Warning over Heseltine’s single funding pot for LEPs

Lord Heseltine’s proposal to hand-over the entire skills budget to Local Enterprise Partnerships (LEPs) could become a reality with the government having launched informal discussions.

The Association of Colleges (AoC) and Association of Employment and Learning Providers (AELP) have both been in talks with the government about LEPs, and both expressed opposition.

A BIS spokesperson declined to comment on government plans for LEPs, but said a statement on the issue would be made in next month’s Budget.

It follows Lord Heseltine’s report last October, No Stone Unturned in pursuit of Growth, in which he said central government should “identify budgets”, including the skills budget worth around £17bn over four years, and “bring them together into a single pot of funding” for LEPs.

Lord Heseltine said the single pot would “be without internal ring-fence” and LEPs would bid for money from the government on a competitive basis, depending on local needs, removing bureaucracy and going along with the government’s “commitment to devolution”.

Martin Doel, chief executive of the AoC, told FE Week that “breaking up college funding” would be a “real mistake” and colleges should be “left to get on with what they were doing already to generate local growth”, working with LEPs and a range of partners.

I’m still naïve enough to believe that sound argument and logic will win the day here”

He said the AoC had been in “constant discussions” with the government, ministers and LEPs themselves about how colleges may be funded by LEPs.

“I think it’s a real mistake to introduce that level of uncertainty rather than sticking with a good plan and letting colleges get on with doing what they’re doing,” said Mr Doel.

“We want to work with LEPs but I don’t think breaking up college funding and giving it to LEPs is a helpful way to do that because it makes it uncoordinated, lacking coherence and won’t be responsive when money is tight.”

The government first responded to Lord Heseltine’s recommendations in December, when it announced LEPs would have responsibility for the Employer Ownership and European Social Fund budget.

Writing at the time for FE Week, LEP Network chair David Frost said: “This country has had a dysfunctional skills system for too long. Despite the billions that have been spent over the past decade, too many employers say that the current structures are not delivering the skills that they need.”

Lord Heseltine proposed bids would be for a minimum of five years from 2015/16 and included in this “single pot” would be the Adult Skills Budget — worth around £10bn over four years — plus offender learning and the Department for Education’s (DfE) £3bn apprenticeships budget alongside local transport, rail industry and flood defences funding.

Mr Doel said if these funds were not “ring-fenced” the system would “lack transparency”.

“You’ll get very uneven outcomes across the country and I also think you’ll get a lack of clear accountability about how the money’s been spent and what’s been achieved with it,” he said.

“I’m still naïve enough to believe that sound argument and logic will win the day here against what is most often anecdotal and partial argument by those who are arguing for the alternative approach.”

Graham Hoyle, chief executive of the AELP, said: “We know the government is trying to work out how LEPs can be worked out, but we think they’re fraught with all kinds of problems. It doesn’t sound right at all.

“We are looking to put in some very, very firm arguments within the next fortnight.”

A spokesperson on behalf of DfE and BIS said: “We’ll be responding to the Heseltine Review at the time of the budget, but we can’t give any indication before that.”

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Editorial : Single pot or potty?

This year’s Budget could well include deep cuts to FE.

Nothing new about the risk of public funding cuts, but the consequence of a central funding pot for local employment partnerships (LEPs) to competitively bid for is a particularly high-risk strategy

What if a LEP prioritises an infrastructure project, such as housing, ahead of skills training?

If LEPs do prioritise skills training, would they be any more sensitive to local demand and economic need for particular skills and courses than colleges and training providers?

And with high youth unemployment and declining 16 to 18-year-old apprenticeship starts, is now the time for big structural change to the way provision is funded?

The former Training and Enterprise Councils (TECs) were scrapped for being costly, bureaucratic and lacking transparency.

Their replacement, the Learning and Skills Council, was heavily criticised for the way it planned skills provision locally, before the Skills Funding Agency took over.

Ultimately, will Lord Heseltine’s proposal — to essentially reinvent nearly 40 TECs in the form of LEPs and each with five-year plans — make for a better FE and skills system?

Are there other equally radical, but better funding reforms, such as Doug Richard’s idea of skills tax credits?

So many questions, and I’ll need a lot of convincing the upheaval will be judged any more kindly than previous structural shake-ups.

Nick Linford, editor