Further education SMEs need help

16 August 2011

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16 August 2011 | Adam Leach

The Department for Education’s market-based approach to higher education will fail unless providers publish accurate data, from which companies can benchmark costs, according to a report.

The department wants smaller providers of education services, such as social enterprises, to be able to compete alongside larger organisations. Published today, a report by the Committee ofPublic Accounts (PAC) said if the policy was to succeed, better and more accurate data must be made available to allow organisations to identify value for money and make them better able to compete.

The committee consulted three education institutions that had managed to make efficiency savings. Each highlighted the importance of knowing what competitors were doing. The report concluded: “The department’s market-based delivery model will not deliver its objectives of improving choice and quality for students unless good comparative information between providers is available.”

It also called on government to provide greater incentives, or strip away disincentives, for smaller providers to collaborate. It found that one obstacle is their cost base but that by teaming up with others to improve their buying power they could put themselves on an equal footing with larger companies. However, the direct competition between small providers to attract pupils is stifling collaboration. The report also called for a change to assessment criteria so organisations could continue to be assessed independently even if they formed a federation.

Committee chairwoman Margaret Hodge, said:“Students in larger institutions have generally achieved better results. Smaller providers could achieve some of the benefits of size, such as economies of scale and improvements to quality and choice, through collaboration. However, the competitive market in which providers operate can act as a barrier to cooperation.”

In October last year the London University Purchasing Consortium (LUPC) announced it wouldmake annual savings of £2 million on legal fees as a result of leveraging buying power.

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