Select Committee on Education and Employment First Special Report

Sixth Report: Further Education (HC 264-I)

Sixth Report: Further Education (HC 264-I)

Published: 4 June 1998
Government Reply: First Special Report, Session 1998-99 (HC 56)
Published: 7 December



Government Response

Further Government Action

1. The further education sector supports the nation's economic competitiveness and social well-being by improving the skills of the existing and potential workforce and by creating opportunities for achievement for all members of the community.

The Government fully agrees with the Select Committee's emphasis on the vital contribution of FE to the nation's economic and social well-being. The sector reaches out to many people who have not traditionally taken advantage of learning opportunities; and plays a major role in the provision of basic and, in particular, intermediate level skills courses.

The Government continues to develop and refine its views on the priorities of the further education sector, particularly through its annual guidance letter to the FEFC. The most recent letter, published on 23 November 1999, reiterated its view that the FE sector is responsible for the future of millions of young people and adults, and through them the future of our economy and our society. The FE sector will be central to the new post-16 arrangements that will be established under the Learning and Skills Council.

2. Further education has reached the stage where the Government now has to make choices and explain its priorities. The key point is that criteria for the allocation of public money to further education should be made clear. Later in our report we set out some such criteria.

The Government fully agrees with the Select Committee's emphasis on the vital contribution of FE to the nation's economic and social well-being. The sector reaches out to many people who have not traditionally taken advantage of learning opportunities; and plays a major role in the provision of basic and, in particular, intermediate level skills courses.

Since the Education and Employment Committee's report on Further Education in 1998, fundamental changes have been made to the way post-16 learning is funded and planned in England, including the role of Training and Enterprise Councils and the Further Education Funding Council for England. As reported in the Government's responses to the Committee, the Government has carried out a major review of TECs and a further review of all post -16 structures. The Learning to Succeed White Paper, the outcome of this review, recognised the Committee's concerns in this and other Select Committee reports, that current structures were a recipe for confusion, duplication and frustration, and that there were too many bodies involved in planning and funding post 16 provision. It therefore announced the creation of a national Learning and Skills Council to replace the FEFC and TECs. The LSC will be responsible for the planning, funding and quality assuring all post 16 learning up to degree level. It will be operational from 1 April 2001.

The creation of the LSC, and its 47 local arms, will lead to a major improvement in the co-ordination and coherence of all post 16 learning to meet both present and future skill needs. But it will also play a key role in promoting the benefits of learning. These are not just the economic benefits, important though they are, but the personal, family and community benefits which the Committee recognised as essential to the national social well being. With its overview of all post 16 learning, it will therefore bring a new strategic focus to lifelong learning and play a key role in making a reality of the Government's vision set out in the Learning Age.

3. The Government must make it clear to the FEFC what it wishes to fund in FE colleges, and this will drive FEFC policy. We believe that the key areas for colleges are: 16-19 provision; adult learning; widening participation; certain training relevant to employment; and basic skills. Having said this, we also recognise the value of learning for individual students' general development and the value of learning for pleasure. However, at a time when funding remains tight, the FEFC has to prioritise funding and we believe it should favour the key areas we have identified. Non-vocational courses can be funded from other sources, eg local authorities, and by students themselves.

As above

As 1 above

4. The Government fully agrees with the Select Committee's emphasis on the vital contribution of FE to the nation's economic and social well-being. The sector reaches out to many people who have not traditionally taken advantage of learning opportunities; and plays a major role in the provision of basic and, in particular, intermediate level skills courses.

We are determined further to ease the efficiency squeeze and, in line with the Committee's recommendation, are constraining the efficiency gain expected of the sector to 1 per cent in 1999-2000.

Nothing to add to original response.

4.1 Further education colleges should not have to face an efficiency saving any greater than that agreed for the higher education institutions-one per cent per annum. This would cost an additional £54 million in 1999-2000, on the Association of Colleges' (AoC) figures.

In November 1999, the Secretary of State announced that the FE sector would get an extra £365 million in 2001-02, bringing the total funding to nearly £3.9 billion in 2001-02, a 7.7 per cent increase in real terms over 2000-01 and a 16 per cent increase in real terms over 1998-99. The recent spending review has added a further £58 million to the 2001-02, bringing the increase in funding over 2000-01 to £423 million, representing an increase of 9.2 per cent in real terms. £100 million of 2001-02 expenditure is to be allocated for capital expenditure, and will help ensure that colleges have up to date ICT equipment and will support other important capital projects, including private/public partnerships and access for disabled people.

4.2 The further education sector should receive an additional £60 million per year to cover the cost of capital expenditure necessary to improve building stock and equipment, including equipment for information and communications technology.

The settlement provides for capital expenditure of £195m over the next 3 years. Most of this, some £120 million, will be deployed to improve building stock and equipment, related in particular to the widening participation and rationalisation agendas; provision to meet skills shortages; and improving access for the disabled. Some £75 million is to be allocated to enhancing the sector's information and communication technology : in the first year in particular, a key priority will be to ensure the sector is well placed to contribute to the University for Industry (UFI) provision.

As 4.1 above

4.3 The settlement provides for capital expenditure of £195m over the next 3 years. Most of this, some £120 million, will be deployed to improve building stock and equipment, related in particular to the widening participation and rationalisation agendas; provision to meet skills shortages; and improving access for the disabled. Some £75 million is to be allocated to enhancing the sector's information and communication technology: in the first year in particular, a key priority will be to ensure the sector is well placed to contribute to the University for Industry (UFI) provision.

