Can colleges continue to stretch their budgets?
With the college sector bracing itself for further funding cuts, we report upon how some are looking to procurement efficiencies to make up the gap.
So concerned is the Association of Colleges about government attitude to college funding, it has prepared its own manifesto of recommendation to the next Government on why 16-18 education funding should be ring-fenced. In the manifesto, AoC’s President Richard Atkins and Chief Executive Martin Doel state; ‘The Institute of Fiscal Studies estimates that 60% of the cuts in public spending are yet to come, and they want colleges and their students to be protected from the brunt of these cuts, just as schools and universities have been protected in this Parliament.’
Furthermore, they go on to say that the recent National Audit Office report about the participation of 16 to 18-year-olds in education and training confirms that the DfE core budget for this age group has reduced in 2013/14 by 8% in real terms compared to 2010/11. Spending on 16 and 17-year-olds is 22% lower than spending on 11 to 16-year-olds.
The current Government is however focusing its Post 16 resources on Apprenticeships, the only programme in town for colleges to access much needed additional funding. Whilst this provides an opportunity for colleges to partner with businesses to develop new courses, many are looking to tighten the belts and find for operating efficiencies – and strategic procurement planning is again the focus for colleges to make ends meet.
To this point, South Staffordshire College is running a Colleges’ Procurement Forum to demonstrate how it has taken this drive for efficiency forward, and to explore with other colleges how they can all make their funding budgets go that bit further and focus precious resources on learners. Keynote speaker will be the new Chief Executive of the Skills Funding Agency and Education Funding Agency Peter Lauener, who will be delivering a message of efficiency planning to the sector.
Back in 2006, even before the economic crash, the National Audit Office was encouraging colleges to improve their procurement practice to reduce costs. Sir John Bourn, the then head of the NAO, stated, “Modern procurement processes have reached a stage where they can bring colleges big savings – money that they can redeploy to direct services for learners. All colleges should seize the opportunities and support that are now readily available to help them implement the necessary improvements.”
The NAO reported in 2006 that colleges in England spent £1.6 billion each year on a range of goods and services from books and stationery to examination fees and energy bills. It said that some colleges recognised the benefits of introducing more efficient and effective processes, but many needed to improve their processes substantially, and could contribute to plans to save £75 million nationally within two years. The report to Parliament identified practices that would lead to savings without compromising quality. Most importantly, colleges could redeploy these savings to support front-line teaching.
How many colleges actually achieved savings is unknown, but efficiency is once again high on the agenda with colleges coming together on 11th March 2015 to share ideas on how they can save money through procurement. The Colleges’ Procurement Forum hosted by South Staffordshire College will hear how South Staffordshire College has set a strategy of centralised procurement and using a specialist procurement agency, the Colleges’ Buying Club to facilitate tendering across its six campuses and its Academy.
As with the original NAO report, the forum will look to identify key steps to improve the capacity of further education colleges to make savings and manage procurement more efficiently by:
- Recognising the benefits and raising good procurement as a priority
- Taking advantage of more efficient procurement methods, such as e-procurement
- Reviewing, understanding and improving the management of current contracts and suppliers
- Sharing best practice
- Exploring opportunities to collaborate with others, to gain economies of scale when buying goods or services
South Staffordshire College runs a regular procurement group headed by its Deputy Principal and Finance Director Vanessa Howard, with an action plan targeting key categories where savings could be achieved. So far, savings of well over £100,000 have been achieved across such areas as professional services, ICT and engineering purchasing, and outsourced catering. South Staffordshire College has a strategic partnership with the Colleges’ Buying Club which ensures that the College gets best value pricing from the Club’s no cost, EU compliant tendering service, reducing its costs further by negating the need for in-house procurement expertise.
Graham Morley, Principal of South Staffordshire College will be inviting fellow colleges to discuss how they can collaborate to increase their buying power and save money through economies of scale and active market competition. Outsourcing collaborative contracts is one way of securing lower prices as facilities management and catering firms look to win large college contracts, as well as print management contracts where the much maligned photocopy industry looks to redeem itself from the sharp practice of some unscrupulous salesmen in the education sector. Commodity purchasing of equipment, stationery and consumables such as energy too is an opportunity for colleges to collaborate and make significant savings.
Education Investor will be reporting on the Colleges’ Procurement Forum, and listening intently to hear whether the political parties think further education funding is worthy of any pre-election funding promises. One thing is for certain; regardless of who is in power post the May general election, the college sector will continue to feel it is underfunded and will look increasingly inwards to consider how it can become more efficient to continue to offer its students a quality education.