SFA delays full implementation of simplified funding system

Skills Funding Agency listen to feedback from FE providers and delay roll-out until 2013/14

The Skills Funding Agency (SFA) has delayed full implemenation of its ‘simplified’ adult skills funding system until 2013/14.

Colleges and training organisations will have to use the current methodology in 2012/13, but are advised to plan for the upcoming changes in what has been called a ‘dual running’ period.

The agency had originally planned to implement the new funding system in 2012/13.

However, a spokesperson from the SFA said that the timing of the new methodology was always “subject to further engagement with the sector”.

“We have engaged and have listened to the feedback from providers and will implement a dual running approach in 2012/13,” the spokesperson said.

“Colleges and training organisations will continue to be paid for the year in accordance with the current methodologies, but will also have sight of the new methodologies in order to plan for the changes in the year ahead (2013/14).”

The most recent reference to a 2012/13 launch can be found in a SFA policy update titled ‘Proposals for Funding Simplification’ published on April 27 (click here to download).

It states: “This paper sets out the proposals for simplifying the Skills Funding Agency’s funding system in 2012/13.  Proposals include a simplified rates and funding formula, as well as initial thinking about a new earnings and payment process for providers.”

It later shows a draft table of the simplified rate structure and plans to retain area cost uplift.

A further presentation given by David Hughes, National Director of College & Provider Services at the SFA  on November 17, 2010 outlines plans for a simplified rates system, simplified data returns and removal of provider factor, excluding area costs in 2012/13.

The SFA said in a previous statement to FE Week that they never intended to roll out the new methodology in 2012.

A spokesperson from the SFA said: “There isn’t any delay. We have always been committed to start the funding simplification process in 2011/12 so that we are ready for roll out of dual running in 2012/13 and full implementation in 2013/14.”

The delay, announced in ‘A new streamlined funding system for adult skills’  on October 10, proposes a simplified funding system which includes a single Adult Skills Budget for all colleges and training providers, as well as a single methodology for providing them with funds.

The document also suggests a standard ‘rates matrix’ which would fund all provision, including apprenticeships, and a funding system based on delivery in Individualised Learner Record (ILR) returns.

The SFA argues that the new system will be “a more open and transparent mechanism for determining funding” and mean that colleges can work more easily with their local communities.

The latest report states: “Any new approach must be fair and transparent. It must also recognise the diverse needs of adults, some of whom face barriers of disadvantage and disability, and in addition it must safeguard public funds.”

The document also confirms that the area cost and disadvantage uplifts will be kept in the new simplified funding formula.

The SFA suggests that because colleges and training organisations will no longer be required to record guided learning hour (glh) data, administration costs will also be reduced.

However, Beej Kaczmarczyk, Director of Funding at Sector Training, said: “Serious questions should be asked as to whether this delayed 19 plus funding reform is worth implementing. In places it adds complexity, others inconsistency, and many questions remain unanswered.”

The adult skills provision is currently funded through the Demand Led Funding (DLF) methodology introduced in 2008/09.

Classroom and workplace learning are divided in the current methodology, but would be combined under the new funding system. Providers would be paid using the monthly method.

The new SFA report follows a BIS-led consultation ‘A Simplified FE and Skills Funding System and Methodology’ and the response in ‘FE – New Horizon, Investing in Skills for Sustainable Growth’ published in 2010.

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  1. The SFA are selling this change on the basis it brings simplicity. Here are my top 5 early observations concerning their attempt at ‘simplification’:

    1. One of the main ‘simplifications’ introduced in the current classroom (LR) formula is the historical provider factor. To scrap this and fund everything on actuals (as per worplace ER formula) is more complex not less.

    2. Increadibly there is no mention of Outcome Incentive Payments (being developed by David Cragg and ‘piloted’ this year). Many had expected this would account for around 30% of the funding. Has the idea been dropped as too complex and difficult to audit? My guess is it has not been dropped, so expect added complexity in due course.

