The further education and skills sector is still beset by red tape and complex funding arrangements despite a government plan to simplify the system, according to National Audit Office (NAO).

In a report published today, the NAO says work by the Department for Business, Innovation & Skills (Bis) to reduce bureaucracy has only had a limited impact on the cost to colleges and other providers.

Bis drew up a plan to simplify the administrative burden on the FE sector two years ago following critical reports from the NAO and the Public Accounts Committee.

The NAO had estimated that it could be costing the FE sector up to £300 million a year to meet funding, qualification and assurance requirements, and that substantial savings could be made by cutting red tape.

However, in today’s report it estimates that changes made by Bis since then have only produced savings of around £4 million a year.

It says most of the cost comes from having multiple funding routes, through the Skills Funding Agency and Education Funding Agency, and says Bis has not done enough to streamline funding.

Bis does not know how much it costs colleges and other providers to meet these funding requirements and therefore does not know if costs are rising or falling, the report says.

It has also done little to estimate the costs of dealing with upcoming changes such as apprenticeship reforms.

The report says providers accept there have been some positive steps made to streamline processes, but most feel the overall burden is either worse or no better than before the simplification plan.

Amyas Morse, head of the National Audit Office, said: “We and the Public Accounts Committee have highlighted before the over-complexity in the further education sector and the unnecessary burden this places on training providers. This diverts money away from students.

“Despite some progress there is still too much red tape. While initiatives to reduce the levels of bureaucracy have generated some good ideas, putting them into practice has not significantly cut the cost incurred by hard-pressed providers. The Department for Business, Innovation & Skills, working with the Department for Education, needs to consider more radical ways to simplify complex funding arrangements.”

Martin Doel, chief executive of the Association of Colleges, said funding cuts in the sector meant all unnecessary bureaucracy needed to be removed so resources could be focused on students and not red tape.

Stewart Segal, chief executive of the Association of Employment and Learning Proviers, said there was a lot more to do to simplify the burden faced by training providers, who still feel pressure to deliver more for less.

“The NAO report is welcome because it highlights how providers are often delivering similar programmes, particularly for young people, for three different government departments, i.e. DfE, BIS and DWP, which require different procurement and contracting processes,” he said.  

“This inevitably has significant cost implications.  AELP continues to call for more alignment of cross government programmes and the need for an environment where more resources are focused on delivery to customers.”

However, Bis said it had made “good progress” in removing and reducing bureaucracy for FE providers.

“Funding and inspection systems have been streamlined and providers tell us that this has had a positive impact,” a spokesman said.

“We will carry on working with the sector to reduce bureaucracy whilst driving up the quality of FE provision and making it more responsive to the needs of learners and employers.”

Related stories:

MPs told of the tangled web that has been woven - February 2012

A simple way to help the FE sector save millions - December 2011