What the government's new skills strategy means for training providers

2 December 2010

The Association of Learning Providers (ALP) has offered a warm welcome to the coalition government's new skills strategy for two main reasons: the confirmation of apprenticeships as the flagship skills programme and an unprecedented opening up of the FE market to all quality providers.

ALP has now had the opportunity to absorb the details of the main strategy paper and the accompanying funding document, and while there may be some issues where perhaps further clarity is needed, it has analysed the key points for training providers as follows:

An open market from August 2011

The 'Investing in Skills for Sustainable Growth' document announced (para. 13 and 59) that from 2011-12, the former ALR and ER budgets will be folded into a single Adult Skills Budget which will be accessible to colleges and training organisations with a minimum expectation of apprenticeship delivery.

The only budgets which will remain outside this primary budget will be the Adult Safeguarded Learning budget, offender learning (OLASS) and ESF. The main budget will include monies earmarked for apprenticeships and will also cover basic skills to higher-level skills, “in the mode of delivery that will best meet the needs of learners, employers and communities (classroom, workshop, on-line and in the workplace)”.

What will be funded

Annex 1 of the funding document includes a table setting out the programme budgets for 2011-12 and 2012-13. Next year £605m from the total Adult Skills Budget of £2.8bn will be allocated to adult apprenticeships with the figure rising to £648m the following year. OLASS will be allocated £133m and the Adult Safeguarded Learning budget will remain constant at £210m.

The government wants 75,000 extra adult apprenticeship places by 2014-15 which equates to about 200,000 new people starting the programme each year. Fee assumptions will remain at 50% for 2011-12. The National Apprenticeship Service will fund 18 .Apprenticeship Diversity pilots over the next twelve months designed to test out different methods for improving access to apprenticeships for underrepresented sections of society.

These projects will directly lead to approximately 5,000 opportunities. We have to wait until next month to hear how much funding the Department for Education will provide for apprenticeships for the 16 to 18 age group. There is also little detail yet on the scale of pre-apprenticeship provision.

The government expects (para 14 of the funding document) that at least £100m of the single budget will go towards workplace training in small and medium-sized enterprises (SMEs) with fewer than 250 employees to co-fund level 2 qualifications.

For individual learners, providers may find useful the tables in the main strategy document (page 11) for fully funded and co-funded entitlements, including those for basic skills. These vary for each qualification level according to whether the individual is aged 24 or under.

From 2013-14, individuals over 24 will be able to take out loans to fund level 3 and 4 courses. They will also have to co-fund level 2 learning. Every adult will be offered a Lifelong Learning Account, giving them access to loans, which they can take to an approved provider of any type.

For providers who are active in both the BIS-funded skills markets and the DWP welfare-to-work programmes, joint commissioning, as called for by the UKCES, remains elusive for the time being. However, BIS ministers believe that skills training can play a fundamental role in helping people to secure sustainable employment.

The funding document says (para 10) that there will be fully-funded provision for 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.

Minimum Contract Level confirmed at £500k

As expected, it has been confirmed (para 64 of the funding document) that in 2011-12 the Skills Funding Agency (SFA) will only directly contract with providers with a Minimum Contract Level (MCL) threshold of £500,000. The threshold will rise in subsequent years but decisions will not be taken on the level of increase until an evaluation of the initial MCL introduction has taken place.

Increased transparency for provider performance

December sees the publication of comparable information gathered through the Framework for Excellence on the quality and outcomes of further education provision. This information will include the views of learners and employers on the quality of the learning and training they have received, including attainment of learning aims, and progression into further and higher learning and employment.

Learners, employers and their intermediaries will be able to access this information through a customer-facing website and so to judge whether the provision will meet their particular needs. Development of a more comprehensive range of public information will be published in January 2012 and will be widely available through the Next Step service and each provider's website.

According to the main strategy document (para 14), this increased transparency will drive 'a step-change' in quality improvement based around the learner's view of the provider rather than the view of the funding agency. The government has also said (para 23) that it will encourage interested independent providers and employers to take over failing colleges in the future rather than just relying on mergers between colleges to take place.

For independent providers, the opening up of the FE market is an enormous step forward and it represents the achievement of one of two original key objectives for ALP that were identified when it was formally established in 2002 – the other being that the supply market should only be populated by good quality providers whether they come from the college or independent sector.

