Capita F&HE Conference 2012

1. Survival of the Fittest! Vici Cadwallader-Webb May 2012 Capita F&HE Conference 2012

2. Period of significant challenge/ change Significant budgetary constraints – To standstill is to grow! Uncertainty around the future funding mechanisms Many colleges are not hitting funding targets and are generating surpluses on the back of this Increased regulation/ measurement Poor Inspection results BIS publication – New Challenges, New Chances What is the currently happening within the Sector?

3. Consequences of failing to address the challenges… Inability to meet the needs of local learners/ communities Financial failure Merger/ Takeover/ Federation by/ with another College Closure? All of the challenges with regard to funding and associated cuts amount to the same thing……. Better quality More learners/ activity Less funding Significant constraints In essence, more for less! What is the currently happening within the Sector?

4. Funding Cuts What do we think the cuts look like? 4

5. Do nothing Reduce costs Increase income Group Structure /Collaboration/ Federation/ Merger Options that Colleges could employ

6. Reducing Costs • Increase Group size • Increase Teaching Staff Utilisation • Curriculum Efficiency • Reducing Support Staffing Costs “Colleges must now adopt a policy of continuous improvement….” “The use of learning technologies in delivery must increase moving forward….” “The direct cost of putting a lecturer in front of a group of learners is between £40 and £60 per hour based on average utilisation levels within the sector” “The mix of permanent to temporary staff should be a strategic decision based on the needs of the college…”

7. Increasing Income • Full Cost Degrees • Growing Overseas Provision • E-Learning & Innovative Delivery Models • Purchase of Independent Training Provider • Academies Purchase of Private Training Provider can install some much needed commercial awareness into the parent college, and galvanise existing curriculum delivery departments. Quick Case Study – Growing Provision for Overseas Students At a college we worked with: The provision initially commenced with 400 overseas places approved through the BAC and Tier 4 in September 2009 and these were soon filled. In January 2010 the number of places was increased to 800 and again these were filled by March 2010. The total income from these students for a full academic year is £3m. Growing income can be uncertain, especially in the current environment, growing income is no substitute for the cost reduction and efficiency agenda but should be seen as a companion to it.

8. Group Structure/ Collaboration/ Federation • Managing the estate more effectively • Outsourcing backroom services / Shared Services  • Federations • 14-19 and Diploma Partnerships Mothballing some of the estate; Taking over / running Local Academies Data Management; • Additional uses of estate: • Effective Events Management • Meeting place for local businesses • Sports Fields / Pitches – Increasing evening income • Short term Leases Work with other local colleges to share and allow the best performer to take over duplicated provision;

9. Merger • Merger as a genuine option must be driven by: • Localism; • Learner need; • It must stand up in terms of enhancing the opportunities for existing and potential learners; and, • Offer financial stability for the new college in the long term. • Process (Pre 1 April 2012): • Strategic Options Review • Feasibility study • Initial Outline Proposal • Due diligence/ Public consultation; • Full Merger Proposal and White File; • Secretary of State makes a decision • Put before Parliament Process (Post 1 April 2012): • College Structure and Prospects Appraisal • Competition? The term “modern merger” has been coined perhaps to distinguish it from some of the “shotgun weddings” which have occurred in the sector. An early Due Diligence of both colleges would confirm the criteria in the Heads of Terms and may suggest others. The colleges would create an over-arching entity which would bring the support systems of the colleges together on an outsourced basis in the short term.

10. What do the best colleges achieve and why? Engaged by LSIS to identify those colleges that appear to have a high level of efficiency and effectiveness and to understand through discussion with and review of college data how they achieve this: The College type is either General FE or Tertiary; Financial health is classed as either good or outstanding; The overall 2009/10 success rate for the College exceeds 80%; The surplus/deficit made by the College is at least 7% of the total income; The learner destination survey results are at least 80%; The learner views survey results are at least 8.0; The employer views survey results are at least 8.0; The Ofsted report is either good or outstanding; and, The above results were shown to be stable or moving in a positive direction when reviewed against previous years. How many colleges met the above criteria?

11. What do the best colleges achieve and why? Findings from the review: All colleges managed the following KPI’s in the detail across all levels within the College: Success Rates Group Size Staff Utilisation Curriculum Efficiency Support Costs The colleges were already planning for the proposed changes to the Funding Methodology and many have revised the offer to learners on the back of the announcements to date The colleges looked to use technology to drive further efficiencies rather than allowing it to be a barrier

12. Structural Changes/ Actions Necessary to Survive the Cuts Immediate College Year 1 – Year 2 Year 3 College Continuous • Stronger. • More Efficient • More adaptable to Change

13. Immediate KEY DRIVERS Establish what they are Determine Current Performance Monitor / Establish a monitoring system Review Teaching Staff Utilisation DELIVERY Cut back on temporary staff if resource is available in College Review Support Costs & take appropriate action Review Curriculum Efficiency INCOME / COSTS Assess Income Streams & plan to increase Review Collaborative Arrangements Implement Changes coming out of above

14. Years 1 and 2 SET PERFORMANCE TARGETS Set for Curriculum Teams for Curriculum Efficiency Set for Staff Utilisation and Monitor Regularly Quality of Provision CURRICULUM PLANNING Deal with Curriculum inefficiencies quickly Identify Staffing Requirements based in Curriculum Plan Review Permanent and Sessional Contracts Identify Blended Learning and Common Unit Teaching SUPPORT COST MANAGEMENT Identify duplications in business processes (look at different sites) Work with Managers to most effectively work / Centralise or De-Centralise processes. Consider shared services

15. Year 3 and Continuous Review and Implement Shared Services if relevant Develop a robust procurement approach to all suppliers / services Continue to benchmark spend in key areas against sector median Regular Revisit of Independent Strategic Options Reviews Explore Merger / Federation