KPMG on the college sector, financial health and “infrastructural change”

I am currently reading KPMG's report for the Learning and Skills Council, Delivering Value for Money through Infrastructural Change. The report was published recently by the LSC's successor, the Skills Funding Agency. It is more interesting than it sounds - at least to those working in the college sector. It reviews the FE sector, current delivery models and potential institutional change.

(I will forgive the report's use of the American term "organizations" and the misspelt reference to the "Robins Report" [sic] on Higher Education in the 1960s.)

While a wake-up call to colleges should not be necessary the Executive Summary warns:

The financial health of the FE sector is in general deteriorating rapidly, and requires urgent action.

The report provocatively notes:

Some Governing Body members may tolerate a more relaxed view of deficit and insolvency than in their day job in the private sector.

The report also believed that the regulatory framework was such that:

... there appears to be implicit in these statements [by the LSC about intervention], and the actions that have followed, the view that some degree of failure is to be tolerated and there are no immediately dire consequences of delivering a deficit budget; instead, a protracted period of dialogue with the LSC is envisaged. In our experience, the consequence of the time this process takes for some LSC’s and Principals and Governing bodies is that one or both may be complacent for too long, or strive to elongate the dialogue, before robust remedial action - by which time it is often too late to salvage the college. The option of closure for a failing college is not seriously contemplated by colleges as a consequence because it has happened so rarely.

The report goes on to suggest that the current regulatory arrangements also hinder new ways of working and structuring institutions in the "FE system".