THEFURTHEREDUCATIONFUNDINGCOUNCIL

July 1998

Accountability inFurther Education

Response from the FurtherEducation Funding Council

ACCOUNTABILITY IN FURTHER EDUCATION:RESPONSE FROM THEFURTHER EDUCATIONFUNDING COUNCIL

INTRODUCTION

1 The Council welcomes the opportunity tocomment on the government’s consultation paperAccountability in Further Education.

2 The Council fully endorses the importanceattached to good governance by the paper; andparticularly the emphasis on the importance of goodgovernance in enabling further education colleges torealise the achievement of the ‘learning society’advocated in the recent green paper. By goodgovernance, the Council means governance that candemonstrate both its probity and its effectiveness.

3 The publication of the paper marks animportant development in the government’s viewsabout how good governance in the sector is bestensured and supported. The proposals about thecomposition of governing bodies will result in afundamentally different model of corporategovernance than that established by the Further andHigher Education Act 1992. The Council looksforward to working with the government andcolleges to develop this model more fully. Inparticular, the Council welcomes the opportunityoffered by the paper for local community membersto take a more active role in college governance andfor colleges to be more closely engaged with theirlocal communities. This will build on theachievements of many colleges which increasinglyact as key strategic partners forging local learningnetworks, and as brokers with other partners in theregeneration of their communities.

4 The Council acknowledges the merits ofincluding in governing body membership individualsput forward by local authorities including electedmembers, individuals from local community bodies,staff and students. The Council recognises that, todate, many governing bodies have concentratedtheir efforts on their financial accountability. Forthe merits of the new model of governance to befully realised, it will, however, be extremelyimportant that the government, in making thechanges proposed, continues to place value on thecontribution made by business members.

In particular, colleges are run, in most cases, in abusiness-like manner and their ability to meet thedisciplines of incorporation and challengingfinancial circumstances owe much to the work oftheir business members.

Comments on the Proposals

5 The Council makes a number of observationsabout the proposals:

a. it is essential that, in implementing theproposals, the government emphasises thatcollege governing bodies are corporate entities,that their members owe collectiveresponsibility towards the corporation and thattheir primary duty, as members, is to thefuture of the college. It follows from this thatthe government needs to be clear about thenature of an individual’s membership of thegoverning body. The consultation paper refersto ‘nomination’ of members by other bodies.The Council believes, above all, that membersneed to serve as members of the corporation,owing their allegiance to the corporation. It isessential that they are not seen, and do not seethemselves, as delegates or representatives ofthe body or category from which they aredrawn. In this context, it might be more helpfulto refer to individuals as being ‘put forward for’,or as ‘candidates for’, membership rather thanas ‘nominees’; and also to allow for collegeswhich themselves want to identify localcommunity members to be endorsed by localcommunity bodies. A preferred alternativemight be for outside bodies to put up severalnominations to a search committee who makeappropriate recommendations to thecorporation;

b. the Council strongly endorses the proposal thatcorporations be the appointing authority for allmembers. Nonetheless, the government needsto be clear about the method by whichmembers will be appointed. The Councilstrongly believes that it is essential that thecorporation makes the appointment, using thesearch committee. All appointments shouldfollow from the essential starting-point of acareful analysis of the needs, in terms of skills,experience and category, of the college. Thiswas stressed by Lord Nolan’s committee andthe principle of appointing on merit isparticularly important. This means that bodieswhich may, in future, make nominations

3

should be required to put forward a range ofnames and, where possible, to agree with thecollege the preferred candidate. The newmodel of governance will be unworkable andwill fail if colleges feel that members are beingimposed on them and that they do not reflectthe needs of the corporation. Colleges must beable to reject nominations;

c. the Council welcomes the emphasis placed onthe role of staff and student members of thegoverning body. It recognises that staff andstudent members will be elected by their peersbut, once elected, they too should be regardedas full members of the governing body and theCouncil would prefer that all members ofgoverning bodies be regarded as having thesame status. This would place considerableresponsibility on those members as well as onthe conduct of the corporation itself. Collegesmay also need to consider whether there areother strategies to support student governors intaking on their responsibilities and to ensurethat the views of students are heard effectively;