    3. The proposed ‘simple’ 30 rate ‘matrix’ is based on Award, Certificates and Diplomas in the QCF. Increasingly learners will be accumulating credit, so what for example is the rate for a learner on a Diploma who has already achieved the nested Certificate? Would the A51a discount field be used? Ask this question everytime someone from the SFA tries to claim they have reduced the number of qualification rates from 6,000 to 30 (same question is also applicable to, say, someone doing an Apprenticeship who already has A-C in GCSE English and Maths so does not need Key nor Functional Skills)

    4. The document says ‘simplification’ will be gained as glh will no longer be important and unlisted qualification rates and those outside the QCF will be placed in the new ‘simple’ rates matrix. How would that work for, say, ESOL qualifications which could be 9 glh or more than 1000? Glh loadband table needed to pick the right box in the rates matrix??

    5. The SFA had originally planned to scrap the disadvantage uplift and somehow include funding for this within Learner Support Funds. This document says it will continue to be used in the formula. At present it is not used for non-apprenticeship provision in the workplace (you and I call that Train to Gain), so far from getting simpler, in this case the formula gets more complex.

    Finally, I have no problem with a complex funding methodology, and neither should the SFA. Not because as a funding consultant it keeps me in business, but because in order for the funding to be ‘fair’ in an innovative and complex sector like FE, it simply can’t also be simple. Simples really!

    What do you think?

    • Sean Lee

      I think the main worry is that we might have 2 formulas – one for SFA, one for YPLA(EFA)and 2 underlying/diverging ideologies. Removing GLH will not remove the need to keep registers or indeed ensure that they are being completed accurately – irrespective of the needs of auditors.

  2. I just don’t understand what they’re going to do with Skills for Life and LLDD provision. it gets ONE mention in the whole document…

    I still say £150 a unit with 4 PWFs, across the board, is the best way to simplify, why do you need anything else? gets rid of problems with huge Dips and tiny Awards if it’s unit-based.

  3. Mick Fletcher

    The move away from using glh has serious potential dangers and providers need to ask whether the benefits of this change outweigh the risks. At the moment the funding for a qualification is based in large part on the evidence of provider practice – how long do institutions find it takes to deliver acceptable quality. The proposals substitute for this large body of evidence the judgement of a small group of designers as to what a qualification might be ‘worth’. These judgements are vulnerable to poltical pressure (as for example are judgements about ‘equivalence’ increasingly felt to be suspect) they represent a centralisation of power and are just less robust.

  4. George Layfield

    It strikes me that this is another piece of evidence that someone who is not conversant with reality is medalling with something that they know little about (in a practicle sense). The upside is that there is is time to respond, the downside is that, over the last 20 years, FE has had numerous attempts to simplify funding and data collection. John Bolt once said “You can have something that is simple and unfair or something that is fair but complex” – I paraphrase!

    My view is that the real reason for data overload and the unbelievable costs for the consultancy needed to understand the funding is not the amount of data but the annual changes to the requirements.

  5. David F

    Radical change in needed!
    To be clear, the poor taxpayer currently has to fund a methodology so complex that:-
    1) the commissioning body needs to employ 1,600 people simply to perpetuate it
    2) the underpinning database contains 46 THOUSAND qualifications
    3) people devote their entire lives interpreting what on earth is going on

    How can the vast amount spent centrally on ensuring the system of distribution is ‘fair’ together with the even greater amount spent locally in managing to these systems possibly represent value for money for the taxpayer or the learner?

    For me, the central question is, if you had to distribute £100 amongst 10 people is it better to:-

    1)Give them each £10 regardless of who they are.
    2)Give them £7.56 each once the cost of commissioning, systems development and local management has been taken into account with a formulaic adjustment for those who live in certain postcodes to take it up to £8.27. Unless, of course, they spent the last £7.56 or £8.27 (dependent on postcode) predominantly on sweets in which case the formula would best be designed to reduce the £7.56 (or £8.27) by 50% of their sweet spend to promote healthy eating. Any ‘sweet’ money held back could then be reallocated by individual negotiation. Of course, if anyone didn’t spend all their money by the end of the week it could be reclaimed – but so as not to be pedantic you could allow them a 30p underspend without penalty. Any money reclaimed might (or might not) then be given to anyone who overspent by buying apples (cox orange pippins from Tesco only) and bananas (fair-trade from Asda). Actually, come to think of it, it might be worthwhile getting them to write down all their expenditure and, because they might be tempted to cheat, it’s probably a good idea to pop in occasionally to give it a quick once over… Of course, some people might find all this confusing so it might pay them to spend a few pence of their £7.56 getting some advice from this bloke called Nick who seems to know about this stuff – maybe he’ll tell them how to wangle £8.27 next time…