The Department for Business, Innovation and Skills (BIS) is near the end of consultation on its report on a new funding system for FE, which builds on the independent review of fees chaired by Chris Banks. It closes on October 14, six days before the spending review.
Fees do not apply in the 16-19 sector. Hence, the Banks review was about fees for publicly funded provision. Indeed, the review focused on adult- responsive funding (pound;1.8 billion) and employer-responsive funding (pound;1.3 billion), excluding safeguarded learning (pound;0.2 billion), offender learning (pound;0.1 billion) and adult financial support (pound;0.2 billion).
Whether adults and employers have to pay fees depends on whether they access adult-responsive or employer-responsive funding, whether funding is for upskilling (first full level 2 and 3) or reskilling (a subsequent level 2 or 3) and, for adults, whether they are claiming means-tested benefits. But Banks insists that where fees apply, they should be collected as a pre-condition of receiving public funding.
But the economic climate could not be worse, with disposable incomes and employer spending on training falling. The Skills Funding Agency could end up with under-spends clawed back by the Treasury, or providers could restrict their offer to "free" training, although this will be harder if workplace learning (pound;0.8 billion) is redirected to adult apprenticeships (pound;0.6 billion) where employer contributions of 50 per cent will always be required.
Loans are the answer, but to "make Banks work", lessons have to be learnt from HE. For instance, between 1998 and 2006, universities struggled to collect upfront fees of pound;1,000 from full-time students. There is no reason to believe FE colleges will find it any easier to collect, say, pound;1,000 from everyone over 25 enrolling on a first full level 3 course. In HE, the conclusion was that fee loans were needed for full-time students, especially financially advantageous income contingent loans (ICLs).
Banks, too, saw the need for fee loans, but said universal access was less strong in adult FE than HE as fee remission is so extensive and so many adult learners are working. Such a conclusion would not have been made if learner support had been included in its remit. Part-time HE students now pay upfront fees, despite intensive fee remission. Many are not in work, with the result that HE providers struggle to collect fees every time.
HE has concluded that employers are unlikely to always pay fees and part- time students are also unable to pay them. The solution is fee ICLs. All the signs are that the independent review of HE funding chaired by Lord Browne will propose these for part-time students. Meanwhile, Banks proposed career development loans (CDLs) for adults in FE, but his review failed to differentiate between upskilling and reskilling. ICLs can be justified in HE as nearly all tuition funding is linked to first level 4 qualifications. Adult funding, meanwhile, supports reskilling and upskilling, but where fees for upskilling are payable, namely for over-25s seeking a first level 3, fee ICLs should be available.
To save BIS money, the total cost of a first level 3 to 19- to 24-year- olds and over-25s should be funded through ICLs. Adult level 2 and 3 funding for reskilling should be restricted to CDLs. If BIS is concerned that employers will not pay up-front fees for an expanded system of adult apprenticeships, small firms adult apprenticeships loans could be considered.
The Government hopes to be in power for fives years. This is sufficient time for it to learn more about the similarities and gaps between the adult and HE sectors.
Mark Corney, author of Funding, Upskilling and Reskilling in the 21st Century by CfBT.