| Key issue | Operational evidence |
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| 1. Decline in availability of traditional AEB funding | Whilst there is strong demand from potential learners, the funding and additional support available to them have been severely impacted by austerity e.g. a 45% real-terms cut in funding for adult learning from 2009/10-2017/18 (Augar review p119).
Independent training providers (ITPs) do not have automatic annual AEB allocations like FE and local authorities do, who also have an additional opportunity to bid for more against ITP’s in the procured AEB process.
The establishment of local authority in-house training arms e.g. The Growth Company, will further erode funding opportunities for ITP’s unless they are already delivering provision in the locality they are bidding for. ITP’s are increasingly competing for Framework Contracts without a guarantee of income – making strategic planning and investment very difficult.
Restricted AEB funding, against rising demand for Level 1 and 2 provision, means that ITP’s have to make choices about what they offer. This is further exacerbated by national entitlements which mean providers have to prioritise some qualifications, leaving limited opportunity for innovative sector-based curriculum
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| 2. Introduction of a new intervention and contractual controls regime - driven by a number of high profile provider failures | Oftsed - the introduction of the Education Inspection Framework in September 2019 means a renewed focus on quality and compliance e.g. Inspectors will be spending less time looking at performance data, and more time considering how providers are making sure their learners are developing the knowledge, skills and behaviours required to allow them to successfully progress and achieve.
ESFA - all ESFA contracts with ITPs will require them to provide an ‘exit plan’ setting out how the ITP will assist the ESFA to transfer learners to other providers. This is intended to ensure that, should an ITP cease trading (for example Carillion and 3aaa), there is ‘stability and clarity for learners and the sector and a reduced risk to public funds’.
ITPs will be allocated individual named ESFA contract managers who will maintain ‘regular contact, including as appropriate, face-to-face meetings to review contract performance, compliance, financial position, quality, capacity, or other risk factors. If they think this is necessary, ESFA contract managers will be contractually entitled to require ITPs to provide information such as their management accounts and/or a rolling 12-month cash flow forecast, audit reports, in-year recruitment, retention and learner progress profiles, and feedback from learners, staff and employers.
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| 3. Devolution of adult skills budget – leading to increased competition and need for local investment | Local Authorities and Combined Authorities are pressing for greater devolution of the adult skills budget. City mayors are also showing interest in bringing more of FE and skills under local control.
Devolution will see responsibility for roughly £700 million – about half of the overall AEB – transferred to six combined authorities, which are made up of two or more local authorities, and the Greater London Authority. Due to a diktat by central government about £450 million of that pot is allocated to FE colleges, meaning a smaller funding pot for ITP’s.
The need for geographic and local expertise will mean increased bidding challenges for ITP’s who will find it increasingly difficult to demonstrate local knowledge and partnerships against incumbent providers or large prime organisations e.g. PeoplePlus Serco, Seetec.
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| 4. The apprenticeship levy, the changing role of employers and a drive towards higher level apprenticeships | The Department for Education (the Department) has failed to make the progress that it predicted when it reformed the apprenticeships programme in spring 2017 – with a £400m Levy underspend. The number of apprenticeship starts fell by 26% after the apprenticeship levy was introduced and, although the level is now recovering, the government will not meet its target of 3 million starts by March 2020.
The Levy programme is now more heavily weighted towards higher-level apprenticeships e.g. Management training and Professional Development Courses accounted for £551m of total Levy spend.
Around 20% of the new standards are available at level 2 (often the level at which learners join the programme). In contrast, more than 40% of the old-style frameworks were previously available at this level.
In response to changes to industrial policy and the Apprenticeship Levy, employers themselves may seek to provide what previously has been delivered by other parts of the FE and ITP sector.
Apprenticeships may also favour HE institutions with their strong brands, established schemes with large employers (such as sandwich courses) and professional training providers. over 100 universities and many other HE institutions have successfully applied to join the register of approved Apprenticeship providers so that they too can access the levy funding e.g. Bachelor’s degrees and Masters programmes accounted for £448m of total Levy spend.
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| 5. Technology | Educational technology will see learners self-direct, whilst distance learning and virtual learning will undermine the hold that colleges have on their local population and expand competition. To remain competitive, ITP’s will have to innovate, take risks, partner across the sector and embrace the move from physical learning to virtual learning. |
