The College Financial Handbook is now out

Stop the press!  The much-anticipated College Financial Handbook is here (published 20 March 2024) and it’s a must-read for all those involved in the leadership and governance of colleges in England.

At the point when English colleges were told that they were part of the public sector, we were promised that a handbook would be developed by the Education and Skills Funding Agency (ESFA) in consultation with the sector. The handbook, which comes into force this August but has been published now to help colleges prepare, is intended to provide helpful guidance on how colleges can meet their new public sector obligations, seeking to distil HM Treasury’s weighty tome Managing Public Money into about 50 pages.

So have they succeeded?

For all those who have worked in and supported the sector a long time - in my case, 25 years this September - we know that guides and handbooks can often feel more like prescriptive rules.  Notwithstanding the labels given to the various ‘bite-sized guides’ since reclassification, they and the associated Dear Accounting Officer letters are, in reality, hard rules. Rules which if broken can have consequences. The documents have sought to provide practical guidance on the application of the rules, although in many cases when applied they have raised questions which has meant a need to seek consent from the ESFA (who have in turn often had to seek consent from Treasury).

The College Financial Handbook is similarly prescriptive in parts.  Akin to its close cousin the Academy Trust Handbook, the College Financial Handbook contains a series of ‘musts’ and ‘shoulds’. ‘Must’ means it’s a rule. ‘Should’, whilst optional, effectively means it’s a rule unless you’ve got a compelling and well-justified alternative way of addressing the issue in hand and are willing to stand your ground if challenged over which you didn’t just do it the way suggested in the handbook.

A missed opportunity?

It is perhaps a missed opportunity that the ESFA has not allowed a period of consultation with the whole sector before finalising the draft handbook.  Instead, the ESFA convened a working group comprising a range of sector representatives to help it to develop the handbook, with ministers having the final say.  The ESFA was keen to get the handbook published in final form as early as possible to give colleges time to make sure that any necessary adjustments could be made to their systems and processes, but not enabling a full opportunity for everyone to feed back on the draft carries risks.  Notwithstanding the best efforts of the working group, there may be unintended and unforeseen consequences when the rules are applied in the real world – and by not consulting fully some colleges will feel done-to.

Future consultations

There are still opportunities to provide feedback which will shape future editions of the handbook, and we should all make full use of those, but for now these are the rules which will come into force after the summer holidays.

It is clear that there has been a genuine desire to try to explain in a college-specific context the boundaries which come with being part of the public sector. Some of the rules contained within it are inevitably going to be annoying to college leaders and boards, in the way that there have been frustrations arising out of the bite-sized guides and the consent processes which sit behind them. Chief amongst those concerns has been the slowing down of decision-making for our highly responsive and nimble college sector. 

Everyone in the system is trying their best in this new world, but it has posed real risks to capital projects, worsened difficult situations involving employees and hampered the ability of colleges to determine how they address some challenging scenarios.  What is one person’s appropriately pragmatic way of dealing a sad employment situation, an innovative solution to a difficult problem or a necessary incentive to secure the best talent is another person’s perceived pay-off, excessive salary or novel, contentious or repercussive transaction requiring the consent of the state.

Good governance supports colleges to succeed 

Combined with exceptional leadership, good governance has always been at the heart of the success of the sector.  Not every college can get everything right every single time, but the sector is packed with talented and committed leaders and governors.  It is critical to maintaining the ability of colleges to support and drive forward our communities that those leaders and governors retain the tools they need to be able to meet their responsibilities. How can we fairly hold to account our college leaders and governors if they are not given sufficient freedom to operate?  Colleges remain independent exempt charities, governors remain trustees and our system works best when everyone acknowledges that.  The regulatory landscape has changed again, but that has always been the life of a college leader and governor.

If we truly see colleges and the state as collaborators in a critical joint endeavour to improve society, then the hope for the handbook must be that having a more comprehensive rule book helps everyone to be clearer about what they can do without having to engage in consent processes which consume significant time and resource. It cannot be good for either colleges or the state to do otherwise.  Hopefully with the advent of the handbook confidence will build rapidly as precedents are set. It will be key for those precedents to be as facilitative as possible if colleges are to be able to deliver upon their mission as successfully as we all need them to be. Our families, friends, employers and wider communities simply need that to be the case.

Further updates on the handbook

Stone King will publish some initial thoughts on the content of the handbook and will continue to keep the sector updated. We are also coming together with RSM and the ESFA after Easter, following on from a similar event we held last year, where we will discuss some of the detail, challenges and opportunities arising from the handbook. Get your questions and thoughts ready and please contact me or my Partner Ciara Campfield in the meantime if you would like to discuss how the handbook might affect your college. 

The handbook can be read here.