Regulating the New Governance: the case of further education

Journal of Vocational Education and Training, Volume 55, Number 2, 2003

Regulating the New Governance: the case of further education STEPHEN COPE, JO GOODSHIP & DAVID HOLLOWAY University of Portsmouth, United Kingdom

ABSTRACT This article arises out of a research project that sought to assess the development of regulation within the public sector. It examines the forms and impact of the regulatory systems that now operate within the public sector focusing on the further education sector. The research project developed out of an awareness that the increase in various forms of regulation and control by central government, that was begun under the Conservative government prior to 1997, has continued under successive Labour administrations. The project sought to assess current forms of control, to examine the relationship between the regulators and the regulated, and to consider various alternative accounts of this relationship. It examined the regulatory regimes in such areas as health care, personal social services, policing, further education, probation, social security and housing. The project used a range of methods, including documentary research, questionnaires to local level managers and officers, and semistructured interviews with key individuals involved in the implementation of regulated services.

Introduction The regulation of public sector services has become increasingly important in recent years, but it remains relatively under-researched (Cope & Goodship, 1999). This particularly applies to the welfare sector, where public services have been undergoing radical structural change for a number of years albeit with considerable variation across policy sectors. This increased importance for regulation and control by central government shows no signs of diminishing. Travers observed that ‘of all the policies that New Labour have lifted wholesale from the Conservatives, the use of audit and inspection in the public services is one of the most visible’ (Travers, 1998, p. 12). It was an awareness of the 183

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level and importance of this change that prompted the research project upon which this article is based. The article proceeds as follows. First, it outlines the nature and objectives of the research project as a whole. Secondly, it examines specifically and in more depth regulation within the further education sector and, finally, it considers the issue of ‘regulatory capture’. The article stems from a research project that compares and contrasts the regulatory regimes of key public services (namely, further education, health care, policing, probation, social security, social housing and social services). The multidisciplinary research project started in September 1998, and key research findings were collected and analysed in the subsequent 2 years. The research had both an institutional perspective (to assess the extent of regulatory control or capture within a policy sector) and a policy perspective (to assess the impact of government-sponsored regulation upon policy-making and service provision within different policy sectors). The project involved both primary and secondary research, and quantitative and qualitative research methods. The primary research took the form of semistructured interviews with the chief executives (or equivalent) of regulated agencies within a case study area (n = 30), and a questionnairesurvey of key regulated actors within those same regulated agencies (n = 58, 59% response rate). The secondary research comprised a literature review and documentary analysis (FEFC inspection reports, policy statements and internal documentation). The article considers regulation in the form of governmentsponsored control, influence and monitoring as performed by relatively detached regulatory agencies such as audit and inspection bodies. Such regulation covers a mix of public and private sector agencies that deliver public services. The research project deployed a number of research methods, involving both primary and secondary research, and quantitative and qualitative methods. These included a questionnairesurvey of regulated agencies delivering public services, semi-structured interviews of key actors involved in the regulation of public services, analysis of source documents and a literature survey. One of the key themes of the ‘regulating the public sector’ project has been the interdependence between the regulators and the regulated. Regulators depend on the regulated for expertise and information, and the regulated depend on the regulators to justify further funding and provide approval. Levels of regulation vary across policy sectors, dependent on such factors as the legal and political power of the regulators, and the professional and political power of the regulated. Our research has found that, as a result of such asymmetrical interdependence, there is less regulatory control and even evidence of regulatory capture, in some policy sectors, for example, health care and policing, than in other policy sectors, namely further education and social security. Key explanatory

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factors include the degree of professional and political power of the regulated, the legal and political power of the regulators, and the political salience of policy sectors (or issues within) for sponsors of the regulators (mainly, central government). Consequently, the use of regulation as a way of reforming public services sometimes has unintended consequences for central government. This article is divided into the following sections: • • • •

the rise of public-service regulation; modelling public-service regulation; regulating further education; conclusion: central control or local capture?

The Rise of Public Service Regulation Until recently, regulation has largely been seen as ‘what government does to business’ (Hood et al, 1998, p. 61). However, ‘government itself is also subject to regulation’ and ‘public organisations are subject to influence from other public agencies operating at arm’s-length from the direct line of command and endowed with some sort of authority over their charges’ (Hood et al, 1998, p. 61). Many public-sector services have increasingly come to be provided by a mix of public and private sector agencies. Public-sector regulatory agencies therefore regulate a wide range of public and private sector bodies – central government departments, executive agencies, quangos, local authorities, private contractors and voluntary bodies. Our concern is with ‘governance’, rather than ‘government’. Following Rhodes, governance ‘refers to self-organising, inter-organisational networks’ and is ‘broader than government, covering non-state actors’ (Rhodes, 1995, p. 11). Governance is both multi-level – embracing actors from sub-national, national and supranational levels of government – and multi-sectoral, comprising actors drawn from the public and private sector. It is concerned with the management of relatively discrete policy networks to deliver public services. Three sets of pressures have contributed to the rise of the regulatory state; for heuristic purposes, these can be understood as manifesting themselves at the macro-, the meso- and the micro-level The Macro-level: shifts in political economy Global economic developments, with implications for the capacity of states to manage their national economies have pushed states to increasingly regulate the provision of public services. Globalisation or ‘the increasing interdependence of world society’ (Giddens, 1993, p. 528) has pushed states to restructure themselves and the societies they govern in order to remain competitive. Some states have moved away 185

