College mergers: statistics, inspection outcomes and planning for success
In this blog, Matt Bromley, education writer and adviser with over 20 years’ experience as a teacher, headteacher and principal, explores merger activity within the post-16 sector, and its impact on inspection outcomes, and explains key considerations and actions for colleges considering a merger.
The post-16 landscape
There are currently 226 further-education and sixth-form colleges in England, compared to almost 450 when colleges were incorporated in 1993.
Since 2015, when the government launched its review of post-16 education and recommended a move ‘towards fewer [but] larger, more resilient and efficient providers’, there’s been a marked increase in the number of colleges merging, and a new option for sixth-form colleges to convert to become 16-19 academies has hastened this decline in sector size.
According to the Association of Colleges (AoC):
- 78 college-to-college mergers have taken place since 2015 (2 in 2015, 11 in 2016, 29 in 2017, 12 in 2018, 10 in 2019, 7 in 2020 (excludes 2 colleges that were broken up), 2 in 2021, 3 in 2022 and 2 so far in 2023)
- 1 more college-college merger is currently planned for 2023 (involving three colleges) and 1 college is due to be closed
- 1 college attained university status and become a HE Corporation in 2018. It was designated as an FE institution under the Further and Higher Education Act 1992
- 4 university-college mergers have taken place (2018, 2019 and two in 2021). In all cases (post-merger), the college remains or was designated as an FE institution under the Further and Higher Education Act 1992
- 2 colleges were broken up in 2020 and campuses transferred to 3 other colleges
- 29 sixth-form colleges have converted to become 16-19 academies (17 in 2017, 3 in 2018, 5 in 2019, 1 in 2020, 3 in 2021)
- 2 more sixth-form colleges have consulted on academisation - conversion dates are to be confirmed
- 1 sixth form college closed in 2022
- Type A mergers are where all the existing corporations are dissolved and a new one created (a double or triple dissolution plus a new incorporation)
- Type B mergers are where one corporation continues and the others are dissolved with the staff, assets and liabilities transferring into it (a single dissolution)
Inspection statistics and outcomes
Mergers have, naturally, changed the number of colleges that Ofsted inspect – but they’ve also changed inspection outcomes, or so says an analysis published by Ofsted on 15 June 2023.
The number of colleges that Ofsted inspected was reduced by just under a third between 1 September 2016 and 31 May 2023 - largely because 66 colleges merged into other institutions.
Since September 2016, 114 colleges have been involved in a merger, as well as 2 institutes for adult learning. These mergers resulted in the formation of 48 colleges and 2 institutes for adult learning. The number of colleges Ofsted reported on reduced further, as 29 sixth-form colleges academised, and 4 colleges dissolved.
According to the latest Ofsted analysis, a higher proportion of colleges that went on to merge were judged require improvement or inadequate than the proportion of all colleges at 31 August 2016. This, said the inspectorate, reflected the aim of the area reviews to deliver high-quality education and training.
By 31 May 2023, 42 of the 48 merged colleges had received their first full inspection. 81% were judged good or outstanding. This is 16 percentage points higher than the proportion judged good or outstanding prior to merging.
Most colleges either maintained or improved on the grades of their constituent institutions at their first inspection after merging. There were 11 that saw a lower grade than any of their constituent institutions and were judged requires improvement or inadequate at their first inspection after merging. Of these, 5 improved at their next inspection and one remained requires improvement. The other 5 are, at the time of writing, awaiting their next full inspection.
It’s worth noting here that colleges that did not merge also improved over the same period. As of 31 August 2016, 81% of colleges that have not since been involved in a merger were judged good or outstanding. As of 31 May 2023, 95% of these colleges were judged good or outstanding. This represents an increase of 14 percentage points.
Many mergers have involved colleges judged requires improvement or inadequate merging with colleges judged good or outstanding, which were then judged good at their first inspection. However, as Ofsted points out, this is not the only direction of travel.
There are 6 merged colleges, all made up of 2 colleges previously judged good, that were judged requires improvement or inadequate at their first inspection after merging. Overall, due to more improvement than decline, and colleges previously judged requires improvement or inadequate being disproportionately involved in mergers, the proportion of colleges judged good or outstanding has increased. Between 31 August 2016 and 31 May 2023, the proportion judged good or outstanding increased by 16 percentage points.
Do mergers work?
According to DfE research, carried out in September 2019, there is no strong statistical evidence of college mergers leading to an improvement or deterioration of college performance on average. Rather, the DfE found that, on average, the effect of merging was statistically indistinguishable from zero.
In fact, the DfE found no significant improvement in profit margins, staff costs, or success rates.
The DfE’s methodology allowed them to rule out the influence of individual college histories as well as the wider sectoral trend. Their finding was, they said, robust to the different model specifications they had explored and applied to all financial and non-financial outcomes we have examined.
This rather begs the question: Why is the impact so negligible - or at least variable? If it is, why does the government want more colleges to merge?
