Great debate on AEB devolution: will it be a successful policy?

The motion: This House believes the devolution of the £1.5bn adult education budget will prove to be a successful policy

More than 150 FE sector leaders came to the Houses of Parliament on Monday, January 28, for the third FE Week-Pearson Great Debate.

The previous two debates were on apprenticeship reforms (July) and T-levels (September).

About £600 million of the AEB will be devolved to six combined authorities and the Greater London Authority from September; the debate focused on whether the policy will be successful or not.

It was hosted by Gordon Marsden, the shadow skills minister, and facilitated by Shane Mann, managing director of FE Week’s publisher Lsect.

Speaking for the motion was Dr Susan Pember OBE, of the adult learning provider membership body Holex and a former lead director for FE in the Department for Education. Nick Linford, the editor of FE Week, argued against it.

The panel also included Cindy Rampersaud, senior vice-president for BTEC and apprenticeships at Pearson, and Mr Marsden.

Audience members asked questions and offered their experiences of the AEB and the likely effects of devolution.

At the start of the event, most believed the devolution of the AEB would not be successful.

This result did not change and the motion was voted down.

For the motion

“We have to make devolution work,” Dr Pember said.

“The system we have now is not serving the nation as it should. We need to do something and we need to do it now.”

One in five working adults had low literacy, there was a national skills shortage, creeping concern about automation and an over-reliance on the state – all evidence of an adult education and skills “stall”.

Over the past ten years the budget for adult education had been cut by 40 per cent and only 1 per cent of the money for post-18 education was spent on community education.

She said the apprenticeship levy was working, but the activity in the sector was being diverted into degree-level courses, while level 2 apprenticeships struggled.

“Large swathes of our population are feeling left behind.”

On the positive side, Dr Pember said, 86 per cent of adult community learning providers were rated grade two or one by Ofsted.

“We do know how to do it if there was more investment, or the funding that is there was provided differently.

“We have a system that is broken and is not getting to the people who need to get on in life.

“We need the new structure to encourage adults back into learning. A structure that is about local planning, local co-ordination and hearing the person’s voice. We need local authority services working with providers and employers. Devolution can do that.

“I have real confidence we are seeing great progress. We are seeing the right structures being put in place and the right plans.”

The Greater London Authority was committed to free courses at level two and below for people on the living wage, as well as the minimum wage. The same offer was available in the West Midlands.

“These plans and structures will give local people a voice on where money needs to be spent and gives us a chance to see the needs of these areas.”

She made reference to the upcoming spending review and her hopes that instead of Whitehall departments and large providers responding to the Treasury, combined authority mayors would say they needed extra funds.

“This policy will be the solution to many issues we have now. It will deliver local, lifelong learning strategies, real partnership and real delivery from assured providers and will work with other councils.

“It should give us clear progression routes and help learners through those routes.

“What I’m looking for is something we don’t do much in this country: reward learners.”

In other countries, she said, local government ran ceremonies to reward people who had done something differently.

“We will have high-level promotion and lobbying like we have never had before.”

Dr Pember said it was necessary to look at what was going wrong: participation was falling and local need was not recognised by the national system.

Only a handful of providers worked across county borders.

“You have to think what this does for your area. Learners with low skills will not need to travel, local providers know what they want and combined authorities are bending over backwards to find out what is needed. That sounds good for the future.

“Having mayors champion skills as part of a bigger infrastructure seems a much better vision for the future.

“I’m open to change and change is now needed.”

Mr Marsden said there were clear opportunities in new structures of devolution, but the changes had to work for the next 20 years.

There had to be more horizontal, not simply vertical, co-operation. Infrastructure projects should be tied up with local delivery, wherever possible.

Ms Rampersaud did not think it was a matter of “one-size-fits-all” and there was a place for local initiatives.

Against the motion

“I don’t think it will be better than what we have now,” Nick Linford said in response to Dr Pember.

He raised the postcode lottery – currently the learner only needed to live in England to access courses, but, once devolved, the budget could only be spent in the combined authority area, which could mean checking whether a person lived on the right end of a street.

Second, he argued devolution would actually mean more centralisation, as instead of providers deciding what courses to run, combined authorities could decide what courses were right for their area.

He raised the example of the Greater London Authority, responsible for 8 million people, which would make decisions for the whole of London.

This had been tried with local learning and skills councils, but abandoned as it could not be agreed what sectors were a priority for the capital.

“I have real issue with the idea this is localism, particularly in London, as the best decisions are made on the ground at the colleges and providers.

“To take it away from them is the opposite of being more localised.”

He also raised costs: Sadiq Khan, the mayor of London, could not get an administration budget, with the Department for Education instead suggesting he use the unspent AEB to hire administrators to dish out the funding.

The duplication of administration was “horrendous,” Mr Linford said. The top-slice of the budget used to fund local administration in London would be more than £3 million as it was still unclear who would audit providers.

Fourth, he asked whether FE funding would be better or less protected if it sat with a combined authority.