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from being ‘welfare states’ to being ‘competition states’, more concerned with retaining and attracting business to their territories in the face of competition from other states (Jessop, 1993). In Britain, government policy is increasingly directed towards low inflation, low taxation, skilled and flexible labour markets, and curbs on public expenditure. This shift constitutes a significant pressure on states to increasingly regulate public service provision (Cope, 1999). It has led to an increasing concern that spending on public services is directed towards achieving centrally-set policy goals and contained within centrally-set budgets. The rise of statesponsored regulation of public service provision is a prominent manifestation of this increased concern. From the Meso-level: the rise of new public management New public management has been a significant response by governments to increasing globalisation. The British government has been very much on the crest of this new public management wave, although some policy sectors, such as health care, have been more exposed to new public management reforms than other policy sectors such as policing. The rise of new public management can be seen, in part, as an attack on the entrenched and relatively autonomous positions of professionals and bureaucrats within government. Professionals are portrayed as missionorientated with little regard to the costs of providing public services and bureaucrats viewed as rule-bound with little regard to achieving policy goals (Pollitt, 1993). New public management is ‘the attempt to refashion public services in such ways that they resemble the private sector’ (Hughes et al, 1997, p. 299). It involves simultaneous moves to centralise and decentralise the management of public services. First, it centralises the making of policy strategy, especially policy goals and policy budgets, increasingly in the hands of the core executive at the heart of government, embracing a closely-knit network of senior ministers and civil servants. New public management separates ‘steering’ from ‘rowing’, leaving the centre to steer, while other agencies row (Osborne & Gaebler, 1992, p. 34). Secondly, new public management decentralises the delivery of policy to a plethora of rowing agencies, including executive agencies, local authorities, quangos, private contractors and voluntary bodies, that exercise managerial and operational discretion within the limits of policy strategy set by the steering centre. These delivery agencies thus possess ‘freedom within boundaries’ (Hoggett, 1991, p. 251). New public management thus involves ‘the separation of purchasing public services or, as it is often called, their provision from production’ (Foster & Plowden, 1996, p. 46). By providing centralised leadership, it is argued, government can decentralise policy delivery to empower consumers of public services, as a ‘remote agency is less likely to give customers the public services they want’ (Foster & Plowden, 1996, p. 52). 186


Central steering agencies, such as central government departments, increasingly – both directly and indirectly – regulate local rowing agencies including executive agencies, local authorities and quangos by setting policy goals for rowing agencies to achieve, fixing budgets within which they must operate, awarding contracts (or quasi-contracts) to competing agencies, appointing the ‘right’ people to head up such agencies and establishing regulatory bodies, such as the Audit Commission, to monitor the performance of such agencies (Clarke & Newman, 1997). Managerial surveillance is central to new public management – the ability of steering agencies to monitor and direct rowing agencies more effectively. Within rowing agencies, it is concerned with the ability of managers to control employees more effectively. The regulation of public services is at the heart of new public management. The Micro-level: self-interested politicians and bureaucrats Rational choice theory provides potentially useful ways to model the behaviour of state politicians and bureaucrats, which may partially account for the rise of the regulatory state. As a deductive model, rational choice theory ‘proceeds from assumptions and axioms about human motives and behaviour, and draws the logical institutional and policy implications from those axioms’ (Almond, 1991, p. 38). It assumes that ‘all phenomena are reducible to individual behaviour’ (King, 1987, p. 94) and further assumes that ‘individuals are egotistic, utility-maximising, rational self-interested actors’ (King, 1987, p. 92). However, they admit that the concept of self-interest is ‘potentially extremely elastic’ (Ward, 1995, p. 79). Rational choice theory is thus built on the twin assumptions of methodological individualism and self-interested maximising behaviour. Rational choice theorists therefore argue that – unless otherwise constrained – politicians do not serve voters and bureaucrats do not serve politicians; instead they serve themselves – certainly not some notion of the ‘public interest’ (Dunleavy, 1991). A rational choice account of increasing public service regulation would stress that such regulation serves the interests of both politicians and senior bureaucrats. By establishing regulatory agencies, steering agencies are attempting to exercise control-by-proxy over rowing agencies; regulatory agencies are a key link (and break) between steering and rowing agencies. Politicians and bureaucrats in steering agencies are no longer directly responsible for public service provision. Thus, politicians can deny responsibility when things go wrong on the ground, arguing that they are only responsible for policy goals and budgets, and blaming rowing agencies or ineffective regulatory agencies for policy failure. Also, senior bureaucrats can perform more high-status policy advice work and less low-status policy management work, leaving the ‘grubby’ business of providing public services to rowing agencies and the business of monitoring public 187

