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 16-19 efficiency savings– Overseas students supported in HE– Serious loss of fee remission in FE– Infatuation with apprenticeships

Participation Rates

Participation of 16 year olds SFR 2010

0.0

20.0

40.0

60.0

80.0

100.0

Full-time education

Work BasedLearning (WBL)

Participation Rates

Participation of 17 year olds

0.020.040.060.080.0

Full-time education

Work Based Learning(WBL)

Work & WBL

16 & 17 year ol ds i n wor k/ WB L

0. 0

10. 0

20. 0

30. 0

40. 0

50. 0

60. 0

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Work Based Learning (WBL) Employer Funded Training (EFT) J obs Without T raining

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

Work Based College Based Upskilling Reskilling Upskilling Reskilling

Level 2 Co-funding

Co-funding

Full funding

Co-funding

Level 3 Full funding

Co-funding

Full funding

Co-funding

Aged 19 - 24

Level 4 Co-funding

Co-funding

Co- funding

Co-funding

Level 2 Co-

funding Co-funding

Co- funding

Co-funding

Level 3 Loans

Loans Loans Loans

Aged 25+

Level 4 Loans

Loans Loans Loans

Age of learners in General FE colleges, 2003/04

Full-time equivalents All learners

16-1841%

19-208%

21-249%

25-5937%

60 AND over3%

Under 162% 16-18

16%

19-205%

21-249%

25-5961%

60 AND over7%

Under 162%

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.”

MeaningWe want to stop fee remission for everybody else.

Fee remission categories

Fee Remission

2003-04 2004-05 2005-06 2006-07

Means Tested Benefit 261,293 235,239 218,761 251,682

National Entitlement 301,104 375,707 427,131 471,067

Local Discretion 1,157,445 1,090,194 845,782 720,051

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Nu

mb

er o

f lea

rner

s

Rate cuts - Basic Skills

ESOL in college (ALR) 2009/10 2010/11 2011/12

Funding rate reduction 3% 4.3%

National funding rate £2,817 £2,732 £2,615

Programme weighting 1.4 1.2 1.0

Fee element % 47.5% 50% 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 19-24 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 16-18

• 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