The Association of Colleges (AoC) has estimated that colleges failed to deliver between £45m and £60m of adult provision last year as a result of policy changes.
It warned funding may need to be returned in 2013, despite a change in reconciliation rules announced this month that allow underdelivering colleges to hold onto Skills Funding Agency cash from 2011/12.
Julian Gravatt, AoC assistant chief executive, told FE Week: “The 2011/12 funding round was particularly difficult because of changes to funding rules and rates made at great speed following the 2010 spending review.
“Some of these decisions were later amended during 2011 and a different approach was taken by government for 2012/13.
“We estimate that, at the end of 2011/12, colleges would have been unable to use about £45m to £60m.
“Colleges keep the funds now, but may have to hand it back in 2013. This will make an already tough budget round in 2013/14 even harder. Loans and new initiatives funded from the skills budget mean core funding allocations are likely to be cut by an average of 10 per cent or more.”
The AoC warning comes after an industry source told FE Week the amount of underdelivery among all providers for the last academic year stood at £630m — nearly 17 per cent of the agency’s £3.8bn allocation fund.
If underperforming colleges and providers are not meeting their targets, then their business should be shifted to good quality providers who can show demand from employers and learners”
The agency had said it “did not recognise” the £630m figure, but also declined to reveal the underdelivery figure it currently had. It has also failed to comment on the AoC’s figure for underdelivery among colleges.
An agency spokesperson said: “Providers have until November to make their final returns against the 2011/12 contracting year and at that point we will have final data on the value of activity delivered by the FE sector in 2011/12.
“We operate in-year performance management for providers. This means we can be assured funding is used for the benefit of learners and employers and those funds are allocated and reallocated in direct response to learner and employer demand.
“Using the latest information from the sector in November we will make any necessary changes to make sure funding continues to support demand now and into 2012/13.”
However, Graham Hoyle, chief executive of the Association of Employment and Learning Providers (AELP), called for new providers to step in where targets were not being met.
“If underperforming colleges and providers are not meeting their targets, then their business should be shifted to good quality providers who can show demand from employers and learners,” he said.
“If the agency’s reconciliation rules are being relaxed too much in favour of underperforming institutions, that would seem to be running against the thrust of recent reforms and would be in danger of turning the agency back into a centralised supply-led planner. And when the FE and skills sector needs to fight to protect its overall budget with a new government spending review on the horizon, it is inexcusable for poor performance to be protected.”
David Hughes, chief executive of the National Institute of Adult Continuing Education (NIACE) and a former director at the Skills Funding Agency, said: “Any underspend represents missed opportunities for thousands of adults to learn and we regret that, but it was clear that the changes in eligibility made it very challenging for many colleges and providers to earn their allocations fully.”