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service provision to regulatory agencies. There is evidence that the rise of the regulatory state fits with the self-interests of politicians and bureaucrats in steering agencies (Dunleavy, 1991; James, 1995; Cope, 1997). Modelling Public-service Regulation As part of our research we compared the regulatory regimes of key policy sectors, and to assist such policy-comparative research we surveyed a range of models of regulation and developed a model of regulatory regimes. The power-dependence model was utilised to map out the aims and resources between key actors within a regulatory regime (Rhodes, 1981) – for example, the sponsor, such as a central government department, the regulator, such as the Audit Commission and central government inspectorates and the regulated including further education colleges, local authority housing departments, housing associations and social services departments. The key assumption behind this model is interdependence – regulators depend on the regulated for information and expertise, while the regulated depend on the regulators for funding, approval and political support. Furthermore, there is mutual dependence between sponsors and regulators, and between sponsors and the regulated. Consequently, actors exchange resources, for example, legal, financial, professional and political resources, in an attempt to achieve their aims. From existing research it is evident that there are different degrees of interdependence within regulatory regimes of policy sectors. For example, in comparing the regulation of the education, police and health-care services, Hughes et al found (1997, p. 309): [The] review of the regulatory mechanisms for ensuring accountability in the public services reveals the variety of organisational forms charged with this task. The particular mechanisms reveal considerable, though not unexpected, diversity given the very different historical trajectories of these services, their differing political profiles and the extent to which they have been regulated at a local or national level and whether regulation has relied on formal or informal mechanisms. There are certainly differences in the degree to which the mode of assessment remains within professional hands. The extent to which outsiders are involved in assessment is likely to determine the level of resistance to the regulatory regime. Similarly, Hood et al noted (1998, p. 62): ... the behaviour of regulators inside government seems to be related to how close they are to those they oversee in professional/social backgrounds. In general, we find the more 188


distant regulators are from their clients in backgrounds, the more formally they behave (in the sense of non-participatory standard-setting, rule-bound regulatory behaviour and heavy reliance on formal reporting and sanctioning, rather than participating, discretionary regulation with co-operative methods for gathering information and modifying behaviour). The different patterns of interdependence between actors within policy sectors are a key explanatory factor in understanding the different forms of regulatory regimes of public services. We constructed a continuum of regulatory-regime models upon which policy sectors generally can be placed (see Figure 1). At one end of the continuum there is the regulatory-control model (either a sponsordominant or regulator-dominant variant) where the sponsors and/or regulators control the regulated. At the other end there is the regulatorycapture model (regulated-dominant) where the regulated control the sponsors and/or regulators. Between these two ends there are a range of regulatory-bargain models, where the sponsors, regulators and regulated influence each other as a result of their interdependence. The degree of interdependence between the sponsors, regulators and regulated, and the consequent degree of regulatory control (or capture) reflects the professional and political power of the regulated, the legal and political power of the regulators, and the political salience of policy sectors (and issues within) for the sponsors of regulation. For example, highly professional groups, including doctors and police officers, are generally more resistant to external regulatory control than less professionalised groups, for example, housing officers and probation officers; regulators with significant statutory powers, such as the former Further Education Funding Council (FEFC) and the Audit Commission, generally exercise more control than those with weaker powers like the Social Services Inspectorate (SSI) and ombudsmen; and those policy sectors subject to much political and media attention, particularly education and health care, are generally subjected to increasing regulation to ensure government-preferred policy outcomes are realised. Much of the research on public-service regulation has been directed at charting the growth of such regulation. Hood et al observed (1998, p. 62): The size of regulation inside government cannot be measured to three places of decimals, but it is big business. UK government invests more resources (in staff and public spending) in regulating itself than it does in regulating the much discussed privatized utilities ... [We] identified no fewer than 134 separate bodies regulating the UK public sector at national government level in 1995. They directly employed

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almost 14,000 staff, and cost £766M to run – just over 30 pence in every £100 spent by UK government ... It is clear that such compliance costs are borne by the regulated not the regulators.

Figure 1. Continuum of regulatory regime models.

Public-service regulation is thus a control mechanism by which central government seeks to govern the activities of those agencies providing public services. Regulatory agencies, such as the Audit Commission, National Audit Office and central government inspectorates, are a significant link between central steering agencies and local rowing agencies. They seek to enhance the steering capacity of the centre to govern an increasingly fragmented governance. They monitor, influence and, in some cases, control the performance of agencies delivering public services. To illustrate, the Audit Commission have developed an extensive, albeit much criticised, array of performance indicators; the former FEFC, as a funder-cum-regulator, funded and inspected further education colleges; the Office for Standards in Education (OFSTED) facilitates the construction of highly contentious school league-tables; the Audit Commission and National Audit Office audit the spending of public monies to ensure financial probity, and both audit and inspectorate bodies spread so-called ‘best practice’ to agencies providing public services. This substantial regulatory activity performed by regulatory agencies assists steering agencies in ensuring that policy delivery complies with centrally-set policy strategy.