The CSR settlement provides the basis for an additional 700,000 students in FE by 2001/2002 compared with 1997/98. The Secretary of State announced in July an additional £255 million (including £35 million in increased employer contributions) for FE in 1999-2000, and is announcing plans for an additional £470 million (including £60 million in increased employer contributions) in 2000-2001. Overall £3.272 billion is to be allocated for participation in 1999-2000 (a £180 million increase on 1998-1999), on the basis of a 1 per cent efficiency gain; and £3.427 billion is planned for 2000-2001 (a £335 million increase). Provision for the new FE Standards Fund and for capital is additional to that.

As 4.1 above

4.4 The sector will also require additional funding to meet the cost of the introduction of a widening participation factor. The FEFC has stated that, on the current funding levels and student numbers, the widening participation factor would cost about £40 million per annum. It has only allocated £10 million in 1998-99. We therefore recommend that an additional £30 million be allocated to fund the factor in full in the current financial year and an additional £40 million per year in the future, adjusted in the light of student numbers.

4.5 Furthermore, additional funding will be needed if the widening participation factor is to be applied to the relevant proportion of the additional 430,000 students referred to above. We estimate that this would cost a minimum of £10 million overall, in addition to the £350 million recommended above.

In addition to the £10 million (later revised to £11 million) allocated by the FEFC in 1998-99, as a first step in introducing the widening participation factor, a further £9 million was added to bring the amount allocated to the factor in 1998/1999 to £20 million. We are now expecting the FEFC to implement in full the widening participation factor for all students who come from disadvantaged areas. On the basis of the focus on further widening participation in the next two years, the Government expects £50 million in 1999/2000 and £55 million in 2000/2001 to be devoted to this factor.

Nothing further to add to previous response

See 4.1 above

5 We believe that the decline in financial support for further education students in recent years runs wholly counter to the aim of increasing participation in FE for all parts of our society. It is not right that access to financial support should vary so much across the country, or that FE students should receive less equitable treatment in this respect than those in higher education. We therefore agree with the Chairman of the Government's advisory group that additional funding must be found for increased support for students, and that this support should be paid to students as a right, and not be a matter for the discretion of local authorities or any other body. We also urge the Government to examine the possibility of replacing the child benefit currently paid to parents of 16 to 19 year olds in full-time education with student support grants. This could give an incentive for young people to remain in full­time education. As a long term objective the Government should look to make available means-tested maintenance loans to FE students who are studying work­related courses. In our Third Report of this session, The Dearing Report: Some Funding Issues, we argued that the Government should exclude the recoverable part of expenditure on loans to students in higher education from the public expenditure control total. We recommend that means-tested maintenance loans for FE students should be treated in the same way. We also highlight the value of childcare provision in promoting access to further education. We welcome the additional £5 million given to increase childcare provision in FE colleges, but hope that this represents only the start of longer-term increases in provision, not the summit of the Government's ambition.

The Government shares the Committee's view that a system of FE student support largely dependent on local education authority discretionary awards is no longer satisfactory.

We will use the statutory powers provided to the Secretary of State in the Teaching and Higher Education Act 1998 and the School Standards and Framework Act 1998 to replace these awards with new and better targeted forms of student support from 1999-2000.

In September 1999 the Government introduced new further education student support arrangements. They included an enlarged further education access fund, to cover 16-18 year old students as well as those aged 19 and over, which was available to colleges to assist with costs which might otherwise pose a barrier to participation. Each college has considerable discretion over which students to support and the level of that support. Funding for 1999-2000 increased fourfold to £36m and increased further to £54m for 2000-01.

Funding for childcare support in further education colleges in 1999-00 was provided through further Education Funding Council (FEFC) tariffs for which £9m was available to help students whose access to, or completion of, further education might otherwise be inhibited by the cost of that childcare. The £9m was made up of £5m of new money added to the £4m which FEFC had already earmarked through its tariffs in 1999-00. For 2000-01 a new Childcare Support Fund will be introduced to replace the tariff scheme. £25m will be available and will be ring-fenced funding within the FE Access Funds. The scheme will operate in the same way as the FE Access Fund, giving considerable discretion to colleges as to who should be supported and the level of that support. Most general FE colleges have been allocated between £30-£90,000 to assist their students. It is expected that 30,000 students in the academic year will receive help from the fund.

A review of financial support for adult learning currently being undertaken by Derek Wanless, former Group Chief Executive of Natwest, will look at all provision, including the case for loans for FE students, and will report in mid-December. Ministers will then consider what more might be done to make present arrangements more coherent and better targeted and to have advice on possible new areas of learner support.

The new means tested Education Maintenance Allowance was introduced in 15 pilot areas from Sept '99. Early evaluation results show that participation and attendance have improved in the pilot areas. The pilot has been rolled out to an additional 41 LEAs from September 2000 in a number of variants. Some of the new pilots are targeted at young people with specific needs—the homeless, disabled, teenage parents and those with transport difficulties.

On childcare, pilots for 16 and 17 year olds will commence in September 2000. These pilots will provide subsidised child care to help teenage parents to participate in further education. This will be piloted over three years in 20 Sure Start plus areas and five other areas (3 EMA areas and 2 EiC areas) to assess what type of support is most effective and different ways of delivering support with a view to assessing the viability of a nation-wide scheme. Support will only be available to teenage parents participating in education or training.