I’ve worked with many colleges in the process of merger, and many more who’ve recently been through merger. Each merger is different, of course; context is all. But a large proportion of colleges who’ve merged have not, in my opinion, taken advantage of the opportunities presented by merger and have not adequately prepared for life post-merger.
There are two main reasons for this:
Firstly, when there is a senior partner, perhaps the college with the best Ofsted rating or in the best financial health, this college tends to dictate the terms, and it is their corporate identity and their working practices that tend to be carried forward and dominate the merged entity. This leaves those in the junior partner college(s) feeling that the process of merger was somewhat ‘done to them’ rather than ‘with them’, and feeling that their college’s identity has been stripped away and lost. In short, nothing changes in the lead college, but everything changes for the other colleges, whether they want it or not and, more importantly, whether this will work or not.
Secondly, when there is no senior partner and/or where merger is rushed, there is often a lack of detailed forward planning, including limited consultation with stakeholders. This means mergers go ahead before all the colleges involved are truly ready, which results in little - if any - tangible improvements being made post-merger and very few, if any, benefits and economies of scale being achieved. Rather, the merger only succeeds in sowing divisions and resentment, and in creating a tangle of contradictory policy and procedure to be unravelled, not least in terms of staff terms and conditions, and the staffing structure. In short, nothing changes, and all former entities continue as they were but under the stretched, distant leadership of one senior team and board.
So, how can colleges who are thinking of merging avoid pitfalls and plan for success?
According to JISC’s quick guide, ‘Understanding key issues for mergers in further and higher education’ published December 2020, it’s important for colleges to evaluate their strengths and weaknesses ahead of merger. Indeed, any college considering significant structural change must undertake a college structure and prospects appraisal to evaluate strengths, weaknesses and local circumstances, and determine the model that will best allow it to deliver its mission.
Next, JISC advises that colleges consider the drivers for their merger. “Being able to deliver high quality outputs in a cost-effective way is one reason to merge but there may be other drivers in terms of government policy, service delivery, improvement, reputation, competition or indeed survival.”
As with any major change process, JISC suggests colleges ensure a strategic approach to quickly and effectively respond to these drivers. Colleges should explore alternatives to merger: “Where flexibility, low risk and low costs are imperative, you should consider alternatives to mergers. For example, sharing services can also save costs, increase efficiency and share knowledge.” Other alternatives to merger include: creating alliances, joining up networks or subcontracting services externally. It may be possible, for example to partner with another organisation to back up each other’s data.
Next, colleges should seek to understand and address key issues. For example: Will the pre-merger organisational identities be maintained, or will there be a new group identity? Are there opportunities to rationalise systems and services? A comparative analysis across all merging organisations should be undertaken, says JISC.
The consultancy company, Rockborn, which specialises in mergers, has identified eight vital phases for a successful college merger:
Phase 1 is understanding the process and all the colleges involved. Rockborn suggests colleges start by getting all governors and senior leadership teams on the same page by asking: What is the rationale for merging? What’s the history and culture of the existing colleges? How does each college work currently? What potential issues are known or foreseen?
Rockborn say that setting up a joint steering group is essential, and that colleges should make sure the first meeting involves agreeing the group’s terms of reference and the communication protocol, and sets the dates of future meetings in line with key milestones.
Phase 2 is carrying out due diligence. Here, as with any legal agreement, it’s essential that decision-makers have all the facts and can exercise care with the proceedings. Rockborn says that “governors should be presented with both the legal and financial findings early on to inform the planning and decision-making process”.
Phase 3 is to set up workstreams and create the implementation plans. Here, colleges will need to set up a working party for each operational area with representatives from each of the colleges. This group, says Rockborn, will collaborate on their implementation plan — a record of all the decisions and actions required in the lead-up to the merger (and beyond), with key dates to track progress against at each meeting.
Phase 4 is a public consultation and phase 5 involves regular catch-ups to review progress against the implementation plans in order to ensure key deadlines are met and any issues are dealt with as they are raised.
Next, in phase 6, colleges will need to set up workstreams for governance and management structures, and then, in phase 7, they will need to consult staff on the Transfer of Undertakings (TUPE) – in other words, the transfer of staff into the employment of the newly merged college, which will involve a consultation with trade unions and all affected staff ahead of the merger.
Finally, in phase 8, colleges will need to publish the statutory notice informing the public of the impending merger and complete various legal and governance actions. At the point of merger, says Rockborn, governors must hold a meeting to dissolve the existing corporations and initiate the new arrangements they planned for in phase 6.
Of course, the work doesn’t end here and newly merged colleges who consider ‘job done’ fail to take advantage of merger. Rather, after the opening of the newly merged college, it’s important to build new internal structures.
Key to a successful merger, as with all change management processes, is to consult widely and communicate often. Colleges need to open and transparent about what they are trying to achieve, explain the rationale behind the decision, and outline the benefits for everyone involved.
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