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However, despite this control-mission of regulatory agencies, they may sometimes weaken the control that central steering agencies exercise over local rowing agencies in two significant ways. First, the establishment of regulatory agencies further fragments governance. Their relationships with both their sponsors and regulated agencies are sometimes fractious. For example, OFSTED, under Chris Woodhead, had sometimes strained relations with the Department for Education and Employment (DfEE), and often very strained relations with the schools and especially teachers that it regulates (Hughes et al, 1997, pp. 302-304). Secondly, there is evidence that regulators are captured (or partly captured) by those agencies being regulated as illustrated by the Association of Chief Police Officers (ACPO) relationship with the Audit Commission. Savage et al found (1997, pp. 69-70): ... as the Audit Commission’s involvement with the police service developed, ACPO became more integral to its investigations. Not only was ACPO increasingly consulted over the selection of topics for Audit Commission investigation, it was also given the opportunity to comment on draft reports to the extent that ACPO could claim a significant degree of ‘ownership’ of the final reports (including recommendations) published by the Audit Commission. Consequently, regulation (both inspection and audit) may become ‘a new form of image management’ (Power, 1994, p. 48), a ritualistic game in which a closely-knit group of actors perform well-scripted and wellrehearsed roles as part of the ‘growing industry of comfort production’ (Power, 1997, p. 147) – ‘the fact of audit is becoming more important than the how of audit’ (Power, 1994, p. 48). Regulation thus gives the impression that something is being done, thereby providing reassurance to those concerned. Regulating Further Education ‘Education, education, education’ – Tony Blair asserted the centrality of education to the New Labour project during the 1997 General Election campaign. Five years on there has been a spate of legislation, policy documents, White and Green Papers, and promises for further reform and change. Yet there has not been a sea change in policy direction; the Labour Government is continuing with the general thrust of policy pursued by the previous Conservative administration (see Kendall & Holloway, 2001). However, The Learning Age Green Paper (DfEE, 1998), the Learning and Skills Act 2001, and the public utterances of successive Secretaries of State for Education and Employment does suggest that the present Government has a stronger commitment to further education than its Conservative predecessors. 191

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The previous Conservative Government created a new sector of education with the passing of the Further and Higher Education Act 1992 (Smithers & Robinson, 2000). The sector currently comprises 435 colleges (465 on incorporation day, 1 April 1993) in England. Further education colleges became independent self-governing institutions under the Further and Higher Education Act 1992, which removed them from the control of local education authorities. This Act also established the FEFC, accountable to the DfEE, to allocate funds, advise on college reorganisations, mergers and closures, and to take over from the LEAs’ responsibility for inspection and quality. In fulfilling its duties under the Act, the FEFC was required to strike a balance between securing maximum access to the widest possible range of further education opportunities and avoiding a disproportionate charge on public funds. The FEFC received guidance from the Secretary of State for Education and Employment on its functions, and on government policies and particular matters relevant to the exercise of those functions. Its members were senior managers in education or people who had significant experience as employers, and a chief executive, all appointed by the Secretary of State. The FEFC was entirely reliant upon the Secretary of State for its funding (DfEE, 1999). Through the FEFC, colleges received public funding of some £3 billion a year (DfEE, 1999). The DfEE (1999) claimed that the FEFC funding methodology had been devised to reward efficient, successful colleges and provides a substantial measure of financial stability from year-toyear. Many colleges developed a strong entrepreneurial tradition, earning over £1 billion a year from other sources, which they are free to retain (DfEE, 1999). Colleges also worked closely with the 82 local Training and Enterprise Councils (TECs), which were responsible for providing workbased education and training for unemployed young people and adults, and also charged with making that training responsive to local economic needs. The ‘quasi-market’ created by the 1992 Act was intended by the then Conservative Government to foster improved efficiency through marketing, improved management, particularly financial management and generally more cost-effective use of resources – all reforms recommended by the Audit Commission (1985), which examined resource utilisation within the FE sector and prompted a number of managerial initiatives, including the introduction of management information systems and the renegotiation of conditions of service between employers and teaching staff to improve productivity and even course provision (Holloway, 1998). Holloway (1999) argued that Audit Commission reports had considerable influence on the development of the sector. The reports underpinned the move from a public service to a more market-orientated model of further education characterised by a strong managerial thrust. The Audit Commission (1985) influenced the way in which the FEFC was

