The DfE doesn’t have answers around subcontracting and funding ITPs

13 Oct 2021, 14:30

Ministers have got themselves into a subcontracting cul-de-sac, writes Aidan Relf

The Department for Education’s recent webinar on its funding and accountability reforms for adult education was like trying to understand flowcharts at school.   

Except there seemed to be few routes on offer and key questions still need answers before the we arrive at ministers’ chosen destination – an FE system which helps more people land jobs. 

The DfE officials on the webinar were very open about the ministerial emphasis on wanting more employment outcomes.   

Therefore calls for the inclusion of ‘social outcomes’ on the accountability dashboards for colleges are unlikely to cut much ice. The jobs diktat will determine the look of the final reforms. 

And although consultation is ongoing, the principles behind the Skills for Jobs white paper (the clue is in the title) have already been conceived 18 long months ago.   

This also means it’s a little surprising that the department hasn’t made more progress. 

Essentially officials want a simplified system. This looks like a ‘single skills fund’ for adult education whereby funding in the first instance is allocated to colleges in the non-devolved areas.   

Colleges will then be able to commission, i.e. subcontract, other providers to provide ‘complementary provision’.   

The consultation document in July offered some thinking around this in the form of the recent subcontracting reforms. 

But by blocking off other route choices on our imaginary flowchart, the DfE has set itself some massive challenges.   

The DfE has set itself some massive challenges.

And let’s remember that since 2014 with Nick Boles’ rather salty stint as skills minister, the direction of travel under this government has been to try to significantly reduce the amount of subcontracting in the sector. 

It was admitted on the webinar that apart from them acting as subcontractors for colleges, it’s not yet clear how independent training providers will be funded for adult education. 

 However officials confirmed that there is likely to be far less reliance on procurements for ITPs.   

That’s a big deal, especially in respect of the skills pot of the UK Shared Prosperity Fund – which is meant to be replacing the EU’s structural funds and will launch in April – because ITPs have traditionally been major players in the European Social Fund market.   

Meanwhile another blocked route is the restoration of individual learning accounts (ILAs), which could easily fit into the system at level 3 and below, while Lifelong Loan Entitlements meet demand at level 4 and above.   

Whisper it quietly, but opposition to this idea stems from a fear of ILAs destabilising the college infrastructure. The worry is adult learners will exercise personal choice and take their custom to training providers instead.   

This is despite the declaration in the webinar that the DfE wants the new adult education funding system to learn from demand-led apprenticeships. 

So are we then left with more subcontracting?   

It’s a possibility when other factors are thrown in, including colleges being judged on job outcomes for their students.  

The consultation document set out a lagged funding system for colleges based on delivery in the previous year. The officials doubled down on this in the webinar, by saying reconciliation and clawbacks would end.   

They added that funding would have to be earned by “getting students into good jobs” and by “how many students turn up”.  The days of banking ‘unearned’ grant allocations appear to be over. 

Without knowing the final details, a three-year funding agreement could provide colleges with greater ability to strategically plan and provide courses that lead to more jobs.   

But we know from the AEB underspends and their very modest share of the apprenticeship market that employer engagement remains a challenging area for some colleges.   

Therefore the temptation will be again to subcontract to ITPs who have plenty of employers with vacancies as customers. 

Here we hit another big problem. The subcontracting funding rules will limit how much provision can be outsourced from next year. The DfE has asserted that subcontracting can no longer be used just to protect a college’s contract values for a following year.   

This means that the requirement to hit jobs outcomes could become a huge challenge for colleges. Equally, the DfE is no nearer to solving the issue of how ITPs should be funded.   

For now then, it looks like the flowchart has run into a cul-de-sac.  

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