The Skills Funding Agency has announced more detail on a measure to protect providers from potentially huge drops in funding under a new payments regime.

The agency revealed that it would be acting to stop providers’ funding dropping by more than 3 per cent in the next academic year.

Agency payments for delivering qualifications under the new system would also be protected to within 6 per cent the following year.

The measure – termed transitional protection — will also limit the amount the agency pays out, with FE Week research having shown the value of some qualifications could rocket under the agency’s new system.

One such qualification looks set to soar 271 per cent as the agency moves from the ‘demand-led funding formula’ to the ‘streamlined funding system for adults’ from August.

Last month the agency exclusively told FE Week that the protective measure would come into play after research showed the value of many qualifications would fall more than 20 per cent.

These arrangements will ensure the impact on providers from the new funding system will be limited.”

And a recent agency webinar also told of late changes to credit bandings for awards (one to 12 credits) in the agency’s ‘simplified funding rates matrix’.

An agency spokesperson said: “Over the past few months, we have been consulting the sector on the most effective mechanism to underpin the transition to the simplified funding system.

“We are setting out the arrangements for this in the briefings we are now undertaking with providers.

“These arrangements will ensure the impact on providers from the new funding system will be limited to 3 per cent in 2013/14 and 6 per cent in 2014/15.”

She said there would be “specific measures” to protect some areas of provision changing due to wider and longer-term qualification reform, such as at English for Speakers of Other Languages.

The spokesperson was unavailable to further comment on changes to credit bandings.

The change in the value assigned to qualifications in shifting to the new system is called turbulence.

“We accept that the simplified funding system will shift rates of individual qualifications, but our initial assessments suggest that turbulence at provider level will be low in most cases,” the agency has said previously.

“Transitional protection will be put in place to limit this turbulence even further.”

When the current funding system was introduced in 2008/09, transitional protection was also put in place for the same reason and on that occasion funding variations in both directions were limited to a maximum of 2.1 per cent.