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to fund FE institutions after incorporation. The FEFC was responsible for distributing the funds it receives from central government throughout the sector. It did so based on units of provision designed to encourage colleges to guide students through stages of their course of study. The FEFC imposed financial penalties if students failed to complete any stage of their course with the intention of reducing wastage rates. Undoubtedly, the FEFC’s method of funding was also influenced by the results of the jointly undertaken study between the Audit Commission, HMI and OFSTED (1993) into full-time courses for 16–19-year-olds. Designed to develop quantitative techniques for measuring performance and costs in colleges and schools, the study concluded that the then current levels of non-completion of courses by students were unacceptably high. One of its recommendations was that the FEFC should establish funding structures that retained open access to post-16 education, but which discouraged indiscriminate recruitment (Holloway, 1999). Colleges have expanded substantially since 1993 in response to the policies of both Conservative and New Labour administrations to increase and widen participation driven by the imperatives of the FEFC funding methodology. They now have some 4 million students of all ages and abilities, compared with 2.9 million in 1993, attracted by a wide range of full-time and part-time vocational and academic (including degree) courses, flexibly delivered to meet individual and local labour market needs (DfEE, 1999). There is a large capital requirement to fit college buildings and equipment for future needs. Recent changes in the way FE institutions are operated and financed have allowed colleges to innovate and to give wider scope as to how they procure assets. The level of autonomy and borrowing abilities for institutions within the sector are governed under the terms of the Model Financial Memorandum, Circular 98/18 (currently subject to review; DfEE, 1999). FE colleges are subject to stringent monitoring and audit control. The FEFC regularly assessed colleges’ financial health and internal controls including their audit arrangements. To the extent that colleges are recipients of European Union funding, there is a degree of audit control from the European Social Fund (ESF) as required by the European Commission. Parliamentary oversight of the FE sector transferred from the Audit Commission to became the responsibility of the National Audit Office on incorporation in 1993. The National Audit Office has issued highly critical reports on the failure of both internal and external auditors, and the FEFC, to prevent long-term and systematic fraud within some FE colleges, including Halton, Hereward, Derby Wilmorton and Bilston College in the West Midlands, calling into doubt the stringency of the external and internal financial monitoring of colleges (see NAO, 1999). Nonetheless, the FEFC continued to play a vital advisory and approval role for colleges considering public–private partnerships. The FEFC supported the sector by the provision of guidance, through the Model

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Financial Memorandum, and capital support, which was determined against published criteria. Specifically, the FEFC: • advised colleges on the formulation of strategic plans and accommodation strategies; • determined applications for borrowing to undertake major capital projects; • reviewed financial appraisals; • determined capital support applications; • monitored value-for-money; • promoted rationalisation of sites and buildings (DfEE, 1999). Other bodies with a regulatory remit over the FE sector include the Qualifications and Curriculum Authority (QCA) and, to a limited extent the Learning and Skills Development Agency (formerly the Further Education Development Agency [FEDA]). The QCA’s statutory functions are set out in the Education Act 1997, and as the regulatory body for public examinations and publicly-funded qualifications, it takes the lead in designing and developing a coherent national framework of qualifications, which aim to meet the needs of education, training and employment. FEDA was established in April 1995 to integrate and expand on the key functions of the Further Education Unit (FEU) and the Further Education Staff College (FESC), and, while independent, it was funded largely through the FEFC (Holloway, 1998). FE colleges have also become increasingly involved in the New Deal and employment training, and consequently they also find themselves within the regulatory remits of the Employment Service and the Training Standards Inspectorate (part of the Training Standards Council), and local TECs. These regulatory arrangements have also been changed following the implementation of the Learning and Skills Act 2001, which has given responsibility to the new Adult Learning Inspectorate. Table I sets out the key survey findings for all of the sectors that were investigated while Table II presents the FE sector findings alone. Tables III and IV show the changes over time. Table V sets out the main regulatory and other agencies influencing the provision of further education, ranked in order of influence by the FE survey respondents. The survey findings for the FE sector reflect those for the overall survey sample: 91% of FE respondents claimed regulation of FE had increased from 1979 to May 1997 under the Conservative Government, although fewer (36.5%) believed it had increased since that time. The college principals interviewed indicated that there had been a gradual rise in regulation during the 1980s, as there had been throughout the rest of the education sector, then a steep rise in regulation was experienced shortly after incorporation. In more recent years, the rate of increase had slowed a little. The Labour Government undertook a major review of the FEFC, in accordance with government guidelines that non-departmental public

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bodies should be comprehensively reviewed every 5 years, legislated a restructuring of the regulatory framework for the sector and, arguably, a further increase in regulation. Certainly, the increase in the number of regulatory agencies with some form of oversight responsibility for FE colleges since 1993 supported the view that further education is one of the most regulated sectors we examined. One principal listed a vast array of auditors, internal and external, and inspectors who would visit his college – some audit and inspections teams on the premises at the same time – and the statistical returns he was required to submit to regulatory bodies during the course of one year. Unsurprisingly, 89% of FE survey respondents also indicated that colleges’ regulatory compliance costs had increased, 91% agreeing they had increased under the Conservatives, while 63.5% believed that compliance costs has increased under Labour. One college principal claimed: The real cost is difficult to quantify, but the real cost to the college is in terms of staff time, the time it takes to deal with FEFC auditors, internal auditors, external auditors and other people [who] have a perfect right to come in and ask questions from time to time ... There has been a perception for sometime that we are over-audited and over-accountable, there are all kinds of people asking questions that we have to answer, and it is very time-consuming. Effects: all sectors