In ALP's view, the proposals to increase the public transparency of provider performance so that market share is increasingly decided by the well-informed choices of employers and individual learners are vital to ensure a genuine opening up of a demand-led market. Local contract managers simply won't be able to award contracts to poor performing providers under the single Adult Skills Budget without coming under the severe scrutiny of the public, the government and the rest of the provider community.

However, radical change will not occur for a while yet and there is a tension between the increased flexibilities for providers that ministers want to see under the new system and their strong desire to prioritise apprenticeships over the Spending Review (SR) period. ALP's discussions with the SFA also point at least in the short term to possible caps, approvals and informal rules which may limit independent provider growth in provision currently funded under the Adult Learner Responsive (ALR) budget. The funding document (para 60) says that "funding allocations will be based on historical allocations and delivery data".

It says that any diversion of funding away from Apprenticeships is to be agreed with the SFA although all providers "will be able to use their Single Adult Skills Budget to expand Apprenticeships". When we also bear in mind that "over the period of this spending review up to 2014-2015, the further education resource budget will be reduced by 25%" (para 1 of the funding document) but that "spend on adult Apprenticeships will increase (our emphasis) by up to £250m by the end of the SR period" (para 4) then means the resourcing for anything that is not an Apprenticeship is going to be hit hard.

Over the short and medium term therefore, it will be difficult for independent providers to grow significant formerly ALR-funded business. Historically independent providers will have delivered Apprenticeships so that will form the basis of their new allocations. As they can't move funds away from Apprenticeships without SFA agreement, and the general tenor is actually to move more into Apprenticeships, it is hard to see why any significant move away from them into what might previously have been called ALR would be sanctioned.

On the other hand, adults with lifelong learning accounts will able to choose any ACTOR-registered provider they want, so opportunities for growth will be available via this route. Furthermore an open market will in principle be a reality from 2011-12 and increasing transparency for provider performance will make arbitrary caps on independent providers very difficult to justify.

ALP chief executive Graham Hoyle OBE comments: “Ministers have been true to their word that greater competition in the FE provider market should accompany the promised increased flexibilities for providers and we are greatly encouraged that a change in government has not led to the discarding of the demand-led principles laid down by Lord Leitch.

We should recognise that the planner-led culture that prevailed in the LSC years will not disappear overnight but I am confident that better informed learner choice and increased transparency on performance will become the dominant drivers in making an open market a genuine reality for independent providers.”

The two BIS skills strategy and funding documents can be downloaded from here:
http://www.bis.gov.uk/news/topstories/2010/Nov/skills-for-sustainable-growth

Education white paper confirms support for 16-18 apprenticeships

The Department for Education has published its education white paper 'The Importance of Teaching'. For work-based learning providers, the key points are:

?Continued support for 16-18 apprenticeships
?Professor Alison Wolf asked to consider in her current review how to make vocational qualifications 'more robust' (the government says many are not essential or not stretching)
?Wolf to recommend how vocational qualifications should be treated in school league tables
?Common 16-19 performance measures to be introduced for all sixth forms, colleges and other providers
?YPLA renamed as Education Funding Agency and to be responsible for all 16-19 provision
?Unfair post-16 funding in favour of school sixth forms to be rectified
?Opportunities for independent providers to become more involved in the provision of alternative education for excluded pupils.

Notable by its absence is any mention of Information, Advice and Guidance (IAG) in schools and colleges, which is currently subject to review, despite the document referring to all the other reviews going on. One interpretation of the paper's proposals for Ofsted suggests that the new slimline Ofsted inspection regime will not be asked to check on the provision of impartial IAG despite the law requiring schools to provide it.

ALP chief executive Graham Hoyle says: "The DfE's support for apprenticeships is very welcome, but it is equally important for school children to know that they are available. Despite John Hayes' very positive statements on IAG in general, it is difficult to gauge exactly where the government stands on IAG in schools and we will have to monitor this very carefully."

The 'Importance of Teaching' white paper can be read here:
http://www.education.gov.uk/schools/teachingandlearning/schoolswhitepaper/b0068570/the-importance-of-teaching/

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