Consultation 99/37

Higher education in further education colleges:

Code of practice on indirectly funded partnerships

Executive summary

Purpose

1. This document invites comments on a draft code of practice for indirectly funded partnerships entered into by higher education institutions (HEIs) and further education colleges (FECs). These partnerships are often known as franchises.

Key points

2. The code of practice provides guidance on the principles that should be reflected in indirectly funded partnership agreements.

3. The consultation seeks comments from universities and colleges on the principles set out in the draft code, and the commentary on their application; on any additional or different principles that should be included; and on our proposals for monitoring the adoption of the code.

4. We also invite institutions to send us examples of existing franchising agreements so that we may feed back to the sector information about the variety of good practice that partners have already established.

Action required

5. Please send comments to Christine Fraser at the address given in paragraph 18 by Friday 16 July 1999.

Background

6. In November 1998 we issued a consultation paper (HEFCE 98/59: Funding higher education in further education colleges) seeking views on our proposals for funding higher education (HE) provision in FECs. The consultation paper made proposals for promoting effective indirect funding relationships. We also held a series of regional seminars for all HEFCE-funded FECs in October; and a seminar with those HEIs that have the most indirectly funded provision.

7. A working group of the Council’s Sector Strategy Committee took account of all the evidence in preparing a draft code of practice setting out the principles and expectations which should underpin such relationships.

8. We are now seeking views on the draft code. In parallel, we are issuing a document which explains the options available to FECs to obtain funding for their HE programmes (HEFCE 99/36). The two documents should be seen as complementary parts of a single approach, which encourages FE colleges to work in partnership with HEIs in delivering and developing their HE programmes while also seeking to ensure that one widely-applicable form of partnership - namely franchising - is undertaken effectively and in accordance with established good practice.

Principles

9. The draft code in the Annex offers guidance to HEIs and FECs on the principles which they should reflect in their partnership agreements, with a view to ensuring that partnerships are well understood, transparent and able to command the confidence of both partners. These principles provide a framework for promoting good practice in indirect funding relationships. The best test of such a relationship is whether both parties believe that it helps them deliver high quality, accessible and cost-effective HE programmes taking account of their individual circumstances and needs. So the principles are not intended to be exhaustive or prescriptive, and partners will want to determine the specific arrangements that suit their circumstances.

10. The draft code is intended to complement the Quality Assurance Agency’s (QAA) code of practice on collaborative provision. There is deliberate overlap between the two since they are addressing the same issue from different perspectives. The QAA’s code concerns those aspects of collaborative arrangements relevant to quality and standards. This code concerns those aspects of a particular set of collaborative arrangements in England – indirect funding relationships – which relate to value for money in securing a high quality of experience for students.

11. The draft code describes seven principles of effective partnerships.

We seek comments on:

a. Whether these principles adequately describe the main features common to effective indirectly funded partnerships.

b. Whether the principles require any further explanation.

c. Whether there are any other generic characteristics that we should include in the code.

Existing partnerships

12. We expect partners to reflect the code in any new arrangements that they are establishing and to use it to review existing indirectly funded partnerships.

13. We know that in existing partnerships there is much good practice and a wide variety of models of agreements. We would like to illustrate the variety of good practice that exists and we believe that institutions would find information about different models helpful when they are drawing up their agreements. We have already received examples of partnership agreements from some HEIs with much indirectly funded provision.

14. We now invite institutions to send us further examples of the agreements they have, and which they believe represent good practice, so that we can feed back to the sector the main features of the different models already in operation.

Monitoring

15. In the light of responses to our November consultation paper, we have considered the options for monitoring the operation of indirectly funded partnership agreements and the application of the code of practice. Some have argued for tight regulation of partnerships, in order to provide the greatest assurance of good practice. We have concluded that that would not be the right approach. Indirectly funded partnerships are not obligatory. They work best when both partners find them an effective means of securing mutual advantage. But the partners should have discretion to decide what suits them best. We hope that the code will help establish common expectations about the characteristics of effective franchising. But it is for the partners to judge in each case whether their existing partnership has those characteristics, and if not how it can be improved to get them.

