Colleges prepare to do battle with giants Leave a comment

Next year will be the toughest colleges have seen for a long time. It’s not just that there will be belt-tightening all round, but also that the private sector will be better placed than ever to cream off their most profitable work. There is plenty of evidence that big companies in the education business have seen their chance to go for the jugular – and are positioning themselves accordingly.

Forcing colleges to compete against private sector companies is not new. Contestability – meaning competition based on quality and price – has been going on for some time. And colleges have often done well in competition with the private sector. But next year will offer new and bigger challenges.

In September 2007, colleges are expected to get between 90% and 95% of the previous year’s funding. The rest, plus any growth in funding, will be put out to tender, so that companies as well as colleges can bid for it. That money, once earmarked for colleges, could be lost to them.

The total budget is only going up by 2.5%, and there will be cuts to reflect government priorities. So any college which cannot beat off private sector competition will have a very thin time indeed. “It’s meltdown time,” says one principal.

Meanwhile, the work on delivering Train to Gain – the programme of free workplace training – will be handed out by a network of brokers, to be appointed by the Learning and Skills Council. The brokers will find out what employers want and commission workplace training to provide it. Colleges will be competing with companies to win over the brokers.

The biggest beast in the corporate jungle is Carter and Carter, which has been buying up competitors fast in recent months, and has just poached a high-flying college principal to be its director for learning and skills.

The Midlands-based company worked mostly for vehicle manufacturers until last August, when it broadened its base dramatically with the £24.2m purchase of Assa Training and Learning. It told investors this would “provide further penetration into the UK government-funded learning and training market, which the directors estimate is worth approximately £1.3bn”. Then, in February, it spent£13.6m on the purchase of the Fern Group, which, Carter and Carter shareholders were told, “provides access to a key priority segment of the government-funded training and learning market”.

Two years earlier, Assa had been bought by its management, led by Peter Marples. In the 1990s, Marples was responsible for the education practice run by the accountancy firm KPMG, advising the Department for Education and Skills and the now defunct Further Education Funding Council, overseeing college audits, and becoming one of the least known and more powerful people in further education.

Assa made Marples a multi-millionaire. According to the Derby Evening Telegraph, at the time of the merger with Carter and Carter, he owned a Jet Ranger helicopter, four cars, a speedboat, and a magnificent manor house overlooking a golf course. After the merger, he became Carter and Carter’s group business development director.

Poaching principals

At Assa, he had pioneered the technique of poaching former college principals to provide knowhow and contacts. He brought in the ex-principal of New College Nottingham, Dame Patricia Morgan-Webb, as a non-executive director, and told reporters: “Our strategy is to become the no 1 private training provider in the UK over the next five years, and Pat will play an important role in guiding us.”

But Morgan-Webb did not follow him into Carter and Carter. She and three others shared a £1.3m windfall in the form of shares in Carter and Carter, and she now concentrates on her own education brokerage, which she runs with her husband, Christopher Webb, the former chief executive of Handsworth College in Birmingham. They will presumably be in the running to be one of the brokers allocating work on Train to Gain. They are part of a consortium bidding for the Defence Training Review.

However, Carter and Carter has made sure that it does have a college principal in a senior post. This month, 43-year-old Di McEvoy-Robinson leaves her post as principal of West Nottinghamshire College to become the company’s director for learning and skills. “I will be working with colleagues from the sector, building public/private partnerships, and developing regional skills academies,” she says.

McEvoy-Robinson, like Morgan-Webb, is one of New Labour’s favourite FE principals. The Learning and Skills Council newsletter reported in the summer of 2004 that she was among a select group of principals, training providers and students invited to meet Tony and Cherie Blair at Downing St – and one of a very small inner circle to get a private meeting with Tony Blair. She said Blair’s “friendly style and genuine interest in the excellent work of the sector came across throughout the evening”.

Mature market

McEvoy-Robinson got to know Peter Marples while Assa worked on contract for West Nottinghamshire College, improving the engineering work and “modernising the staffing profile”. She shed 50 staff, though she points out that only eight of them were made compulsorily redundant and, during her four years as principal, she increased the staffing from 800 to 1,200.

“Private training providers will be competing with colleges for work,” she says. “Some people say, ‘Di’s going, is this the writing on the wall?’ But, for me, it is an opportunity to develop knowledge and skills. They have brought me in because I am an educationalist. I have worked hard on relationships with the Department for Education and Skills, the Learning and Skills Council and colleges. There is a real hunger in colleges to work with the private sector. I am not leaving the sector, I am just going to be in a different part of it. The landscape of learning and skills is not just a college landscape.”

Marples says McEvoy-Robinson will bring with her “much intellectual property and a record as a good leader in the college sector”. He thinks next year will bring significant new opportunities, although “it will never be as open a market as the private sector might wish”.

He sees his company as working with colleges some of the time, and competing with them at other times. But in commerce, he says, it is not unusual to have a partner in one area who is your competitor in another. “That,” says Marples, “is the mark of a mature market.”

Also gearing itself up to take full advantage of the new company-friendly atmosphere in FE is the VT Group. Education is just one part of this big company’s business, a lot of which consists of military supplies to the British and American governments.

In February, it bought the work-based learning provider Touchstone Learning and Skills for £12m. Touchstone’s main business is Learning and Skills Council contracts, and VT Group’s chief executive, Paul Lester, says the purchase “is in line with our strategy to expand our education and skills business. Our annual revenues run rate in this business is now over £100m”. VT lists the former Labour education minister Baroness Blackstone as one of its non-executive directors.

The effect on the colleges has yet to become clear. Principals who are most alarmed are reluctant to speak on the record. One says: “The government seems to want the profitable bits to go to the private sector. Companies will get funding at the same rate as colleges, but without colleges’ overheads.”

The principal added: “They can use methods of getting business which we cannot use. We have to account for every penny, but they can spend what they like on, for example, hospitality to get new business. It heralds the return of sleaze in FE. And, in the long run, they will want to take over and run the colleges.”

Marples accepts that “there is an argument that the private sector will pick the apples off the low branches” and aim to take over the most profitable work. But he denies that he want to run colleges. Nonetheless, some of the money that is being held back and put out to tender will be lost to the colleges, says Geoff Hall, principal of New College Nottingham and the driving force behind the new 157 Group of big college principals. “And it is inevitable that, if other providers win, there will be redundancies in colleges.”

So far, no thought seems to have been given to the staff whose work will go to the private sector. Their position under TUPE – the transfer of undertakings (protection of employment) legislation – is likely to provoke fierce battles between companies and trade unions. Unions and colleges will argue that staff must have the right to transfer, and to take their contracts and conditions with them.

Hall is concerned that colleges may not be allowed a level playing field. “Why assume that the private sector is better?” he asks. “We want to be sure the contest is fair. Who is judging the bids? The judges must be beyond criticism. If that is the case, we’re not afraid of contestability.”

Hall, at Britain’s biggest college, believes that the main losers will be the smaller and weaker colleges, while Marples, at Britain’s biggest private training provider, thinks the most vulnerable will be all smaller providers, companies as well as colleges.

Hall says that to compete with huge, sometimes even multinational companies, colleges may band together to put in joint bids. He does not rule out the idea that the 157 Group itself could be the badge for joint bids from the big urban colleges.

Marples, meanwhile, has done everything possible to ensure that Carter and Carter is not among the vulnerable. The stage is set for a battle between the biggest battalions each side can muster.

Source :The Guardian

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