Mayoral authorities can’t afford new national adult ed funding rates

Greater Manchester claims new rates would lead to 22% drop in learner volumes

Greater Manchester claims new rates would lead to 22% drop in learner volumes

A large mayoral authority has spurned new national adult education funding rates due to be rolled out next academic year over concerns they will lead to a drop in thousands of learners.

From 2024/25, the government will bring in bumper adult education funding rates through the “adult skills fund” for non-devolved areas of England that will see five new priority bands for subject areas.

However, Greater Manchester Combined Authority (GMCA) estimates that if introduced locally next year, the new national funding rates would result in a 22 per cent drop in the volume of residents accessing courses – equivalent to about 12,000 residents.

Other combined authorities, which have devolved control over their adult education budget, have flagged affordability concerns but expect to use underspends from previous years to cover their costs.

Instead of mirroring the government’s new national funding rates from August 1, GMCA will “continue with an interim methodology for supporting the increasing cost of delivery” through a flat rate increase to individual adult skills funding rates (costs per course) of 6.5 per cent.

The combined authority will also increase grant-funded allocations by 2.2 per cent in 2024/25 to “take into account stagnant levels of funding since the start of devolution”.

For independent providers funded through procured contracts, the funding rate uplifts were “already taken into consideration as part of the procurement process and within their awarded allocation”.

What is GMCA saying?

An update on adult education spending in 2024/25, approved by the Andy Burnham-run authority last week, highlighted the “complex” new rates and “stagnant” levels of funding for GMCA since it took control of its budget in 2019.

The report added: “In recent years GMCA recognised that the cost of delivering adults skills has increased and that in particular the level of funding per course that adult skills providers drawdown, has not increased for ten years.”

Under the government’s new national funding rates, distributed by the Education and Skills Funding Agency (ESFA) to providers in non-devolved areas, high priority subjects such as engineering will see their rates increase by 33 per cent to £3,456.

In contrast, GMCA’s 6.5 per cent increase would bring the local rate for the same course to £2,750 – £700 lower than the national rate.

However, despite suggesting that the government should increase the adult education budget pot – which has remained at about £96 million since 2020/21 – GMCA says it can “absorb” the cost increase using unspent funds from previous years.

In 2022, GMCA had £9 million in “unallocated” adult education funds, reportedly due to falling enrolments during the pandemic. It is also forecasting £98.9 million in financial reserves this year,
although how much of this comes from unspent FE cash is not specified.

A spokesperson for GMCA declined to comment on the differences in local and national funding rates, or the amount of reserves it has available to cover its costs.

The authority – which has the third largest adult education budget – says an across-the-board funding increase for courses is an “interim” approach ahead of gaining increased control over its budget under ongoing “trailblazer” devolution negotiations.

It is hoped that under the future devolution deal, the government will give devolved authorities even more flexibility to spend adult education funding that is currently ringfenced, such as skills bootcamps and free courses for jobs.

Concerns at other combined authorities

Combined authorities that have published adult education spending plans for next year show diverging approaches in different parts of the country, with some following ESFA rates and others offering additional targeted uplifts for specific courses or learners with legal entitlements.

In previous years, some of the ten devolved authorities have avoided across-the-board increases and instead chosen to target funding uplifts at essential skills, English as a second language, or priority subjects such as engineering and manufacturing.

Three authorities that have published their 2024/25 spending plans are following national ESFA rates, but anticipate using unspent funds from previous years to cover cost increases.

In its adult education budget for 2024/25 published this month, Liverpool City Region Combined Authority said it will follow the “welcomed” ESFA rate increases, but warned that they will “in all probability” mean fewer enrolments due to increased costs.

South Yorkshire Mayoral Combined Authority has decided to follow the ESFA’s new rates using £5 million “carried forward” from previous years.

Cambridge and Peterborough Combined Authority claims it is “required” to follow the national rate because it uses the ESFA’s individualised learner record system.

However, it also voiced concerns that although the new rates will increase funding per learner, the number of people able to access courses “will reduce”. To mitigate this, CPCA warned it will need to “potentially draw down” from reserves to cover the costs.

The Greater London Authority, which had a £322 million share of the adult education budget last year – by far the largest share of devolved authorities – is yet to publish detailed funding plans for 2024/25. But earlier this month, its senior adult education team warned that the authority may not have enough funding to meet “increasing demand” in the capital.

As a result, it is likely to reduce the uplifts of previous years “in line with the available budget” and instead target funding towards “essential skills priorities”.

What does the sector think?

LTE Group, which runs several training providers including The Manchester College, has previously warned that devolved skills policy has created “multiple overlapping layers” for providers to negotiate.

Chief executive officer John Thornhill pointed out that in 2022/23, GMCA’s uplift of five per cent was “significantly lower” than to authorities such as the GLA and West Midlands Combined Authority, who increased rates by 13.5 per cent and 10 per cent, respectively.

This risks creating a “postcode lottery” of funding for providers working in different parts of England, Thornhill added.

Alex Stevenson, head of essential and life skills at the Learning and Work Institute, told FE Week that an “inherent problem” in managing adult education spending is the “pot that’s fixed”.

He added: “You’ve got the choice of having more learners on shorter, smaller or less well-resourced courses, or fewer learners doing more substantial programmes with more resources.

“Everyone has got to make decisions somewhere about those trade-offs.”

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One comment

  1. Alan Green

    This is not a difficult issue to resolve. Go to a competative tendering model. Produce a specification which has the numbers required. Job done.
    None of us want a race to the bottom but lets face it there is still profitability in a competative model. Also drop the notion of high % GLH as not all learners are one size fits all.
    The MCA has the ability to do all of the above so does the sector.