d. it is essential to change the currentrequirement on college governing bodies tohave a TEC nominee. In future, as expressedabove, all members of governing bodies shouldbe appointed on an equal footing by thecorporation, rather than, in effect, appointedby an external body;

e. all members should be required, by the articlesand instruments, to be ‘fit and able’ to performtheir duties. Currently, this requirementobtains in respect of removing a governor fromoffice. In future, it might be helpful if thisrequirement was clearly applicable toappointments of members in all categories;

f. the Council welcomes the statements about thevoluntary nature of membership and theclarification about when expenses may be paid.It would, however, urge the government tooffer guidance to local authorities to ensurethat local government attendance allowancesare not paid for elected members attendingcollege governing body meetings or relatedcollege business;

g. the Council would urge the government tointroduce reciprocal arrangements for collegesso that college principals will be co-optedmembers of local education authorities andmembers of TEC boards;

h. it is not clear why the requirement to have anacademic board should not apply equally tosixth form colleges, as these bodies are knownto have a useful function;

i. the Council has some concerns about theproposal to relax the specification in thearticles and instruments in respect ofcommittees. Specifically, it would urge that thefinance committee and remunerationcommittee should continue to be a requirementand that there should be a new requirement foraudit and search committees. The auditcommittee is required by the Council’sconditions of funding and the others arerecognised as good practice. Their role andstatus could usefully be strengthened bymaking them a requirement of the articles andinstruments. This would reflect bestcommercial practice, as recommended by theCadbury, Greenbury and Hampel committees.This might complement the reduction of theformal input from business members.Consideration might also be given to governingbody committees being able to include a limitednumber of co-opted members, within certainparameters. A number of college auditcommittees do this successfully, and it wouldbe an additional and productive way ofspreading the involvement in and expertiseavailable to college governance. Finally,governing bodies might be helped considerablyin the transition to the new model ofgovernance and in accounting for decisionsabout membership if search committees wereable to draw on independent assessors, similar,but on a suitable scale, to the role performedby the Public Appointments Unit;

j. it would be extremely useful if the governmentcould accompany implementation of itsproposals with some further clarification of thenature of personal liabilities of members ofgoverning bodies. This might be relevant toattracting a wider range of members;

k. the Council welcomes clarification of thosematters which can and cannot be delegated andrecognition of clear reporting requirements;

l. the government might usefully give furtherconsideration to the need for guidance forcolleges about the scope of those local andcommunity groups from which members mayin future be drawn.

4

Additional Observations

6 In addition, the Council would make thefollowing observations about governance which ithopes the government is able to embrace within itsimplementation of the proposals in the consultationpaper.

Underpinning accountability

7 The Council suggests that other methods beadopted to help underpin college accountability totheir local communities, in addition to changes tothe membership of governing bodies. For example:

a. a requirement that colleges consult localstrategic partners, including local authoritiesand TECs when drawing up their strategicplans. This would help ensure that local viewsare received and that the plan fits with, isinformed by and informs those of other localagencies. This partnership approach ispreferred to the current requirement that theTEC approve the college’s plan. The Council’sview is that this requirement should be dropped;

b. a requirement that colleges publish their plansand hold an annual meeting at which they canaccount for their achievements against thatplan. This is understood to be the practice inScotland and in the schools sector;

c. the role of the clerk should be clarified. TheCouncil considers that the clerk has anessential function; should have the right ofaccess to the chair of the governing body; andmust be able to act with sufficientindependence from the college management.This should be specified in a job descriptionagreed by the board. The clerk might usefullybe required by the instruments and articles tobe appointed by the board, for that part of theirjob, without the post being denoted necessarilyas a senior post for that purpose. The Councildoes not, however, consider that the clerkneeds to be drawn from outside the collegestaff, or that this is practicable or useful formany colleges. There is some concern thatsuch a requirement, implied by the selectcommittee’s recent report (Further Education;The education and employment committee:Report VI), would be counterproductive andcertainly contrary to good private sectorpractice. Nor does it consider that, if there aresufficient safeguards about status, role andindependence, that it is incompatible for a clerk

also to be a member of the collegemanagement. The Council’s inspectionframework currently considers the extent of theseparation of roles where a clerk also holdsanother post within the college to ensure thatthis is appropriate. However, some positionssuch as the finance director and principal’sassistant may not normally be compatible withthe role of the clerk. The formal role of theclerk as ‘whistleblower’ should also berecognised formally, as it is now under therevised financial memorandum;

