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Reform is the word on everyone's lips

Big changes are expected from ministers and funding chiefs at the Association of Colleges' annual conference in Birmingham next week. Ian Nash identifies some of the main issues that are likely to be on the agenda.

The first tranche of colleges to be given a lighter touch from the auditors and freed from the much-criticised cash clawbacks when they miss recruitment targets will be announced next week at the annual meeting of the Association of Colleges.

A record 1,400 people from education, industry and politics will attend the conference in Birmingham - one of the largest events on the education calendar in the UK.

It has become the show piece for the post-16 sector where ministers and funding chiefs announce the key policy and funding issues for the next three years.

This year, the conference sets the stage for the most significant reforms since incorporation of colleges in 1993. Charles Clarke, the new Education Secretary, is due to announce results of Success for All consultation and reveal big-budget decisions on the back of it.

The Department for Education and Skills has won ministerial approval for the carve-up of its budget among the Learning and Skills Council (colleges), universities and schools. Total LSC figures will be announced at the conference and colleges can expect around pound;1 billion.

A detailed breakdown will not be available until December 5 when LSC chair Bryan Sanderson will unveil them to the "chairman's day" conference. Last year the event was an invitation-only meeting for local LSC chairs and executive directors.

In line with Chancellor Gordon Brown's edict in the summer Comprehensive Spending Review, the DfES and LSC are working towards three-year budgets. In the past, while he has spelled out the three-year spending plan, the DfES has dished it out year by year, creating what the AoC called a "planning blight".

That will change this time around - but not fast enough for many colleges. LSC approval for each college to run its affairs relatively unfettered will be phased in over three years. Most are expected to have it by 20056.

The LSC will also launch its bureaucracy busting task force report, Trust in the Future. Its chairman, Sir George Sweeney, will press for freer planning to reduce red tape and paperwork. John Harwood, LSC chief executive, will endorse the proposals in his keynote speech.

Mr Harwood is also expecting to announce big increases in the capital budget, with devolution of funds for buildings and improvements to drive a new system of local LSC reviews and planning.

The speed with which the LSC needs to put new budget plans in place is certain to provoke anguish.

Details of the DfES grant letter will be revealed at the LSC conference, where both Harwood and Sanderson are expected to explain the new approach to allocating funding, taking the bureaucracy task force into account.

The AoC conference sets the scene for a range of key issues to be unveiled in December:

* Last year the LSC gave the 47 local councils their budgets in May. Colleges received theirs in June. This time round, the council wants it all over by March.

* There will be emphasis on a planning-led system for FE.

* Key changes to the funding formula in 20034 will come in area costs, rural isolation, disadvantage and additional support for specialist colleges.

* The controversial issues are how much to pay colleges for area costs such as those in London, the South-east and remote rural areas and for disadvantage. This is where there will be winners and losers.

* Pressed to consult the whole sector, the LSC is instead convening focus groups rather than going through full consultations, pleading lack of time and uncertainty over how much money it has.

* The lack of consultation before the event is likely to generate some complaints and comment after the event.

* The LSC is expected to announce consolidation of the Teachers' Pay Initiative and the College Pay Initiative into core funding. This is a key AoC lobbying issue and depends on ministers allowing them to do so.

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