6. There is a tension in any funding methodology between equity and simplicity; between the desire to make a system as sensitive as possible to different needs and the need of those involved for stability and transparency. We agree with the FEFC's fundamental review group that the funding methodology should not be replaced. However, we also agree that some simplification of the formula is necessary. A balance has to be struck: at the moment the balance is tilted too far towards complexity. We agree with the fundamental review group that every opportunity should be taken to simplify the formula and to ensure that it is fully understood.

7. The onus is on the FEFC to try and ensure that, wherever possible, the funding system does not create perverse incentives or reward behaviour which runs counter to the core aims of the further education sector. Simplifying it as we have suggested above should help to make this possible.

The Government shares the Committee's conclusion that the FEFC should aim for simplification in the funding methodology where possible.

A great deal of work has gone into creating a new and simpler set of funding arrangements spanning post-16 education and training, suitable for adoption by the new Learning and Skills Council and the Employment Service. In January, the Department published a consultation document setting out general principles and followed that with a further consultation document in May, providing more details. Work is continuing, so that the LSC and Employment Service will be able to take forward consultation on the new arrangements in the autumn.

The Key objectives of the new system are that it should promote excellence and high quality delivery of service; that it should be responsive to the needs of individuals, employers and communities; that it should ensure targeted support for the socially disadvantaged and be flexible enough to cope with everything from full time conventional learning in an academic setting, to brief periods of learning using Ufi materials; that it should be simple to understand and administer; and that it should ensure that money follows the learner.

8. We are in favour of using the methodology to widen participation among those who have not traditionally been involved with further education. But the use of the postcodes may be a rather crude way of doing this and we look forward to further development of ways of targeting educational under-achievement. Furthermore, if a significant change of approach is desired, £10 million pounds—out of an annual budget of £3 billion—will not be enough to achieve it. Hence our recommendation in paragraph 88 above that the factor be properly funded, at a minimum cost of about £40 million per year.

We consider that henceforth the widening participation factor should be properly funded. In the light of projected growth, this implies that the widening participation factor should be funded at £50 million in 1999/2000 and £55 million in 2000/2001 from within the overall grant to the FEFC, and we are looking to the FEFC to secure that. We are also looking to the FEFC to continue to refine the current means of identifying such students and we have asked that Departmental officials be kept in touch with developments.

The FEFC has extended its system to include certain categories of student, such as those on basic skills courses, asylum seekers, the homeless, etc, irrespective of postcode. The Secretary of State has asked the FEFC to ensure that the widening participation factor should have reached an average of 10 per cent per relevant student by 2001/02.

9. We are in favour of the principle of moving towards closer convergence of average levels of funding (ALF) per unit: it is ultimately fair to all colleges. Although we note the complaints of some colleges about the negative impact of the move towards convergence, they have been balanced by the complaints of other colleges about the slowness of the process. As with other aspects of funding, we would argue that the real problem is not convergence itself, but the level of convergence—it is a question of total funding available, not the methodology itself.

The increased funding for the sector for 1999-2000 and 2000-2001, with an associated reduction in the efficiency squeeze to 1 per cent in the former year, may be expected to ease the pressures of convergence, as will the implementation of the full widening participation factor to reflect the additional costs to colleges of catering for disadvantaged students. Nevertheless, convergence remains a difficult process and we wish to ensure that it does not penalise unduly colleges serving disadvantaged areas. We are therefore asking the FEFC to delay for a year the process of convergence, which had been planned to be completed by 2000/01.

Convergence remains the aim within the new LSC funding system, subject to initial transition arrangements.

10 We support the principle of convergence, but we believe that some measure of flexibility is required in the funding methodology. This would reflect the fact that no tariff will be able to recognise the exact costs of provision. Attempting to develop the tariff into a perfect instrument able to recognise every nuance of colleges' costs could make it absurdly complex. Therefore we recommend that, by 2002, the ALFs of all colleges in the FE sector should fall within a range two and a half percentage points above or below a notional convergence figure.

See above

See above

11. We recognize the additional costs faced by inner London Colleges due to the higher salary costs faced by all employers working in this region. We therefore welcome the recommendations of the FEFC's London costs group, which we believe give the inner London colleges a fair deal. We believe that the new widening participation factor, if fully funded as we have recommended, will also bring additional funding to those colleges in particularly deprived areas, including many in inner London. Given these two changes to the funding system, we are not convinced by the arguments of the Inner London Colleges Group that the London colleges have been especially hard done by compared to other parts of the sector.

We agree with the Committee's assessment that the recommendations of the FEFC's London costs group, endorsed by the FEFC itself, represent a fair recognition of the additional costs of operating in London and its surrounding areas. The FEFC's Tariff Advisory Committee will be reconsidering the London costs issue, and making recommendations to the FEFC for the 1999/2000 academic year.

The FEFC has set new values for London weighting for 2000/01: 1.18, 1.12, and 1.06 for London; and 1.03 for the counties around London. We support these, which will also form the baseline for LSC provision.

12. We do not think it is sensible to attempt to create a 'common currency' for the funding of all post-16 education and training.

The Government agrees with the Committee's view that it is not sensible to attempt to create a common currency for the funding of all post-16 education and training.

Nothing to add to original response

13. However, the one area in which genuine harmonisation of funding would appear to be both possible and desirable is in full-time 16-19 provision.

Even with full time 16-19 provision, there are difficulties in estimating and comparing the funding per student or funding per qualification achieved in FE colleges and school sixth forms.

For 16-19 year olds, schools and FE colleges tend to deliver the same type of teaching, curriculum and qualifications. The establishment of the LSC will help ensure a coherent approach to post-16 provision, helping to support high national standards and greater local collaboration. The LSC will be allocating the majority of its funding according to national rates within a common funding formula.