Regulation ensures financial probity in the provision of public services Regulation achieves value-for-money in the delivery of public services Regulation makes those who deliver services to the public more accountable to central government Regulation ensures uniformity in the provision of public services at local levels Regulation enhances central government control of public service provision at local levels Regulation makes those who deliver services more accountable to the public Regulation ensures high levels of quality in public service provision Regulation is used to alleviate public concern over scandals in public

Agree %

Disagree %

81

7

Undecide d % 12

31.5

42

93

2

5

30

51

19

67

12

21

67

22.5

10.5

21

45.5

33.5

60.5

24

15.5

26.5

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Stephen Cope et al service provision Regulation has led to more businesslike management of public service provision Regulatory compliance costs for delivery agencies have increased Regulators do not possess sufficient expertise to regulate effectively Regulators are sufficiently independent from their sponsors to regulate effectively

50

21

29

86.5

2

11.5

38.5

21

40.5

38

27.5

34.5

Table I. Key findings from survey of regulated agencies on government sponsored regulation of public services. Effects: further education

Regulation ensures financial probity in the provision of public services Regulation achieves value-for-money in the delivery of public services Regulation makes those who deliver services to the public more accountable to central government Regulation ensures uniformity in the provision of public services at local levels Regulation enhances central government control of public service provision at local levels Regulation makes those who deliver services more accountable to the public Regulation ensures high levels of quality in public service provision Regulation is used to alleviate public concern over scandals in public service provision Regulation has led to more business-like management of public service provision Regulatory compliance costs for delivery agencies have increased Regulators do not possess sufficient expertise to regulate effectively Regulators are sufficiently independent from their sponsors to regulate effectively

196

Agree %

Disagree%

100

0

54.5

Undecide d % 0

9

36.5

0

0

36.5

45.5

18

64

18

18

45.5

37.5

20

40

40

54.5

27.5

18

54.5

27.5

18

89

0

11

100

9

18.5

18

63.5

40

30

30


Table II. Key findings from survey of regulated agencies on government sponsored regulation of public services Changes over time All sectors Regulation of public service provision by regulatory agencies increased Regulation became primarily concerned with value-for-money in public service provision Regulation increased compliance costs for public services providers Regulation improved financial probity in public service provision at the local level Regulation improved the quality of public service provision Regulation increasingly arose as a reaction to scandals in public service provision Levels of regulation of public service

Conservative Governments 1979 to May 1997 Agree Disagree Undecided % % % 95 3.5 1.5

Labour Government from May 1997 Agree Disagree Undecided % % % 65 14 21

43

33

24

43

30.5

26.5

80.5

9

10.5

73

5.5

21.5

51

22

27

33

23.5

43.5

32

30.5

37.5

34.5

36.5

29

46.5

37.5

16

42

40.5

17.5

19.5

51

29.5

26

44

30

197

Stephen Cope et al provision were unconnected with the increased use of private-sector management techniques in the public sector Table III. Key findings from survey of regulated agencies on government sponsored regulation of public services.

Changes over time Further education Regulation of public service provision by regulatory agencies increased Regulation became primarily concerned with value-for-money in public service provision Regulation increased compliance costs for public services providers Regulation improved financial probity in public service provision at the local level Regulation improved the quality of public service

198

Conservative Governments 1979 to May 1997 Agree Disagree Undecided % % % 91 0 9

Labour Government from May 1997 Agree Disagree Undecided % % % 36.5 18 45.5

45.5

18

36.5

36.5

27

36.5

91

0

9

63.5

0

36.5

50

10

40

36.5

9

54.5

27.5

27

45.5

45.5

36.5

18


provision Regulation increasingly arose as a reaction to scandals in public service provision Levels of regulation of public service provision were unconnected with the increased use of private-sector management techniques in the public sector

45.5

45.5

9

36.5

36.5

27

11

55.5

33.5

27.5

37.5

25

Table IV. Key findings from survey of regulated agencies on government sponsored regulation of public services.

Main regulatory and other organisations which influence the provision of further education Rank order Name of % of % of Net (based on regulatory or respondents respondents increase or score of other who indicated who indicated decrease influence organisation influence had influence had (indicated allocated) increased over decreased over as -) in time time influence 1 Further 90 0 90 Education Funding Council 2 Parliament 70 0 70 (including Select Committee on Education & Employment) 3 Qualifications 90 0 90 and Curriculum Authority 4 Further 60 0 60 Education Colleges 5 Department for 30 20 10 Education and

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Stephen Cope et al 6

7

8 9

10 11 12 13

Employment Audit Commission (until March 1993)/National Audit Office (since April 1993) Professional Associations (for example NATFHE, Association of Colleges) Courts and tribunals Further Education Development Agency European Union Local Education Authority Pressure groups Local Ombudsman

90

0 90

10

60

-50

20

0

20

30

10

20

60 0

0 90

60 -90

0 10

20 0

-20 10

Table V. Key findings from survey of regulated agencies in further education on government sponsored regulation of public services.

