Memorandum from the Learning and Skills
Development Agency (ILA 18)
1. LSDA would like to draw the Select Committee's
attention to a number of issues that could be considered in relation
to the future development of ILAs.
THE ILA FRAMEWORK
2. The arrangements for ILAsthe policy
framework, their administration and quality systemslie
outside the existing LSC framework for post-16 funding and planning.
They are therefore disconnected from the mainstream delivery system
in the Learning and Skills Sector.
3. Following the experience of the ILA pilot,
we believe that there would be advantages to aligning or integrating
its operation with the LSC to ensure coherent policy, particularly
on fee subsidy and on the quality and accountability frameworks
for providers. LSC mechanisms for approving new providers and
for provider review could be the quality control mechanisms that
learning accounts need to ensure that funds are only channelled
to reputable providers. Such mechanisms are particularly important
where some providers are operating on a commercial basis. LSC
systems do encompass for-profit providers in the sector.
4. Equally, thinking on fees discounts and
fee remission needs to considered in the context of developing
policy on public sector fees. In short, a future role for ILAs
should be developed within the mainstream of post-16 policy.
5. ILAs offer account holders a contribution
towards the fees for their chosen learning programme. Their role
therefore needs to be examined within the wider context of course
fee arrangements for adults. Adult courses receive a substantial
public subsidy (around £2 billion) through the LSC funding
system. Public funding for provision of learning opportunities
for adults should be more clearly acknowledged as a subsidy for
the cost of that provision.
6. LSC funds providers based on a national
rate for the provision delivered, on a per learner basis. This
is deemed broadly to cover 75 per cent of the costs, with the
client (the learner or their employer) contributing a further
25 per cent. Providers are not permitted to charge course fees
to adult clients (or their dependants) on means-tested benefits
or to those on basic skills programmes. Apart from this requirement,
there is no national fees policy for adults and providers are
free to set the course fees that they consider are appropriate
in the context of their local learning market. In practice many
colleges have a policy of not charging fees.
7. Therefore, in colleges, learners are
generally subsidised at between 75 per cent and 100 per cent of
the cost of the programme. Where fees are charged in colleges
for LSC funded provision, these do not therefore reflect the real
cost of the provision. Moreover learners are generally unaware
of the extent of this public subsidy. The ILAs in contrast, do
make clear the course fee subsidy being offered. However, there
are a number of unsatisfactory aspects to current arrangements:
Learners using the ILA to pay for
LSC-funded programmes may be unaware of the full level of subsidyie
both through the LSC and through the ILA
The total level of subsidy will vary
for individuals with identical personal circumstances and on identical
courses, because of differing institutional policies on fees
Providers may be encouraged to introduce
fees inappropriately in order to claim the ILA discount, adding
to the deadweight element.
8. A distinction needs to be understood
between course fees and fees for examinations and assessment.
Examination and assessment fees are additional to course fees.
In December 2001, LSC confirmed that providers may not charge
basic skills learners for any "hidden costs", including
examination and assessment. The 10 per cent widening participation
uplift for basic skills learners is deemed to cover all hidden
9. However, providers have discretion over
whether they charge examination and assessment fees to other learners
exempt from course fees. For institutions with high numbers of
learners exempt from course fees, the cost of absorbing the costs
of examinations and assessment is considerable. Equally, examination
and assessment fees represent a significant burden for individual
learners, particularly those who are claimants of means-tested
10. The use of an ILA mechanism to cover
examination and assessment fees for targeted learners could be
considered. In addition the role, costs and flexibility of examining
and awarding bodies is a neglected area of enquiry and in need
11. From this analysis of course fees and
examination and assessment fees we suggest that the current broad
brush approach to fees for adults:
Takes only a very general account
of capacity to pay
Takes little account of prior learning
Does not discriminate by level of
courseand therefore takes no account of potential returns
to the individual
Only reflects public policy priorities
to a limited extent
Hides the true level of public subsidy
12. We suggest that ideally a clear national
fee policy should be established which makes clear where public
subsidy is focused, in advance of the introduction of a reformed
13. An option for future fees policy could
be to reduce the level of subsidy provided through the LSC funding
mechanism and to require providers to seek a higher fee contribution
from those learners able to pay. This would be in line with government
policy to encourage increased individual responsibility. However,
fee remission arrangements could be maintained and the approach
would be compatible with the introduction of an entitlement to
free provision to level two.
14. Further, consideration could be given
to distributing the fee subsidy on a more targeted basis through
Individual Learning Accounts. There are challenges associated
with targeting via the individual learner (as compared to subsidising
the provision) that need to be taken into account. Research into
the use of vouchers
suggested that to take advantage of the scheme, learners needed
to have basic skills, self-confidence, existing motivation, and
knowledge of the system (ie cultural capital). To be successful
in attracting "new" learners or those who need basic
skills, substantial encouragement and support needs to be available
to individual learners (for example through providers or Trades
15. In addition, the use of ILAs to target
provision would require a change of policy with regard to universality/targeting
and would therefore have implications for the operation of the
scheme. We suggest it could also have implications for institutional
stability. These issues are explored below.
16. LSDA's research into the introduction
of ILAs identified that one of their strengths was simplicity
of operation. Because they were universally available, means-testing
was not needed, allowing for relatively simple administrative
systems. This was of particular benefit therefore to the providers
delivering the scheme.
17. However, this universality was also
a limitationthere appear to have been high levels of deadweight.
From the DfES study,
only 18 per cent of "recent redeemers" had no qualification
at all, 36 per cent had NVQ Level four or above and 54 per cent
said they would have been able to pay without the ILA.
