Let’s get down to business

The FE sector and business are failing to lay the foundations for tomorrow’s innovative workforce, says Sandra O’Neill.

Too many young people are leaving college without the knowledge, awareness and aptitude for business and entrepreneurialism that is vital to employers and to creating the future business leaders that our economy needs.

As the first cohort of students come to the end of the first year of a university education that will set them back little short of £9,000 a year, it is no surprise that applications for places have begun to dip.

Most of those who do graduate from an English university in two years’ time will have debts of £40,000 or more.

So, with larger numbers of young people than ever leaving college to take their chances in the jobs market, it becomes increasingly vital that we address the failure of a system that does not value, and fails to nurture, innovation, entrepreneurialism and employability.

The 250,000 16 to 24-year-olds who have been out of work for a year, along with the one-in-five young people currently unemployed, are a stark reminder of the urgency of the situation.
It’s an issue in which, as a business adviser and accountant, Grant Thornton takes a keen interest.

A report we commissioned in 2010 found that the lack of collaboration between business and education is hampering the UK’s ability to compete globally when it comes to innovation and entrepreneurship.
And it’s having an equally profound and negative impact on young people’s life chances as they emerge from education ill equipped and ill-informed about business.

In Yorkshire we are piloting a scheme — Educate to Innovate — that brings colleges, schools and businesses together with the aim of instilling in young people an interest and an enthusiasm for business that’s not being provided by the exam results-orientated curriculum of A-levels and BTec.

We have discovered a synergy and an energy between young people — full of curiosity and brimming with new ideas — and entrepreneurs, whose lifeblood is new ideas and innovation.

The Umph! business and enterprise competition we hold every summer brings 16 to 19-year-olds from across Yorkshire together with some of the region’s most inspiring entrepreneurs.

The results and feedback from the entrepreneurs, the students and their teachers are electric. Last year, students’ comments ranged from “totally awesome and inspiring” to “it gave me my first proper insight into what business is actually all about, and helped me to understand that it was something I could actually do”.

Yet despite the resoundingly positive feedback, most FE students have limited chances to meet and learn from business people.

Colleges are channelled relentlessly by results-orientated league tables and the constricting demands of academic achievement.

More enlightened colleges, or those with the resources to do so, employ a business liaison officer to create opportunities for businesses to work more closely with their college.

But such roles are few and far between, and most young people continue to leave education with little or no understanding of the skills needed for work, let alone those required to make it as an entrepreneur.

Our Educate to Innovate programme barely scratches the surface, but it does make it clear that there needs to be a change of attitude in colleges and schools across the country, with the crucial participation of business.

If we do nothing, we risk short-changing the workforce of tomorrow, and severely hampering the British economy in the process.

Sandra O’Neill, head of business development at Grant Thornton, Yorkshire

Stewart Segal, incoming CEO, AELP

Stewart Segal has always been interested in knowing what makes people tick.

It’s why the incoming chief executive of the Association of Employment and Learning Providers (AELP) took on a human resources graduate training scheme at Ford after studying geography at university.

And it’s why the 56-year-old father-of-two “can’t help” watching Jeremy Kyle’s confessional shows on television.

Does this stem from growing up in Tower Hamlets, one of the country’s most ethnically diverse, but poorest, boroughs in London’s East End?

“It was tough, but interesting,” he says. “It had a huge cultural and ethnic mix; everyone in our road came from a different place. There were no-go areas, but it wasn’t as tough as some might think. You just took it for granted . . . and it worked.”

The Tottenham Hotspur fan, who takes over from the current AELP chief executive Graham Hoyle next month, is from a Jewish immigrant family, “one of the last of those families living in East London”.

His grandparents moved to the capital from Poland just before the Second World War and although his grandmother spoke English, she “chose not to most of the time”.

It was Segal’s parents — his company secretary mother and cabbie father (who retrained to be a teacher) who were his inspiration.

“The war meant that my dad didn’t complete his schooling. I always knew he carried a frustration at being on the cabs,” he says.

“When he was about 45, he decided to retrain — it was a real inspiration and a big deal to all of us.”

Segal also bucked the trend when he went on to the London School of Economics, the first member of his family to go to university.

But what stands out most after spending time with him, is not just his interest in people, but his genuine desire to get youngsters on to their feet and into the world of work.

“You don’t have to meet too many young people, desperate to get an apprenticeship, to become passionate to help,” he says.

“I don’t want to be too sentimental about it because I also have a strong view about economic development and training being the key to unlocking economic development.”