d. the Council would strongly support theintroduction of an ombuds-function for furthereducation, as recommended most recently bythe select committee. This would do much tobring greater confidence to staff and studentsand would ensure some external scrutiny ofcertain complaints and grievances;

e. publicly available registers of interest andcodes of conduct, together with formalpublished policies on the availability of minutesof meetings, would also contribute to a revisedaccountability framework. Many colleges havealready adopted these voluntarily. The selectcommittee report recommended that collegesshould treat matters as confidential only wherethis was strictly necessary. It would helprelationships within the college as well asbetween the college and its communities ifminutes and other information were readilyavailable. Whilst many colleges do this, othershave rather weak arrangements for publicaccess. A requirement that copies are placed ina library to which the public have access wouldbe a useful way forward;

f. the Council would also support a requirementthat colleges adopt procedures forwhistleblowers and for their protection. Again,many colleges do this and the Association ofColleges has produced helpful guidance, but itis not universally adopted. The selectcommittee also recommended this;

g. the current articles and instruments require theprincipal to make proposals to the governingbody about the educational character andmission of the college. The government mightwish to consider requiring that the governingbody approve these, alongside the approval ofthe budget for income and expenditure,cashflow and its balance sheet, prior to thebeginning of the year to which they relate.

5

Supporting good governance

8 The Council actively supports good governance.The requirements of incorporation have establisheda demanding discipline for governing bodies. TheCouncil has published, in collaboration with thesector, the Guide for Governors and CollegeGovernance: A Guide for Clerks; as well as a rangeof short documents for governors on aspects of theCouncil and colleges’ work. The chair of the Councilmeets chairs of governing bodies annually in a seriesof regional meetings. The Council holds a successfulannual general meeting for which chairs are the keyaudience. Inspection reports on individual collegesare sent to the chairs of governing bodies. The chiefinspector’s annual report provides an analysis of thefindings from inspections of governance andmanagement. Members of staff speak at governors’and clerks’ events and respond to queries fromindividual colleges.

9 The Council’s inspection framework has beenparticularly important in supporting thedevelopment of good governance sinceincorporation. The Council has this year revised itsinspection framework to place greater emphasis ongovernance and management and has broughttogether its inspectors and auditors to delivercomprehensive analysis and judgements to colleges.The new inspection framework awards a gradespecifically for the quality of college governance.

10 The evidence about the quality of governancein the sector has been encouraging. Inspectionreports testify to the support offered by goodgovernors, especially in ensuring that financialmatters are addressed. The chief inspector’s annualreport for 1996-97 states that

. . . highly committed governors bring to thesector valuable expertise and useful contactswith local industry and the community. Theyare good advocates for the college and give oftheir time generously . . . only a few havedeveloped effective indicators to measure theiroverall performance. Governors of mostcolleges have a good understanding of theirfinancial responsibilities but these havesometimes absorbed too much of theirattention. Governors are less comfortable indetermining the educational character of theircollege and in monitoring the quality of theprovision . . . most . . . are not well enoughinformed about students’ achievements or theacademic standards of the college.

Quality and Standards in Further Education inEngland 1996-97, paragraph 40.

11 Given this evidence, the Council has someconcern that the government’s consultation paper,in referring to governing bodies, as ‘ripe for reform’may be misinterpreted as a general criticism ofgoverning bodies, rather than a reflection of a desireto change their nature and focus and to introduce anew model of governance. The Council believes itwill be important for colleges to continue to harnessthe support and goodwill of their business membersand the business community, and to be able to drawfully on those qualities which many governors withbusiness backgrounds bring to their work.

12 However, there are clearly challenges forcollege governing bodies, as the expectations uponthem develop. The Council shares the government’sanalysis that colleges are crucial to realising alifelong learning society and to achieving essentialsocial and economic regeneration. The Council’sresponse to the green paper elaborates on theevolving role and capacity of colleges in this context.