In the case of school 6th forms, in the light of the comments received on its June 1999 consultation paper, in particular from headteachers, the Government decided that LEAs should in future receive the funds from their LEA. However, the involvement of the LSC in School 6th Form funding will ensure that there is coherence in the overall shape and direction of funding across all comparable 16-19 provision. The LSC will begin to fund LEAs for their school 6th forms with effect from April 2002.

14. We agree with the Minister of State that this kind of harmonisation should be achieved by additional funding for the FE sector, rather than a process of 'levelling down'. It should be possible to establish a 'common entitlement' for 16 to 19 year old students on similar courses in schools and colleges and to fund it accordingly. We believe that such a 'common entitlement' should include the kind of enrichment activities which have long been regarded as a key part of traditional school sixth form education. This would ensure all institutions—whether colleges or schools—serving 16-19 year olds would receive comparable funding for providing the same qualifications.

We are concerned that the rate of change required of the FE sector in recent years may have affected standards adversely. We believe that there is scope for greater harmonisation of funding and standards between FE sector colleges and school sixth forms.

We are attracted to the idea of an "entitlement curriculum" common to all 16-19 year olds. We shall wish to consider further what this should involve and how it would fit with our proposals to encourage more young people to follow broader programmes of study post-16 without compromising on standards.

We agree that school funding should not be levelled down. In the May consultation document, we set out a common method of funding Qualifying for Success programmes across schools and FE Colleges. As far as schools are concerned, the LSC approach will apply from 2002-03 and the LSC will work in full partnership with schools and LEAs towards implementation. The Secretary of State has guaranteed that funding for each 6th form will not fall in real terms provided that its pupil numbers do not fall. And in practice this guarantee will be the main determinant of funding for many 6th forms for some time. However, we do expect some movement towards the common approach each year, beginning in 2002-03.

15. We believe that the principles of the FEFC's approach, including the emphasis on student guidance, retention and achievement, should underpin any common approach to funding criteria rather than the principles of the SSA system currently used to fund school sixth forms.

As the Committee notes a number of local authorities and schools are looking at the scope for incorporating aspects of the FEFC funding methodology into their Local Management of Schools (LMS) schemes for sixth form provision. We have welcomed the conclusions and recommendations of the Sixth Form Funding Pilots Report which will be circulated to all local education authorities with an encouragement to take forward these new approaches.

The May consultation document proposed a funding formula which builds on the FEFC not the SSA model. We have proposed that there should be 5 elements in funding:

· a programme element, reflecting the length of the course

· a programme weighting element, taking account of the fact that some courses of the same length are most costly to deliver

· an achievement element, linked to the achievement of a particular outcome

· a disadvantage element, based on individuals' home location and other indices of disadvantage

· a geographical element, initially applying only to London, where there is strong evidence of unavoidable cost.

16. Enabling people to learn in their communities and in the workplace is essential to enhancing skills, providing people with a second chance and encouraging lifelong learning. However, there have been some well-publicised instances where franchising would seem to have added minimal value to students, and yet considerable amounts of public money were allocated to colleges, employers and private training providers for it.

The Government agrees that franchising is making a positive contribution to widening participation, extending access and creating a more skilled workforce. It shares the Committee's view that franchising should not be used by employers to pay for training they would have done anyway, and notes that the FEFC requires this as a contractual condition with employers.

The government has reduced franchising. The new arrangements have some scope for sub-contracting, but one layer only. The government has ensured that any subcontracting that takes place must add real value.

17. We believe that high quality franchising can play a valuable role in the FE system, because of the way it can increase participation, extend access and contribute towards a more skilled workforce. However, in order to achieve this, franchising should grow from colleges' primary tasks of introducing students to learning—at many levels—and helping them progress. The impetus to enter into franchising arrangements should be to further this task, rather than simply maximising income. The funding regime must reflect this principle.

The Government agrees that colleges should not enter franchising arrangements solely to maximise income, and that the funding methodology should not encourage them to do so. It endorses the advice in the recent FEFC Inspectorate report that collaborative provision should continue to be reflected in a college's strategic plan.

Collaborative provision continues to be reflected in a college's strategic plan.

18. Franchising should not be allowed to distort the way colleges work and the way they are funded. We heard evidence that the way franchising was allowed to grow, and the way in which it has been funded, caused problems for some colleges. Colleges should not gain a financial advantage by concentrating on franchised work rather than in-college provision. The changes to the funding of franchised provision announced by the FEFC in January should, we believe, help redress the balance between the funding of franchised and mainstream provision.

The Government agrees that the previous growth in franchising, encouraged by the open-ended Demand Led Element, resulted in some colleges gaining financial advantage through large scale franchising operations.

See 16 above

19. We also heard evidence that the cost of franchised work was generally lower than that of 'mainstream' provision and that therefore it should be funded at a lower level, in order that the FEFC's tariff accurately reflected the costs of provision. If the study of the costs of franchised provision commissioned by FEFC confirms that this is indeed the case, we believe that the FEFC should adjust its funding system to ensure that franchised provision is funded at a lower level.

We agree that the FEFC funding methodology should accurately reflect the cost of franchised provision. Should the study of the costs of franchised provision demonstrate that it costs less than mainstream provision, we look to the FEFC to take action, and adjust the tariff accordingly.

The government will ensure that the LSC adjusts the tariff if it is found that franchised provision costs less than mainstream provision.