The cost in terms of staff time can also be identified elsewhere in the FE sector research literature. Ainley & Bailey (1997) refer to college principals sending senior staff copies of all of the FEFC circulars in the belief that everyone needed to know what was expected of them by the Funding Council. A respondent in that research describes the complexity and laborious nature of recording the key data required by the FEFC (Ainley & Bailey, 1997, pp. 43-44). Similarly, Gleeson (2001, p. 187) reports the concern expressed by senior college managers regarding the ‘displacement of time and energy which goes into data gathering, market research and “bidding” for funds’ that was resulting in a culture change linked more to funding requirements than to the learning needs of students. It was not felt to be coincidental that the steep rise in regulation and FE colleges’ regulatory compliance costs occurred just after incorporation. Half those college principals surveyed (55.5%) suggested the rise was connected to the managerial thrust and creation of a ‘quasimarketplace’ within the sector in the early 1990s. One Head of an FE Centre observed that ‘this ideological climate of free-for-all ... was 200


consistent with the government of the day’s general aim of a market orientated public service free from constraints’. Furthermore, all surveyed agreed that regulation made service deliverers more accountable to central government (through the FEFC) and 64% felt regulation enhanced central government control of FE provision. Less than half of FE respondents (45.5%) believed regulation made them more accountable to the public (compared with 67% for the overall sample), perhaps because the perception among college principals was that regulation was primarily about economy and efficiency in FE provision, rather than raising standards. Although the same proportions of those surveyed within FE, as for the overall sample, believed regulation was concerned, primarily, with value-for-money under successive governments, over half of respondents (54.5%) considered that regulation achieved value-for-money. This proportion was significantly more than for the overall survey. On ensuring quality, the FE findings reflected those for the overall sample and, while just over a quarter (27.5%) agreed improvements had been achieved through regulation under the Conservatives, more respondents in FE compared with the overall sample (45.5–34.5%) claimed regulation had brought about improvements in quality under Labour. This view may have been influenced by the emphasis placed on ‘quality’ by the Labour Party in the run-up to the 1997 general election and the priority the Labour Government had continued to place on reducing youth unemployment by equipping young people with skills demanded by the labour market, particularly through improved vocational courses and employment training (see DfEE, 1997a,b). While all in the FE sector agreed that regulation ensures financial probity within FE institutions, only 50% believed that regulation under the Conservatives had brought about improvement and fewer (36.5%) claimed that improvements had been brought about under Labour. In part, this can be explained by the research starting as the NAO (1999) reported on investigations into financial irregularites within Halton College and Bilston College. The principals interviewed were mystified as to how the systematic fraud and deception which the NAO revealed could have gone undetected by the FEFC for so long, given their personal experiences with the FEFC, but acknowledged that the regulatory regime had been found wanting. One principal stated: (FEFC audit) is a very rigorous process so I get a little surprised when we hear about the Haltons when they are saying retrospectively all these millions of pounds have not been illegally claimed. How have they been able to do that when there has been this incredible scrutiny that’s applied to colleges? In addition to the audit that goes with the Funding Council we sometimes have auditors in auditing the auditors would you believe. We have had experience of that. We’ve had 201

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the FEFC actually auditing Hampshire County Council who are our internal auditors. The findings for FE on regulation as a reaction to scandal matched the findings for the overall sample, but many principals suggested that the sheer scale of the recent frauds and the media attention they had received would inevitably prompt the present Government to introduce even more rigorous regulation to ensure financial probity within colleges. These recent events also called into question whether FE regulators possessed sufficient expertise to regulate effectively. Of college principals surveyed, 63.5% were undecided on the question of expertise (compared to 40.5% for the overall sample); under one-fifth of respondents claimed regulators were suitably qualified to regulate and a similar proportion believed they were not. Interviewees, however, tended to be appreciative of the professional support of FEFC inspectors. Two college principals stressed that relations between colleges and the FEFC were not confrontational, contrasting their experiences with those they were aware of involving OFSTED in the schools sector. In terms of rank order (see Table V), the FEFC was, not surprisingly, considered the most influential organisation on the delivery of FE and its influence was perceived as having increased since it was established. Parliament, including the Select Committee on Education, was ranked second with its influence also thought to have increased. The QCA was ranked third, it’s influence seen as having increased. While it has no direct funding role, the QCA’s ability to dictate the content of courses offered by FE colleges is substantial. College principals ranked their own institutions as fourth most influential. Interviews revealed that, though FE colleges have been subjected to an increase in regulatory oversight, since the early 1990s incorporation had allowed them to become more entrepreneurial and provided college principals sufficient autonomy to diversify and capitalise on gaps in provision in their local markets. The DfEE was ranked fifth, although fewer respondents felt it’s influence had increased in recent years partly as a result that many of it’s responsibilities were vested in the FEFC. The National Audit Office was ranked sixth and nearly all respondents indicated that it’s influence had increased since it assumed responsibility for FE in 1993, followed by professional associations in seventh, although their influence had decreased since incorporation according to half of those surveyed. Courts and tribunals and FEDA were ranked eighth and ninth, ahead of the European Union in tenth position in the rank order-list (although the EU’s influence was considered to have increased as a result of some colleges receiving ESF monies). The LEA, whose influence had declined according to most of those surveyed, pressure groups and the local ombudsman brought up the rear.

