Further education colleges across the UK continue to demonstrate remarkable resilience and innovation, achieving strong outcomes for learners even as budgets remain tight. Despite operating within funding frameworks that demand careful prioritisation and sharp financial discipline, colleges are finding new ways to collaborate, optimise resources, and strengthen decision making. Their ability to adapt - whether through smarter curriculum planning, more agile operational models, or evidence‑driven financial management - shows that FE is not merely surviving a constrained environment, but actively finding opportunities to thrive within it.
One such example lies in colleges’ evolving use of financial benchmarking. Once perceived perhaps as a luxury, it is now widely regarded as a necessity.
Colleges still find value in independently produced insight that informs an understanding of sector positioning, but a stronger sense of needing to understand why resource allocation is different has emerged over time. And it’s no longer necessarily just about financial efficiencies - it’s about sharing knowledge and different approaches to developing processes, organisational structures, and systems implementation, which contributes to a stronger FE sector. This article explores how and why the model of collaborative, contextualised benchmarking is proving transformational.
Whilst some DfE resources provide data by college name, it comes with limitations, as Fiona Morey, Executive Principal at South Bank Colleges explains. “The assurance you get from using Etio’s model is that you know the methodology is being applied consistently across colleges. For example, you can look at DfE returns, you can look at annual accounts…but everybody will have recorded things in slightly different ways. There’ll be nuances…But with the Etio method, you know that everything has gone in at the consistent level, and it’s that consistency across benchmarking with other colleges that’s really, really valuable.”
Article: How Benchmarking underpins financial and strategic transformation at South Bank Colleges.
Etio's own approach to benchmarking has historically reflected sector caution resulting in complete anonymisation and little in the way of developing a community. Colleges could see granular, comparative results, but had no way of knowing who they were being compared with, and thus no opportunity to interrogate practice, circumstances, or structural differences. As highlighted in our recent Scottish colleges partnership, this approach misses out on one of the most powerful opportunities afforded by benchmarking: contextual intelligence.
For example, financial performance can differ dramatically between colleges with high 16–18 learner growth - where funding is lagged and rising student numbers place immediate pressure on staffing and estates - and those with stable enrolment. This reality has been echoed by national commentary, with FE leaders expressing concern that rising student volumes will swallow any funding uplift before it reaches frontline delivery.
A college serving areas of high deprivation will naturally invest more in learner support. A college with a heavy vocational mix will often operate high-cost workshops. A college specialising in agriculture or construction will have different estate and equipment costs from one delivering predominantly academic provision. Without understanding these structural drivers, financial comparisons risk misinterpretation – ultimately, the output of any comparative exercise has to be actionable evidence-based insights, so the interpretation layer mustn’t be underestimated.
The Scottish collaborative benchmarking group, facilitated by Etio, has demonstrated the value of open, evidence-driven comparison. Colleges sit together, review their results transparently, and discuss variances with peers who understand their operational realities. Leaders repeatedly describe “lightbulb moments” emerging from this shared analysis - where previously unclear cost patterns suddenly make sense when contextualised. As sector funding and regulatory expectations continue to evolve, the ability to benchmark against similar institutions is becoming increasingly important in distinguishing design-driven cost from inefficiency-driven variance.
This shift from isolated interpretation to collective sense‑making has proven powerful. As one Scottish finance director notes, the presence of robust, comparable data “helps those difficult conversations” and creates a shared evidence-base on which decisions can be made. Collaboration ensures that benchmarking is not just a diagnostic tool but a mechanism for sector improvement.
Etio is extending this collaborative approach by forming contextual comparator groups for UK colleges. Etio continue to provide robust aggregated comparisons drawn from the data we've collected and interpreted. But additionally, Etio are now also identifying clusters of similar institutions based on characteristics that heavily influence cost and operational performance.
These include:
1. Funding Profile
A college's funding profile can directly impact its cost profile. A proportionally higher than average volume of activity in 16-18, adult, vocational, or HE can create its own cost pattern which can be misinterpreted unless reviewing alongside colleges with a similar funding makeup. Colleges with a high volume of HE activity for instance will invariably carry additional Library Services expenditure and have a higher net examinations cost.
2. Mix (NART Completers by Level)
The mix of delivery levels can also influence cost profile. A high concentration of Entry - Level 2 activity can result in more intensive teaching contact time, and greater emphasis on pastoral care and wraparound services such as safeguarding and financial guidance.
3. Qualifications (NART Completers by Programme Type)
Vocational provision typically requires specialist facilities, equipment, and consumables. There is also often a need for more technical support staff and ongoing investment in maintaining industry-standard environments. In contrast, a more academic profile tends to be less resource-intensive, with greater scope for larger group sizes and more standardised delivery models.
4. Curriculum (NART Sector Subject Areas)
Curriculum mix can also be a cost driver. Those colleges with a significant volume of land-based activity will inevitably encounter more technical support costs whilst also managing costs associated with a large, rural estate, such as groundskeeping and student travel. We may also see greater opportunities for commercial associated activities that can help ease the pressure on the college's core activities.
5. Student Profile
The types of learners that colleges support also needs to be considered when interpreting results. Where colleges have a proportionally higher volume of High Needs funding, we inevitably see an increase in teaching support costs, invariably partially offset by lower teaching delivery spend. The higher costs are through design and necessity rather than inefficiency, and a more cost-effective teaching structure and cost base is required to offset this feature.
Comparator groups enable colleges to generate more relevant insights, highlighting differences not only with the wider sector but also among institutions with similar characteristics, while supporting the sharing of these insights with stakeholders to improve understanding of the underlying drivers.
This sophisticated approach elevates traditional benchmarking to a more considered assessment of the college's organisational structure, income and cost profile, generating evidence and informing discussions around how the institution's features can impact, or at least influence, what it spends. It continues to provide the insights to drive financial efficiencies - the staple output of any benchmarking approach – but now with a more focused lens.
The evidence-base for real collaboration
Etio’s role goes beyond producing the data and providing interpretation and analysis - we facilitate the structured conversations that turn data into action. Scottish colleges are already realising the benefits of the approach to:
Collaborative benchmarking is becoming a mechanism not just for efficiency, but for resilience, strategic clarity, and sector level influence.
The message from Scotland is clear: the combination of robust benchmarking data and structured peer collaboration is transforming practice, enriching understanding, and guiding critical financial decisions.
The next step is simple:
This is an invitation to elevate available analysis with shared insight, and to build an evidence-base that supports both organisational sustainability and sector wide improvement.
If you’d like to see which colleges align with your profile - and explore the potential of joining a collaborative benchmarking group - Etio can provide this comparator list on request.