Segal spent eight years at Ford  (where he met his wife Pam, a fellow graduate; the couple now live in Maidenhead) before moving to Grand Metropolitan, a property conglomerate that eventually merged with Guinness to form Diagio in the 1990s. And here he moved from HR into line management, overseeing the contracts of around 8,000 pub tenants.

His first public sector role was in 1995 when he joined Hertfordshire Training Enterprise Council (TEC) as chief executive.

I’ve been at the sharp end of trying to develop how providers make their programmes responsive to employers”

“I’d been involved with the TECs at Grand Met, but I knew nothing about government, so it was a real eye-opener,” he says.

“I Ioved it. It was breaking ground in the way it was operating. We had fantastic support from the universities and local government, and were operating at a high level, with good people.

“I felt that I could bring a commercial-like approach to public values. I learned a lot about making that combination.”

After three or four years, he felt he was “one step too far from actually doing good stuff” and moved to become chief executive at Spring Skills, which had been one of the biggest national training providers.

But operating contracts with around 75 TECs was a struggle. “At any one time there would be something going wrong with four of more contracts…there was a lot of time spent managing contracts and not delivering to learners. It was one of the biggest frustrations I had,” explains Segal.

“I wanted to give a better service to employers and help to improve learners.”

At the same time the sector was moving to the nationalised system of the Learning Skills Council, a change that he saw through before he set up Learning Edge, a company looking at online learning and his last venture before taking his post at AELP.

What qualifies him for the new role?

“I’ve been at the sharp end of trying to develop how providers make their programmes responsive to employers and making the link between government policies and delivering what employers want, which is simple, transparent, easily understood programmes that deliver to their bottom lines,” he says.

“Sometimes that doesn’t meet where a government is, but training providers have to become more skilful, especially as money shrinks and guidelines get stricter.

“You need to understand what drives the employer — providers have become slick at understanding those needs.

“We should move from a training provider base delivering programmes, to one that delivers workforce development that includes government priorities and programmes. It’s a big switch and challenge, but that’s what we have to do.”

He says the sector’s main problem is having no confidence in long-term planning.

“This is a short-term, reactive sector,” he says. “You’re only ever six months away from another big change, so no one ever puts in the planning needed — you never have any time…you just wait for the change.”

Longer contracts — up to three years — would be better, he says, adding that ministers should “understand the implications” of their changes, such as FE loans and traineeships.

“We’re not good at getting on-board with employers. Agencies forget there are 800 training providers, but they’re dealing with 100 employers each, so how do we turn those around?” adds Segal.

He says apprenticeships have “never been in a stronger place” and that there “seems to be government support for all-age apprenticeships”.

I think the best investment you can make is to build people’s confidence”

However, many large employers are still not taking on apprentices, he thinks.

“I don’t think it’s about money, employer incentives,” he says. “They think the system is not responsive enough for them. That’s not true and we can make it more responsive.”

He believes investment will be well placed in traineeships, which are “a long time coming”, but which should have “a more flexible approach to who can deliver” and be extended to 19 to 24-year-olds.

“If we take this on board and get some employers who really want to deliver this, but aren’t in the scheme now, we will be able to show we can do it. The onus is on us,” he says.

What is it that motivates this city boy who these days enjoys nurturing an allotment, reminiscent of his grandmother who tended a tiny strip of earth in the big smoke?

“It’s people and how they work,” he says.

“It’s what interested me at university and still fascinates me now.  Some people think money should be used to build another road, but I think the best investment you can make is to build people’s confidence so that they take on the next development in terms of their own business careers.

“That is the best way to build the UK economy.”

 

Ofsted critical of foundation learning

An Ofsted investigation into foundation learning has pointed towards a host of problems with the scheme just weeks before the replacement 16 to 19 study programmes are introduced.

The education watchdog uncovered “poor” attendance and “little or no” work placement, along with “low” progression rates.

Its report, Lessons from the Foundation Learning Provision for the new 16 to 19 Study Programmes, also said the scheme’s “overall judgment profile . . . was lower than that for e2e [Entry to Employment]”, which it replaced in August 2010.

The report added: “Progression rates into full-time education or training, an apprenticeship or employment for the total numbers of leavers in the sample for 2010/11 and 2011/12 were low at an average of 50 per cent and 49 per cent, respectively.”

Matthew Coffey, Ofsted’s director of learning and skills, said: “It is important for the government and the sector to learn lessons from previous programmes highlighted in this report, which will aid the development of the 16 to 19 study programmes.”