20. Franchising is a means of delivering education and training, not a separate type of provision. As such, like any other kind of further education it should have the student's learning experience at its heart. Thus students on franchised courses should be, and recognise themselves as being, as much a part of their parent college as those studying in the college itself. To this end franchised courses should not be funded if they are delivered solely outside the area served by the college itself except in exceptional circumstances, when specific authorisation must be obtained from the FEFC. We suggest that these circumstances would include:

· the franchisee must be a national employer or organisation;

· similar provision of equally high quality is only available locally at a higher cost than the nationally-franchised provision;

· the franchising college must be recognised as a high quality specialist in the relevant field.

The Government agrees that colleges should give priority to meeting the needs of their local community. We are concerned to ensure that franchising arrangements should not normally operate well outside a college's area—and if a college does extend its operations in this way, that should be after consulting with the local college or colleges. We endorse the action that the FEFC has taken through its recent guidance on local priorities (as in Funding Guidance 1998-99). We welcome the establishment of the FEFC's Local Priorities Group and look forward to the Group's conclusions.

The Government has asked colleges to increase their income from employers. In his November 1999 guidance letter to the FEFC, the Secretary of State welcomed the FEFC's recommended level of fees for employer training, with the employer paying 25 per cent of the cost of employer-led provision (in cash) and at least 50 per cent of dedicated provision (in cash or kind, but at least 25 per cent in cash). The Secretary of State noted that in many cases, the employers' contribution to the latter should be up to 100 per cent, and is expecting the FEFC to monitor whether these fee levels are sufficient to realise the increased target income.

21. One of the issues that arose in evidence was the extent to which public money should be used to fund the in-work training of employees. We believe that there is too much confusion about what criteria the Government has for funding the training of those in employment. The apparently conflicting cases of TEC funding, the New Deal and franchising were cited in our inquiry. We believe that it is important for the Government to make clear the grounds on which it will provide public funding of workplace training and apply such criteria equitably to all aspects of post-16 training.

The Government shares the Committee's view that we should move towards the adoption of common principles for funding of in work/training of employees.

The May consultation document set out some general principles that should govern the funding of training those in employment. We consider that employers should be responsible for investing in, and paying for, the job related training of their employees. However, we accept that the state should be prepared to fund the assessment and certification costs of some employee training, where it would increase the number of individuals with portable qualifications, thereby promoting their employability and benefiting the wider economy.

22. We believe that there is a case for time-limiting financial support to provide employers with FEFC funded training. Such funding should be used to assist the start-up costs of delivering national qualifications in the workplace. Funding from the FEFC to the college in respect of such training should be gradually reduced over a three or four year period, with the employer taking on increasing responsibility for the funding of the training. We also recommend that, in order to receive funding in respect of franchised provision, the employer concerned must offer a commitment to continue training to a nationally recognised standard for a minimum period after the FEFC funding has expired.

The Government asked colleges to make a start in 1998-99 towards our objective that employers should meet at least half of the cost of employer-led provision, by raising an extra £20 million in employer contributions. For 1999-2000 we look to the FEFC to make arrangements to secure an additional £35 million from employers and for 2000-2001 this will rise to £60 million. We shall consider with the FEFC the interaction with the funding methodology of tapered funding for employer-led franchised provision. From August 1998, FE colleges have not been able to transfer funding to employers, as part of a franchising arrangement, other than for the hire of equipment or premises.

The Government has asked colleges to increase their income from employers. In his November 1999 guidance letter to the FEFC, the Secretary of State welcomed the FEFC's recommended level of fees for employer training, with the employer paying 25 per cent of the cost of employer-led provision (in cash) and at least 50 per cent of dedicated provision (in cash or kind, but at least 25 per cent in cash). The Secretary of State noted that in many cases, the employers' contribution to the latter should be up to 100 per cent, and is expecting the FEFC to monitor whether these fee levels are sufficient to realise the increased target income.

23. The credibility of franchising rests on the quality of the training it secures. Given the continuing debate about the nature of the qualifications obtained via franchised provision, we recommend that the FEFC, the QCA and the Secretary of State should jointly review the qualifications listed under Schedule 2 of the Further and Higher Education Act 1992 as being eligible for FEFC funding.

The Government agrees

The LSC Act abolished schedule 2. This means that the LSC is able to fund all programmes including those previously known as non-schedule 2.

24. The FEFC Inspectorate should pay particular attention to inspecting FE colleges' quality control regimes for franchised provision and the quality of the franchised courses themselves.

We shall be considering with the FEFC, in the light of their administration budget for 1999-2000 and 2000-2001, the resource implications of the comprehensive assessment of franchised provision at the 280 colleges which engage in this activity.

The LSC Act abolished schedule 2. This means that the LSC is able to fund all programmes including those previously known as non-schedule 2.

25. We agree with Baroness Kennedy's analysis that clearer national policy on further education is required.

The Government endorses the Committee's views.

Nothing to add to the original response.

26. We have set out above what we believe to be the key priorities for the FE sector. The Government can help colleges achieve them through the setting of national targets for education and training, but more importantly through the way it allocates funding. Funding should be used as a planning tool by the Government to ensure that its strategic priorities are met. However, we do not believe that central Government should attempt to 'run' the FE sector at a detailed level. Further education is a locally responsive service: the Government's role should be to put in place a strategic framework that will promote effective local relationships.

