WE ALL remember the theory that inspired public sector reform. The notion was that if the spenders of public cash were governed by business people, selected for office rather than elected to it, the efficiency that inspired Britain plc would inspire colleges and the like.

This philosophy was always a bit rum. It had two fault-lines running through it. First, it assumed that governance and management was a context-free activity. The second fault-line was accountability.

On top of these fault-lines some of the houses became crooked. The scandals, starting with the much-publicised Derby Wilmorton saga and culminating with the Rogergate scandal at the Association of Colleges, turned a passion for enterprise into a passion for probity.

Lord Nolan will be remembered forever as the man who put governance back on track - a public duty, a guardianship of public money, a responsibility to respond to the social as well as the economic community, a system which encourages complaints and protects the whistleblowers.

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With this change of philosophy, the Department for Education and Employment consultative document on accountability in further education offers few surprises.

The paper puts the case for change simply. Colleges should retain self-governing status but there needs to be more responsiveness and accountability to their community.

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After five years, governing body arrangements are ripe for reform.

It is proposed that membership of governing bodies should be reformed so that there will be staff members, student members, the principal (mandatory, in the future, rather than at his or her option), local authority nominees, community body nominees, and up to three co-opted members.

The rest will be business members (including a TEC nominee). So, if the overall membership is 12 (the new minimum), the corporation would consist of four business people, the principal, a staff, student, local authority and local community member and three further members.

More significant than numbers is power. The business members will no longer have a veto on key decisions (eg appointing new members); all governors will be equal.

Finally, there are some tidying- up measures. For example, governors will be free to decide their committee structure rather than have certain compulsory committees as at present.

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Also, there could be compensation payments to governors who have child care costs as a result of attending meetings or who lose money if they are self-employed.

What should colleges do now? Even those who wish to cling to the old philosophy will probably find that resistance is useless.

The trick will be to ensure that the babies are not thrown out with the bath water. If the business interests see these changes as an assault, they could pack their bags and leave - a disaster given the virtues which their involvement has attained since incorporation. The second thing institutions should do is to respond to the consultative paper's questionnaire. Most colleges have adopted codes, registers and the like.

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Colleges should review how far they have gone with this (is there a whistleblowers' charter, for example) and then respond clearly to the government's search for facts. Should we fail in this, we will have only ourselves to blame if the secretary of state moves to mandatory arrangements.

Finally, the smart colleges will be the ones which act in advance of the legislative change. Membership of boards needs review, and search committees will need to engage local authorities and community groups in achieving the best nominations.

There is a prize promised for all those who act promptly. Inspectors will be charged to monitor progress towards the reform of governing body membership. This progress will be taken into account when accredited status - giving colleges which reach student exam targets over the three years to September 1998 greater freedom from the DFEE and FEFC - is considered.

Keith Scribbins is a consultant in education management and governance.

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