From 1,300 rates to 30
It is not the first time that FE providers have been promised a simpler funding system, but this time it could actually happen. Proposals unveiled last week will attempt to sweep away 1,300 different funding rates, and replace them with just 30.
The changes, outlined by the Skills Funding Agency (SFA), were welcomed, but according to Association of Colleges assistant chief executive Julian Gravatt, the changes are driven by the need to make the system comprehensible to students given that they will control much of the funding through loans.
"There's an issue that they have to make the system easy enough for the Student Loans Company to administer," Mr Gravatt said. "At the moment, you would have to get a personalised allocation for everyone who applied."
So it is out with confusing abstractions like the "standard learner number". Instead, each unit and course will have a cash value, which can be adjusted to account for deprived students and cost variations around the country.
There will be five grades of qualification - standard, low, medium, high and specialist - which attract increasing amounts of funding according to the cost and complexity of providing them. These are then applied to six sizes of qualification, from single units to fully funded 16-to-18 apprenticeships. Implementation has been put back by a year to allow providers to get to grips with the new system.
Colleges will not only be concerned about whether their own allocation goes up or down, but also about how well the competition down the road does out of the changes. "It's like changing the tax system," Mr Gravatt said.
It means that 2013 is going to be a year of huge upheaval for FE, with the introduction of loans, the raising of the participation age for 17-year-olds, and overhauled funding systems for both adults and teenagers. Before then, providers are likely to want negotiations on the SFA changes, adjusting the rates and formula if they feel they are being unduly destabilised.
The funding system has been "simplified" twice before in the last 10 years, but complexity keeps creeping in, often in a bid to meet political priorities. FE providers will be hoping this is third time lucky. "We hope we can put in place a system that broadly looks right, and then we can leave it alone for a few years and not tinker with it," said Paul Warner, director of employment and skills at the Association of Employment and Learning Providers.
"Half the complexity and bureaucracy that providers deal with comes from the fact that there's always a feeling that it will all change soon. I hope we can just leave it alone for a bit. We've been hoping for that for years," he added.
The Young People's Learning Agency has its own proposals for simplifying funding for 14-19 courses.
It has modelled the impact of a range of options, which could result in one in 10 providers having up to 10 per cent of their funding cut.
Colleges and training providers will not know the effect on adult funding until the Skills Funding Agency shows them sample allocations next year.