London mayor’s skills strategy signals funding switch from qualifications to job outcomes

London will shift its adult education budget payment model away from funding qualifications towards wider outcomes such as progression into work, its first ever skills strategy has confirmed.

The mayor Sadiq Khan unveiled the final plan in the launch of his ‘Skills for Londoners’ strategy today, ahead of the Greater London Authority’s takeover of the AEB in 2019/20, which will amount to roughly £311 million per year.

When it replaces the national funding formula, it will be the first time any FE funding, with the exception of the traineeship programme, has been dependent on positive progressions.

The move to outcome-based funding is likely to be controversial amongst colleges that for decades have simply been paid for delivering qualifications.

National control of the skills system has created a system too heavily focused on delivery of qualifications, rather than quality and outcomes

“National control of the skills system, combined with funding reductions by successive governments, has created a skills system that is underfunded, under-utilised, fragmented, and too heavily focused on delivery of qualifications, rather than quality and outcomes,” said Mr Khan.

“The mayor and London’s boroughs are determined that London should be at the cutting edge of innovation in adult education and skills, particularly in enabling improved social mobility for adults from low-income backgrounds.

“This will start with a more strategic approach to commissioning via the AEB when it is devolved to London in 2019/20, ensuring that funding is targeted to better meet need.

“This will also involve a move, over time, towards outcome-based commissioning to ensure that our focus is on effective skills provision in London that supports adults to gain the relevant skills they need to enter in to and progress in employment.”

Mr Khan recognised “long-term structural issues that directly affect London and other city-regions that need radical overhaul” and insisted the capital requires “greater commitment from government to relinquish its powers to enable local control to direct provision to better meet need”.

Facilitating this move to outcomes will be one of the main responsibilities of the mayor’s new AEB unit.

The job description includes a line on developing “a more outcomes-focused adult education budget programme, including by ensuring funding incentives drive provider behaviour in London without destabilising the provider base”.

Stephen Evans, the chief executive of the Learning and Work Institute, said London’s mayor is “right to have a greater focus on outcomes, but not just limited to employment”.

“Where courses are clearly geared towards supporting learners into employment, it makes good sense to incentivise progression into work” he told FE Week.

London’s boroughs are determined that London should be at the cutting edge of innovation in adult education and skills

“However, it is also important to measure the impact on health, wellbeing, citizenship and so much more to make the case for greater investment in learning.” 

And Mark Dawe, chief executive of the Association of Employment and Learning Providers told FE Week that “the Mayor’s view that a more strategic approach to commissioning the adult skills budget is required and making it more outcome based will generate better results for London’s economy and communities.”

Today’s strategy, which is being launched by Mr Khan at the King’s Cross Construction Skills Centre, which is run by the College of North West London, is light on detail for how this new methodology will actually work.

It said a “Skills for Londonders Framework” will be informed by the strategy, which will “set out further detail on the mayor’s funding priorities, desired outcomes and delivery approach for the devolved adult education budget, European Social Fund, Skills for Londoners Capital Fund and other City Hall skills and employment programmes”.

Outcome-based funding has typically been associated with pre-employment schemes for the long-term unemployed, funded by the Department for Work and Pensions.

Mr Khan said he intends to work with London’s borough sub-regional partnerships, to “continue to support the devolved work and health programme, assisting very long-term unemployed people – particularly those with health conditions – to enter, or re-enter, work”.

The mayor will “explore how devolved skills funding could be better aligned with the work and health programme, to support the join-up of different funding streams and deliver stronger coherence across the skills system, achieve better outcomes and drive up employment for the most disadvantaged Londoners, particularly disabled groups”.

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  1. G Miller

    “The move to outcome-based funding is likely to be controversial amongst colleges that for decades have simply been paid for delivering qualifications.” Why single out colleges? Last time I looked the AEB funding rules – and ESFA revenue-funding rules generally – apply to all providers equally. ie. In terms of what they need to deliver to earn their allocations. I could also take issue with the phrase “simply been paid for delivering qualifications” as a gross over-simplification of the reality. But then that probably sums up FE Week’s editorial policy doesn’t it!

  2. At our college, we deliver both high job outcomes and recognisable qualifications. That way, the learner has a job but also something tangible and transferable to help them progress their career. So like G Miller, I would question the phrase “simply been paid for delivering qualifications”. We have an excellent performance both on achievement rates as well as on job outcomes – the two are not mutually exclusive!

  3. Dr. Gareth Thomas

    I will be interested to follow this, having worked for the LSC and SFA on the attempted introduction of outcome based funding previously, including job entry and progression in work. It is far more challenging than people assume, and the data to support payments is generally not considered robust enough to base payments on and pass NAO scrutiny. I know things have improved with improvements in technology, however I suspect there is still some distance to travel before we can introduce an accurate and robust system, be it for FE Colleges or Independent Training Providers. Procurement of the new provision will be interesting as I know far too many FE Colleges and ITPs that will not be able to demonstrate their track record in delivering the outcomes the Mayoral Combined Authorities (MCAs) will want to buy. The changes will introduce a lot of uncertainty and instability if not managed correctly. Good Colleges and ITPs should already be on top of this and preparing for devolution. Those who are not stand to lose out.