Posted: 11 February 2016
Last week saw the news that FE colleges may be able to sell assets and reinvest the proceeds in technology; see here for more information. The debate on social media afterwards suggests there’s a bigger policy discussion needed here.
It’s an interesting development because it crosses a line – property is an asset that usually appreciates in value so is part of the college sector’s main asset base. Because technology depreciates over a short period of time (often 5 years), any investment in technology would ideally be funded from income so as to avoid eating into the overall long-term asset base.
The bottom line is that the reduction/shortfall in (mainly public purse) income means that the sector is having to dip into assets to cover costs that should be funded in the normal operational and investment cycle. The challenge for FE is that their ability to invest is already impacted by the fact that many funding cycles are annual or volatile – it’s hard to make a case for payback period of over 1 year, and it’s tough to invest for longer without the certainty of income. This is a challenge that the education sector faces on an ongoing basis (see item 3 in this House of Commons, Committee of Public Accounts report for more information).
The current situation is not dissimilar to selling off school playing fields, or the sale and leaseback arrangements on public buildings – both of which attract a lot of comment and criticism in retrospect due to the impact on health and costs, respectively.
Yet it’s understandable that FE is in this situation. Predictions of consolidation across the sector may well be right (see here for one principal’s view) and the immediate needs of the sector and its students must be addressed to avoid disadvantaging a generation of learners. Reusing the proceeds of asset sales – particularly assets that are no longer appropriate or fit for purpose in some instances – might solve an immediate problem but the long-term impact could be a bigger one. What happens when that digital estate itself needs replacing and upgrading?
But nonetheless, it’s an investment that is clearly needed. The value of digitising learning is championed by many, and discussed in some detail in this FE week supplement in December. The reasons to invest are plentiful.
The recent policy mantra has been that FE must act more commercially, which includes delivering a wider range of apprenticeship programmes. There are many great examples of the FE sector doing just this through forging close links with employers and commercial organisations (Nigel Rayner’s article in FE News here is an interesting synopsis of the challenges faced).
Ultimately though, the key enabler to acting commercially is to give the sector a more stable and longer-term funding cycle. Only this will enable a more productive planning and investment cycle – at the heart of other commercial organisations – without stripping the sector’s assets.
This is a debate set to continue.
-Helen Hayes, Head of Products and Services, YMCA Awards