Sixth form colleges – a crossroads for the sector?

Accountancy firm Buzzacott looks at the road ahead for academy trusts in FE

The sixth form college (SFC) sector is currently at a pivotal point in the context of area reviews and the announcement in the Autumn Statement that SFCs can become academy trusts. But what is the state of the sector going into this potential period of change?

Area reviews

There is a wide geographical spread of SFCs in London, which is under scrutiny as part of the area reviews. There are opportunities for SFCs to merge with local neighbours or to develop their geographical focus.

Student numbers in London sixth form colleges.

 

SFCs cannot be reviewed in isolation from the sixth form provision within schools and further education colleges. The local dynamics and alternatives for students are more complex. However, the area reviews do highlight some of the key strategic questions for SFCs; what is their unique offering, which students are being targeted and how should SFCs market themselves?

Once the strategy is clear, three basic structural options arise for SFCs to deliver it:

  • Stay as you are
  • Become an academy
  • Merge/collaborate

Academy status?

Academy trusts and SFCs are both funded through the EFA. Academy trusts can recover their VAT and this would be a key financial benefit for any conversion, which is estimated to equate to £350,000 per annum on average for SFCs. However, academy trusts are not permitted to have debt finance, which could be a potential sticking point for conversion and a limiting factor in the future.

Academy trusts can be constituted as a Single Academy Trust (SAT) or a Multi-Academy Trust (MAT). Constituting as a MAT would enable SFCs to form a federation with other schools from primary up to sixth form level. However, individual governing bodies within MAT structures usually only have a local remit, with the central board setting the overall strategy and being ultimately responsible to the regulator. The SFC identity could be lost very quickly within a MAT structure.

Despite academy trusts having greater freedoms than local authority schools, the level of regulation and restriction of freedoms would still represent something of a straightjacket for SFCs. But how much would this really matter for the sector? The statistics show that diversity of income remains under 10% across the London SFCs, which are focused on their core funded programmes.

The key regulatory implications of becoming an academy trust include:

  • Whole of government accounts reporting
  • Academies Financial Handbook compliance 
  • Change from FE/HE SORP to Academies Accounts Direction

Other important factors include the impact on governance and culture at an SFC. Whilst academy trust status offers SFCs a whole range of opportunities, there is also potential for the small SFC sector to be subsumed within a much larger academy trust sector with the corresponding loss of a unique offering.

Collaboration

The further education (FE) sector is alive with potential mergers currently. This is a big step for SFCs where collaboration has predominantly only existed through joint procurement groups and sector liaison groups. The impact of current collaborations explored so far in the sector has generally not been great enough to have a material impact on College finances or strategy.

Critical mass is a key driver behind mergers and the first SFC merger in recent times between East Norfolk SFC and Paston SFC was no exception. The table above shows the relative size of the London SFCs.

Increased size may afford SFCs greater investment in leadership as well as educational specialisms. Synergies are also highlighted as a key driver behind mergers. But a successful merger must also be customer driven and offer something attractive to students. This is where the greater strategic challenges lie for many SFCs.

The finances

There are 12 SFCs in the London area. Of these, five have an ‘outstanding’ OFSTED rating and only one is rated as ‘requires improvement’. The financial health is, on the whole, strong with eight outstanding SFCs. This puts SFCs in an excellent position for pro-actively exploring new strategic options, but also gives weight to the ‘stay as you are’ position.

Ofsted performance and financial health in sixth form colleges

 

The SFC map

Area reviews have been a significant source of concern for SFCs. So how does the SFC map of London look?

The spread of SFCs around the outside of inner London suggests that the spread is not too far out of alignment with the population centres. Recruitment data from SFCs does show that there is overlap in student catchment areas. However, competition is needed to drive the quality of the colleges.

Where now?

Much of the upheaval within the FE sector was driven by financial viability following changes to adult funding and the focus on apprenticeships. Whilst financial pressures undoubtedly exist within the SFC sector, the immediate financial health of the Colleges is not standing on the same precipice as it was for many FE Colleges. This may afford the sector more time to consider strategic options.

That said, the ‘stay as you are’ model is continually less attractive for SFCs and the political momentum with the area reviews and autumn statement announcement appear to be pushing the sector towards change. It is therefore definitely a time for SFCs to consider their strategic plans, be clear on their offering and consider their options so that they are prepared for the future. 

www.buzzacott.co.uk 

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