A question of balance: the FHE Bill

There’s an important Bill under scrutiny in the Assembly which rests on the question of balance.

Here are its whys and wherefores.

The FHE Bill’s Purpose

The Further and Higher Education (Governance and Information) (FHE) Bill, gives additional freedoms to further education (FE) colleges. Under the Bill, a college will be able to:

  • modify or change its instrument and articles of government
  • dissolve itself and transfer (with some safeguards) property, rights and liabilities
  • borrow without prior consent of Welsh Ministers
  • conduct itself through a subsidiary company.

Colleges will be classified as ‘not for profit institutions serving households’’ (NPISH) – a status they have had since incorporation in 1993.

Too Closely Controlled by Government?

The decision by the Welsh Government to introduce these changes came about following the announcement by the Office for National Statistics (ONS) in 2010 that colleges in the UK were too close to their respective governments and could not therefore be treated as NPISH. Rather, colleges should be reclassified as being part of central government.

Without the FHE Bill, colleges would have lost their cash assets and annual surpluses – these would belong to Government which could decide what to do with these funds. They would also lose one-half of their capital funding an estimated £20m.

Where is the Bill now?

The Bill published in April 2013 is now in its third stage, having passed the important first two stages of scrutiny.  The Bill has four stages to pass before it achieves Royal Assent.  In the first stage the Children and Young People Committee explored whether or not such a Bill was needed. The second stage allowed for amendments to be considered by the Committee. The third stage will allow for amendments at a plenary session of the Assembly and the fourth stage should be the approval by the Assembly of the amended Bill. Royal Assent then follows.

The rest of the UK

The ONS left decisions on the future status of FE colleges to each Government. Wales has taken a different path from that in Scotland and Northern Ireland – where colleges will become part of central government. The Scottish Government is already developing approaches to mitigate the negative effects on college budgets by setting up independent trusts to which college funds will be transferred. Colleges (and other approved organisations) will be able to bid to these trusts to receive these funds. In both Northern Ireland and Scotland, chairs of governing bodies are appointed by a Government Minister.

In England, legislation has already been passed giving colleges greater freedom. However the underlying philosophy in England – competition and choice – differs considerably from that in Wales – partnership and collaboration.

A question of balance

Assuming all goes to plan, the Bill is likely to receive Royal Assent early in 2014. The Welsh Government currently provides around 80% of college funding – including work-based learning and capital funding. An appropriate balance needs to be struck between on the one hand the Minister setting out priorities for the sector, and ensuring colleges deliver the Welsh Government agenda and the taxpayer receives value for money and on the other hand the increased freedom of colleges to manage their own affairs and respond to the needs of their local communities.

ColegauCymru and colleges will seek to clarify their future working relationship with Welsh Government, possibly through a memorandum of understanding.

Confidence in colleges

The Welsh Government’s view is neatly summarised in the White Paper that predated the Bill. “Colleges, rather than government, are best placed to determine how the needs of learners and local communities should be met”.

Colleges will make every effort to make sure they repay the Government’s confidence in them.


About johngraystone

Previously Chief Executive of ColegauCymru (2001 - 2014). Now carrying out various consultancy activities in post-16 education and skills. Interest in education policy and the governance of further education colleges.
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