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Education briefing: Structure and Prospects Appraisals, new BIS Guidance for FE corporations

    • Education - Briefings

    13-05-2014

    Further education colleges will recall that the Minister for Skills wrote to Chairs of Corporations and Principals in February 2013 to stress the need for corporations to undertake Structure and Prospects Appraisals (SPAs) whenever they were contemplating a change to their college’s structure or delivery model. This followed a period of apparent uncertainty within the FE sector as to the interpretation of the government’s policy on college mergers and other major changes as set out in New Challenges, New Chances, issued in November 2012.

    BIS has now issued guidance on the triggers for and manner of undertaking SPAs. This can be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/305583/bis-14-703-structure-and-prospects-appraisals-guidance-for-colleges.pdf
    The guidance should be read alongside New Challenges, New Chances. Further guidance from BIS in this area is unlikely. Colleges wanting more guidance on process are advised to consult the SFA.

    Key points

    • The guidance does not apply to sixth form colleges (SFCs). A footnote to paragraph 8 on page 2 suggests that similar issues will arise for SFCs. However, DfE policy on the required process may be rather different from that of BIS and we would suggest that an SFC wanting guidance in similar circumstances should clarify the position with the EFA.

    • The guidance does not apply to FE colleges subject to intervention, as any SPA will be undertaken by the FE Commissioner, working with the corporation and using a process similar to that set out in the guidance.

    • There is no requirement that a corporation use independent advisers or consultants to undertake the SPA, although the guidance accepts some corporations may wish to do so. The guidance stresses that the corporation must oversee the process and take decisions arising from it. In practice, however, we would suggest that involving an outside consultant is likely to increase the objectivity, or at least the perceived objectivity, of the SPA.

    • Corporations are expected by BIS to keep their vision of the college and its performance under regular review. If that review indicates that the college’s delivery model is not allowing them to best meet the needs of their customers an SPA is called for. At this stage the guidance states that “we would not expect a college to have any firm solution in mind but rather to be setting the criteria against which proposals will be judged”.

    • The guidance lists some of the possible triggers that might prompt a college not in difficulties to review its mission and structure, and some of the issues the corporation will need to consider. In deciding whether an SPA is needed “the significant factor will be the quantum of change”. The required quantum of change is not defined. There is a reference to a “full Appraisal”, so BIS may be contemplating a spectrum of change, with a corresponding scale of full to partial SPAs depending on the extent of change contemplated. Presumably dissolution/merger would always require a full SPA while a limited collaborative arrangement might require a much reduced review. In the past, selecting a collaborative partner has not commonly involved a transparent or competitive process, so colleges will need to consider carefully in future whether this might be needed.

    • The corporation needs to approach the question from the viewpoint of how the needs of current and future learners and employers should best be met, rather than how the current institution can survive.

    • The review of the college’s mission and performance will be expected to include some consultation with key stakeholders. Key stakeholders are defined as including other local providers. We would suggest that such consultation will have to be handled very carefully if the college is not to suffer commercial damage. 

    • The guidance states that there is no statutory basis for the consultation, prescribed list of consultees or prescribed format. The need for consultation is said to rest on the need for local accountability. We would add that failure to consult stakeholders could increase the chance of legal challenge  by a person or organisation likely to be affected. Such a challenge could be based on alleged breach of public law principles of natural justice and reasonableness, and possibly on alleged breach of charity law.

    • Once the college has a specific proposal and plans for implementation it will then be expected to hold an open and transparent competition to select any partner organisation. This is based on the need to ensure competition law is complied with.

    • Colleges are told that they must inform the funding agencies as soon as they have reached a decision on their proposed change. However, in practice we would advise that a college should contact the funding agencies as soon as they have formed the view that an SPA is needed and with an indication as to how they are going to run it.

    • Where the outcome requires a new college to be incorporated (either to create a completely new institution or because Model A is being used for a merger) the consent of the Secretary of State will be needed. BIS has indicated that it will be sympathetic to requests to establish completely new FE corporations where they will increase learner choice. We would suggest that where two colleges considering merger are pretty equal in bargaining power a Category A merger may be of interest, and the involvement of the Secretary of State will at least make it much less likely that a disappointed potential partner could challenge the merger.

    Conclusion

    The guidance is useful but does not obviate the need for colleges considering significant change of structure or delivery model to take legal advice and to consider using external consultants where an SPA will be needed. Eversheds Education team have extensive experience of advising colleges considering undertaking major changes. We will be happy to explore with such colleges the options open to them and how they should proceed in order to meet their objectives while satisfying the requirements of BIS and the SFA.

    For more information contact

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