13 The Council will support colleges as theydevelop governance arrangements that underpin theproposals in the consultation paper. In particular,the Council believes that it is timely to review theguidance available to colleges and governors and tobring it up to date. Some recent events, andparticularly the publication of reports on GlasgowCaledonian University and St Austell College, suggestthat some governing bodies would welcome furtherguidance. Consequently, the Council has announcedthat it will establish, jointly with the FurtherEducation Funding Council for Wales and theAssociation of Colleges, a working group to developnew guidance on good governance. It is anticipatedthat this guidance will offer information on goodpractice as well as the formal requirements ofgovernance. It will be important for any revisedguidance to take full account of the new expectationson governing bodies following implementation of thegovernment’s proposals. This will enable colleges todevelop further their abilities to engage with theirlocal communities and to demonstrate theiraccountability. The Council looks forward to thegovernment’s contribution to the working group.

Council’s powers of intervention

14 The Council has considered how it can bestenforce the reforms to the composition of governingbodies and other measures which might usefullyunderpin accountability and good governance. It isclear that the four levers introduced by the Council(the inspection and audit framework; the funding

6

methodology; the strategic planning framework; anddata collection requirements) have not only exerteda strong discipline on corporations, but have alsosupported the development of good governance.The emerging evidence from the latest inspections ofcolleges, where the requirements on governance andmanagement are arguably higher than under theprevious inspection framework, is very encouraging.

15 However, there can be occasions whereguidance and the impact of the four levers describedabove do not seem to be sufficient to ensure thatcolleges have the quality of governance that theyneed, or where guidance does not sufficiently informtheir activities. It follows, using the definition ofgood governance adopted earlier, that these collegeswill find it difficult to demonstrate to theirstakeholders – or to the Council – their probity oreffectiveness. In these circumstances, the currentaccountability framework can sometimes seeminadequate to allow suitable action to be taken. Thecurrent framework depends heavily on the use oftwo powers. The first is the secretary of state’spower to intervene, on the Council’s advice, toremove the governing body. The second is theCouncil’s power to withdraw funding or attach otherfunding conditions to a college’s allocation.

16 Increasingly, the Council has been concernedthat these powers may not enable it fully todischarge its own accountability to parliament andgovernment, and may not provide sufficientprotection when matters are going astray. Inparticular:

• the use of the power to attach conditionsof funding or withdraw funding alwaysneeds to be balanced by the need todischarge the duty on the Council (but noton colleges) to secure facilities for furthereducation which are sufficient andadequate. Making that balance willusually favour discharging the dutiestowards students

• the secretary of state’s power to removethe governors is very much a power of lastresort and has been used very sparingly.

17 This has prompted the question as to whetherthere is a gap in the powers of intervention, andwhether other changes are needed to consolidatethe enhanced accountability to which theconsultation paper aspires. This question has beenexplored recently by the education and employment

select committee, which noted in its report that, inthe event of mismanagement:

. . . in the interests of promoting a clearunderstanding of the role played by the FEFCin ensuring the probity of the sector, werecommend that the FEFC’s duty to interveneis clarified and strengthened. The FEFC needsto intervene at the first danger signal.

Select Committee Report VI paragraph 164.

18 There are difficulties here in envisaging anddelivering a more interventionist approach on thepart of the Council. Any such approach would needto continue to respect the proper autonomy ofcolleges and to take account of necessary practicallimitations. Whilst it is likely that emerginggovernment priorities will challenge the reach of theCouncil’s four levers, it will always be important tohold on to the principle of college autonomy and notto subvert the proper role of a funding body.Colleges need a considerable degree of autonomy inorder to retain their flexibility and responsiveness.The sector’s capacity to respond quickly is one of itsdefining characteristics. The Council believesstrongly that this capacity should not be hamperedby extensive additional constraints or requirements,nor that the Council should, or should be requiredto, substitute its own judgement for that of colleges.

19 Nonetheless, the Council, with some reluctance,considers that there would be merit in adding to therange of its mechanisms for intervention. Inparticular, consideration could be given to:

• the Council’s being empowered tonominate assessors for a stated period oftime to college governing bodies andhaving the right to address governingbodies

• a power of direction, falling short of thepower to attach conditions of funding andrelated solely to concerns about theproper use of public funds and possibly,compliance with the articles andinstruments

• a power for the Council to appoint a smallnumber of governors to a college for aspecified period and purpose.

7

Published by the Further Education Funding Council

© FEFC July 1998