Monday, February 27, 2012

Almost time to party – the ONS deciding on how to classify colleges

Today’s announcement that the Office of National Statistics is re-classifying FE and sixth form colleges out of the public sector is good news.

The change in the ONS position reflects changes ushered in by the Education Act removing various regulatory powers from Whitehall, the Skills Funding Agency (strictly speaking part of the department for Business, Innovation and Skills) and the Young People’s Learning Agency. The ONS ruling does not grant independence to colleges – it merely recognises the new freedoms granted to college corporations. (Those freedoms may have downside when a college stumbles or banks “re-price” the risk associated with lending to colleges.)

The bunting should be strung up as the ONS was threatening a tangle of new red tape. However, before the flags come out we should note that the financial memorandum will have to change. Tucked away at the foot of the BIS press release was a note:

This reclassification is provisional upon ensuring that there are no other public sector controls in other documentation, such as the funding agreements, and keeping under review the use of remaining government powers within legislation.

Nevertheless, the SFA is promising a new financial memorandum “very soon”. Presumably – and hopefully – the YPLA is also treating the issue with urgency. Before 1 April these will be handed down – probably well before then as a consultation draft. The timescales are somewhat tight.

There might be some other footnotes in the full ONS judgement when it is published. (The latest ONS press releases include bed blockers and breast enlargement but nothing appears to be there on the status of colleges.)

Whilst not wanting to be a party pooper, it is also worth remembering that the National Audit Office will have to consider a similar issue – whether the accounts of all the English FE colleges should be consolidated into the accounts of the SFA. The ONS announcement makes it easier for the auditors to say that consolidation (and all the returns which would be required of colleges to make it possible) is not necessary. The NAO will be applying financial reporting standards but the same kinds of issues of control are in play. So before long we should be able to toast the auditors as well as the statisticians.