The Education Funding Agency has published a series of documents outlining its funding arrangements for 2012/13.

It includes version 1 of the funding regulations, which affects all learners aged 16 to 19 and some learners aged 19 to 24 who are funded by the Agency.

Meanwhile version 1 of the rates and formula document provides information on the funding formula used in the 16 to 19 funding model.

(FE Week will be analysing the EFA funding guidance in detail next week. All of the related documents are available here.)

A report by the Sixth Form Colleges Forum (SFCF) warns that many colleges “fear for their future” because of the government’s drive “to create a market” in 16 to 18 education.

The Sixth Sense report (see right) argues that the government promotes school and academy sixth forms at the expense of sixth-form colleges. It says that the colleges are treated unfairly in the funding, tax and support that they receive and calls for a “level playing field on which institutions can compete”.

Sixth-form colleges receive £280 less per pupil than school or academy sixth-forms, according to last year’s National Audit Office report on 16 to 18 education.

The SFCF said that the funding gap was much wider in reality. Ian MacNaughton, principal of The Sixth Form College Colchester, said that schools and academies could move resources between age groups as they had funding for 11 to 16-year-olds. Sixth-form colleges, however, did not have these extra resources to turn to.

The government needs to reconsider . . . what is emerging is just bizarre.

Unlike their counterparts, sixth-form colleges also have to pay 20 per cent VAT on goods and services. Mr MacNaughton said this cost his college hundreds of thousands of pounds a year – VAT could eat into about 2 per cent of a college’s overall resources.

Sixth-form colleges also have to pay full insurance for students, which cost tens of thousands of pounds.

“These issues have been raised with the government and yet they have done nothing about them,” he said.

A spokesman from the Department for Education said: “We’ve been clear how much we value sixth-form colleges. Their record of getting large numbers of students into top universities is outstanding, and they offer fantastic value for money.

“By 2015, we will end the disparity in funding for 16 to 18-year-olds so that all school and colleges are funded at the same rate.”

Mr MacNaughton said funding cuts could make the situation worse. He stressed that the problem was part of a bigger issue of “plummeting” 16 to 19 funding for all institutions.

“The government needs to reconsider . . . what is emerging is just bizarre,” he said.

The report described sixth-form colleges as “engines of social mobility”. Students were more likely to have received free school meals and to have had lower levels of educational attainment compared with pupils in school and academy sixth forms.

But it emphasised their strong performance records, saying that they “outperform all other providers of 16-18 education on a range of measures”.

The overall success rate – how many learners started a qualification and successfully completed it – for schools and academies was 80 per cent, four percentage points below sixth-form colleges.

James Kewin, the deputy chief executive of SFCF, said: “Why disproportionately hit the sector that does more than any other to take kids from disadvantaged areas with lower levels of prior attainment, and progress them right the way through? It doesn’t make any sense.”

Mr Kewin also highlighted how Ofsted treated sixth-form colleges differently. Colleges were judged using a higher benchmark than school or academy sixth forms. He said an academy could be graded “good” and a sixth-form college “satisfactory”, but the college was the better-performing provider. He believed that this made it difficult for parents and students to make informed decisions, as they were often unaware of the different inspection benchmarks.

None of us can afford not to be attractive to good students and that means that provision for less academically confident students is much more difficult to develop.

However, at the SFCF’s Summer Conference, Ofsted said that from September this year inspections would not present outcomes simply in relation to sixth-form college benchmarks. It also committed to moving towards using a single national average in inspections – a move that Mr Kewin described as “really positive”.

Paul Ashdown, principal of The Sixth Form College Solihull, said that an unfair approach to provision could “undermine” the ability of institutions to work in the best interests of young people.

He said: “The whole dynamic of provision [in Solihull] has changed from one where we were able to work together to promote participation and a range of options for young people, to a pretty unmanaged competitive environment where there’s a focus on getting good students.

“None of us can afford not to be attractive to good students and that means that provision for less academically confident students is much more difficult to develop.”

His college actively engages and supports students from disadvantaged backgrounds, but he said it had had to increase entry requirements. Previously, a student could enrol with four GCSEs at grade C. Now they needed five, including English and maths at grade C, and two Bs.

“It has eroded our ability to take risks with more marginal students,” he said.

Gateshead College has appealed against a “satisfactory” inspection grade awarded by Ofsted after an inspection in May this year.

Principal Richard Thorold told FE Week that its formal complaints followed “inconsistencies” in standards applied during the inspection. “It appears the overall judgement is, in the main, based on historical data.”

He said that the inspectors appeared reluctant to apply a fair judgement to the in-year data. “This is, in my mind, where the inconsistencies are in the way the standards are being applied across inspections.”

The college was judged “outstanding” in its last inspection in 2008.

Mr Thorold said although the college had submitted a formal letter of complaint to Ofsted, it was “not going to dwell on it”.

“At the end of the day our focus is on moving forward,” he said.

“We’re going to make changes where we need to, and get on with our business to deliver outstanding outcomes for all our students, customers and stakeholders in Gateshead and the wider region.”

