Can you have a bloodless merger?

Up to 80 per cent of higher and further education institutions are involved in merger discussions, largely prompted by financial pressures. But do they solve anything, or simply lead to redundancies and conflicts of interest? Emma Haughton reports

The proposed merger between Imperial College and University College London may have bitten the dust, but it's unlikely to put off a spate of unions in the further education (FE) sector. In Birmingham, for instance, the proposed merger of City College, Birmingham, and South Birmingham College could create the biggest FE institution in Europe, with some 50,000 full- and part-time students and a budget of more than £60m. Similarly, Derby College was recently formed by the merging of three institutions in the city.

According to Professor David Warner, the principal of Swansea Institute, University of Wales and co-author of How to Manage a Merger... Or Avoid One, up to 80 per cent of all further and higher education institutions are involved in merger discussions of some kind.

"It is gaining momentum, but then there has never been a period when there hasn't been mergers and reconfigurations. Most of our institutions arose without planning, and with more than 500 FE colleges and 170 HE institutions, there is a huge wave of belief that there are too-small institutions about and that it's not a good thing in terms of economies of scale."

The FE sector faces particular problems and pressures, he believes, because FE colleges are very complex organisations to run in terms of funding streams. The nature of their work, with a large number of short courses and part-time students that could, potentially, drop out or in at any time, makes their situation more volatile.

Financial pressures are the overwhelming driver towards mergers, agrees John Brennan, director of further education development at the Association of Colleges (AoC). "Institutions have found it difficult to manage as independent entities, and so are looking for partners strong enough to take them on and manage their business successfully."

So, does merging work? The downside is blood on the carpet, and a lot of it, says Warner. "If you're merging to create economies, where can you make them? Only in shutting sites and making staff redundant. And that's never popular."

The largest growth of higher education is in the FE sector, and the current situation is anarchic and virtually unplanned, he says. There are efficiencies and economies to be made, and, Warner says: "Frankly, they could be just as easily made by running the colleges more efficiently."

Mergers do enable bigger institutions to spread overheads, rationalise provision and become more cost-effective, and this in turn can enable them to buy in expertise, says Brennan. "On the whole, merged institutions seem reasonably successful. Smaller units, for instance, can't afford those specialist staff, and are more vulnerable to wide market fluctuations in particular areas of work."

But Barry Lovejoy, the head of Natfe's colleges department, has concerns about the threat to community access. "You can end up with more specialisation of provision, which can increase travelling distances for students and reduce their ability to access resources. And it does take a long time for two colleges with different working practices and cultures to work as one."

Nowhere is this more likely to become an issue than in the proposals for several FE colleges to merge with higher education institutions. Bradford University and Bradford College, for instance, have announced plans to unite, while Thames Valley University is in merger talks with Reading College and School of Arts and Design.

This presents a whole new set of challenges, says Warner. "Staff in the FE sector work in entirely different conditions from the post-1992 institutions, and on an entirely different planet to the old universities. There are huge human resources issues to resolve. But it's probably some of the most exciting work that is going on, and the distinction between FE and HE is a pretty false one."

Brennan has more mixed feelings. On the one hand, blending HE and FE together offers greater financial stability, as well as the possibility of better progression routes from lower-level qualifications to higher ones. "It's better to have the same group of people delivering learning and managing it in that context."

On the other hand, he has worries about the longer-term implications for the FE components of a merged institution. All the historical evidence shows that institutions with a strong HE focus tend to want to shed their lower-level work, he says: "The old polytechnics are a classic case in point. They started out with a lot of lower-level courses but when they were given university status to encourage them to expand their degree-level work, they ended up becoming total HE institutions."

It's not a very encouraging lesson, he concludes: "The UK economy needs a wide range of skills; and then there is the whole question of widening participation and lifting the attainment of the large proportion of people that achieve little at school and less beyond. We need to make sure that any merged institutions don't lose their focus on them."

education@independent.co.uk