FE Funding in Turbulent Times – Winners and Losers Mick Fletcher

FE or HE HEFCE teaching cut by more than SFA teaching BUT –Loans are tested in HE; not in FE –Research Growth v efficiency savings –Overseas students supported in HE –Serious loss of fee remission in FE –Infatuation with apprenticeships

Participation Rates

Work & WBL

Individuals Loss of funding for 25+ Loss of Adult Learner Grant & RSS Loss of fee remission Loss of SfL premium Reduced volume of provision

Funding Eligibility

Age of learners in General FE colleges, 2003/04 Full-time equivalentsAll learners

Adult FE Funding

Adult Learner Grant Around 30,000 recipients in 2008/9 Most ALG recipients (80%) were studying for a Level 3 qualification. The most popular courses undertaken by ALG learners continue to be BTEC qualifications (46%, higher at 54% among men), followed by NVQs (15%) and Access to HE courses (13%). As in previous years the top broad sector subject areas were Arts, Media and Publishing (20%), and Health, Public Services and Care (18%). Most were aged 25 or under (84%), and two thirds (67%) were under 21; Just over half (52%) were female – slightly lower than the figure among all learners on the ILR (54%);

Skills Investment Strategy “ We will focus fully-funded provision on people who are unemployed; on people on Jobseekers Allowance and Employment Support Allowance (Work Related Activity Group) to help them obtain work. Such training could include units and awards as well as full qualifications.” Meaning We want to stop fee remission for everybody else.

Fee remission categories

Fee Remission

Rate cuts - Basic Skills ESOL in college (ALR)2009/102010/112011/12 Funding rate reduction3%4.3% National funding rate£2,817£2,732£2,615 Programme weighting Fee element %47.5%50% Fee element ££1,338£1,366£1,307 Funding£2,606£1,913£1,307 Change on previous year-27%-32% Change on 2009/10-50% Change on 2010 Adult Literacy-34%

Employers No pressure to contribute cash Full funding for level 3 apps. No need to fund 25+ level 3 apps No compulsion, licence to practice etc. Continued leverage through SSCs New role in LEPs BUT Loss of Train to Gain

Investment in Adult Learning - Cash

Investment in Adult Learning - Time

Providers Rate cuts and new approach to rates Moving towards payments on outcomes Need to replace EMAs and ALG from dLSF Single (adult) budget almost End of targets but some heavy expectations Funding units (for some) Assumption of substantial fee income

Setting rates From cost based to price driven The role of Credit Increased efficiency SLN learner Ratio

A price based system We recognise that moving to an outcome-based system will necessitate wider changes to the funding methodology. This is an area where we would like to hear the sector’s views. For example: What does a move to a greater focus on price contestability mean for different delivery organisations where public and private sectors have different cost bases? If we moved to a price-based approach, would we need to change the balance of payment so that the majority was on achievement rather than the current system where the majority is paid on- programme? Could we use price to incentivise delivery for those most in need, and the outcomes we most want to see - for example to support unemployed people into training and work?

Price led funding

Fee Income Assumptions Loans planned at £129 million in 13/14 £398 million in 14/15 Assuming 25% multiplier as in HE means £516 million extra fees in 13/14 £1.6 billion extra fees in 14/15 Fee income currently £130 million

Fee Income (Individuals)

Chris Banks Career Development loans - rejected Matching funding to fee income - rejected Collecting cash from employers - rejected Fee remission for low paid - rejected Freedom to confer bursaries - lost