Many of the cases for merger seem to be based on the notion that there is an optimum type of ‘landscape’ for the sector and that institution size is a fundamental part of this.
Ernst & Young (2007) exemplify this by contrasting higher education provision in Glasgow and Manchester (see below – note that Paisley and Bell College merged subsequent to the publication of these figures):
|Undergraduate||Postgraduate||Students||Academic||Total staff||Income (£m)|
|Glasgow School of Art||1,247||253||1,500||128||307||16|
|Royal Northern College of Music (RNCM)||440||185||625||88||211||11|
A review of the literature however suggests that there is little empirical evidence to support the argument for an optimum size of institution (setting aside the argument for economies of scale in research). As there are marked similarities with the divergent views on how exactly ‘economies of scale’ might apply in relation to shared services in the sector, it is worth taking a brief look at the various commentaries.
An Evaluation of Mergers in the Further Education Sector: 1996-2000 (Department for Education and Skills, 2003)
This report has a very useful key issues section.
"In general it proved difficult to reach a direct conclusion about optimum size since much depends on particular circumstances. Some very large colleges prospered after merger; some did not. Some concerns were expressed in several larger mergers examined, that they might now be too big. Complexity of management increases with merger, as does the distance of the principalship and senior management team (SMT) from line staff and delivery. The problems of handling a multi-site operation are substantial and this often allowed unhelpful culture and attitudes to remain."
"Large colleges may not prove particularly attractive to potential students. Some colleges observed their smaller competitors stressing that ‘small is beautiful'; ‘they can’t give you the personal service’. Some of the colleges were finding a positive way forward in separately packaging aspects of their delivery, promoting separate ‘brand images’."
"A merger might prove financially beneficial or otherwise; but it is always fraught with economic uncertainty. Many of the case studies demonstrated the appearance of ‘financial surprises’ after merger occurred, although, no particular pattern emerged from the research."
The Evidence Base on College Size and Mergers in the Further Education Sector (Payne 2008)
This report offers a useful summary of economic theory and how it relates to the FE sector.
"Whilst the discussion of economic theory in relation to the FE market suggests that there may be efficiencies associated with larger colleges, there is a question about the minimum size at which colleges can enjoy these efficiencies, and whether there is a limit to economies of scale such that beyond a certain size the college will become less efficient – ie whether some organisations could become unmanageably large."
"A quantitative analysis of the relationship between college size and performance shows that there is no evidence of a relationship between college size and success rates and no evidence of a relationship between college size and financial health."
"Governments in Northern Ireland and Wales have recently taken the decision to move to a smaller network of regional colleges because they believe that greater critical mass will allow colleges to exploit economies of scale, improve the use of investment, increase coherence across the sector, and enhance the status of colleges. The published reviews for both countries do not include any evidence that larger colleges are necessarily more effective, or that college mergers result in net benefits. The Webb Review for the Welsh Assembly Government does cite evidence that efficiency savings could have a significant impact when an FE institution reaches a turnover of around £15 million, but this evidence is not provided in the report."
Further Education Colleges – Models for Success (DIUS 2008a)
This report sets out a number of alternatives to merger and criteria against which proposals will be judged.
"Colleges vary considerably in size. Analysis of 06/07 data shows huge differences in total income between the smallest colleges (£1.9m) to the largest (£82m). There are similarly big differences in student numbers. However, we do not believe the size of a college is an indicator of its effectiveness or performance."
Delivering Value for Money through Infrastructural Change (KPMG 2010)
There has been consensus that the quality of the college leadership and the quality of the governance arrangements are the major determining factors influencing the success or failure of a particular college. There has been less agreement about the influence of size as a factor in delivering value for money.
"… there is absolutely no consensus on the optimum size for a college from consultees. We noted that the majority of principals we consulted seemed to think that the ‘next size up’ to their own college was the optimum size!"