If more votes could be won by using the AEB for something else, as it was not known if it was ring fenced after 2020, combined authorities might decide other forms of infrastructure were more important.

“It does worry me that as the DfE budget gets smaller by devolving, initially £600 million out of £1.5 billion, the DfE will care less.

“The bigger the budget, the more weight you have in a department over how that budget is used and it will have less protection.”

Conflicts of interest also needed to be considered: combined authorities, made up of local authorities, were intended to be more transparent, but there were suggestions of favouritism in certain parts of the country. Local authorities would also be bidding for training contracts.

“It can be summed up as a decision that was made at some stage (devolution is not specific to education, it is a thread of policy), but the decision did not have to be made to put the funding into the hands of the combined authorities.

“It would have been easier to give them influence over the local strategy without the responsibility for tendering, contract managing, audit, compliance, financial assurance, funding rules, data returns, data compliance – all the things we spend a couple of hundred million pounds a year on in Westminster to do on behalf of all of us in England are now going to be duplicated.

“There may be some better decisions locally. I’m quite excited by what they are doing in London to move towards outcome-based measures. Some areas will make better decisions than the decisions made in buildings in Westminster.

“But that should be for all of us, not in silos. I think the policy will be less successful than it is now as we are going to spend a lot of money creating a lot of silos, reinventing a lot of wheels and in about five years’ time, when I’m proved right, we’ll be saying ‘why did we do that?’”

WEA says it faces core budget cut of 28 per cent next year due to devolution

WEA boss Ruth Spellman spoke at the FE Week-Pearson debate on Monday about the problems posed to the 105-year-old institution by devolving the adult education budget.

“I am hoping the WEA can survive this government, but we are looking at a cut of 28 per cent in our core funding next year,” the chief executive of the Workers’ Educational Association said.

This refers to an estimate of how much the WEA will lose when the Education and Skills Funding Agency devolves the AEB to the Greater Manchester Combined Authority and the Greater London Authority.

“That does not make any sense because we have 2,000 locations in the most disadvantaged postal codes across the country,” Ms Spellman added.

“We need a mix of both the national and local providers. If there is a national initiative to basic digital skills, how on earth are we going to do that through a plethora of different organisations?

“Entitlement needs to be a national offer through a mix of national and local providers.

“We are a national organisation that is incredibly local.”

The founder of the Big Issue, Lord Bird, told parliament last April that the WEA will lose about £7 million because of devolution.

The WEA is rated “good” by Ofsted, has a £19.1 million AEB contract, and teaches around 50,000 disadvantaged learners every year.

Ms Spellman continued: “This is about funding the right solutions for the right problem and having a big enough involvement so all adults can get access to education at whatever age.

“There are some great things about devolution and I am absolutely convinced we will survive, because we are so valued and common sense, but it will be despite the structures, not because of them.

“I put my faith in that, rather than a blind adherence to devolution.

“We do need a national education and skills strategy, and we need continuing access to learning all the way through working life and we do need to design a system that delivers that.

“I do not think we should rearrange the furniture when we do not know what system we are to trying to support.”

Post-devolution audits still unresolved

One issue raised during Monday’s FE Week-Pearson debate was the “horrendous” replication of administration that would come with devolving the adult education budget, including audits.

With just seven months to go until devolution kicks in, the issue of audits is still being battled.

The Greater London Authority, led by mayor Sadiq Khan, has been lobbying the ESFA for more cash to cover the costs for over a year.

If the extra funding isn’t offered, the GLA fears it will have to top-slice even more than the £3 million from its annual £311 million budget that it has set aside for administration costs – although it cannot put a figure on this yet.

For the 2019/20 academic year, the authority said it will cover the audit costs by using part of its £1,272,282 implementation budget from the Department for Education.

But it is still working out how it will pay for them from 2020/21 onwards.

Board minutes from a GLA meeting in January note that the authority and ESFA are “each responsible for auditing the adult education providers that they fund”, but are “considering how the two organisations can work together to achieve cost efficiencies in relation to audit and reduce the administrative burden for the providers we have in common”.

The minutes add that the “current offer from the ESFA” for a joint approach to audit, received in December 2018, “does not fully meet our requirements as determined by GLA auditors”.

As a result, “further discussions with ESFA to finalise the approach to audit are ongoing, with an in-principle agreement expected to be in place by March 2019”.

Audits are one area where the prediction of “horrendous” replication looks set to prove true, and not just in the GLA.

The Greater Manchester Combined Authority told FE Week it will take responsibility for all audit, financial health checks and due diligence processes for its contractors under a devolved AEB, but will work with Whitehall on auditing providers getting funding from both ESFA and GMCA.

Liverpool City Region Combined Authority is also collaborating with the ESFA on joint working arrangements for audit and assurance, fraud and investigations and financial health ahead of devolution.

Cambridgeshire and Peterborough and the Tees Valley combined authorities both said they will be carrying out financial due diligence and performance monitoring, including audit, for the funding they are responsible for.

A DfE spokesperson confirmed it was working with the various combined authorities “to review options in relation to audit arrangements post devolution”.

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