Consultation and change don't come easy

17th September 2010 at 01:00

Real change is hard, and among those finding it particularly hard are civil servants in the Department for Business, Innovation and Skills (BIS) who drafted the recent consultation documents on FE funding.

The Government made it clear that it wants priorities in the FE system to be determined by the market with funding following the choices made by individual employers and individual adults. The authors of the consultation documents are fluent enough in the language of the market but it is also clear that they don't trust it - service users need to be guided, incentivised and regulated in case they make wrong choices.

Some confusion in Whitehall is understandable. The last government introduced a "demand-led" system that in practice diminished the role of customers and gave power to planners to dictate what people could and could not choose. To the instinctive centralists in BIS the commitment of the new government to market forces might similarly be empty rhetoric. There are, however, sufficient signs that the new commitment to make colleges focus on the needs of service users rather than the actions of officials is genuine and strongly held.

A distrust of the market emerges in several places. The documents assert that in current financial circumstances "it is more important than ever that government funding is focused where it is most needed" and they ask about methods for prioritising this funding. The assumption is that tighter budgets need more central direction over how they should be spent. The opposite is true.

The consultations ask about how to target funding "where it will achieve most value" or "where it will have most impact". The implicit view is that decisions about value and impact are best made at the centre and imposed through regulation. In practice, a well-functioning market nearly always makes better choices than central direction and the Coalition's decision to move away from national targets rather than generate new ones makes sense.

A lack of understanding of a market-driven system is evident in more subtle ways. One of the centrepieces of the consultation on a simplified FE funding system is the suggestion that it might be time to move away from a system of rates that reflect costs and use a system of prices that reflect credit as used in the Qualifications and Credit Framework (QCF) instead. Credits are based on notional learning time (NLT), and unlike the current measure of guided learning hours (GLH), which is based on evidence of the practice of hundreds of providers over several years, NLT has no empirical basis.

The impact of such a change is to shift influence from the market place to those who set the rates; a view confirmed by subsequent questions on moving "towards a more price-driven system". If the choices of individuals and employers are to be decisive, a neutral system of rates based on the necessary cost of efficient delivery is a pre-condition. Manipulation of prices by officials, however well-intentioned, will shift the focus of colleges back to Whitehall.

A final misunderstanding of an open market is represented by the continuing enthusiasm for regulating qualifications, with a raft of intermediary bodies deciding which ones should be eligible for public support. This restrictive approach developed under the previous administration risks undermining the potential advantages of the QCF. More importantly, it allows planning in by the back door so that mandarins can once again control the system.

There is no good reason why individual adults and employers should not be trusted to make intelligent choices about FE as they do in HE.

Mick Fletcher is an independent consultant. The consultation documents can be downloaded at

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