Examination of Witnesses (Questions 80-99)
MR BRYAN
SANDERSON AND
MR JOHN
HARWOOD
MONDAY 9 DECEMBER 2002
80. So it is a cost reduction, not a measure
of productivity?
(Mr Harwood) It is a measure of the cost of managing
the scale of our budget. That is what the overhead cost is about.
It is about enabling that overall budget which will be rising
to £9 billion in 2006 to be run for a certain overhead cost
which Parliament has prescribed.
81. So it is the ratio between staffing costs
and the overall costs—
(Mr Harwood) The ratio between the overhead costs
of running it.
82. Therefore it is a measurement of input and
not a measurement of output?
(Mr Harwood) The output of course is what we have
managed to achieve with the programmed spend that Parliament gives
us, which is going to rise from £7.5 billion this year to
just over £9 billion in three years' time. Our job—and
you will be able to hold us to account as to whether we do that—is
to achieve the sort of change in terms of skills and in terms
of 16-18 participation that we are all setting out to achieve
and to see whether we are able to do that within the overhead
costs' envelope that has been set for us.
83. Pursuing that point with reference to the
grant letter that was sent last week where the Secretary of State
is really quite explicit in saying that he expects the Council
to ensure that it has the right staff, in your letter to the Chairman
for today's meeting you say that most of the LSCs have staff with
experience of the schools sector, therefore not all of them do?
(Mr Harwood) That is correct.
84. £1.5 billion is what you are currently
spending on the schools sector but some of your local LSCs do
not have staff with experience of schools.
(Mr Harwood) They do not have experience of having
worked in the schools sector, that is correct.
85. What proportion, broadly, of local LSCs
have not got any staff with experience of working within the schools
sector?
(Mr Harwood) It is about a third.
86. About a third? Also on the grant letter,
in terms of the budget as it is projected over the next three
years, the separate budget line for school sixth forms is merged
into the learning participation budget line for 2004-2005. What
is the significance of that?
(Mr Harwood) I do not know what the significance of
that is because I did not write the letter.
87. It is the Secretary of State's decision
and £1.5 billion has been switched from its old budget line
and aggregated with a different budget having been all rolled
up together. There must be some reason for that, there must be
some implications of that?
(Mr Harwood) What the Secretary of State is trying
to do is to simplify the budget lines that are the votes that
are allocated to the Learning and Skills Council. That merged
line will be necessary when we have achieved convergence and we
are able to, in that case, not need to have a separate guaranteed
funding line for schools because we have a single funding system.
88. So the corollary to that is convergence
will have been achieved by 2004?
(Mr Harwood) It will not have been achieved by 2004.
I think what is happening is that the funding lines are being
merged in advance of that, but I must emphasise that that does
not in any way undermine the requirement on the Learning and Skills
Council to maintain the real terms guarantee for sixth forms.
89. Last year when we met you said that the
cost of convergence would be around £280 million for 16-18
years and £600 million for all FE students. In view of the
announcement by the Secretary of State recently of the £1.2
billion extra, are you going to be able to distribute that £280
million in the first instance to achieve convergence 16-18?
(Mr Harwood) We shall certainly be distributing the
additional funding the Secretary of State has conveyed to us for
next year and the two years afterwards. Our best estimate at the
moment—and we have not finalised this so I would not want
this to be regarded as the definitive final version—is that
the additional funding that we are due to receive from the Department
and Treasury over the next three years will go a substantial way
to achieving that convergence.
90. How are you going to be distributing that
as of 1 April next year? Are you going to be distributing it on
the same formula, the same methodology to sixth forms as to colleges?
(Mr Harwood) No, we are maintaining the two funding
streams that we have at the moment until we achieve convergence,
so the sixth form funding system that currently exists will continue
with an LSC formula, as I am sure you know, and then the non-schools
formula will continue.
Chairman
91. Before you move off, if you are changing
topics entirely, I have just one supplementary to the main questions
that David was leading on. All this money that has become available
is under the general Government logo of "Investment for Reform"
and in a sense what I wanted to ask you, building on David's line,
was how do you guarantee that the partners that you are working
with on this work together, because presumably if weak colleges,
for example, are identified by OFSTED with their expanded remit,
you must come in behind that and learn from that and take action
that will help those colleges cease to be colleges that not only
are under-performing but will start to receive less money from
the Department if they are not careful. How does that relationship
work in terms of you helping to deliver on the reform?
