Sixth form colleges at 20

Everyone loves anniversaries. This month it is the golden anniversary of the Beaching Report which shrunk the rail network. Next month it is twenty years since colleges were given their independence.

For colleges these are challenging times. Things are perhaps even more confusing for sixth form college sector.

Even though sixth form colleges have proven themselves to deliver qualityoutcomes and excellent value-for-money, the sector feels unloved. Last autumn the Sixth Form Colleges Forum debated the possibility of a mass conversion toacademy status. (This will never happen – there are too many financial obstacles.) The sector feels that academies get all the limelight while many schools now want to trespass on 16-18 landscape. In the case of sixth form free schools, the two developments combine.

Over the years there has been a steady shrinkage of the sixth form college sector. In 2001 there were over 100. In 2011 there were 95. The numbers carry on going down. On 1 August this year one of the oldestcolleges in the country, Ludlow College, merges into a local General FurtherEducation college.

Financial headwinds will affect sixth form colleges – both the funding squeeze and the competitive environment. While the sector as a whole starts of in fairly robust health some colleges start with greater challenges.

In 2010/11 five sixth form colleges had negative “performance ratios”. This is a measure of financial health which takes operating surplus and adds back the non-cash cost of depreciation. You would expect this always to be comfortably positive although there can be exceptional circumstances. (In one case the college appears to fit in that category.)

Surplus-based measures of financial health do fluctuate. One-off costs and lucky windfalls can distort the picture. A key measure of financial viability is a sustainable relationship between income and pay.

In 2010/11 there were nine sixth form colleges with a pay:income ratio of 75% compared with an average of about 69%. In 2000/1 there were fourteen colleges with such a high ratio – but three of those colleges are no longer around.

All these measures will suffer some turbulence over the next few years – not least with the effects of the 2013/14 funding changes and then the end of the Formula Protection (probably) three years later.

It should be remembered that operating losses and high pay costs can be shouldered for some time where sixth form colleges have been salting away cash-backed reserves.

When, hopefully, the 2011/12 college accounts are published in the next few months, we will see the readiness of sixth form colleges for the next decade.