See response to 27 (below)

27. We are concerned that there are too many bodies involved in the planning and delivery of further education. We urge the Government to examine the possibilities for reducing the number of these bodies. We agree that the FEFC is well placed through its regional committees to take a greater role in planning FE provision. We therefore recommend that the FEFC's role in ensuring 'adequate and sufficient provision' be strengthened, and that the Council be required to report annually to the Secretary of State on the sector's capacity to satisfy the need for FE at a local level.

We note the Committee's concern about the number of bodies involved but are not convinced that the solution is to give a lead role to the FEFC regional committees. We think it is important to make the distinction between statutory or contractual obligations that are specific to a particular sector— where the lead role will be clear—and those issues which are cross-sectoral. Nevertheless we recognise the broad responsibility of regional committees for advising the FEFC on sufficiency and adequacy of provision and will consider further how regional committees can be assisted in their work. We are also seeking to strengthen the membership of regional committees including through the appointment of elected local authority members.

Since the Education and Employment Committee's report on Further Education was published in 1998 , fundamental changes have been made to the way post-16 learning is funded and planned in England. From April 1 2001, the new Learning and Skills Council will take over responsibility for planning and funding all post-16 education and training from the FEFC and TECs. This will provide effective co-ordination and strategic planning, with a real focus on learning and skill needs. The new arrangements will also provide new and consistent audit and inspection.

28. Representatives from the LGA and the TEC National Council told us that who took the lead in initiatives to bring together organisations with a stake in FE to consider planning issues at a local level—or indeed whether a leader existed—was of secondary importance. We disagree. We therefore recommend that the regional committees of the FEFC take a lead in bringing together key organisations in FE.

We note the Committee's recommendation that the FEFC should be required to report annually to the Secretary of State on the sector's capacity to satisfy the need for further education at a local level. We shall explore further the possibility of the FEFC doing so through its regional committees and drawing on the activity of local partnerships.

As above We agree that it is vital to have effective co-ordination and strategic planning at national and local level. The Learning and Skills Council will lead in bringing together a wide range of partners, including employers, the Employment Service, local authorities, Regional Development Agencies, and community and voluntary groups, to plan post-16 provision so that it meets the needs of individuals, business and the wider community. Local Councils will also take full account of the views of individual learners, with Learning partnerships occupying a special place in the local planning and feedback arrangements. Local Councils will also work very closely with the new Connexions Service, which is our radical new approach now being developed to guide and support all young people aged 13-19.

29. We look to the FEFC's regional committees to facilitate the establishment in their areas of smaller, sub-regional partnerships, bringing together relevant organisations, which will help to identify local needs more easily.

As above

30. RDAs will have a strategic role. We do not believe that they should take the lead in planning FE, not least because they have little direct influence or control over FE colleges. We expect RDAs to work in close liaison with the regional committees of the FEFC.

We agree with the Committee's view that the RDAs should have a strategic role in economic regeneration.

See response to 2, above. The LSC will be responsible for the planning, funding and quality assuring all post 16 learning up to degree level. It will be operational from 1 April 2001.

31. We are encouraged by the examples of strategic collaboration among colleges. We believe that the FEFC Regional Committees should work to encourage such cooperation. However, we also believe that there is scope for rationalization of FE providers without damaging diversity and competition. For instance, there are 14 colleges in the Thames Gateway area alone. However, mergers must be planned, there must be a clear rationale behind mergers and they should be approved by the relevant FEFC regional committee. We recommend that the Government should provide clear guidance about the criteria on which mergers should proceed.

The Government agrees with the Committee's views on the scope for developing collaboration and partnership and on mergers and on rationalising the organisation of the further education sector.

The government continues to encourage the FEFC to take a proactive role in mergers and there has been an increase in merger activity in the last two years. The same approach will be followed with the LSC from April 2001. Support for mergers is provided through the Rationalisation fund which is available to the FEFC (and in future the LSC) to support merger and other rationalisation activity.

32. We welcome the Minister's robust approach to the more interventionist role to be played by the FEFC in cases of college mismanagement. In the interests of promoting a clear understanding of the role played by the FEFC in ensuring the probity of the sector, we recommend that the FEFC's duty to intervene is clarified and strengthened. The FEFC needs to re-evaluate the way it analyses information from colleges and should be willing to intervene at the first danger signal. Regular contact between the FEFC and the independent clerks to governing bodies (see paragraph 169 below) would assist in this process.

The FEFC has put in place a range of mechanisms to address the Committee's concerns, and closely comparable concerns expressed by the Committee of Public Accounts. The Government will keep under review the possibility that more may need to be done in respect of the FEFC's ability to intervene.

On 11 October 1999 the Government gave the FEFC the power to nominate up to two members or observers to any further education college governing body.

The Learning and Skills Act provides that the LSC will be able to directly appoint up to two members to any governing body in the FE sector. The Secretary of State will also be able to intervene either on the advice of the LSC or on his own account.

33. We recommend that the minutes of meetings of colleges' governing bodies be made available for inspection by interested parties at the college, including staff and students. Only where there is an overwhelming need for confidentiality should information about any item on the agenda be withheld. Many colleges already do this, and we hope that all colleges will introduce appropriate methods to ensure that such information is easily accessible to staff and students. Steps should be taken to ensure the staff and students know that the information is available and how they can get access to it.

It is already a statutory requirement that minutes of governing body meetings, other than of confidential matters, should be available not only within the college but to the public as well.

There is nothing to add to the Government's previous response.

34. We also believe that meetings of college corporations and their committees should normally be open to the public.

The Government has reservations about whether open meetings of the governing body should be normal practice, bearing in mind the commercial, business and personnel matters that can constitute a significant proportion of governing body business. Rather, the Government would endorse the good practice of publishing an annual report and holding an annual public meeting, at which the college's progress and future plans can be examined and questioned by the public.

