Some thoughts on audit, governance and regulation in colleges

I have some doubts over the government’s plans to redistribute the role of the Learning and Skills Council among a Young People’s Funding Agency, adult Skills Funding Council, a National Apprenticeships Service and over a hundred local authorities – oops, I almost forgot the sub-regional clusters. What an article in the Guardian dubbed a "quango tango". Camparisons with the fragmentation of British Rail aren't exactly cheery. But let us put to one side issues of joined-up government and managing the transition, what about the implications for the regulation and governance of colleges who deliver so much education and training?

Presumably the “provider assurance” function of the LSC will be split two or more ways. This will be sad as this will be disruptive and risk a fall-out of auditors who do know colleges - even if they can be frustrating at times. Any loss of experience and expertise may result in a nit-picking defensive mentality or a soft-touch approach (as opposed to an effective light-touch). Possibly colleges will get both.

The re-arrangement of agencies might, on a brighter note, lead to a re-think of audit for colleges. (But I doubt it.) I would query whether the smallest colleges – particularly the smaller sixth form colleges – need their own internal audit service. These colleges often have a total income of a few million and limited non-core activities. They are quite different from Newcastle College with its £150 million income.

The smaller colleges are little different from the schools that they compete with for staff and students. They are arguably less exposed to risk than small housing associations who are not obliged to have their own internal audit.

As always there is a need for a cost-benefit analysis.

I am not downplaying the importance of internal control. I certainly think that all colleges should have their own audit committee – which should assess and report to governing bodies how assured they can be that internal control is robust. Whether they get this assurance from internal audit, external audit, healthchecks by consultants, or whatever, should be a matter for them.

Auditors as unsung heroes and the role of audit committees

No one likes auditors – or so it seemed until I read in yesterday’s Guardian that Auditors are unsung heroes.

To be precise, Duncan Campbell-Smith was only really talking about the Audit Commission who audit local government and the NHS (and inspect social landlords). But I’ll claim some credit as I temped in the mid-90s for District Audit!

It is nice for auditors and accountants to get some good press. Their image problems are such that there are even calls for jihad against the profession.

On a serious note, I do think that when – in the aftermath of organisational failure in the private, public or even third sector - the cry goes up of “where were the auditors”, we should also ask about the audit committee who should have been thinking about risk and internal control. Auditors need audit committees to keep them on their toes. In order to do that effectively, audit committees have to know what their own purpose is. Too often they don’t.

The end for Carter & Carter - FE college comes to the rescue

Last week brought the good and perhaps surprising news that the training giant Carter & Carter was to be taken over by England’s largest FE college. The acquisition by Newcastle College will save 1500 jobs. (The reach of the college was already far-reaching – at least geographically.)

As I’ve discussed here before, Carter & Carter started off with big ambitions – it promised to overtake Cambridge University in size. Instead it was plagued by at least bad luck.

This isn’t the first take over of a private training provider by a college but it is in a league of its own. (Not all such acquisitions have been very businesslike – I know of one which ended in tears after the college involved did not undertake due diligence.)

The take-over is not so good news for promoting contestability in the FE sector. Carter & Carter could have been in the market for rescuing and turning-around failing FE colleges – its a strange twist of fate that it was the other way round.

LSC RIP - Chronicle of a death foretold

Today the government announced that the Learning and Skills Council will be axed in 2010. It will be replaced by a Young People's Learning Agency, charged with helping local councils work together in providing for 14-19 learners, and a Skills Funding Agency (SFA) to administer funding to colleges and training providers.

When it was set-up in 2000, the LSC was built very much on the basis of the local Training and Enterprise Councils. If it had been built around a regionalised and reformed Further Education Funding Council (its predecessor), its early years may have been happier.

While the writing was on the wall for some time, now colleges will now be preparing again for the unknown. Let’s hope the government manages these changes effectively without destabilising and fragmenting the learning and skills landscape.

Policies all round – the Daily Telegraph on the “regulatory thicket”

The Daily Telegraph website carries an anguished article by Charles Moore about the regulatory burden of “policies” on civil society.

Moore writes:

A "policy", you must understand, is not a simple thing any more. It is not just a statement like: "We aim to provide residential care for the elderly" or "We try to cure children with spinal injuries" (or whatever). Nor is it just a statement of specific rules such as "No alcohol may be consumed on the premises" or "Pupils need not wear school uniform in the sixth form".

No, a policy has to be a lengthy document on anything that the Government thinks important. It must set out aims, procedures, targets, monitoring, assessment, evaluation and so on. Depending slightly on what sort of organisation you are, you must have policies on health and safety, access, disability, recruitment, transparency, energy efficiency, environmental health, etc, etc.

I share some of this frustration. (I’ve blogged on “over-policying” before.) However, I do not share Moore’s ideological diagnosis:

The "speech community" of the post-1960s Left has gained almost complete power and influence over the administration of government. Its concepts, its way of putting things, now have the force of law. It is producing the slow death of free institutions in this country.

Neverthless, the proliferation of policies like a triffid in public services is a threat. Public and third sector organisations need to adopt a sensible approach – streamlining things where possible by combining some policies and relegating some to “procedures” outside the remit of board governance. Sometimes they need to have confidence and stand up to regulators when the so-called “good practice” of having a particular policy will get in the way of effectiveness. Above all there is a need to focus on improving outcomes rather than being in thrall to process. (Too many action plans can be just as much a distraction as too many policies.)

