The publication of the Report of the Review by Professor Russel Griggs of Further Education Governance in Scotland is a watershed for further education colleges in Scotland, one way or another.
Although the Scottish Government have not yet confirmed to what extent, and on what timescale, they will implement the report, the assumption in the sector is that significant change is inevitable. Stakeholders, including all the sector colleges, have been invited to comment on the Report, and the Scottish Government's response to the Report will presumably be influenced by stakeholder response.
There are 34 recommendations. Among the principal recommendations are:-
A new regional structure in which Scotland's further education colleges would be grouped into 12 regions;
Executive authority and strategy setting will be at regional level, dealt with through a Regional Board with a paid and independently recruited Chairman;
Central funding will be provided to the regions, for use in pursuit of certain identified outcomes, and they will be judged on achievement of those outcomes;
College reserves in excess of 10% of annual revenue to be used for the benefit of the sector overall, and unallocated current reserves exceeding 10% be available to central government for the same purpose;
National terms and conditions for teaching and support staff should be implemented;
Principals will no longer be Board members, but will be "in attendance";
Capital projects will be centrally funded and controlled;
There should be a new Management Information System (MIS) covering the sector
Clearly, it is well enough understood by those promoting change that moving from current structures to that new position – assuming for the moment that the principal recommendations are broadly adopted – contains considerable legal challenges. The report notes that primary legislation may be required in some respects – for example incorporation of the new regional entities. The challenges should not be underestimated. It is not entirely clear that the structural proposals or the scale of the challenges are fully thought through. Questions arise in various respects. For example:
The nature of the regional entity is not specified. It is expected that colleges will choose from two basic options. Firstly, colleges in a region could be fully merged into a single legal body into which is bundled all the legal rights, liabilities and obligations of the merged colleges. Such a structure has the advantage of allowing a single top level of management to be imposed, comprising the Board and a single Principal, although questions of how much local management is needed would still arise. College mergers have happened before, and are happening now in the sector – for example between Cardonald and Anniesland. Regional mergers could be of a different order – and there is one College (James Watt) whose two campuses are proposed to end up in different regions. A further complication is that the land-based colleges which are spread throughout Scotland are merging, with their non land-based training being subsumed by neighbouring colleges where appropriate.
The other option is what might be described as "federation". On this model, one would expect individual colleges to retain a "corporate personality". However, the key powers, such as setting of strategy, receipt and disbursement of funding, and the setting of terms and conditions for staff are "hived up" to a regional body. The individual colleges come together under a new "constitution" under which they agree to operate and to be managed. This model, at least in broad outline, is also under consideration in the sector. The report notes that there are examples of single purpose co-operation agreements running successfully.
As the Report also notes, the government may legislate for something different, or provide for cutting through normal legal constraints – by deemed transfers and special exceptions from normal rules.
Whatever the outcome, the body must be capable of receiving, holding, and disbursing funds and entering into contracts of all kinds – for example, for goods and services to be supplied across the region. It must be capable of holding assets of all kinds, including buildings. As the Report notes, there has been a great deal of estates renewal over the past few years. Colleges own buildings, sometimes at more than one location. Unified estates management is – as other public sector bodies may testify – a challenge in itself. Fairly new buildings may have their share of unresolved construction issues, so questions of liability, and contractual disputes may be in the mix.
Learning services may not necessarily physically relocate. Relocations obviously raise issues such as property acquisition and disposal, the extent to which recent estates improvements can be "written off". Consequently, the regional structure must be such as will deliver coherent management of its constituent parts – but who is answerable to whom for what?
At the moment, each college employs its own staff. Terms and conditions are not consistent across this sector, and some have not been updated for many years. It is possible that, even where updates had been attempted, they have not been done effectively. It seems fair to say that, at a local level, the quality of relationships between college management and teaching and support staff and unions varies from college to college, but the good will disappear with the bad under a national structure.
The Report recommends the setting up of separate committees to negotiate and agree national terms and conditions. While possibly unavoidable, this does not suggest that these terms and conditions are going to be settled any time soon. Some colleges have already undertaken a lengthy and involved process of negotiating staff reductions and revised terms and conditions of employment. Amending these even further to harmonise the different terms will be no easy task, as has been demonstrated where mergers have already taken place in the college sector.
There is potentially a further stage of implementation, involving individual employment contracts on new terms and conditions. Here again, as any employment lawyer would confirm, the challenges are significant and unlikely to be resolved in a short time.
The likelihood is that the regional entities will be established sooner than the unified terms and conditions for its staff. Given the disparities among various colleges, a federated structure might find itself dealing with different groups of employees with quite different terms and conditions.
Whether the regional entity is a federation with powers transferred to it, or is truly a merged body, it will undoubtedly involve a transfer of undertaking for the purposes of employment law. The regional entity, therefore, takes up the employment liabilities of all constituent colleges and must address these from a "cold start" position. Any rationalisation of support services such as human resources will lead to the disappearance of local knowledge of, and relationship with, employees.
Pooled resources for teaching, administration and management staff will undoubtedly lead to redundancies and the inevitable dispute about who gets what job and how?
Reference was made above to ongoing college mergers, with options for further mergers being considered. Once could expect, in those cases, common terms and conditions to be negotiated for those staff who are "TUPE'd" into the merged body - but these may have to be revisited if and when national terms and conditions are arrived at on conclusion of the "political" process.
Another important issue is how pension provision would be affected by any restructuring of the further education colleges. Public sector pension provision is, of course, a political hot potato and has already been the subject of many Union strikes.
Most if not all further education colleges will be participating employers under both the Scottish Teachers' Superannuation Scheme ("STSS") and the Local Government Pension Scheme (Scotland) (the "LGPS"), which are statutory-based schemes. As such, by virtue of the Regulations, they are a "Scheme Employer", rather than an admitted body. That makes it quite difficult for them to cease to be employers under either Scheme. Generally, academic and teaching staff will be in the STSS and non-academic and support staff in the LGPS.
So, further education colleges are stuck with the terms of the Regulations governing the two Schemes. These cannot readily be altered other than by action of the Scottish Ministers (political means). Each set of Regulations requires what is effectively an auto-enrolment of members into the Schemes. In other words, employees are automatically eligible and automatically become members, although in each case there is an opt-out procedure which requires member consent.
Our pensions team is already advising a number of LGPS scheme employers/admission bodies in relation to the LGPS, for example, in relation to admission, terms of admission agreements, termination of participation, cessation deficits, contribution levels, auto-enrolment etc. However, as mentioned for LGPS employers, unlike admission bodies, it seems opt out of the LGPS would require to be by statutory means.
We have also been advising other public sector employers including several Scottish universities in the STSS and legislative requirements in relation to auto-enrolment into that scheme etc. Again, it appears cessation of participation in the STSS would require to be by legislative amendment.
The proposed restructuring is likely to create complex pension issues and cause further disquiet among public sector employees regarding the future of public sector pension provision.
It is clear that the Scottish Government intends significant change and restructuring in the further education sector. The transition to a new structure raises significant challenges for the sector as a whole, and no doubt local issues will emerge as each regional structure is created. These are early days, of course.
The Report concentrates, of course on structure, and not implementation. The "transition" challenge is perhaps underemphasised, however.
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