There is nothing to add to the Government's previous response.

35. We support the Government's proposals on the membership of governing bodies. These proposals seem to address several of the concerns which were made to us during this inquiry, and we believe will carry the support of all those involved in further education.

The Government welcomes the Committee's support for its proposals to reform the membership of college governing bodies and has considered its detailed recommendations carefully as part of its evaluation of the responses to Accountability in Further Education.

New arrangements were introduced on 1 August 1999. It is now a statutory requirement that all governing bodies have members nominated by local authorities, community groups, staff, students and where appropriate, parents.

36 We recommend the following:

· the appointment of an independent clerk to the governing body of each further education college should be made a statutory requirement,

· an FE ombudsman should be appointed, to whom students, whistle-blowers and others can turn if they do not feel that their complaints are being dealt with adequately within the college. Such an appointment would do much to restore confidence in college governance among staff,

· all FE colleges should maintain a register of interests of governors and management which is open to public scrutiny and publish a code of conduct by which they can be judged based on guidance issued by the Secretary of State. It is important that the FEFC is given a specific duty to inspect colleges' performance against such codes.

It does not therefore appear to the Government that there is a strong case for establishing an Ombudsman for, or extending the remit of the Local Government Ombudsman to, the further education sector.

The Government does however expect all colleges to have effective complaints procedures in place, and the FEFC is reviewing its arrangements for considering complaints that have not been resolved at the college level.

Since 1 August 1999 all FE college governing bodies are required to maintain a register of the financial interests of members.

37. The contribution made by both teaching and support staff in the FE sector has been the major factor in the many achievements made since incorporation.

The Government agrees that college teaching and support staff have made a very great contribution to the achievements of the FE sector since incorporation.

The Government announced on 2 November a new policy framework for the further professionalisation of the FE teaching force, and senior management. Substantial support will be provided from the Standards Fund, for a new qualifications requirement on teachers new to the profession; for the continuing professional development of those already in post; and for intending, new and serving college principals. We have also consulted on increasing professionalism and the role of qualifications for FE staff; and have announced £50m for FE pay in 2001-02, to reward the contribution made by staff.

38. We believe that it is important to establish certain model conditions for the employment of FE staff, reflecting the fact that it is a national service. Standards should be set for the length of the working week, holiday entitlement, sick pay and similar benefits. Such a framework would leave room for local negotiation on specific issues, but would establish basic standards for the employment of staff.

The Government agrees that a national framework, setting out minimum standards, is desirable.

The negotiating bodies for staff in the further education sector are devising national frameworks to cover minimum employment practices for their staff. The DTI has implemented several Directives, including the Part-time Working Directive and the Fixed Term Working Directive which also establish minimum rights all employees.

39. It is the nature of the employment contract between staff and employer that is the overriding concern, not the distinction between full-time or part-time, agency-employer or college-employer. In each case minimum standards of employment practice must be met, and staff must be fully involved in, and committed to, the work of the college. All staff, whatever the basis of their employment, should have access to appropriate training and development.

Introduce new rules governing the conduct of employment bureaux and the rights of workers using them. It is intended to publish the consultation document before the end of this year. The Government agrees that all staff should be fully committed to the work of their college: a strong working relationship is important. We agree that all staff should have access to training and development—whether they are employed by agencies or by colleges.

The DTI published a consultation document on a review of the regulations governing employment agencies in May 1999 and expects to finalise its proposals later this year. The government is encouraging the development of teaching staff through the FE Standards Fund and the introduction of a compulsory qualifications requirement for FE teachers from Sept 2001.

40. We welcome the Government's commitment to undertake further investigation of the use of staffing agencies in the FE sector if the current DTI inquiry does not address this issue. We look forward to considering the results of this. We will also be interested to see the results of the Inspectorate's monitoring of part-time and agency staff.

The Department of Trade and Industry plan to consult on the results of their review by the end of 1998, and we will consider then whether we need to investigate further the use of staffing agencies in the FE sector.

We will consider the need to investigate further the use of staffing agencies in the FE sector after the DTI publishes its proposals.

41. Colleges are in the best position to understand their recruitment needs in terms of staff qualifications and experience. We do not think it appropriate for any individual staff agency to be regarded as a monopoly supplier of staff to the sector. We are unclear why the Colleges' Employers' Forum felt it necessary or appropriate to 'endorse' a single provider, rather than simply backing the general principle of high quality agency staff.

The Government understands that the former Colleges' Employers' Forum took the view that Education Lecturing Services was the only agency that met its criteria, and that its successor organisation, the AoC does not endorse or promote any single agency. The Government agrees that the key principle is that staff should be of high quality.

Nothing to add to previous response

42. The quality of further education is largely determined by the abilities of its staff and developing these must be a priority for the sector.

The Government's demand for the pursuit of high standards is set out in the Learning Age (particularly paragraph 5.4). A key factor in that is the need to ensure better teaching and we are grateful to the Committee for its support on this. The UK Further Education National Training Organisation has been established, and the Department will be providing pump priming funds of £0.5 million in each of the next two years.

DfEE Ministers are considering a policy to make it compulsory for new FE teachers to hold, or work towards and achieve, and appropriate teaching qualification.

43. We were not convinced that FEDA offers good value for money in the work it undertakes on behalf of the sector, or that its work justifies an annual expenditure of some £10 million.

The Government welcomes the Committee's encouragement to FEDA to refocus its work.

