and identity to consider, as well as the discarding of some of its services and potential job losses.

Colleges may also need to look at structural issues such as a physical increase in size and its associated problems, for example building space and car parking. Practical issues, such as compatibility of IT systems, could also cause potential challenges.

Some larger colleges are looking overseas to offset the funding gap. One English college has established a partnership with the Nigerian government for vocational centres in Nigeria, and another is participating in a joint venture in China. Moving into new areas can lead to exposures that may not have been encountered in the UK.

Outsourcing, too, presents risk. If a service provider fails to deliver, any reputational damage will have a serious impact on the FE organisation.

This makes it essential to clarify responsibilities for service delivery from the start, with contracts carefully managed and reviewed.

3. Reputation

The need for FE colleges to promote and manage their reputation – with less funding and greater competition – has never been greater.

It is hard to build and maintain a good reputation, but easy to ruin one – from a low ranking in a league table, to poor academic results, reports of bullying or even physical damage to premises.

Robust business continuity plans are needed to help provide a speedy and proactive response to any crisis, and ward off negative press reports and adverse reaction on social media.

Facing a dilemma

Today, the FE sector faces a dilemma. Do nothing and organisations face further income loss, damage to their reputations and even closure. But embracing cost-cutting measures without careful planning presents additional risks which, if not managed well, could be just as dangerous.

Come and talk to us if you are facing any of the challenges highlighted in this article – we are on hand to provide support. Email us at info@zurichmunicipal.com