Government seeks views on AEB tender as funding squeeze looms

Increased devolution and growing investment in other provision could lead to another small funding pot, experts warn

Increased devolution and growing investment in other provision could lead to another small funding pot, experts warn

adult education budget

Government officials are seeking sector views as they design the next national adult education budget (AEB) tender – which one specialist is predicting will face a further funding squeeze.

Several Education and Skills Funding Agency market engagement events are scheduled for later this month, September, ahead of the launch of the invitation to tender, which is expected to get underway before the end of 2022.

It will be a rerun of the controversial 2021 AEB procurement for providers in non-devolved areas of England, which was hit with multiple delays and significantly reduced the private provider base.

But there are likely to be several differences this time around amid the government’s funding and accountability reforms, which are currently in the public domain for consultation. These include proposals for new and increased funding rates.

This, alongside increased devolution and growing investment in other provision (such as skills bootcamps and the roll-out of the new Multiply programme) could lead to a smaller funding pot.

The last AEB tender totalled £74 million, down by one-fifth on the £92 million in the previous AEB tender from 2017. FE Week analysis found the number of private providers with a direct ESFA AEB contract shrunk by almost 60 per cent, from 208 to 88.

Jim Carley, a procurement specialist in the FE sector who runs Carley Consult, said: “With the increase of alternative provision such as skills bootcamps alongside new devolution deals, such as D2N2, on the horizon, the national AEB pot may face a further squeeze.”

At the same time, he added, AEB remains “highly desirable for providers, so we can expect an increasingly high level of competition, with only those bidders achieving the highest scores winning a slice of the funding”.

A prior information notice published by the ESFA last week about the upcoming tender states that the agency will discuss how potential procurement will “interact with the proposed FE reforms and potential further devolution of skills provision”, which includes the “possible introduction of new funding rates, accountability arrangements, and the implication of further devolution deals for contracts”.

The ESFA also wants to “understand learner needs in non-devolved areas and what kind of provision needs to be prioritised” and hear “reflections on previous procurements and use this to explore potential delivery models and performance standards”.

The agency also wants to test market capacity to deliver ESFA AEB among other procurements occurring across the skills landscape, including Multiply, skills bootcamps, free courses for jobs, traineeships and the UK Shared Prosperity Fund.

It is not clear how much funding in total will be up for grabs through the procurement, or even the exact timeline, but contracts are expected to start August 2023.

Jack Flynn, assistant director of bid services at Carley Consult, said given increased devolution and greater focus on skills bootcamps, providers will have a challenging time growing their ESFA allocation, as the scope will be narrower.

The best route to doing this, he said, is by “committing to deliver more of what the ESFA needs, rather than asking for more funding for what the provider is currently doing – evolution of the offer will be crucial to maximise the funding awarded to providers”.

Online market engagement events for the upcoming tender are scheduled for September 27, 11am to 12pm, and September 29, 10am to 11am. Click here for more information.

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