A host of policy announcements figured in Chancellor George Osborne’s Autumn Statement. Mick Fletcher looks at those affecting FE.

The announcements in the Autumn Statement that affect FE seem primarily driven by concerns about youth unemployment.

There were few surprises and most of the changes proposed deserve a cautious welcome as steps in the right direction.

There are, however, some significant gaps and some detail that require careful reading.

The headline announcement — a move to fund employers directly through HMRC — is probably the least welcome element.

Although vigorously championed by the UK Commission for Employment and Skills, it has attracted little support elsewhere and the hints that alternative arrangements may be available for small and medium-sized enterprises seems to recognise that it is a high-risk strategy.

The fact that further technical work is needed and another consultation promised for the Spring strongly suggests the policy has not been well thought through.

The statement confirms that a cash contribution will be required from all employers, though we are no clearer about how this will be enforced; and it nowhere explains why having to pay for something 90 per cent of employers have not paid for to date will encourage uptake.

Intriguingly, it talks of ‘an additional contribution’ to the costs of training 16 and 17-year-olds — pointedly missing an opportunity to confirm that they will remain 100 per cent funded like other options for the same age group and, equally pointedly, excluding 18-year-olds (presumably because they don’t contribute to the participation age target).

Instead of a seamless policy for a 16 to 24 phase of youth transition that once seemed on the cards, a much more segmented approach appears to be emerging.

For 16 and 17-year-olds there is the promise of an additional state contribution; 18, 19 and 20-year-olds will have the 16-hour rule partially suspended; and both groups will benefit from the removal of employer National Insurance Contributions.

Those aged 21 to 24 seem to be in a bit of policy limbo, perhaps until the Cabinet Office review finally emerges.

Under these new proposals, the 18 to 20 age group will be able to claim Job Seeker’s Allowance while undertaking a traineeship; or while studying English and maths (under compulsion if they lack a level two qualification).

In this latter case however, they will only be able to spend up to 16 hours per week in class.

There will still be no support for those undertaking a significant vocational qualification — the ‘work first’ principle of the Department for Work and Pensions seems to have trumped arguments that higher skills are needed for sustained employability.

There seem to be no new arrangements for supporting graduates make the difficult transition to employment.

The decision to fund an additional 20,000 higher apprenticeship places is similarly welcome, but may prove a cheap gesture since progress in this area has been slow, and the introduction of loans for those over the age of 24 is clearly having a damaging impact on take-up.

The government seems constantly to believe it can create apprenticeship places even when its policy recognises that all apprentices must be employees.

It also ignores the fact that alongside the rhetoric of growing numbers, its other policies — sensible in the case of minimum durations, less so in the case of direct funding — seem designed to reduce them.

The announcement of an extra 30,000 places in higher education with the prospect of removing a cap on recruitment altogether by 2015-16 is another proposal that, while welcome in principle needs to be considered carefully.

If it is to be funded by selling off the student loan book there are question marks over its sustainability. Against the backdrop of the recent rapid expansion in a few private higher education providers it could prove destabilising.

At the Association of Colleges conference, Business Secretary Vince Cable spoke about the ‘blurring’ of FE and higher education provision.

It is possible therefore that FE colleges might benefit from a large proportion of the extra numbers.There has to be the suspicion, however, that the expansion will be accompanied by competition aimed at lowering the unit price which could spell danger both for standards and the sector’s reputation.

Mick Fletcher is an FE Consultant

Problems with new Skills Funding Agency (SFA) software continue to trouble FE staff as they prepare to attempt submitting key recruitment information by 6pm tomorrow (Thursday, December 5). Known as the R04 submission, the data could be used by the Education and Funding Agency and SFA for both funding and performance management purposes. Ian Pryce explains the headaches the Learning Aim Reference Service (Lars) and the Funding Information System (Fis) are causing in preparing to submit the data.

If at the end of your supermarket run the barcode scanner didn’t recognise half your items and overcharged you for the rest, you’d be forgiven for doing your Christmas shop elsewhere in future.

This summer and autumn, colleges have unfortunately found an unexpected item in their bagging area — financial uncertainty. And this is causing new and troubling operational problems for many.

FE is complex and, unlike supermarkets, the same product generates different income depending on the age and nature of the purchaser (the student).

But the current problems with funding software are outside our control and can have serious ramifications.

We should however put it in perspective. We know the students we have enrolled. We know their programmes of study and qualifications. We even know where they live.

We can track attendance and performance and we can use that data to inform marketing, staffing and rooming decisions.

What we can’t do is get an accurate handle on the income they generate.

To an outsider this may not seem too serious. After all, government is paying to profile so our staff get paid, but it causes two important problems.

First, we are an ultra-low-margin service. Typically, colleges generate surpluses of only 1 per cent of income.

We lose funding if we fall short of target, and rarely gain if we overshoot.

Forecasting income from your own records is a very inexact science, made harder by funding and tariff changes. If we get our forecasts wrong by even 5 per cent (and the current picture looks much less accurate than this) it could mean a financial crisis. We operate in a “just-in-time” funding system with almost no room for error.

Things are complicated further by subcontracting. Do we guess what we owe them? Err on the cautious side? Play hardball and wait until the problems are fixed?

All three options are problematic. You may need to claw back later, or might tip your partners into insolvency and damage your success rates.

The second issue is operational rather than financial.

The funding system errors inevitably mean rework, revisiting enrolment data, re-inputting, re-validating.

This significant duplication of effort has a real cost, and a human cost as no one likes wasting their time.

In addition, it has an impact on the next set of priorities.

At a time when data staff should be focusing on setting up next year’s curriculum, focusing on attendance and retention processes, and concentrating on enquiries and applications, their capacity is reduced by these problems.

At a time when finance staff should be planning adjustments to the cost base (up or down) for next year they are fretting about whether the governors will forgive an inaccurate income forecast.

These are subtle in their impact, but they have an effect on the quality of outcomes and our medium term resilience.

We know the culprits are Lars and Fis — our 2013 pantomime villains.

We know the Skills Funding Agency is sympathetic and will seek to help anyone who makes the wrong calls.

We know that under the excellent Kim Thorneywork, the agency has been received more and more favourably by the sector, and their financial management, in very difficult circumstances, has been exemplary. We know everyone is focused on resolving the problem.

And maybe it is these things that will be a blessing in hindsight?

Colleges live in a very unforgiving world — Ofsted, data validity error reports, allocations that must always be achieved, success rates that must never go down.

We should resist the urge to lash out in our frustration. Instead, let’s learn from mistakes that could have been foreseen and managed, let’s resolve to change data requirements slowly (especially in the wake of the closure of the gatekeeping Information Authority), and let’s resolve always to have a Plan B.

A sincere apology to our management information systems teams wouldn’t go amiss either.

Ian Pryce, principal of Bedford College