I would also suggest that organisations look at the Policy Governance model of the American organisation guru John Carver which focuses on policies as central to the role of boards in governing organisations. In this model:

Policies are written statements that are designed to provide that framework of values and perspectives and thus guide further decisions. They set up rules, defining what is to be accomplished and what should not occur. The policies are embodiments of the values and perspectives of the greater authority that the board stands in to represent. If policies direct all further decisions, then the best place for leadership is in the development of policy.

It sounds like common sense but many organisations struggle with this and end up micro-managing (often encouraged and/or coerced by the regulatory pressures discussed by Moore).

Personalisation and Co-operation - mutual solutions in social care

Today I went to a co-operative movement conference on Personalisation and Co-operation. The speakers were Neal Lawson from Compass, Helga Pile from UNISON and Mick Taylor from Mutual Advantage.

I am sure that I will blog some more later on some of the broader issues but I found Mick Taylor’s contribution particularly interesting and inspiring. He has been working with a new co-operative society, Caring Support, set-up to pool individual budgets of a group of social care users. This gave them collective and individual control over the services that they received as well as providing for better terms and conditions for the staff.

I do hope that the co-operative movement will promote and incumbent such mutual solutions to the challenges of an ageing society and the needs of the most vulnerable users of public services. The government appears interested in this area with the recent announcement of more money for the Social Enterprise Investment Fund.

Getting the goat - Conservative plans on homelessness

The budget may not have been very exciting but the opposition is really getting serious about the housing crisis. The Financial Times reports that Conservative MPs and conference delegates are being urged by Caroline Spelman, their party chairman (sic), to help build a shelter for a rare breed of Bagot goats at a working farm near Gateshead.

Surveying UK civil society

As a corporate affiliate of the National Council for Voluntary Organisations, today I received my copy of the new UK Civil Society Almanac 2008 (pdf of the executive summary available). It is a pretty comprehensive review of where the third sector is at. Significantly it takes over from the previous NCVO almanacs of the voluntary sector with their narrower coverage.

The Almanac's executive summary notes that civil society organisations account for £109 billion of income in 2005/6. That’s a lot of activity. (I would query the inclusion of “independent schools” as part of civil society but the omission of Further Education Colleges which give so many young and not-so-young people a second chance as well as opportunities to develop skills for citizenship and employability.)

The Almanac addresses many important issues for the third sector which I will no doubt blog about as I read my way through the book.

Looking forward to a period of financial uncertainty the Almanac comments: “It remains to be seen how this will affect civil society, but the difficulties at Northern Rock plc highlight the dangers.”

Audit committees with added value - the NAO's "top tips"

The National Audit Office has launched a new edition of its Audit Committee Handbook. While it is primarily intended for audit committees of government organisations, other audit committee members may find it useful.

Alongside the Audit Committee Handbook there is a self-assessment checklist and a guide to “adding value”. The latter includes some practices that many audit committees would consider to be fairly routine or standard. However, it does suggest some practices that are less common but would certainly add value such as:

- calling appropriate business heads to meetings to explain how they are delivering on their agreed actions or on risks for which they are responsible; and

- improving communication between audit committee chairs and auditors with meetings outside of the formal committee meetings.

Supporting student governors - learning lessons from Scotland?

This week I discovered the sparqs website. It is a free service which is funded by the Scottish Funding Council to assist and support Scottish students in improving promoting quality improvement. I am not aware of anything similar in England – we could perhaps learn from our devolved cousins.

On the sparqs website there is a useful Supporting College Student Governors Handbook. (We’ll have to forgive whoever forgot to proof read the web page about it. The odd typo creeps onto this blog so I won’t cast the first stone.)

The Supporting College Student Governors Handbook sets out key information for student governors including how they can engage with their fellow students.

In the Handbook I did find some confusing wording on the difficult issue of to represent or not to represent. It notes: “Governors do not represent particular groups or interests, and as such they cannot be mandated.” Yet elsewhere: “Although you gain your position on the board as a student representative, remember that all of your decisions as a board and as an individual member will impact on other stakeholders too.” I would suggest that student governors are not student representatives but are there to give a student perspective – not least in a providing a reality check in what can be an isolated governance bubble. (I would suggest that the same issues arise for resident members on housing association and ALMO boards – or indeed any board members who are customers.)

I would also query the relevance of the examples of conflicts of interest in the Handbook. They are not likely to encounter the examples given. How many student governors are likely to also be a company director in the construction industry? Examples relating to, say, grants to student unions may have been more instructive when student governors may also be active on student union executives.

Despite my misgivings over some elements of the Handbook, I would like to see something in England for student governors. It would be timely given the profile now given to Learner Voice.

E-openness: New Freedom of Information website from mySociety

There is new website from mySociety (the people who brought you They Work For You and Directionlessgov). The What Do They Know site focuses on Freedom of Information. It helps you to easily and simply file request and share information on these requests and their results. The site is still in development but it is working. Have a look and maybe use it!

Commitment to reduce public sector bureaucracy

Sadly the aim “to reduce the enormous quantity of meetings, co-ordinations, permissions, conciliations, dispositions, regulations, circulars, etc, etc.” is in Cuba rather than in the UK public sector.

It will be interesting to see if Raul Castro can deliver on his commitment and breathe new life into Cuba’s centrally planned economy. Closer to home the jury is still out on Gordon Brown’s own commitment to regulatory reform. There does appear to be continuing threat to the independence of foundation hospitals.