The 13-page report further highlighted “insufficient integration of functional skills” as among the “weaker aspects” of foundation learning, which was designed to help 14 to 18-year-olds work towards to level two qualifications.

There was also “insufficient impartial advice and guidance on progression routes”.

Mr Coffey said the number of learners going on into full-time education or training, an apprenticeship or employment had been too low.

“To break this pattern, providers must make use of best practice in understanding why some providers are succeeding where others fall short,” he said.

The 16 to 19 study programmes, which will include traineeships and A-levels, are expected to be in place from August to replace foundation learning, which ends next month.

Professor Alison Wolf’s government-commissioned Review of Vocational Education found nearly 1,300 qualifications in the foundation learning “catalogue”, many of which were “very small”.

She said: “Employers value either a few familiar qualifications or ‘real’ experience.”

A Department for Education spokesperson said: “Alison Wolf was highly critical of foundation learning provision . . .  because students end up taking numerous low-level qualifications that do not help them progress.

“That is why we are ending provision next month and establishing new study programmes from September.

She added: “We are also publishing new data to record the destinations of students the year after the end of key stage four and after taking A-levels or other level three qualifications.”

However, the Ofsted report — published on Friday, May 31 — also contained plaudits for foundation learning.

The education watchdog had looked at evidence from 59 providers — not including colleges — delivering the scheme to 16 to 18-year-olds and said it had resulted in “a very large number of learners improving their personal and social skills”.

Exams watchdog launches fee probe

Ofqual is investigating exam spending by colleges after its annual report found payments by schools had more than doubled in ten years, from £154m in 2002/3 to £328m in 2010/11.

Between 2006/7 and 2010/11 the number of different qualifications available schools and colleges also rose by almost 10,000, from 8,150 to 18,100.

Much of the increase is accounted for by the introduction of the Qualifications and Credit Framework, which by 2010/11 included 9,700 qualifications.

An Ofqual spokesperson said: “We want to find out what has caused spending to increase in recent years, and find out if improvements in the way exams are bought might result in schools and colleges saving money.”

Opinion Leader Research Ltd has been commissioned by Ofqual to carry out the research.

The firm will be contacting more than 500 schools and colleges in England and Northern Ireland to conduct 20-minute telephone interviews with senior staff.

Two different surveys are being drafted — one for staff responsible for recording and monitoring exam spending such as college finance directors, and one for staff who choose which qualifications to buy in, such as curriculum managers.

The announcement of Ofqual’s exam spending survey, which will also look at schools, was welcomed by the 157 Group.

Its executive director, Lynne Sedgmore, said: “We welcome an open and transparent review to really help understand the costs, benefits and more generally assess value for money.”

Ofqual’s annual market report for 2012, which considered schools spending, suggested four possible reasons for the increases, including more qualifications being taken and a shift in demand towards qualifications which have higher fees.

“In recent years, there has been an increase in the number of ‘other’ [neither GCE nor GCSE exams] qualifications taken in schools and some of these have higher fees,” it said.

Ofqual also told FE Week that it was possible there had been an increase in the number of additional fees being charged, such as late fees or resit fees.

An Ofqual spokesperson said: “We do not know the extent to which each of these factors is responsible.”

The examinations watchdog said it would encourage any colleges who were contacted to participate.

Housing deputy to take NCG reins

The deputy chief executive of a housing charity is getting the top job at NCG (formerly Newcastle College Group).

Joe Docherty (pictured) is to succeed Dame Jackie Fisher as chief executive when she retires this summer.

He is currently at Newcastle-based Home Group, a social enterprise and charity with a turnover of more than £300m. It houses more than 120,000 people a year in 55,000 homes across 200 local authority areas in England, Scotland and Wales.

Jamie Martin, NCG governors’ chair, said: “Joe is the ideal leader to take over the reins at NCG.

“He has unrivalled experience spanning the charitable sector, education and the arts, as well as a successful track record in leadership across a wide range of organisations.”

Before Mr Docherty’s time at Home Group, which provides care and support for 26,000 vulnerable people, he headed government-backed regional economic development body Tees Valley Regeneration for seven years from 2002.

He completed an advanced management programme in business administration and managementat Harvard Business School two years ago and is a trustee and council member of the University of Durham.

Mr Docherty is also a trustee of the Esme Fairburn Foundation, a charity which supports education, arts, environment and social change; and a trustee of the Arts Council England, chairing their northern area council.

He has a masters in construction finance and management from the University of Strathclyde where he also achieved a bachelors degree in engineering.

