Although government policy varies across the four home nations of the UK in line with different local requirements, it is clear that mergers are not an easy option and do not always deliver the anticipated benefits readily and that, in many cases, alternative means of improving efficiency and effectiveness may be preferable.
We note elsewhere that the FE sector appears to consider mergers more readily than other options and there has been considerable effort made to point the sector to a range of collaborative options that should be considered as an alternative to merger.
Exploring the alternatives
The Department for Innovation Universities and Skills (2008b) produced a toolkit to help governors and senior managers evaluate the options and a series of case studies highlighting examples of the different models.
A study into 'Delivering Value for Money through Infrastructural Change in the FE sector' (KPMG 2010) suggests that shared services and federated activity have the greatest potential to deliver efficiencies in the sector. It claims however that the legal and regulatory framework in FE is a significant inhibitor to these types of activity. Differences in legal status make collaboration with the independent specialist college sector particularly difficult. However an equally important factor appears to be the culture in the sector (driven to a significant extent by policy) which emphasises competition over collaboration.
The study also makes the point that value can mean different things to different stakeholders and cites a number of examples such as the growth of franchising in the early 1990s which was very good for the bottom line of college finances but delivered poor quality for the learner and an example where a consortium approach between a college and local sixth forms has increased participation rates but resulted in the college delivering a financial loss every year.
"We have identified a number of barriers which prevents (sic) colleges being innovative in improving value for money. A fundamental cause of many of them is the impact of the legal and regulatory framework for colleges which imposes a limit to the flexibility of strategic partnerships.
The present constraints on colleges often leave them with only the option of merger to achieve critical mass sufficient to achieve their ambitions in a cost effective way.
In some cases where colleges have sought to collaborate, it seems that the tougher interpretation of the Charities Act by the Charity Commission appears to be preventing activities such as the co-location of provision which some FE colleges and specialist colleges have tried to achieve.
The question must also be considered as to which organisation in a collaborative venture receives the benefit of the increased value for money ie the learner, the college, the partner, the funding body, the public purse etc."
"The policy environment is a key driver of activity. There are policy tensions as the drivers for institutional collaboration are not as strong as the drivers for institutional competition."