BIS Select Committee Inquiry: Skills Funding Agency and Government policy in respect of Further Education funding

Evidence from the 157 Group

The 157 Group

The 157 Group consists of 27 of the largest General FE Colleges in England, all of whom are graded good or excellent for leadership. Together they have a combined turnover of over £1.5b; they educate 650,000 students and employ almost 40,000 staff. The group was formed following the recommendation of Sir Andrew Foster in his report on the future of FE that principals of large, successful colleges, with the capacity to do so, should have a greater influence in policy and a role in building the reputation of the sector. Current patrons include Sir Andrew Foster, Sir David Melville, Sir Mike Tomlinson, Baroness Sharp, Baroness Wall and Baroness Perry. The group meets regularly with ministers, civil servants, national agencies and key influencers to help shape and implement policy. It gives evidence to select committees and produces policy papers as well as acting as a peer network to disseminate excellent practice across the sector.

Committee Topics

The transitional arrangements currently in place between the LSC and the Skills Funding Agency (including any legacy issues surrounding funding problems experienced by the LSC in respect of its management of the capital programme);

Whilst recognising the decision and legal status of the Machinery of Government Changes (MOG) we feel it is important to state for the record that the separation of 16-18 and 19+ funding is extremely unhelpful and will undoubtedly have an impact upon FE providers. However the most pressing concern is the current lack of a strategic national lead on how post 16 provision is organised within an area. This means, for example, that the DCSF is still promoting new school 6th forms at a time of falling rolls. We would encourage the committee to examine this critical issue. It is also worth noting that the 157 Group sees the dislocation of FE Colleges from (what is often) their main funding Department, the Department for Children Schools and Families (DCSF) as a significant issue.

That having been said the 157 Group wishes to play a positive role in ensuring the success of transitional and new arrangements. We therefore welcome the opportunity this inquiry presents.

It has been extremely well publicised that the Learning and Skills Council has significant failings in terms of financial management, communication and transparency. The capital crisis is perhaps the most high profile example but there have been other significant failures such as the Train to Gain budget allocations. Both of theses situations have placed FE Colleges in an untenable situation. It is therefore regrettable but understandable that the sector has lost confidence in its national funding body. The sector needs confidence in any new body and we call upon government and its national agencies to review the relationship between the central LSC office, local LSC offices and BIS to ensure that such a situation cannot be repeated in future, regardless of government reorganisation.

Looking to the future and Capital investment we have significant concerns. We would encourage the committee to examine how Building Schools for the Future and FE developments are planned coherently and equitably. 

Significant powers rest within the Office of the Chief Executive for Skills Funding, including the ability to appoint up to two members of a corporation board, intervention powers as held currently by the LSC and the ability to adopt or develop performance assessment measures. We have long argued that there should be a board to oversee this work. Accepting the passing of the Bill and the status of the SFA we would still argue for the creation of an advisory board that includes sector representatives. Such a board would add transparency to the office, increase confidence in the new agency and be in line with proposals for the sector to play a larger role in the strategic planning and regulation of the sector as a whole.

157 would like to state the vital importance of the SFA being a significantly smaller body than its predecessor. We would encourage the committee to examine the evidence that this commitment, as laid down in the Apprenticeships, Skills, Children’s and Learning Bill, is being met.

• How the SFA will oversee the FE budget through its relationships with the UK Commission
for Employment and Skills, the National Employer Services and the National Apprenticeship Service; and

As a Group we wish to clarify that BIS / SFA is not responsible for FE funding in a general sense. Rather it is responsible for adult funding and 19+ funding pulled down by FE colleges whether adult responsive or employer responsive (adult apprenticeships and Train to Gain). It is also important to clarify that DCSF provides ring-fenced funding for 16-18 apprenticeships which cannot be vired to adult apprenticeship provision.

We welcome the proposals within the Skills Strategy to simplify the funding system so that all colleges can respond easily and more effectively to employer demand. The proposal that the SFA will introduce a united ‘account management system’ for all (but the poor providers) is extremely welcome. Such a move will enable colleges to respond quickly and to target needs. We welcome also the proposal to move towards outcome based funding and are keen to engage in the debate over how measures will be defined.

It is particularly welcome that government has acknowledged that the FE sector has been overly regulated in comparison to other sectors and that substantial progress has been made in terms of quality and control since incorporation. The Group is highly motivated by the notion of ‘empowered’ providers, a single purse funding model and increased freedoms locally.

