Is funding reform really making things simpler?

AELP’s Jane Hickie asks if the sector is really getting simplification from the changes to further education funding

Jane Hickie

Are we really getting simplification from the FE funding reforms?

The Treasury is hard at work on this autumn’s spending review and there is plenty of speculation about whether we will see a three-year settlement this time around. With the uncertainty surrounding the pandemic continuing and the strength of the economic recovery, we definitely can’t rule out the possibility of another set of single-year budgets.

The outcome of this review has major ramifications for the ambitious reforms set out in the Skills for Jobs White Paper at the start of the year. The strain on the public finances will mean that the Treasury will be looking for the Department for Education (DfE) to deliver on its vision for an adult skills system that is “simpler, outcome focused and more effective”. 

I am not sure that I have seen a better definition of value for money in the context of any government-funded programme. The Association of Employment and Learning Providers (AELP) has broadly welcomed the thrust of the further education funding and accountability consultation, which opened last month. However, the reforms to adult education could be much bolder for the learner and the employer, and it is once again a disappointment that 15 years after the Foster and Leitch reviews, the DfE still resists a demand-led approach to reform and instead falls back on its default institutionally led solutions.


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Year after year, we have seen these so-called solutions result in adult education budget (AEB) underspend, which often leads to Treasury clawbacks. Since 2010, the AEB has halved to £1.34 billion but, if the current budget is not being spent – even though we need the programme to respond to the impact of the pandemic – it is really difficult to argue that the budget should be restored to previous levels. The government has a real opportunity to ensure that more adult learners and employers can benefit, if it learns from the success of the apprenticeship reforms by putting them at the heart of the funding system. And before anyone shouts about the current levy underspend, let us not forget that the levy was heading for a significant overspend before the lockdowns prevented the recruitment of thousands of new apprentices.

In our response to the DfE consultation, AELP has argued that individual skills accounts are the solution to boosting adult education at levels 3 and below, creating greater choice and ownership of lifelong learning with the ability for different parties to contribute towards the investment in skills required.

We point out that the AEB is needed to support a vast and complex spectrum of needs from learners but, in the current proposals, there is not enough recognition of how the reformed system will meet the needs of employers who currently rely on it for upskilling and reskilling.

With the pandemic’s impact, tighter controls on migration, skills shortages in key sectors and now a record number of job vacancies, the programme’s role in retraining adults, including those out of work, has never been more important, if we want those vacancies to be filled.

We agree with the proposal for stronger and more effective collaboration between different types of provider locally but, at the same time, the DfE should not offset this by reducing market competition. Competition and collaboration should not be seen as mutually exclusive facets of the system.  Learner and employer choice are much more important considerations.

AELP recognises the value and need for the DfE to fund an aspect of place-based infrastructure but we believe that, for the time being, there remains a role for procurements to enable the learning offer to be “joined up” as opposed to the majority of funding being institutionally and placed-based. The Procurement Bill will finally enable the government to properly account for provider track record within further education. Ultimately, we need an approach that protects high-quality existing capacity and allows for sensible good-quality new market entry.

A track record

On the downside, the weakness of the current proposals is the insufficient DfE recognition of track record within a model that proposes giving colleges significant powers on local commissioning. For AELP, this is a worrying prospect, considering the sector’s recent history, which led to the establishment of the FE commissioner’s office and new powers of intervention being introduced in the Skills Bill.

In the funding consultation, the secretary of state’s objective is to “simplify the way the funding is allocated” – a repeat of the commitment made in the White Paper. Yet, since the it was published, we have seen the DfE move to channel funding through the Local Skills Improvement Plans and now a proposal to create another funding stream through colleges. In our view, this is the very opposite of simplification. 

AELP welcomes DfE’s confirmation that “the apprenticeship model, with a lead role for employers, will remain unchanged” and we support this position. However, the idea to decouple the model from the adult education system is not a simple process, given the interdependencies that currently exist. Training providers deliver a wide range of FE provision, so dramatically changing the adult funding system through a largely college-led commissioning system has a direct impact on the feasibility and viability of many providers to deliver wider provision, such as apprenticeships.

We have seen that in the recent non-devolved AEB procurement, good providers delivering adult and apprenticeship provision are having to move away from adult education completely after being unsuccessful with their bids. The resulting gaps in provision and previous strong employer relationships will not easily be replaced.

The Treasury’s insistence on value for money as part of the spending review outcome means that the DfE needs to cast off its institutionalised instincts and change to an adult education system that will transform more people’s livelihoods and support the economic recovery.

Jane Hickie is chief executive of Association of Employment and Learning Providers

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Jane Hickie

Jane Hickie is managing director of Association of Employment and Learning Providers

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