Dame Jackie leaves having led NCG since 2000, during which time it was rated by Ofsted as outstanding before a controversial inspection last year resulted in a downgrade to good.

Last summer, FE Week reported how NCG had cut the education watchdog’s visit short following what Dame Jackie referred to in an internal email as “some troubling incidents”.

The inspection was later concluded but the college’s downgrade was described by Dame Jackie as “flawed”.

“I was astounded to see the final grading of NCG, but not surprised when I saw the flaws in the way the grade was arrived at,” she said at the time.

Nevertheless, under the leadership of Dame Jackie, who announced she was stepping down late last year, NCG has grown from a single FE college to a national provider working with 95,000 learners and 20,000 companies every year.

It now employs 3,600 staff at 70 locations across the UK and has annual turnover of more than £192m.

“We are immensely grateful to Dame Jackie for her tireless work over the past 12 years with NCG, and although she will be a hard act to follow, I am confident we have an excellent successor in Joe,”said Mr Martin.

NCG currently has five divisions in Newcastle College, Newcastle Sixth Form College, West Lancashire College, in Skelmersdale, Intraining, based in Sheffield, and youth charity Rathbone, in Manchester.

Late funding rates ‘unacceptable’

Skills Funding Agency announces transition factors hitting provider funding rates by 25 per cent or more.

Colleges and training providers have been told their Skills Funding Agency earnings rate could fall by a quarter or more, with just two months before the new academic year.

The agency is introducing protection measures for colleges and training providers, to “smooth” the impact of its new funding system.

The measures are intended to stop providers’ earnings rocketing or nosediving.

Jerry White, director of planning and performance at City College Norwich, said: “It is going to be vexing curriculum planners up and down the country to be told, with only around 30 working days to go until the beginning of the new contract year, that funding values need adjustment resulting in the need to change delivery and resource plans.”

The agency said decisions on next year’s funding were still open to review.

Each provider has been given a number — a ‘transition factor’ — that indicates how much of the budget under the new system it can keep.

A provider transition factor of 0.9 would mean its national rates are reduced by 10 per cent, so it would need to do more work for the same money.

Allocations, finalised at the end of March, remain unaffected by the ‘transition factor’.

Worries about providers learning how they would be affected by the protection measures were aired in a Joint Information Systems Committee online forum for college finance directors, where one provider revealed its rates under the new system would be cut by 25 per cent.

“I can’t imagine that colleges are going to take this lying down,” said one forum member.

FE Week has also learned that at least one independent training provider has been given a transition factor below 0.7.

Meanwhile, a number of colleges have already approached the Association of Colleges with concerns about their situations.

Julian Gravatt, the association’s assistant chief executive, told FE Week: “In principle, it’s right for the agency to smooth the introduction of the new formula, but it’s unacceptable that some colleges have only just received this information at a time when they are setting their 2013-14 budgets.

“We are busy taking up college queries with agency staff.”

An agency spokesperson said: “We have worked with the sector over the past 18 months to develop and implement a more streamlined funding system.

“We are helping providers move to the more streamlined system including using a transition factor which will ensure that their total cash earnings remain within three per cent of the current system.

“The transition factor is derived from the latest full year data from 2011/12 to generate an adjustment which maybe positive or negative to earnings of a provider. It has not been designed to be applied at the level of each qualification for planning provision.

“In circumstances where provision has changed dramatically from 2011/12 to 2013/14 we will review each provider’s transition factor to ensure that high quality provision to learners and employers can continue.”

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Editorial : The transition factor

The Skills Funding Agency has been helping providers understand its funding reforms since first publishing plans in October 2011.

It has also designed the reforms in partnership with an advisory group made up of provider representatives.

But, as with all funding reforms that have come before, there will be winners and losers.

At the end of March the agency said it would “smooth” out the winning and losing with transitional protection.

Now we learn the extent of smoothing required for some providers — and it’s huge.

Imagine signing off your curriculum plans and then learning a 0.7 transition factor will be applied.

Effectively, this means to earn a £10m allocation you would have to plan £13m-worth of provision, and at a rate of 70p in the pound.

It will also be interesting to see how subcontractors react.

Presumably they will be seeking out prime providers with a transition factors above one, as they will now be earning more than the national rate.

All avoidable of course, had the funding system reform been resisted.

Nick Linford, editor of FE Week

Older apprentices taking 16 to 18-year-old places

The 16 to 18 apprenticeships budget has been cut by £166m as would-be apprentices were squeezed out of places by “competition” from older applicants, a senior Department for Education (DfE) civil servant has revealed.