We welcome the proposal that colleges and training providers will have discretion to respond within the overall framework, shaping the range of courses they offer to meet demand. Again, we would question how this will work on the ground, particularly with the SFA’s role in monitoring. We welcome the proposal that such discretion will be linked to future funds with rewards for those who respond flexibly and rapidly and seek further clarification on how decisions on such funds and flexibilities would be made. We would also like to see published funding figures for the overall SFA operating budget.

The 157 Group strongly supports the proposed UKCES model of a community scorecard and course labelling to enable empowered customers to make informed decisions. We are pleased there is clear commitment to amend the way in which the funding system currently works to enable top rate colleges and training providers to manage their budgets in a more flexible and demand led manner, and to offer more places than would otherwise have been the case through additional funding. Such a move, in which the market is more directly shaped by learner and employer needs, is correct and timely. We seek clarity on how those providers and courses will be selected and how funding would flow.

Whilst we welcome in principle the concept of a clear consistent ‘traffic light’ system that enables learners to rank courses, programmes and institutions we have concerns that it may add an additional level of bureaucracy and would ask the committee to review the ‘multitude of scorecards’. We note with interest that the system aims to include, where possible, the record of colleges in getting people into jobs. The 157 Group is extremely interested in this

As a Group we take this opportunity to raise our concerns over commissioning. Commissioning tries to second guess learner demand and fund accordingly, leaving some organisations over-funded against actual recruitment and others under-funded when numbers exceed expectation. The 157 Group would strongly advocate a model where funding truly followed the learner, i.e. recruiting a learner brings a predictable funding allocation. Not only is this a market led model but it then leaves the LEA to address provider quality and the implications of consumer choice. This is intervention by exception rather than as the norm. It places faith in providers to be aware of and responsive to the needs of their community. It ensures that the government only pays for what is delivered and that schools, academies and colleges all benefit from the same funding regime.

A government that needs to cut public expenditure should devolve to local provider networks the tasks of meeting the government’s strategic objectives and serving their local community. This requires trust and clear and transparent funding to these self managed skills networks. Accountability has to be both vertical to the funder and horizontal to the community. With this in place the 50-100 funded networks across England would allow the central bureaucracy to shrink to a few hundred key staff akin to HEFCE with dramatic savings. It also ties in to notion of empowered providers and increased autonomy for the top performing colleges.

• The delivery role that is envisaged for Local Authorities and the RDAs.

The 157 Group remains concerned over Local Authorities understanding of the FE offer. The use of FfE by Local Authorities for commissioning high quality learning places is a much repeated but major concern. The arguments are well rehearsed; there are concerns over ’like for like’ measurements and difficulties in measuring across diverse provision. In addition, we would argue that LA’s do not yet fully understand the role and work of the FE sector. We would welcome further discussion on this area.

The return to Local Authority control raises significant concerns over ‘cross authority’ issues. Evidence from the ground suggests that travel to learn patterns are being affected, providers are faced with multiple data recording systems and funding levels vary. The 157 Group would urge the committee to examine the potential for national guidelines on these areas.

We welcome clarity of the new role for RDA’s in strategy setting and accept the strategic role RDA’s with LA’s and SSC’s will take in producing regional skills strategies which articulate employer demand and will align more closely skills priorities with economic development. Colleges are key players in this new landscape and it is critical that RDA's work in that framework in partnerships with colleges as well as the other key players. Colleges are central to the regional skills strategies and to the proposed single integrated strategies. We would encourage discussion on how FE should be represented at the table.

We would encourage committee members to ask BIS ministers and officials to explain the SFA and local authority/RDA interface, as well as the proposed freedoms for the top 15% of FE colleges and the role of Sector Skills Councils.

The 157 Group strongly advocate that the SFA should be “a smaller, lighter touch body, focused on funding not planning” as was originally proposed by the government. That doesn’t mean however that we would not welcome a strong employer voice at the local level such as the Employer and Skills Boards. We would however want to see the emergence of strong local provider networks to work with those Boards at local level to align demand and supply of skills training.

The Group are pleased that the skills strategy recognises the role of sub regional groupings. We believe that there is a need for greater discussion on how this would work in practice locally and regionally, particularly in the context of the new RDA role.

To discuss this paper further, or gain further information on the 157 Group, in the first instance please contact Kat Fletcher, 157 Director of Policy and Development on kat.fletcher@157group.co.uk