EducationInvestor – Article: Exclusive: FE colleges could be privatised, say experts

Changes to the laws surrounding further education colleges could open the way to privatisation, sector experts have said.

Speaking at a recent EducationInvestor conference, David Hughes, the chief executive of the National Institute of Adult Continuing Education and a former director of the Skills Funding Agency, said: “There is a willingness – it might even be a desire – on the part of the government for a college to be privatised.

“It will happen, and I think it’ll send shockwaves through the sector,” he added.

A number of regulatory changes included in the Education Age 2011 have made such takeovers possible.

From 22 April, when the act comes into force, colleges will be able to change their own instruments and articles of government, removing the business secretary’s ability to constrain their actions. The Office of National Statistics also announced in February that it would reclassify FE colleges as private sector bodies.

The act will also allow colleges to convert to a new legal form open to investment, such as a company limited by shares.

Colleges will be required to maintain their charitable status. But Glynne Stanfield, an education lawyer with Eversheds, pointed out that this was also true of the College of Law, which is currently in the process of a private equity buyout.

“The type of deal could equally happen in an FE context,” he said, adding that private investment in the sector would be very attractive “from the point of view of a government that wants education to be less dependent on the taxpayer”.

A growing share of Hefce funding is being offered to lower-cost courses taught by FE colleges. This could also make the sector an attractive alternative to investors seeking a foothold in the higher education market, Stanfield added.

Paul Champion
Strategic Project Manager

Mobile: 07540 704920

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