16. We therefore propose to adopt the following approach:

a. In the light of this consultation, we will issue a final code before the autumn, and invite HEIs and FECs to review existing and new partnerships to see how far they meet the principles of the code. There would be no formal monitoring process.

b. In due course - perhaps after a year or two - we would undertake a sample survey to find out whether HEIs and FECs have reviewed their partnership agreements, and how far they meet the terms of the code.

c. If such a survey provided evidence of continuing concern about the effectiveness of indirect funding partnerships, we would consider at that stage what further steps would be appropriate.

17. We seek comments on the options for monitoring the code of practice; in particular on our preference for partners to self-monitor their agreements and on our proposal to conduct a sample survey of agreements in due course.

Timetable

18. Please send any comments by Friday 16 July to:

Christine Fraser
Institutions and Projects Directorate
HEFCE
Northavon House
Coldharbour Lane
Bristol
BS16 1QD

Tel 0117 931 7308
e-mail c.fraser@hefce.ac.uk

Annex A

Draft code of practice for indirectly funded partnerships

Introduction

1. This document is a code of practice for indirectly funded partnerships (commonly known as franchises) entered into by HEIs and FE colleges.

2. It has been prepared in the light of:

a. The conclusions and recommendations on franchising made by the Dearing Committee.

b. The study we jointly commissioned with the Quality Assurance Agency (QAA) into the nature of higher and further education sub-contractual partnerships.

c. Comments received from colleges at HEFCE regional seminars held in October 1998 for newly HEFCE-fundable FE colleges, and a seminar with these HE institutions which have the most indirectly funded provision.

d. Responses to our consultation document, HEFCE 98/59, ‘Funding higher education in further education colleges’.

3. It is intended to provide guidance to HEIs and FECs but is not intended to be either exhaustive or prescriptive. The circumstances of individual partnerships vary. So long as the end result is high-quality teaching and learning for students, on financially viable programmes, it is for the partners to determine the precise arrangements which will best suit them. All partnerships should reflect the principles stated below, although their implementation may vary.

4. We recommend that this code is used in conjunction with the QAA’s code of practice on collaborative provision. The two codes of practice address the same issue, but from different perspectives. The code here relates to the aspects of indirect funding partnerships of concern to the HEFCE because they relate to value for money in securing an acceptable quality of experience for students on courses funded in this way. The QAA code relates to aspects of collaborative arrangements relevant to quality and standards.

Background

5. From 1999-2000, the HEFCE will be responsible for funding all HNCs, HNDs, degree-level and postgraduate provision whether delivered in HEIs or FE colleges. Some provision delivered in colleges will be funded directly; some will be funded indirectly. Indirect funding could be provided either through sub-contractual partnerships with HEIs or through consortia arrangements with other FE sector colleges and HEIs. It is the former with which this code of practice is concerned.

6. An indirectly funded partnership is one in which the student is attributed to the HEI for funding purposes but the course is wholly or partly delivered in the FE college. There are some exceptional cases where an HEI franchises provision to another HEI (for example, a university to a college of higher education). This code also applies in such cases.

7. There are good reasons for maintaining and encouraging these partnerships. They fulfil an important role in widening access for students. They can provide good opportunities for student progression. They offer a valuable vehicle for close collaboration between HEIs and FE colleges in meeting local and regional needs for coherent provision of HE. And they help to develop diversity in the sector. Where partnerships are already working well, we want to sustain them. We also want to encourage the formation of new partnerships.

8. On the other hand, we know that some colleges have in the past experienced difficulties with their indirectly funded partnerships. We have a responsibility to ensure that the provision we fund offers students a comparable quality of HE experience, irrespective of where it is located or how it is organised. HE provided through FE sector colleges is becoming increasingly important in delivering the objective of widening access for students, and it will continue to grow. Therefore it becomes correspondingly important to ensure that indirect funding partnerships contribute to the achievement of high standards and value for money.

9. We have sought in this code to identify the characteristics of effective funding partnerships. There is much good practice already in evidence. We now need to make that practice universal. We expect HEIs and FE sector colleges to use the code as a basis for reviewing existing indirectly funded partnerships, and for developing new partnerships.

