Area reviews in the FE sector - an opportunity to future-proof your organisation

By Paul Bagnall

Nationally, Further Education is undergoing a series of Area Reviews to help put the sector in good stead to serve students and employers as well as achieve a strong financial footing. The review process is well underway with three out of the five waves complete or in train. With Area Reviews affecting the West region expected later this year and into early 2017, there is still time to finalise individual college plans, canvassing the views of key stakeholders and ensuring financing is robust over the medium term. Participation in area reviews will need colleges to share information on student numbers, costs and revenue predictions which should be capable of challenge and sensitivity analysis.

The prospect of merger or federation activity between colleges as part of the outcome of the Area Reviews is highly likely given the focus on improving reach and quality, whilst also reducing costs. This is not without risk for all parties involved - challenging conversations with funders around sustainability and commercial viability could well emerge - whilst transition funding is available from the Skills Funding Agency's Transactions Unit, it is clear they are demanding equally high quality information and plans, including:

1) 3 year cash flow;

2) A detailed implementation plan; and

3) Evidence that the qualities and capabilities of the key management are right for delivery.

Medium term public funding pressures, changing demographics and the increased influence of employers in "purchasing" education mean that the issue of Further Education change is as relevant as ever. Delivering efficient operational change, having the right revenue model, creating stable funding structures to enable growth and delivering the right deals are just some of the areas that are affected.

PwC has been involved in drafting guidance for due diligence required by colleges restructuring after the Area Reviews, and we have seen colleges really engage with advisors to understand the risks and opportunities that this process can bring.

How do you see the changes impacting the sector in the West?

Please share your thoughts or get in contact.

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