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Take care before you carve up FE funding

Bigger judgments have to be made by the coalition Government on the "funding council" landscape before the premature formation of a post-16 Further Education Funding Council for England (FEFCE). Arrangements for schools and higher education will determine the funding bodies for FE.

But the Government must reconcile the tension between funding by sector and by age. The Tories support funding by sector where a separate funding council exists for schools, universities, welfare to work providers and FE colleges. The Lib Dems support funding by age where a single funding council exists for all young people up to 19, irrespective of provider, and funding councils for adult skills and higher education are merged, although Jobcentre Plus and employment programmes could be added to the mix.

The starting point is schools. Currently, 150 local authorities distribute pound;36 billion of revenue funding for 5-16 provision in 17,000 primary and 3,100 secondary schools. Meanwhile, the Young People's Learning Agency (YPLA) distributes pound;0.2 billion directly to 205 academies for 5-16 provision, pound;0.2 billion to academies with sixth forms and pound;2.3 billion to school sixth forms that are not academies.

Education Secretary Michael Gove has said all primary and secondary schools should become academies eventually. As a result, the YPLA or its successor would directly fund more than 20,000 schools. Even so, 5-16 provision would be funded on local rates, but 16-19 provision on national rates. Transferring 5-16 schools funding from local authorities to the YPLA creates a possibility for all 5-19 schools funding on national rates. Crucially, the Institute for Fiscal Studies has shown that a pupil premium would be more effective if schools were funded on national rates.

Meanwhile, a post-16 FEFCE must await the Browne review of higher education. Any bringing together of FE and HE would need to be considered in light of recommendations to the Higher Education Funding Council for England (HEFCE), especially if all or part of its pound;5 billion teaching grant is turned into income-contingent loans, which would imply closer co- operation or even merger of HEFCE and the Student Loans Company.

From a sector perspective, a post-16 FEFCE looks sensible operating alongside a national 5-19 schools funding agency, a reformed HEFCEStudent Loans Company and a retained Jobcentre Plus. But they are at odds with an age approach to funding.

An age approach implies a single department and a single national 5-19 schools, college and apprenticeship agency. It would be responsible for the pound;4 billion 16-18 FE budget and the pound;0.8 billion 16-18 apprenticeships budget and all 5-19 schools funding, with all provision funded on national rates. The goal of full-time FE to 14-year-olds would be easier to achieve and the pupil premium could be paid to 14- and 16-year-olds in FE colleges.

It is in the context of 16-18 FE and 16-18 apprenticeships staying with the Department that the proposal to merge the Skills Funding Agency (SFA) and adult apprenticeships with HEFCE began, emphasising the funding gap between adult FE and HE students. If university vice-chancellors veto a Council for Adult Skills and Higher Education (CASHE), the SFA could be merged with Jobcentre Plus and employment programmes, bringing together adult skills and employment policy.

Mark Corney, Education and skills consultant.

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