SFA boss: everyone should be a winner

20th February 2015 at 00:00
Peter Lauener vows to create `simple' national funding formula

The head of the Skills Funding Agency has pledged to overhaul FE's funding system after admitting it is too complicated and leads to a "postcode lottery" of resources.

Peter Lauener, who leads the SFA and the Education Funding Agency (EFA), said that one of his top priorities was to introduce a national funding formula to simplify the sector's finances - a total of about pound;7 billion a year in government funding.

In 2011 the National Audit Office estimated that up to pound;300 million a year was being wasted on red tape and called for substantial savings to be made. But last December the audit office's follow-up report calculated that changes since then had saved only about pound;4 million a year.

The report calls on the Department for Business, Innovation and Skills and the Department for Education to do more to streamline funding arrangements, which it says are "complex" and a "struggle" for many providers to navigate.

Speaking at the Skills Summit in London last week, Mr Lauener said that "simplification" was high on his agenda. "The current funding system is too complex," he argued. "A simple national funding system should be part of the overall system we are creating.

"There's always the temptation to add `twiddles' to a funding system, and believing that by doing that we are going to impact on behaviour. I want to make sure the skills budget is as simple and streamlined as possible. It's quite complicated at the moment. There's too much of a postcode lottery."

Mr Lauener also told delegates there was "scope to make savings" in the SFA and EFA, which he described as "two pieces of the same jigsaw". Efficiencies were possible in both bodies, he said, but there were no plans to merge them.

Speaking to TES after the event, he added: "Every area of government has to make savings, and there are lots of areas where we can work together more effectively and efficiently."

However, although he said it "made a lot of sense" to have one person in charge of both bodies, Mr Lauener denied there were plans to unite the two. "I did not take the job with the expectation or understanding of a merger," he insisted.

The range of funding routes and the complexities involved in accessing them can lead to a "postcode lottery" where learners using different providers and living in different geographical locations have varying amounts of money spent on their education and training.

Martin Doel, chief executive of the Association of Colleges, welcomed Mr Lauener's comments. "Many people have tried to simplify the skills funding system before," he said. "It's difficult to understand and complex to operate. The greatest benefit from our point of view would be to have a greater degree of predictability."

However, he warned that there was a danger of "brutal simplicity", adding: "If you said every adult learner and apprenticeship framework had the same money, the market would move to the cheapest to deliver."

Mr Doel said that changes already under way, such as the development of local enterprise partnerships and apprenticeship reform, could complicate the system further. There should be a more systemic look at how the various funding systems could fit together, he added.

"We are happy with Peter leading the EFA and SFA, and it is likely there are synergies between both agencies, so it's good he can see where efficiencies can be made," Mr Doel conceded. "However, a merger would create a huge funding agency, which would be difficult to manage as a single entity."

Stewart Segal, chief executive of the Association of Employment and Learning Providers, said there should be a national system. "We would support funding of programmes, rather than on the basis of qualifications as it is at the moment," he said. "That would take a lot of the complexity out."

Mr Segal added that there could be a "greater coherence" between the EFA and SFA without the need for a merger. "Most providers have two separate contracts, one with each body, and we feel that could be improved," he said.

Funding complexities made simple

  • The Department for Education funds 16- to 19-year-old students through the Education Funding Agency, while the Department for Business, Innovation and Skills funds learners aged 19 and over through the Skills Funding Agency.
  • The EFA funds students to pursue a programme of learning that usually involves a variety of qualifications, in the same way as it allocates money to schools.
  • However, the SFA attaches funding to the delivery of individual qualifications.
  • Extra funding is available from the European Social Fund, which is administered jointly by the Department for Work and Pensions and BIS.
  • From this year, local enterprise partnerships will begin to take responsibility for allocating local capital budgets for adult skills and the latest programme of European funding.
  • Providers told the National Audit Office that they struggled with the mix of arrangements.
  • Some have had to employ extra staff to understand the complexities.
  • Because of the range of funding approaches, students in the same class may be funded through as many as six different routes.


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