AEB Devolution Roundup

Last week I played prophet of doom and, sadly, many predictions are already starting to come true in the form of closures, reduced apprenticeship starts, and even redundancies. It’s a tough time for everyone, but this week I’m going to focus on something a little more mundane in the form of the Adult Education Budget.

What’s the score with AEB Devolution?

To date, AEB devolution is operational in 7 of England’s combined authority areas: Cambridgeshire and Peterborough, Greater Manchester, Greater London, Liverpool City Region, Tees Valley, West Midlands, and West of England. ESFA maintains responsibility for certain categories of learners, including those outside of devolved areas, continuing learners, 19 to 24 traineeships, and a handful of providers - who can deliver nationwide - focused on the most disadvantaged.

The vast majority of devolved contracts and ESFA allocations have been awarded and, despite AEB’s broad remit and ongoing qualification shortages, most were rather smaller than the industry had expected. In short: if you didn’t already land a contract, there are none to be had.

Who are the major winners of AEB?

The vast majority of AEB funding has been awarded by grant to colleges, leaving every devolved area other than Tees Valley with less than 30% of the total budget put out to tender for 2019-2020. In Greater London, just 10% of the devolved AEB was earmarked for procurement.

Controversially, colleges were automatically re-awarded contracts despite massive underspend. Research by the Association of Employment and Learning Providers points to a total underspend by colleges of £63m in 2016-17 and £76m in 2017-18 - that’s an estimated 26% of their total allocation for 2017-18.

To put that into context, ITPs were permitted to bid for just £110m total funding for the same period, even though ITPs have, on the whole, made much better use of the available cash. The situation has led the AELP to recommend that the entire AEB budget should be put out to tender to address resulting gaps in provision.

Despite their underspend, colleges were also allowed to bid on AEB tenders and, in many cases, won. So, colleges have been automatically awarded funds, failed to spend them AND been permitted to win additional funds.

Has devolution helped address AEB’s problems?

Performance figures are not yet available for AEB in the devolved regions, so there’s a degree of speculation involved. However, as with my recent review of ESF, the signs aren’t promising.

Analysis by TES has shown that all seven combined authority areas have seen drops in the number of providers receiving AEB funding, from 608 across all areas in 2017-18 to just 334 in 2019-20 for a reduction of 45%. Part of the issue comes down to the way funds are distributed in the devolved areas: just a small number of colleges are currently allowed to spend their allocations out of their devolved areas, where previously nationwide delivery and subcontracting was the norm.

So, ITPs, who are the major beneficiaries of subcontracts, lose out once again. Anecdotally, I’m aware of numerous providers who are ready to deliver to address skills shortages in their areas who would love to get their hands on a piece of the underspend. However, to date, we’ve seen no indications that this is a likely scenario.

Given that AEB allows for the delivery of nearly any qualification, and that we’re still seeing massive skills shortages at every level, the situation is frankly inexcusable. Moreover, providers are already looking at tough times in the coming years between the loss of ESF and the ongoing coronavirus situation.

What’s the future of AEB and regional skills devolution?

The truth is that it’s tough to make the call right now, but major stakeholders have called for overhauls of skills spending on the regional level.

The Local Government Association last month called for the AEB budget to be doubled from £1.5 billion to £3 billion, citing an opportunity for learners to access ”a range of entry level courses through to professional qualifications, provide interview support and confidence-boosting programmes and help more people already in work with courses to retrain, upskill or move up in the workplace.”

Meanwhile, Jamie Driscoll, Mayor of the North Tyne Combined Authority, has suggested that regional devolution of the proposed National Skills Fund could allow greater flexibility to address skills shortages at the local level.

Whichever solutions Government settles on, safeguarding SME ITPs must be among the top priorities. While we’ve seen an increasing trend towards awarding large public contracts to major national and international service companies, local providers and SMEs still form a vital part of the FE ecosystem in England. Clarity from central government is sorely needed, or we’re likely to see many small providers go out of business in the coming years.

Is your ITP business starting to feel the squeeze? I’m always available for a chat if you’re looking for a lifeline. Just pick up the phone!