10. The purpose should be defined in relation to both parties’ missions and strategic plans.

11. Both parties should be clear why they have entered into the partnership.

12. It should be possible for each party to assess whether in practice it is achieving the purpose, which implies that each party should have considered what success criteria or performance indicators it would use.

13. The statement should be a formal written agreement. It should be drawn up by means of an agreed and explicit procedure that involves all those in both the HEI and the college who will have a significant part to play in implementing it. The agreement should be approved by the Senate or equivalent academic body of the HEI and signed by senior managers from both the HEI and the college.

14. It should be:

• comprehensive

• cross-referenced to other related documents

• available to staff, students and anyone else with an interest. There may be elements which both parties agree should be kept confidential (notably anything which would risk prejudicing commercial or management interests). But that should be very much the exception.

15. The agreement document should state:

a. The duration of the agreement. Franchising agreements can be of any duration, for example, from one or two years to provide a specific course, through to long-term association between the HEI and the college across a range of activities. So the duration will depend on purpose and circumstances.

b. Action to be taken if either party is not meeting the terms of contract, and procedures for resolving disputes.

c. How, within both the HEI and the college, the operation of the agreement will be managed. Particularly in cases where the HEI enters into agreements with a number of colleges, there is likely to be value in a central unit to ensure effective and consistent management. Where responsibilities are delegated to departments of the HEI, it should be stated what those responsibilities are, and how the HEI will monitor its effectiveness in discharging the agreement.

16. The agreement should cover the following.

Designated responsibilities

17. Each partner should be clear about their respective responsibilities:

a. Who is responsible for student recruitment, selection and admission?

b. What support is provided for students, and by whom?

c. Who deals with complaints and appeals?

d. Who is responsible for staff recruitment and development?

Finance

18. For the duration of the agreement, the HEFCE will fund the student numbers at the standard rate for the relevant price band. Those students may also attract funding premiums (for example, the widening access weightings). The amounts of money from within that income stream which the HEI retains to cover its contribution to the arrangements will differ in each partnership, so the HEFCE will not prescribe a set proportion which must apply. But in all cases, both parties should be clear:

a. What is the total HEFCE funding being allocated to the HEI in respect of those students.

b. What part of that funding the HEI will retain.

c. What that retained funding is intended to pay for, in terms of the HEI’s overheads and services contributed to the partnership arrangements, with an indication of how that retention has been calculated.

19. It is not feasible to cost every aspect of a partnership agreement. Particularly in a long-term and wide-ranging association between HEI and college, there will be intangible and unquantifiable benefits. One of the advantages of indirect funding partnerships is that an HEI can undertake activities at marginal cost which would cost the college a great deal more to do on its own (for example, in relation to the various administrative requirements associated with HEFCE funding). There will be wider activities and facilities provided by the HEI whose contribution to the franchised provision cannot sensibly be costed. Nonetheless, both parties should be clear about how the total funding available for the franchised provision is being used.

20. Currently, most agreements operate by the HEI transferring to the college a net amount of funds after deducting the amount it retains for the services it provides. An alternative model for clarifying how the funding flows is a service level agreement whereby all of the allocated funds flow through to the college, which then buys back agreed support services from the HEI.

21. There should be agreement on:

a. How and when payments will be made, and the recording of transactions.

b. Which party collects student fees.

c. What happens to funding when students fail to complete a course.

d. What happens if there are changes in public funding.

22. The students contracted by the HEI to the FEC will be included within the HEI’s total HEFCE-funded student numbers for the purposes of calculating any grant allocations for special funding initiatives which are based on a student-number related formula. Non-formula project and special programme funding received by HEIs can also cover relevant activity in the FEC. The partnership agreement should set out how the HEI and FEC will determine what element of any special funding allocations from the HEFCE is attributable to the programmes delivered in the FEC.

Re-assignment of student numbers

23. For the duration of the partnership agreement, so far as the HEFCE is concerned, the student numbers belong to the HEI. The HEI must have reasonable discretion to move numbers around. It is one of the advantages of franchising for colleges that it gives flexibility to re-deploy numbers within a larger student total so as to reflect fluctuations in recruitment. This can help ensure that penalties do not apply for over- or under-recruitment to specific college courses, as they would if the college were directly funded by the HEFCE. That flexibility needs to be retained.