(Mr Sanderson) It is a bit of a carrot and stick and
you are right to raise it. I think that the big difference for
me compared with business experience is there is not an option
normally to close these places down. If it were an under-performing
business you would pull the rug from under it and dispose of it
somehow or other. FE colleges in particular in my experience are
so fundamental to the urban regeneration programme in so many
cities around the country, that is not an option however they
are performing, so we have to turn them around and there we have
a big issue for the Learning and Skills Council.
92. Has North East Derbyshire College been closed
down, as the Minister said in a recent debate on FE, or is it
still open under a different name? We have a colleague in the
House of Commons who is particularly interested to know, Mr Dennis
Skinner.
(Mr Harwood) He has been asking questions about it,
but the answer is that learning will continue in the building
which is currently occupied by the North East Derbyshire College
but it will continue as a merged institution.
Mr Chaytor
93. If I could just move on to the question
of targets that the Secretary of State has set in his letter.
He says he wants to reduce by at least 40% the number of adults
without a level 2 qualification by 2010. Does that make sense?
Do you know how many that is? Is there not an easier way of setting
that target? If I can refer to another one just to reinforce my
point.
(Mr Sanderson) That is probably the most difficult
one.
Mr Chaytor: I will give you an even more difficult
one. The previous one is improving the literacy and numeracy skills
of 1.5 million adults. How do we judge if they have improved?
Chairman: Can we start with the two, I do not
want to lose either of those.
Mr Chaytor
94. On the level 2 qualification, we do not
know how many have not got it now but we are told we have got
to reduce that by 40% and we do not how many people there will
be by 2010.
(Mr Harwood) We think that having a target of reducing
something by X% is a good first step, but for managerial purposes
we need to convert that into the other way round so that we can
plot progress. What we have proposed is that we should have a
percentage target of the achievement in the adult population.
We are talking about a 73% target. That in a sense gives us something
positive that we are trying to aim for.
95. A target for those who have, not a target
to reduce —
(Mr Sanderson) You can see the point of that.
(Mr Harwood) We can do all the things that we need
to do which is to disaggregate that across 47 areas and set performance
targets for each one of our Learning and Skills Councils and then
together aggregate the total. Can I go on to the basic skills
target. That is a similar one where what that has been converted
into is, first of all, a proposition that we should equip so many
adults with basic skills qualifications each year. I talked about
it at the beginning probably before you arrived, about our achieving
more than we set out to achieve in our first year so in our first
year we actually achieved about 250,000 rather than the 40,000
that we set as our target.
96. When we say a basic skills qualification,
are we are talking about the same national qualification across
the country or are we leaving it to the discretion of local LSCs?
(Mr Harwood) We are talking about a basic national
minimum standard across the whole country. That is the first thing.
The second thing is that we obviously need to know the people
who are flowing through that process. That is a measure of flow
and what we need to make sure, because of course what we are talking
about is a bath out of which water is flowing but also into which
water is coming possibly at the same time, is how full the bath
is, and that is why next year with the Department we will be doing
a survey of adult literacy and numeracy in order to check how
well we are tackling the basic challenge.
Chairman
97. Will that be after the National Skills Strategy
or before it or when?
(Mr Harwood) I suspect it will be part of the National
Skills Strategy because clearly when I was talking about skills
earlier on one of the key components in raising skills in the
workplace is the need to make sure that we reduce the number of
adults who have real problems in numeracy and literacy. A key
part—and this was identified by Chris Humphreys's National
Skills Task Force—was tackling that table of adults who
have real problems in literacy and numeracy.
Mr Chaytor
98. If I could ask about one more target also.
On the 90% of young people by the age of 22 having participated
in a programme fitting them with the skills for entry into higher
education or skilled employment, essentially that includes everyone
from one end of the spectrum with five A-levels to the other end
with a single NVQ 1. Would it not be more sensible and meaningful
to disaggregate that target to two separate targets?
(Mr Harwood) There seem to me to be essentially two
targets we are trying to aim for, one is attainment, but before
anybody can attain they have to participate. The LSC last year
set its long-term goal of 2010 a participation target of somewhere
around 92% so we think that the latest target fits very well with
the one we were undertaking which is about a participation target
for 2010. If we are to keep up and catch up with what is happening
in the rest of Europe that is the sort of level of participation
we need to be aiming for by 2010.
(Mr Sanderson) The rest of Europe is nearly there
already.
99. If 91% of those 92% have got a NVQ 1 that
is quite a different picture overall, hence my question.
(Mr Harwood) That is why I disaggregated the issue
about first of all the percentage of participation but then building
on that we need to adopt an attainment target. I think personally
that we should be aiming to have a system which funds a basic
entitlement to a level 2 qualification in this country and we
ought to be saying to all adults who do not have a level 2 qualification
we will fund you in order to achieve that level 2 qualification.
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