Colleges and training providers should lose the right to public funding for adult education if they cannot attract equal investment from individuals and businesses, a review of fees in further education has proposed.
Led by the former Learning and Skills Council chair Chris Banks, the review said that courses outside of special entitlements, such as for a first level 2 qualification, should only be funded to match contributions through fees.
At the moment, funding rates are reduced to account for an assumed level of fee income, which is now 50 per cent of the cost, but public money is allocated whether or not the fees are actually collected.
The review said that, according to the Government's assumptions, an extra pound;1 billion should be paid to providers in fees in addition to the pound;3.5 billion of taxpayers' cash. But that target will not be reached, with the most recent accounts putting the figure at pound;491 million.
Colleges said the main areas of difficulty in collecting fees are from employers with Train to Gain and apprenticeships.
Julian Gravatt, assistant chief executive at the Association of Colleges, said: "One of the biggest challenges of the last few years has been that the Government has transferred funds across to Train to Gain and promoted it to employers on the basis that it's free."
John Hayes, the FE minister, welcomed the review. "We are committed to making the further education system as flexible, effective and efficient as possible, as well as ensuring that learners, employers and the Government achieve best value for their investment," he said. "My own determined view is that, however we move forward, the most disadvantaged learners should not be worse off."
The review proposes extending the system of career development loans, interest-free for the period of study, to ensure those on low incomes still have access to FE. It argues that since the Government only pays the interest, a small investment can fund many thousands of extra students. It also suggests a review of the wider system of FE student support.
It follows a study commissioned last year by the Department for Business, Innovation and Skills, which concluded that the demand for FE was not greatly affected by higher fees.
Nick Linford, head of the Pearson Centre for Policy and Learning, which is launching its own research on how to encourage businesses to contribute more to publicly funded training, said the review's changes would have wide-ranging implications that would need to be addressed.
For instance, if individuals stop paying instalments on their fees, the Government funding would dry up, but colleges would still suffer a penalty to their success rates if the student left.
Mr Linford said: "The match-funding approach to fees being recommended is both radical and attractive, but without significant simplification of the funding mechanisms and a pragmatic approach to IT solutions it may be difficult to realise."
James Fothergill, head of education and skills at the Confederation of British Industry, said it was not clear whether the measures would encourage businesses to invest more in training. However, he thought they might be more likely to use the publicly funded system, rather than funding training solely with private money, if it is being made more responsive to their demands.
Editorial, page 6
REVIEW'S KEY POINTS
- Government funding should match contributions from individuals and businesses, up to a maximum limit.
- Providers should publish the total course cost and the fee contribution expected.
- More public funding should be diverted into financial support, particularly career development loans.
- "In-kind" contributions from employers should not be counted, only cash.
- Government should make online learning accounts a priority.
- The criteria for fully funded courses should be reviewed to make sure those most in need get help.
- Government should monitor the implementation of changes to ensure it protects participation, especially among vulnerable groups.