Simon Judge, the DfE’s finance and commercial director, wrote to the Education Select Committee after its expected funding of 16 to 18 apprenticeships in the current financial year fell nearly 20 per cent to £684.3m.

He said the removal of poor quality provision explained some of the underspend, but increased competition from applicants aged 19-plus, funded by the Department for Business, Innovation and Skills, was also a factor.

“The removal of poor quality [apprenticeship] provision is only one element of the overall underspend,” wrote Mr Judge in a letter dated May 8 to committee clerk Lynn Gardner.

He said changes in the apprenticeship mix by sector, and the wider economic conditions facing businesses in some regions and sectors, also explained the fall.

The financial revision was disclosed in the DfE’s supplementary 2012-13 estimate.

In the most recent Statistical First Release, published in March, the number of under 19 apprenticeships started in the first half of this year was provisionally 69,600 — a 12 per cent drop on last year’s provisional figure of  79,100.

By contrast, the 19-24 apprenticeship starts over the same period grew 6.5 per cent.

This comes just two months after the government revealed under 19 apprenticeship starts had fallen for the first time in three years — from 131,700 in 2010/11 to 129,900 last year.

Tristram Hunt, Junior Shadow Education Minister, claimed the underspend revealed incompetence. “The number of apprenticeship starts for young people has already fallen by nearly 2,000 in the past year. And now we discover that the government is so incompetent that it’s not even spending all the money in the apprenticeships budget. With nearly one million young people unemployed that is simply unacceptable,” he told FE Week.

A joint statement from the two departments said: “There are a number of reasons behind this underspend. This includes changes in the cost of courses that were taken up, economic challenges facing some sectors and an increase in 19 to 24-year-olds choosing to become an apprentice. We have also rooted out poor quality provision that was not meeting the needs of today’s employers.”

A senior economist at the Institute for Public Policy Research, Tony Dolphin, who wrote  the report Rethinking Apprenticeships, added that apprenticeships should be reserved only for those aged 16 to 24.

“They should not be just another form of on-the-job training; they should specifically support the transition of young people from education into work through a mix of on-the-job targeted training and more general off-the-job learning,” he said.

Grade threes get traineeship go ahead

Further education leaders have called for a rethink on traineeships after new rules revealed lower-rated providers would be able to run the scheme, despite it having been designed for top-ranking providers.

Skills Minister Matthew Hancock announced the traineeships framework last month, including details of how only providers graded by Ofsted as outstanding or good (grade one or two, respectively) could run them.

But according to Skills Funding Agency (SFA) rules published more recently, subcontractors deemed by Ofsted to be in need of improvement (grade three), or who have never been inspected, also will be able to run the scheme.

The issue has reopened the debate around Ofsted grades being the only means of determining suitable providers.

Lynne Sedgmore, executive director of the 157 Group, has previously described the system as “providing only a limited perspective as it does not reflect the full range and nuances of the varied grades, differences and aspects of college provision”.

She said she wanted to see the latest issue addressed.

“Our concern at the use of Ofsted criteria alone to determine the delivery of traineeships is on record,” said Mrs Sedgmore.

“Even more worrying would be for those criteria to be inconsistently applied.

“If the anomaly highlighted is an oversight, it should be rectified, to enable the focus to be on the bigger issue of how a college’s impact can be properly measured.”

Grade three subcontractors can deliver traineeships as long as they were on the SFA’s subcontractors’ register at the start of this month. Their lead contractors must be grade one or two.

Unregistered grade three subcontractors, or those registered after May, will not be able to run the scheme. No grade four providers, or those with a notice of concern, can deliver traineeships.

Stewart Segal, chief executive designate of the Association of Employment and Learning Providers, said: “We want to ensure that the rules for Education Funding Agency and SFA contractors are consistent.

“With a huge cohort to tackle and a limited overall budget, it’s important that we resolve this matter before the programme starts, rather than wait for case-by-case judgments.”

An SFA spokesperson said providers with an Ofsted grade of good or outstanding could use their existing supply chain to deliver a “high quality offer” to learners and employers.

“We will review provider eligibility on a regular basis to reflect any changes in Ofsted ratings,” she said.

A Department for Education spokesperson said: “For the first year of the programme, grade three prime contractors will not be able to run traineeships and any newly-registered subcontractors will need to be rated as good or outstanding by Ofsted.

“We are only allowing grade three subcontractors to deliver traineeships where they are subcontracted to a good or outstanding prime contractor and we are confident they will be able to deliver a quality service.”

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