With the budget announcements tomorrow coinciding with the half way point for this Government, Steve Besley, Head of Policy at Pearson, looks at what might lie ahead for the world of FE 

The end of the year is always a busy time for the FE sector but this year it brings the added twist of marking the halfway point for the Coalition Government. From now on, the context will be increasingly set by the build up to the May 2015 general election. Indeed there’s already been talk of updating the Coalition Agreement though it seems we’ll now have to wait for the New Year for any announcements on that.

For FE, the last two and a half years have been spent coping with the funding settlement set out in the early stages of the Coalition while trying to provide the skills programmes needed. Its faced some new ambitions such as those on apprenticeship numbers, levels of English and maths, and quality standards, some important consultations on funding reform, 16-19 programmes, apprenticeship provision and ESOL, and some significant Papers including those on HE, adult and community learning and fee loans. Its had a few sticks waved at it in the form of new inspection criteria, new efficiency requirements and a new intervention escalation process but also had some carrots dangled in front of it such as simpler systems and greater freedom. It has survived but it has been a tough slog.

So what now, what should FE expect for the next two and a half years, more of the same or something different? The new(ish) Minister’s commissioning of a Guild suggests he’s keen to keep the momentum of the New Challenges, New Chances reform programme going while funding will never be far away especially with a new spending round tomorrow. It points in other words to more of the same.

Four issues in particular, however, look likely to dominate.

First, further transformation of the skills system away from centralised planning and towards local responsiveness. The mantra here is employer ownership, putting employers in the driving seat and where possible diverting funding to them so that demand led becomes a reality. This approach can be seen in such mechanisms as the Employer Ownership Pilots and some of the City Deals and has been adopted as a way forward by both major Parties. Ed Miliband’s Conference speech pledging to put a cool £1bn of apprenticeship funding into the hands of managing employer groups and Michael Heseltine’s recent single pot proposition for locally commissioned provision are both examples of where this approach is gathering momentum.

Providers are left grappling with some of the teething problems associated with funding change while having to operate two increasingly divergent funding systems.”

The issue here is responsiveness, a strong theme in Ofsted’s challenging Report in July and a big driver for Government generally but one that is not always straightforward. Labour market signals are not always clear and providers need to know where responsibilities for identifying them lie. Under the Heseltine model for instance, labour market needs would be articulated through (LEPs) Local Enterprise Partnerships and providers would negotiate business plans with them. The danger here is that this adds another layer of complexity to an already perceived complex system. As ever, the fit between demand and supply in the world of FE remains uneasy and is likely to see further refinements in the coming months.

Second, and never far away, funding reform. The story here over the last two and a bit years has been threefold: streamlining the system so as in theory at least to free up providers from bureaucratic restrictions; protecting essential provision and those most in need; ameliorating where possible the impact of cuts by adopting more efficient forms of provision on the one hand and fee loans and co-investment on the other. Views remain mixed about the effect of all of these and given both the new funding system and 24+ fee loans don’t kick off in until next year, the full picture is unlikely to be clear for some time.

For the moment, providers are left grappling with some of the teething problems associated with funding change while having to operate two increasingly divergent funding systems, one for pre-19 provision, one for post-19 and facing considerable uncertainty about the impact of fee loans on 24+ provision. According to recent figures from the SFA, 40% of colleges have strong financial health ratings compared to 29% four years ago; it says a lot about how well the sector has adapted and it will need to continue to do so.

Third, qualification reform. Much of this is being driven by changes in the schools sector but these and other waves will equally hit FE over the next few years. At 16-19 for example, apart from the proposed introduction of English Bacc Certificates due in core subjects from 2015, there are important changes coming to both A’ levels and general Programmes of Study from next September. Maths too remains an important element as the Level 2 threshold becomes established, alternative provision post-16 is identified and the big heave to raise performance levels for a substantial number of adults gets under way. Elsewhere, further development work seems likely to follow recent consultations on ESOL and Higher Apprenticeships, Ofqual continues to review the QCF, NOS and market generally while the impact of the Innovation Code remains a subject for debate. The issue here, as for much of the qualification system, remains how best to ensure quality while providing for flexibility.

Fourth, quality, or more precisely professional standards leading to quality, brought to the fore recently by the Lingfield Review. More wide ranging than anticipated, the Review has pointed the sector in a particular direction with its proposals for different forms of governance, the setting of professional responsibilities in a standard Covenant, new forms of peer assessment for high-performing institutions let alone of course the creation of a leading representative body in the form of a Guild.

Quite what impact this Review will have on the sector is hard to say at this stage but coupled with the work of the Commission on Adult Vocational Teaching and Learning and that of LSIS on professional qualifications, we may yet see much stronger professional recognition for the sector. Something at least to look forward to.

Steve Besley is Head of Policy at Pearson