The Ofsted report, published last week, said: “The proportion of learners who stay . . .  and successfully complete their qualifications has declined since the previous inspection, and there is too much variation in the quality of provision across the college.

“Attendance is often low and, despite the college’s attendance policy, goes unchecked in a few areas.”

However, the report praised work-based learning programmes and said the college was “outstanding” at developing partnerships with other organisations.

Mr Thorold said that “significant strengths” were highlighted, including the college’s partnerships with employers,  inclusive atmosphere, work-based learning, work with the unemployed and young people not in education or employment, and clear strategic direction.

“Our work with employers is reflected in the report and in the grade profile for employer responsive. However, it is only one statement amongst many and it does not truly reflect the holistic picture that I wanted them to draw of the college.”

Stafford College, which in May Ofsted also deemed to be “inadequate”, has also submitted an appeal.

Principal Steve Willis said the informal feedback from inspectors gave a “misleading picture of the quality of work that takes place at this college”.

It  was given a grade 2 when it was last inspected in 2009.

Franklin College is also considering an appeal after dropping from “good” to “inadequate”.

A spokesperson for Ofsted said it did not comment on individual inspections “over and above the published reports”.

“Ofsted does not comment on whether a complaint or concerns have been received about individual providers. Information about the process for investigating complaints about providers can be found on the Ofsted website.”

A BBC Radio 4 programme, broadcast last week, revealed that a growing number of schools are appealing poor inspection results.

Jan Webber, an inspection specialist for the Association of School and College Leaders, told the BBC: “It is OK if it is a consistent judgement for everybody – the greatest issue that we have is inconsistency.  That’s when it causes a lot of angst.”

The Skills Funding Agency (SFA) has announced the rates for functional skills in the new streamlined funding system for adult learning.

English and maths qualifications will be funded at a base rate of £336, equivalent to 5-12 credits in the government’s new “learning aim rates matrix”. But a 1.3 Programme Weighting Factor will boost the amount for entry level maths to £437.

A spokesperson for the SFA told FE Week that the agency had worked closely with the FE sector to agree the rates, based on current data.

“The agency has made clear that in doing so, further work is needed to explore whether this data is representative of the delivery requirements for functional skills. We will be working with providers over the summer to assess whether we need to revisit this rate when setting the final funding level for 2013/14.”

We would obviously like to see higher rates to enable colleges to provide more maths and English teaching”

The rates were set with the help of the Funding External Technical Advisory Group.

Chris McLean, vice principal of North Hertfordshire College and a member of the advisory group, told FE Week: “I think the sector will be happy with the rates set.  There is one pot of funding, which can be spent only once, and therefore it was imperative that the group developed a balanced system that provides a fair income for the activity delivered.”

However, Julian Gravatt, assistant chief executive of the Association of Colleges, told FE Week that it wasn’t a perfect outcome. “We would obviously like to see higher rates to enable colleges to provide more maths and English teaching, but it’s helpful that these rates are based mainly on existing funding levels – which will minimise disruption and allow teachers to focus on teaching.”

The new simplified funding system for adult skills will be introduced in the 2013/14 academic year, with shadow working available from September.

The original proposal for a simplified funding system had 30 cash totals in the “learning aim rates matrix”, including 10 for apprenticeships.

Revised proposals excluded apprenticeships, but the SFA now says that they will still be funded using the learning aim rates matrix, but boosted by an additional sum yet to be set.

As many of us suspected, simplifying FE funding is proving harder to achieve than BIS thought.”

A spokesperson said that the extra money would reflect the additional activity a provider had to undertake when delivering an apprenticeship.

“Due to detailed work needed to establish and validate the value for such an element, the funding group has recommended that details for this are released  once more work has been completed, and wider consultation has taken place with employer groups.”

The SFA said more details would be published later this summer once the extra funding had been tested and consulted on.

Mick Fletcher, a visiting research fellow at the Institute of Education and consultant, told FE Week: “As many of us suspected, simplifying FE funding is proving harder to achieve than BIS thought.

“Fortunately officials have not been afraid to take advice on some of the detail so the system is becoming more sensible as it becomes more complex.  Part of the difficulty is that instead of starting with the reality of FE and designing a funding system to fit it, the designers have started with a grand design built around the QCF and are struggling to force large parts of FE provision into it: hence the difficulty of accommodating apprenticeships, or basic skills.”

Lead providers charged more than £175 million in management fees to subcontractors in the 2011/12 academic year, an analysis by FE Week suggests.

A Skills Funding Agency (SFA) spreadsheet published on the agency website suggests that contract holders took an average “top-slice” of 23 per cent from subcontractors. It also suggests that subcontractors earned about £581 million, based on original provider allocations worth just over £759 million.

A spokesperson for the SFA told FE Week: “There is an expectation that the funding provided is used for the benefit of the learner and spent on their learning programme or provision.

“The amount of funding retained by a lead provider for programmes and provision delivered in whole, or part, by a subcontractor must represent good value for money and reflect the actual costs incurred by each party in the delivery of that provision.”

The data, gathered from declaration forms submitted by lead providers, shows that Somerset County Council kept, on average, 37 per cent of the funding it gave to subcontractors, amounting to almost £200,000 in the 2011/12 academic year.

