Government response to the IUSS Committee’s Seventh report of Session 2008 – 09

A 157 Perspective

The 157 Group represents twenty seven of the largest, highly successful Further Education Colleges in England. Working together we seek to disseminate effective practice, build the profile of the sector and act as a peer network for continuous improvement. As a leading body of Principals we work across government to influence policy in the learning and skills arena and related areas.

The 157 Group warmly welcomed the then Innovation Universities Science and Skills (IUSS) Select Committee’s decision to take up the 157 recommendation on holding a mini inquiry on the Further Education (FE) Capital Funding crisis. It is well known that the major mismanagement of the programme has caused severe difficulties for individual colleges and the reputation of the sector as a whole. We are grateful that the issue is being scrutinised at the highest levels and seek assurance that it will remain a matter of high priority.

Having warmly welcomed the Select Committee report we looked with interest to the government response. Broadly we welcome its content and seek to build upon it.

• We are pleased that the failure of the LSC to manage the capital funding has been formally acknowledged by government. Whilst we are reassured that appropriate risk management procedures have been put into place to manage the future of the programme we would seek assurance that similar measures have been put across the organisation to deal with other major funding areas. Experience tells us that the capital scenario has in many ways been replicated in other elements of the LSC work, for example Train to Gain funding. We would urge BIS to ensure that similar mechanisms are in place for all major funding streams and projects across the LSC.
• The responses acknowledge that there was a lack of effective forecasting control within the LSC making it impossible to spot the gap between demand and supply and raises a wider question on the way the LSC allocates funding. The current arrangements create significant difficulties for providers on the ground seeking to develop a flexible and appropriate offer. We would urge BIS in this context to review how it chooses to allocate funding to providers. 157 have developed a significant number of papers which examine alternative mechanisms providing greater flexibility and the ability to accurately respond to demand.
• That significant failures existed in the DIUS and LSC relationship is clear. We would therefore ask how effective is the relationship between the new Department for Business Innovation and Skills (BIS) and other NDPB’s working within the learning and skills arena? Confidence in such relationships has been damaged and we would therefore recommend a thorough review is conducted to ensure that all NDPB’s reporting into BIS are governed in an appropriate and effective way.
• We recognise the need for a prioritisation exercise to agree future capital funding priorities. The 157 group are extremely concerned by the slow progress of agreeing a way forward. We are clear that the process must be sector agreed, but are also clear that funding must be allocated fairly and proportionally.
• We are pleased to recognise that the Skills Funding agency will have significantly stronger risk management structures. Whilst we acknowledge the Governments position that the SFA will be a nationally consistent organisation, with a centralised funding system which will allow easier access to budgets, we would question why such information was not available within the LSC. At a time of great unease within the sector there needs to be assurance that public funds are spent in a clear and transparent manner.
• The 157 Group has consistently argued that the Skills Funding Agency should be a NDPB rather than its current agreed status within the BIS structure, the capital scenario is an excellent example for why we hold such a position. In terms of hearing direct from senior practitioners how projects are rolling out in the ground and giving confidence that ‘one of our own’ is part of the overall governance and strategic direction of an organisation the sector would be more confident if it was actively involved in the SFA’s governance structures. We would ask the government therefore to review its position on this matter.
• We are pleased that with Sixth Form Colleges transferring to Local Authority control they will in future seek to gain funding from the Building Schools for the Future fund. This was a specific proposal from the 157 Group and an areas we have consistently prioritised including submitting it as an amendment to the Apprenticeship Skills, Children and Learning Bill. We are therefore delighted that this has been adopted.
• We recognise that the sector must continue to share best practice and potential options for moving forward on alternative funding for future projects. The 157 Group has been working proactively on this issue for a number of months engaging in discussions with the banking industry, local authorities and the government valuation office. We will continue to work to develop alternative options and are willing to discuss our progress with relevant parties.
• Single capital funds- views welcomed from members – do we have a line on whether we wish to see a single fund etc? Any Capital funding would be welcome. It is clearly unacceptable that funding is available for new projects going forward in the schools and HE sectors but is unlikely to be provided for FE.
• The major issue remains funding. Whilst we support the LSC decision to reimburse all costs its has committed to under its fee support arrangements this simply does not go far enough. The LSC decision to insist on fully costed and ready to go schemes before final approval required colleges to incur heavy expenditures between Approval in Principal and Approval in Detail stages. None of this, to the best of the 157 Groups knowledge, has been reimbursed for the non selected projects. This has left colleges with significant financial burdens that are not faced by schools potentially delivering equivalent post 16 provision.
• We acknowledge both the political and real impact upon individuals of not allowing any college to go under as a result of the capital scenario. However the 157 Group asserts that funding must be allocated fairly and that includes considering the risk management of providers. It would be unjust if those providers who practised strong risk management, including the building up of substantial reserves to ensure organisation strength would be negatively affected by any prioritisation process.
• The Capital Funding programme has made a significant impact upon the FE estate, however much remains to be done. We therefore will continue to lobby government to ensure that further funds are found in the next funding round.
• While communication between the LSC and the sector has improved the move to the SFA may disrupt this flow. As a sector we need to know the strength of the case that the LSC is putting to government for ongoing capital support in the next funding round. There is still likely to be some monies for capital spend on education and the sector needs to secure a significant share.
• What is clear is that the major focus now must be upon supporting all colleges to find a positive way forward in developing their ‘Capital Strategies plan B’. Addressing issues such as VAT and guaranteeing three year revenue flows for colleges would significantly help in securing alternative capital funding streams.