18. There is a clear tension between simplicity
of operation and closer targeting to those in greatest needincreased
targeting inevitably requires more complex administrative systems.
While a universal system will avoid stigma and may therefore be
more attractive, a clear consequence is that it will also incur
19. There is a policy choice between tolerance
of a rising level of deadweight in the interests of widening participation
or development of increasingly fine tuned targeting and the administrative
costs associated with such a system. If the policy intentions
of lifelong learning are realised and levels of participation
increase significantly, the capacity of systems to target public
subsidy and minimise deadweight is likely to become increasingly
THE ILA MECHANISMS
20. If ILAs are to be more targeted on those
with low levels of skillsfor example, to support the implementation
of a level two entitlementaccess to reliable information
about learners' prior achievement will be needed. However, collection
of reliable data is notoriously difficult. In current arrangements
there are no incentives for individuals or providers. Whereas
in the longer term a unique learner identifier introduced at school
age may be developed, this will not help in the short term.
21. The potential of ILAs to act as a mechanism
for the systematic collection of individual learner data at a
national level could be explored. At the moment the Individual
Learner Record contains much of the detail about course programmes
that the ILA record lacks and needs in order to be able to play
the role we envisage. On the other hand the ILR does not track
individuals. Bringing the LSC and ILA mechanisms together could
have significant benefits.
22. Smartcard technology, associated with
a unique learner identifier, may have potential in this area.
Such technology is increasingly familiar to people. Young people
will soon be aware of the connexions card; adults are already
aware of supermarket loyalty cards, Air Miles and similar schemes
which are based on a record (an account) of transactions. Perhaps
the most important learning from these arrangements is that people
co-operate willingly in the maintenance of their individual record
because it is clear that benefits derive from it. This is not
always the case with current enrolment procedures.
23. However, irrespective of any longer-term
systems solutions, targeting of ILAs will require more complex
administrative systems to assess individual eligibility for the
additional ILA subsidy. In summary, if ILAs are to be targeted
there will be a need for:
Improved mechanisms for tracking
individual learners' achievements
Mechanism within the ILA system for
verifying evidence of individual learner circumstances (for example,
verifying if a learner is in receipt of a means-tested benefit).
24. If the decision is taken to direct a
greater proportion of the fee subsidy through the ILA mechanism
rather than direct to institutions, there will be an impact on
the stability of providers. Payment will come after the actual
recruitment of learners on to programmes whereas in the current
LSC system payment is based on a projected delivery plan and adjusted
in the light of actual recruitment in a future year.
25. The instability this might cause could
in turn have an adverse impact on the capacity of providers to
remain financially viable and to maintain and develop the quality
of their provision. Serious consideration will need to be given
to this matter. Rather than creating a responsive provider network
committed to meeting individual needs it could diminish the diversity
of the provider network and undermine long-term quality improvement
26. Careful modelling needs to be carried
out on the likely impact on the range of providers. Consideration
may need to be given in the longer-term to a funding system that
establishes a notion of core institutional funding in addition
to the learner-driven element. This might secure an appropriate
level of stability within the provider network.
27. The amount spent on supporting learners
in the FE sector with indirect costs (travel, childcare, materials,
etc) is in the order of £50 million. This support is more
directly targeted at those in need of financial support but again
has a strong element of local discretion and is not supported
by a national entitlement.
28. If course fee subsidy were targeted
more carefully some of the savings might be available to strengthen
learner support and create a clearer entitlement for adults. Support
for adults in the Learning and Skills Sector is very limited compared
with HE where there are grants and loans, or with under-19s where,
in addition to parental support, there is the possibility of EMAs
in pilot areas.
29. Consideration could be given to ILAs
being used to distribute learner support. In order to carry out
this function ILAs would need mechanisms for paying actual money
to the individual to meet costs such as transport, materials and
childcare. ILAs may therefore need to work through a payment agency.
LEAs have well-established arrangements for means-testing and
making payments for both HE support and EMAs; and there are clear
grounds for their playing a central role in support with transport.
The ILA centre would determine whether an individual, in the light
of their learning to date, and policy priorities, were eligible
for a type of support. They would then agree with a payment agency
to meet the cost.
30. Using an ILA in this way would not completely
remove the need for college based access funds, which provide
a way of dealing quickly with unusual and emergency needs. It
could however be the vehicle for delivering national entitlements,
for which there is no rationale for or benefit to administration
at the level of the individual provider.
31. The development of ILAs for this purpose
might be feasible but consideration should be given to the consequences
of spreading responsibility between different agencies and whether
this would aid efficiency.
32. We suggest that the potential of an
Individual Learning Accounts mechanism could be developed to:
Target resources more finely towards
priority individuals and types of learning
Track learners and their achievements
Make clearer to individual learners
the level of subsidy that is being provided.
33. However, to achieve this, the development
of the ILA mechanism should be based on:
A national fees policy to:
Secure more effective targeting
of subsidy and reduce deadweight
Clarify and make more evident
the level of actual public subsidy being provided.
Integration with mainstream systems
of the Learning and Skills Council.
Learning and Skills Development Agency
1 In this paper, where we use the term fee subsidy
we are referring to the subsidy through course funding as well
as that through fee remission. Back
Triumphs and Tears, P. Hodkinson, A. Sparkes and H. Hodkinson,
(London, David Fulton), 1996. Back
Individuals Learning Accounts-follow up study, DfES research
brief No RBX 01-02; January 2002. Back