In this climate we cannot afford to run apprenticeships for nothing.”

A spokesperson for the council said it had a project and performance management role – checks on the quality of delivery accounted for 15 per cent of the retained funding.

“If a subcontractor cannot complete all the duties they are usually expected to do, the council will take on these duties and keep the appropriate funds,” the spokesperson told FE Week.

“These duties include promotional activity to recruit learners, providing venues, conducting induction sessions, learner and employer reviews, providing additional support for learners, assessment centre functions and responsibilities, key and functional skills delivery, curriculum development and delivery support.”

The spokesperson added that it was a “tailored approach” that reflected the different tasks undertaken by the council and the subcontractor.

However, a subcontractor used by Somerset County Council told FE Week: “This particular provider provides us with very few learners; in the main we source them ourselves and engage in huge and costly marketing opportunities to secure both learners and employers.

“We spend a lot of our time chasing the provider for things not completed, which often results in us doing certain aspects ourselves. (Therefore) a 35 per cent management fee is not giving us value for money.

“In this climate we cannot afford to run apprenticeships for nothing. Providers need to realise that we are a business, a business that is completely learner-focused, but one that needs funds to support local employers and their apprentices in achieving their goals.”

If colleges are greedily taking bigger and bigger slices of the pie then that has to impact on the overall quality of the training.”

One subcontractor told FE Week in June that the management fees of some FE colleges were a “rip off”  a concern since echoed by the Forum of Private Business (FPB).

A spokesperson for the forum told FE Week: “Quite simply FE colleges should not be making huge profits at the expense of subcontractors or businesses, the latter who are parting with money in good faith so that their staff are trained to the best possible standard.

“If colleges are greedily taking bigger and bigger slices of the pie then that has to impact on the overall quality of the training.”

Lead providers who subcontract will need to supply a report at the end of the 2012/13 contractual year which proves their top-slice is “no more than is required to cover the actual costs directly incurred in managing its subcontractors.”

The Association of Employment and Learning Providers (AELP) said it was discussing a number of solutions, including a new code of conduct, with the Association of Colleges (AoC).

“Subcontracting is a legitimate business practice that we would like to see maintained in the skills sector, but at the same time we don’t want to see unjustifiable management fees taking money away from frontline provision,” an AELP spokesperson said.

“There are some meaty issues to address here and that’s why AELP and AoC have got together to look at possible solutions carefully rather than wait for an imposed solution from above which may not work best for the sector.”

Errors have been  found in data and management information reports published by the Education Funding Agency (EFA).

The reports, which give local authorities an overview of the 16 to 19 provision in their area, incorrectly included adult learners in  further education.

A spokesperson for the EFA told FE Week that Qualification Success Rates (QSR)  should only include data for 16 to 18 year-olds. Part of the report has been affected as a result.

“We have subsequently revised our code and are in the process of producing and checking updated reports for all FE colleges, sixth-form colleges and independent private providers,” the EFA spokesperson said.

“We will delete the erroneous reports and upload corrected versions as soon as possible.”

The EFA said the issue was a “coding error” and later emphasised that it had “no concerns” with the data provided by colleges.

“In this instance our quality assurance process was not sufficiently robust and will be revisited for future releases,” the spokesperson said.

“However, there should be no impact of there being a relatively minor error in this report.”

The reports are not in the public domain, but are available both to local authorities and education providers through the information management portal.

The “coding error” was identified by members of the College Management Information Systems (CMIS) network.

One CMIS manager suggested there could be more to the problem than the inclusion of adult learner data.

“I’m not entirely sure where they’re getting the figures from for the learner numbers, Standard Learning Numbers and out-turn funding as they don’t agree with our final claim figures (which came from the Learner Information Suite from our final Individualised Learner Record),” the manager said.

“They’re clearly not including adults because they’re only out by a relatively small number, but it does mean I have no idea what to check it against.”

The inclusions of adult learner data in the EFA reports follow significant errors in other data sets published by government agencies.

The National Success Rate Tables for 2010/11 were removed last month after more than 23 per cent of qualifications were found to be showing an “unknown” level, up from 2 per cent in the earlier QSR.

Meanwhile a breach report published by the UK Statistics Authority found that FE Choices, a website that allows the public to compare the performance of providers, had 2,700 changes to “unique values”.

The Deputy Prime Minister, Nick Clegg, announced today that the goverment will be piloting a new pre-apprenticeship scheme, known as a ‘traineeship’.

In his speech at the CBI Jobs Summit Mr Clegg said: “The teenagers who aren’t ready for an apprenticeship, say. These were the children most let down by the previous system.  Now, as we reform that system, we’re determined that they are not lost in transition.

I know that one idea John Hayes, the Minister for Skills, is looking at is piloting a new ‘traineeship’; a package of training and work experience to get the basic, necessary skills, with a recognised qualification at the end of it, an extra rung on the ladder to get you on your way to an apprenticeship or job. Again, that help will be targeted in the areas most in need.

And more detail will be coming soon.”

Read the speech in full here.