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The FE sector is still in the throes of major changes. The Learning and Skills Act 2001 has introduced significant changes to the regulatory regime of FE. The FEFC and TECs have been replaced by a Learning and Skills Council, which has responsibility for funding the FE sector, Modern Apprenticeships and other activities previously under the auspices of the TECs. The Learning and Skills Council will assume responsibility for quality, but inspection arrangements will remain split although different agencies will be involved. OFSTED is responsible for the inspection of provision for 16-19-year-olds in the colleges, while a new Adult Learning Inspectorate has been established for the post-19 provision. Given the focus of this research it would be unwise to make broader generalisations about how senior college managers define and perform their roles. Nevertheless, the findings do appear to be congruent with those from research into the impact of the Further and Higher Education legislation on teaching and managerial cultures in the FE sector (Shain & Gleeson, 1999; Simkins & Lumby, 2002), the spread of managerialism in the FE sector (Elliot, 1996; Ainley & Bailey, 1997; Gleeson & Shain, 1999; Simkins, 2000) and college leadership (Gleeson, 2001; Lumby, 2003). In particular, our findings lend some support to the view that ‘strategic compliance’ has become the predominant response of senior managers in the sector to legislative and policy change, and the stringent monitoring and auditing (Gleeson & Shain, 1999). College mangers receive change, and reform policies and regulatory demands filtering them through their existing ideologies and perspectives, producing different interpretations and strategies that range from compliance to resistance. Shain & Gleeson, 1999, p. 452) define strategic compliance as ‘critical of some aspects of reform but accepting of others’ In short, the senior college managers found ways of maintaining their core educational values, while they adapted to the increasing pressure from the regulatory regime. Conclusion: central control or local capture? It has been suggested that those public services that are most professionally organised, such as policing and health care, are less likely to be controlled by regulators and more likely to be captured by the regulated. Less professionalised public services, such as further education, are more likely to be controlled by regulators. In the case of further education, Holloway argued that the Audit Commission ‘has undoubtedly had considerable influence’, partly because of ‘the weak professional identity of staff’ (1998, pp. 53-54). There are asymmetrical patterns of interdependence between sponsors, regulators, and the regulated across policy sectors, reflecting different distributions of legal, financial, professional and political resources between these key actors within different policy sectors. Regulatory regimes, in which regulators have close professional ties with regulated agencies (e.g. policing), in 203

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which regulators are highly dependent upon regulated agencies for expertise (e.g. health care), in which regulators are highly reliant on regulated agencies for implementation of their recommendations (e.g. social services), and in which regulators have little political and media support (e.g. housing), are more likely to display forms of regulatory capture than regulatory control. Though no regulatory regime is purely based on regulatory control or regulatory capture because of interdependence necessitating a regulatory bargain, some regimes, for example, policing, display more signs of capture than others. However, the nature of such regulatory regimes changes over time as the aims and resources of key regulatory actors change. In comparing the regulatory regimes of public services, the further education policy sector displays significantly more regulatory control than health care, social housing and social services. This is partly explained by the FEFC being a funder-cum-regulator ranked by survey respondents as the most influential agency in shaping further education provision. Yet the further education sector shows no palpable signs of regulatory capture. The relatively weak position of the sector’s professional associations makes regulatory capture less likely and, moreover, regulatory control more likely. Consequently, central government are increasingly likely to use regulatory agencies as a key vehicle to reform further education. Regulatory agencies possess a set of incentives (e.g. more funding, enhanced powers) and disincentives (e.g. less funding, diminished or even withdrawn powers) to implement government policy locally. Regulation, particularly under the present Labour Government, is a key tool for central government to influence local policy delivery and a way of getting sometimes resistant, and sometimes highly bureaucratised and professionalised, local agencies to deliver what is wanted centrally. Regulators thus become the ‘eyes and ears’ of central government and it is unlikely that central government will be able to resist the temptation to use the law to establish new regulatory agencies or to grant extra powers to existing regulatory agencies. Following Travers, ‘of all the policies that New Labour have lifted wholesale from the Conservatives, the use of audit and inspection in the public services is one of the most visible’ (1998, p. 12). The continued, and arguably increased, significance of regulation as a mechanism to control the public services is a manifestation of the Labour Government’s concern to deliver its election pledges, both in terms of securing valuefor-money in spending public monies and of raising standards of public services.

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