Ministers have been impressed by how, under its Chair and Chief Executive, FEDA has refocused its energy to supporting key FE issues of quality and access. The Government sees the Agency as an important national independent resource of experience and expertise focusing on the delivery agenda: support for policy development and implementation; the promotion of continuing professional development; evaluation work; support for providers; and the dissemination of good practice. It will want the Agency to develop capacity across the range of provision funded by the LSC, giving particular priority to the work-based route. The Government will expect the LSC to continue to provide funding for FEDA in 2001-02. In the longer term it will ask the LSC to review its funding relationship with the Agency. It will also consider whether it will continue to be appropriate for the Secretary of State to appoint members and to be represented at Board Meetings.

44. We believe that the appointment of a new Chairman and board members may provide an opportunity for FEDA to refocus its work, and we urge it to do so. It should withdraw from the direct provision of staff development activities and should focus its efforts on research on behalf of the sector, building on the strengths of one of its predecessor bodies, the Further Education Unit. The funding it receives directly from FEFC should be reduced accordingly. The Secretary of State should then consider whether there is a need for a centrally funded research capacity and how it should be provided.


See 43 above

45. We support the Government's determination to encourage more young people to study a broader programme of education beyond the age of 16, and to combine elements of both academic and vocational study where appropriate. Such reforms are timely. We recognise that the needs of adults are particularly relevant to the FE sector. The Government's endorsement of a common modular structure across A levels and GNVQs, with individual certification of modules, will more easily allow learners to build up credit towards qualifications which match their needs. However, the Government's decision to allow only one re-sit for each A level module taken by young people seems to sit ill with its commitment to lifelong learning. We would not wish to see different perceptions of the worth of qualifications achieved by young people compared with those achieved by adult learners. We welcome the Government's intention to seek further advice from the QCA on the feasibility of a unit-based system. This, we believe, is central to providing for the needs of students in further education.

The Government welcomes the Committee's support for the broad thrust of its reforms to the post-16 qualifications system.

Nothing to add to original response

46. We recognise the importance of the qualifications framework for the funding of further education, particularly because in FE, much more than in other parts of the education system, the funding received by institutions is closely related to the qualifications sought and achieved by individual students. Moreover, if the current agenda of widening participation and lifelong learning is to be put into practice, the qualifications system needs to recognise the need for achievement over differing timespans.


Nothing to add to response

47. While we welcome the joint work being undertaken by OFSTED and the FEFC in inspections, we are concerned that courses undertaken by students in different institutions may be subject to differing levels of inspection. It would be impractical to create a single inspectorate for all 16-19 provision. However, we believe that students have a right to expect common standards and rigour of inspection in comparable provision, whatever the setting. We therefore recommend that those involved in the inspection of 16-19 education and training work together as closely as possible to ensure that such common standards are developed and applied to all provision, including that offered by schools, colleges, TECs and private training providers. Where provision remains of unacceptable quality even after the application of the inspection process, we would expect the Secretary of State to retain the right to withdraw public funding from the institution concerned.

We agree with this recommendation.

The Learning and Skills Act has received Royal Assent. This provides for a statutory Common Inspection Framework for use by OFSTED and the new Adult Learning Inspectorate across post 16-19. The Act also provides for intervention in poor performers. The Government is discussing with the LSC how this principle can be implemented across the whole range of the LSC funding.

48. The criteria for deciding where HE is taught should not be based on the artificial demarcation between types of institution, but on a clear commitment to learning progression, to high quality provision, and to providing access to higher education at a location which suits learners' needs.

FE colleges have an important role to play in reaching people who might not consider going to a university, and in giving them opportunities to experience HE level study, and perhaps to progress on to a university in time. That is why links with HE institutions and HE provision are important.

We have nothing to add to previous response.

49. We recommend that the FEFC, as part of its duty to plan for adequate and sufficient provision, ensure that mainstream FE provision is not displaced by colleges wishing to increase their HE provision. We would not wish to see FE colleges suffer from 'mission drift'.

The Government agrees that it is important to guard against mission drift, and ensure that FE colleges continue to fulfil their role in providing courses and qualifications particularly at intermediate level.

We have nothing to add to the previous response.

50. We firmly believe that the funding methodology should be related to the cost of provision, so that significant levels of cross-subsidy are not generated. We therefore welcome the Government's commitment to the direct funding of HE provision in FE colleges. We also look forward to the results of the KPMG study sponsored by HEFCE into the comparative costs of HE provision in universities and colleges.

It is sensible that in general HEFCE should be responsible for funding HE provision in England, no matter where it is delivered, and in the Response to Dearing the Government announced that responsibility for funding HNDs and HNCs would transfer from 1999/2000. The funding councils will need to consider further whether other higher level qualifications should be transferred in subsequent years.

The KPMG study has produced some interesting information, but its sample was limited. As a result, HEFCE plans a further and more comprehensive review.

In addition to Higher National Certificates and Higher National Diplomas, HEFCE now funds courses in FECs leading to certain other higher education qualifications. These are higher degrees, e.g. Masters courses; postgraduate certificate of education (PGCE); first degrees (BA, BSc, BEd); Diploma in Higher Education (Dip HE); and Certificate of Education (Cert Ed). Other higher education courses, e.g. professional courses, at FECs are fundable by the FEFC, but this is under review Funding is allocated using the HEFCE funding method which takes into account student related factors and institutional and locational factors. Institutional funding is converging to bring all institutions within a tolerance band or plus or minus 5 per cent of the standard resource.

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