24. But flexibility needs to be exercised by agreement between the HEI and the college, so that the college is not surprised by a sudden and unilateral decision to re-deploy, with consequent disruption for students and possible reduction in the local accessibility of provision.

25. The partnership agreement therefore should state in what circumstances numbers may be re-deployed from the college; and the procedures for agreeing such redeployment.

26. The agreement should also state what happens to the student numbers at the end of the agreement period - in particular, whether on expiry they are attributed to the college or to the HEI. For the duration of a partnership agreement, the franchised student numbers must be within the HEI’s funded number total. If the college also has its own numbers, there is nothing to prevent it re-assigning them to the HEI for incorporation within the HEI’s student number total for the duration of the agreement, with those numbers then reverting to the college at the end of the agreement. However, the HEFCE’s consent will be required for any such transfers between institutions.

27. An objective of all indirect funding agreements should be to ensure good quality and high standards of provision for students, and effective partnership between the institutions. There is no single right way of doing it: that will depend on circumstances. But in all cases the arrangements should be published for the students and staff concerned.

28. Indirect funding partnerships can provide opportunities to broaden and enrich the experience of students on the courses involved. The sort of areas which may be considered in terms of student access to HEI facilities include:

a. Access to libraries and general resource centres.

b. Access to equipment, facilities and resources specific to the subject area.

c. Access to student union, welfare and social facilities and services.

29. Improved opportunities for student progression are a valuable feature of many franchising arrangements. The institutions should agree, and students should be told, what the opportunities are, including:

a. What range of courses they may be able to progress on to at the HEI.

b. Whether such progression is automatic for college students who reach a specified level of attainment on the course provided at the college, or whether the HEI will apply a selection procedure.

c. The basis for calculating the ‘credit’ the student will get for successful completion of the college-provided course in terms of the point of entry to the HEI-provided course.

30. Opportunities for collaboration between staff are also a valuable feature of franchising, and may include:

a. HEI staff contributing to the teaching of college provision.

b. Joint staff training and development.

c. Collaborative curriculum development.

d. Involvement of college staff in research and development activity undertaken by HEI staff.

31. Although there is a greater likelihood of this sort of collaboration where the HEI and FEC are in close proximity, distance should not rule it out.

32. In many cases, HEIs have partnership arrangements with two or more colleges. It is seen as a major benefit that there is not merely a one-to-one relationship, but colleges can work together collaboratively, as well as with the HEI, so that greater coherence and strategic planning can be achieved on a local or regional basis.

33. The HEI is responsible for the quality and standards of all programmes for which it receives HEFCE funding, in accordance with the QAA’s code of practice on collaborative provision.

34. The agreement should state the respective responsibilities of the HEI and the college in undertaking quality assurance procedures.

35. The agreement should state what happens if provision is judged by the QAA to be of unacceptable quality, particularly in the event of funding for that provision being withdrawn.

36. There should be regular reviews of the agreement and performance in carrying it out.

37. The HEI and the college should agree how often the review will take place, and the procedure for undertaking it, including reporting of results to the governing bodies of both institutions.

38. The HEI and the college should have in place procedures which will allow them to assess whether and how far:

a. The needs of the students are being met.

b. The conditions of the agreement are being met.

c. Where relevant, students are gaining access to HEI facilities.

d. Where relevant, students are progressing on to the HEI’s directly provided courses.

39. Any changes in the partnership document should be made by mutual agreement and incorporated in revisions to the written statement.

40. No FE college should use any HEFCE funding to engage in ‘serial indirect funding’, where the HEI contracts with one college to deliver provision but that college subsequently sub-contracts the work to a second college.

41. Beyond that, we will not prescribe a limit to the number of indirect funding partnerships that an HEI or college should enter into using HEFCE funds: that will depend on circumstances, and is for the judgement of the HEI and college.

42. Nonetheless, we expect HEIs or colleges with multiple partnership agreements to be able to:

a. Demonstrate a coherent approach to their indirectly funded partnerships.

b. Explain the principles they are applying in choosing partners.

c. Explain, in the case of an HEI franchising provision in subjects which it does not directly provide, what quality assurance safeguards will apply, given that the HEI does not have its own subject expertise in that area.