1.

FURTHER EDUCATION AND SKILLS REFORM

1.1. Following the Comprehensive Spending Review (CSR), the Department for Education and the
Department for Business Innovation and Skills have been formulating their reforms.
1.2. The Education White Paper is now due in the week of the Corporation meeting with detailed
funding plans to be announced in the week before Christmas.
1.3. The Department for Business Innovation and Skills has published its plan “Skills for
Sustainable Growth – Strategy Document” on 16 November 2010.
2. 16-18 YEAR OLDS FUNDING
Educational Maintenance Allowances (EMAs)
2.1. This is perhaps the greatest area of concern for colleges. Currently 16-18 year old students
receive up to £30 per week whilst they are in full-time education and prior to this year it was
supplemented by two bonuses of £100 for attendance. The scheme has proved very beneficial
in retaining young people in education and for encouraging good attendance. At the College,
many learners use their EMA to pay for their travel costs to College.
2.2. The Government is proposing that from December 2010, no new learners will be enrolled on
to the EMA scheme. The annual cost is some £663 million. Only £54 million will be retained
and used for “targeted student support”.
2.3. The College is considering how best to mitigate for the loss of EMA and is looking in
particular at travel schemes.
Learner responsive funding
2.4. The timetable for 2011-2012 funding allocations is as follows:

November 2010 Local authorities advise YPLA of strategic priorities for their local area
December Joint DfE/YPLA 16-19 Funding Statement published
YPLA confirm to existing providers the volume of activity to be funded in
January 2011
2011/12 [NB: not cash at this stage]
YPLA provides information to local authorities on aggregated provisional
February 2011 allocations (volumes) and confirms any additional numbers to be funded
outside the lagged approach (see below)
YPLA sets national base rate based on total volume of provision to be
March 2011
funded
March 2011 Final allocations confirmed to all providers
May 2011
YPLA issues funding agreements to providers for signature
onwards

2.5. It is notable that the funding rates will not be set until March 2011.
2.6. The 2011-2012 funding allocation will be based on “lagged funding”.

Increase in Standard
2010 initial
learners from learner Additional
enrolment Provider
numbers of
X start to end X number to X
factor + Learning
of year learner ratio Support
learners
(2009-10) (2009-10)
2.7. Notably, there is no discussion or negotiation of learner numbers. This applies even in respect
of cohort changes. There will be no additional funding (in-year or at end of year) for
exceeding learner targets. Instead, the growth will increase the funding allocation for the
 following year. This may present problems when there is a temporary increase (or drop) in
leaner numbers.
2.8. Funding will be channeled through the Skills Funding Agency. However, local authorities
retain a duty to secure provision in their areas and are expected to exert strategic influence.
3. 19+ YEAR OLD LEARNERS
3.1. 19+ year olds will suffer proportionately more from the Comprehensive Spending Review
(CSR) induced reforms as the 19+ budget is less well protected than for younger learners.
3.2. The Following chart illustrates the reducing levels of funding available through the Skills
Funding Agency.

Skills and FEreform-Funding

4,500

4,000

3,500
Other Ministry skills projects
3,000
Skills infrastructure (incl LSIS)
2,500 Offender learning (OLASS)
m

Learner support
n £
ilo

2,000
s

Adult & Community Learning

1,500 3,104
2,835 2,796 2,686 Information, advice & guidance

1,000 Adult skills budget

500

0
2010-11 grant letter 2010-11 baseline 2011-12 budget 2012-13 indicative

3.3. The 2010-2011 funding for adults skills shows a reduction of only 1.4% from the current year
baseline. However, this potentially represents a reduction of almost 10% from the amounts
actually allocated to providers this year.
3.4. There will be a single adult skills budget. This allows virements between learner and employer
responsive (but not away from apprenticehips).
Adult Learner Responsive
3.5. The cuts and reforms will be implemented progressively to 2014-2015 when they will have
been reduced by 25% from current levels of funding. It appears that the cuts will be
progressively deeper towards 2014-15 when a system of student loans will be in place to
compensate for the loss of government funding.
3.6. The main changes for 2011-12 will be:
• national base rate will be reduced by 4.3%
• Skills for Life literacy and ICT will have the weighting of 1.2 removed
• Fee remission will apply only to learners in receipt of “active” benefits (eg JSA)
3.7. The main changes for 2012-13 will be:
• national base rate will be further reduced
• the provider factor will be removed from the funding formula
• Fee remission for level 2 and 3 qualifications will only apply to learners aged 19 to 23
years old.
3.8. The main changes for 2013-14 will be:
 • No funding will be given in respect of level 3 qualifications
• A student loan system will be introduced for level 3 learners who don’t qualify for grant
funding (ie aged 24 years and over).
Employer responsive
3.9. Apprenticeships will increase significantly. Non apprentice funding (“Train to Gain”) will
become more restricted and will reduce significantly.
3.10. The main changes for 2011-12 will be:
• Minimum contract level of £500k
• Level 3 non-apprenticeship provision not funded
• Level 2 non-apprenticeship provision only funded for employers with less than 250 staff
and to be co-funded (at 50%)
• No ESOL funding (in the workplace)
• Pilot of outcome incentive payments
• Growth in adult apprentices
• Employer contributions for adult apprenticeships to increase
Some effects of the changes
3.11. The removal of the provider factor from funding allocation calculations will remove the link
between student success and funding. This is likely to be replaced by a harsher criteria of
outcome payments (ie payments for students gaining employment).
3.12. The removal of level 2 and 3 tuition fee remission and removal of all grant funding for level 3
learners over 23 years old and student loans system may reduce demand. It might also lead to
an increase in student expectations of provision and to an increased level of complaints and
possibly in seeking legal redress.
3.13. Reforms and funding cuts are not spread evenly over the whole provision. Instead, some areas
will be subject to several changes. For example ESOL funding will have experienced a cut of
50% in funding from 2009-10 to 2011-12.
3.14. The changes will require more sophisticated financial modeling to gauge their effect on the
financial position of the College as a whole.
3.15. The College is considering bringing into collaborative partnership, small independent training
providers who will have their own funding removed under the minimum contract levels
criterion. The Skills Funding Agency has informed us that they expect the funding previous
given to those providers to mover over to the College if they deliver under our own contract.