The Adult Education Budget - a significant reform

28 Jan 2016


Today's Skills Funding Agency (SFA) statement on the Adult Education Budget is a reminder that things are changing significantly in this area. Here's a recap of what is new:

  • After almost ten year's of consistent cash cuts to release funds for workplace learning and apprenticeships, the adult education budget is fixed in cash terms for the next four years at £1.5 billion (a small cut in real terms).
  • Skills devolution will take effect in stages, starting in 2016-17, on the basis that the adult education budget supports a "local service". Senior ministers, led by the Chancellor of the Exchequer, have promised to devolve the adult education budget in five areas by 2018-19 (subject to conditions).
  • The introduction of the apprenticeship levy leaves space for a new focus on what publicly funded adult education is for. Just over £800 million of the existing budget is earmarked for fully funded statutory and policy entitlements (English, maths, first levels 2 and 3, courses for unemployed people and traineeships). Should these areas be expanded or are there other priorities?
  • The decisions to end co-funding for Level 3 courses taken by 19 to 23 year olds and workplace learning releases a small amount of new money for these priorities. What should they be? After the 50% cut in spending on English for Speakers of Other Languages in the last seven years, is this a priority? Would it be better to do more on adult mental health? Family learning?  Digital skills? It won't take long for any available funds to be be used up quickly. The challenge will be to prioritise sensibly.
  • After 20 years in which the adult funding formula was increasingly tied up with qualifications, the SFA is taking small steps in the other direction. Funding in 2016-17 can be used for a wider range of courses but in a context where higher level qualifications are funded from student loans and apprenticeships are funded from the new levy.
  • The arbitrary distinctions between adult further education and community learning will be partly removed 20 years after they were first developed. All education is for life, for work and for personal development. In the short term the two areas will continue on parallel tracks but there are new opportunities to bring things together.

SFA's announcement explains a major reform programme which was started when Peter Lauener became joint SFA/EFA Chief Executive in October 2014 and which was accelerated by the devolution revolution. SFA needs to simplify its funding system before it can devolve it (at which point life may become more complicated). A further factor in favour of simplification is the pressure on administration costs. Qualifications are being partly separated from funding calculations because the existing arrangements are burdensome. Each year SFA staff have to price 5,000 qualifications that are eligible for funding having assessed another 5,000 which have been rejected. Moving away from this system causes some trepidation among awarding bodies but it is surely better for qualifications to be judged by their educational value than via a funding test. So simplification is an important theme but it would be wrong to describe the 2016-17 system as simple. The funding rules have been edited but there are still quite a lot of them. The data collection arrangements (using the Individual Learner Record) will still be a major enterprise. The systems for handing out money, checking how it has been spent and making in-year adjustments are still likely to be complicated and the decisions may not be on time.

The other point to understand is that the budget is being stabilised as a platform for reform. Reforms are underway in the funding system and will also be implemented via post-16 area reviews. Once combined authorities take control of the adult education budget, they are likely to want to move it around. There is less than two years to plan this and some realism will be needed. Everyone wants better matching of skills provision to future jobs but the data will never give us quite what we want. The Individual Learner Record is a deep and wide pool of data which can now be matched retrospectively to HMRC records to assess outcomes. This is leading edge data matching but it won't satisfy everyone. Ideally the system would involve a Dick Cheney style total intelligence system which matches people to courses to jobs (preferably high skilled ones). It may happen some day but not yet.

Change brings new risks and these changes are no exception. SFA is loosening some of its funding rules just at the point where it will be cutting back on staff. Recent experience with high needs education funding and with the skills capital budget shows that local councils and Local Enterprise Partnerships are both very stretched. Capacity has also been cut in colleges and community learning providers. They can and will reverse direction to develop new courses but it will not happen overnight. The immediate task will be to understand the new set of rules, start thinking about how to achieve new goals and to manage change in a way that is as efficient and effective as possible,