FE will continue to lurch from funding crisis to funding crisis until purchasing power is put in the hands of learners and employers, says Tom Bewick

FE budgets are under severe pressure, so what better time to rethink how to protect learners, employers and communities from the cuts. I’m always staggered about how accepting the sector is of the way in which its multi-billion pound budget is carved up.

Savings and efficiencies must be made. But why is there no debate about turning the  whole funding model for FE on its head?

A good way to illustrate the status quo is to think about how things were once centrally planned in the Soviet Union. Production, whether it was bread to put on the supermarket shelves or tractors to bring in the harvest, was organised at the level of the ‘commanding heights of the economy’. These involved bureaucrats whose sole purpose was to concoct ludicrous targets: distribute the roubles via complex funding formulas and generally flatter their immediate bosses with the sheer indispensability of it all.

You could apply the same description to the current world of FE. It has a top-down, rigid, and seemingly indispensable funding model for no other reason than a group of highly paid civil servants telling their ministers that it needs to be so. Why should perestroika come to FE when the people in charge have no Gorbachev to lead them? The sector will lurch from crisis to crisis, until there’s a revolution in how our society puts real purchasing power in the hands of the learner and employers.

The sector will lurch from crisis to crisis, until there’s a revolution in how our society puts real purchasing power in the hands of the learner and employers ”

The government could do three things: attack the massive waste amongst the bureaucracies that serve FE; move to a universal system of skills accounts for all post-16 learners; learn from other countries.

Anyone looking at the accounts of the Education Funding Agency, the Skills Funding Agency (SFA), the UK Commission for Employment and Skills, and the Student Loans Company (SLC) will straight away spot areas for savings. Why do we need so many quangos in this space? The total administration cost for the SFA last year was £131m, and at the UK Commission for Employment and Skills it is more than £6m.

To put this in perspective, the running costs of these bodies alone would fund the opportunities of tens of thousands of young people a year.

Let’s change this so that every young person is given a skills account card when he or she reaches 16. The state would deposit the amount each learner or employer is entitled to, in terms of taxpayer support and according to Parliamentary-agreed funding rates. Unlike the versions of learning accounts that have been trialled to date, these cards would be managed on contract to the private sector. Any fraud or abuse would fall on the card issuer, not the government.

The real point is that purchasing power would be placed in the hands of the consumer of learning. At a stroke, it would get rid of the need for most of the institutions that have grown up around adult education. Indeed, the general public could be issued with shares in the new Learning Bank, bringing common ownership of an apparatus that would be accountable to real people instead of Whitehall’s pen-pushers.

The government also could learn from successful models abroad where the best approaches to vocational education and training are not centrally planned — Germany, Switzerland, South Korea, Singapore, and even India all have decentralised funding models. The US has community colleges, where the local learner and business is sovereign. Perhaps the best thing we could do with the current FE funding ‘system’ in England is not to have one at all.

Tom Bewick ,director and chief economist at the International Skills Standards Organisation