Memorandum submitted by the Learning and
Skills Council (ESF 15)
1. SUMMARY
1.1 This is a submission from the Learning
and Skills Council, the government agency responsible for the
funding of all post 16 learning and education in England with
the exception of higher education.
1.2 The LSC has been at the forefront of
ESF Co-financing organisations. We are responsible for managing
Objective 3, Objective 2 and Objective 1 programme monies. The
Council has currently had offers of £395 million from Government
Offices who administer ESF Co-financing on behalf of DWP. We have
adopted a proactive strategy towards using Co-financing for the
benefit of learners since its beginning in April 2001 and will
be the largest recipient of ESF Objective 3 funds.
1.3 The development of Co-financing has
required close working relationships with the ESF Division of
DWP in interpreting European Commission guidelines and applying
pragmatic processes to ensure Co-financing works at a local level.
Local LSCs have worked closely with regional Government Offices
and the national office of LSC has developed strong working links
with DWP at a national level.
1.4 Co-financing has allowed the LSC to
develop local strategic plans that address local issues of social
inclusion and learning disadvantage. Many of the recipients of
ESF money are from disadvantaged communities for whom learning
and associated activities are traditionally hard to access.
1.5 We have also been able to work with
traditional and non traditional providers who have enabled access
to disadvantage groups. The voluntary sector have secured significant
amounts of ESF funding and have found the single funding stream
coupled with the reduced bureaucracy an improvement on the former
direct bidding approach.
1.6 Some complex issues have been addressed
in the early years of Co-financing with the full engagement and
support of DWP. These issues include, defining open and competitive
tendering to meet the strategic aims of local plans; developing
IT support for the claims system; assurance processes geared to
the needs of both LSC and the EC which are not over burdensome;
consistency of message with Government Offices; the bureaucratic
burden on some providers in order to satisfy matched funding requirements.
1.7 Overall, in spite of the challenges
and difficulties the LSC judge that our engagement with ESF Co-financing
has been worthwhile and given a huge added investment to learning
in England.
2. INTRODUCTION
2.1 This submission to the select committee
is from the Learning and Skills Council (LSC). The LSC is the
government agency responsible for the funding and planning of
all post 16 education and learning in England (with the exception
of higher education). The evidence in our submission relates to
our role as an ESF co-financing organisation.
2.2 The LSC is a national organisation with
47 local LSCs and a national office in Coventry. It allocates
over £7 billion per annum to further education colleges,
work based training providers and other learning organisations
and works with these organisations to raise the levels of participation
in learning, raise the standards of achievement within learning
and increase the engagement of employers in workforce development.
2.3 This submission covers two of the areas
listed for the select committee:
— DWP's role in administering the fund;
and
— the choice, administration and monitoring
of Objective 3 programmes.
3. ROLE OF
DWP IN ADMINISTERING
THE FUND
AND RELATIONSHIP
WITH LSC
3.1 ESF Co-financing was introduced in a
White Paper response to weaknesses in the performance of ESF in
England. The origins of Co-financing stem from the White Paper
"Learning to Succeed" in June 1999, and two technical
funding consultation papers from DfES in early and mid 2000.
3.2 The LSC has been at the forefront of
Co-financing in England since its beginning in April 2001. Within
the first 12 months, 46 (out of 47) local LSCs had submitted to
Government Offices, both detailed Co-financing plans (a basic
requirement of becoming a formal Co-financing organisation), and
initial Measure Level bids to the value of £262 million ESF.
All 47 local LSCs are now approved as Co-financing organisations.
3.3 The LSC has currently received formal
Government Office offer letters amounting to over £395 million
ESF—a significant increase on the original £262 million.
3.4 Co-financing has changed how ESF is
administered in England. Co-financing means that ESF funds are
bid for, and channelled through major public organisations who
can administer the ESF funds and provide the required match funding.
It enables a single funding stream through the Co-financing organisation
which can be used to develop a strategic investment framework
rather than the previous piecemeal approach to ESF through direct
bidding to regional Government Offices(GO). It offers the opportunity
to plan ESF in a strategic way based on regional development plans
and local co-financing plans which, following consultation, are
set out in the LSC Co-financing strategic plan for a local area.
3.5 The LSC came into being on 1 April 2001
just as co-financing became the Governments preferred approach
to ESF. Despite the heavy workload and many priorities of the
LSC, we took a policy decision to adopt a strategic approach and
maximise the ESF funding invested in learning. We have led the
way on co-financing and although such leadership always carries
risks, we have achieved a great deal. Each local LSC has drawn
up a co-financing plan for its area and received approval from
their GO for their overall strategic approach. These plans cover
both Objective 1 and Objective 2 (where appropriate) and Objective
3.
3.6 Co-financing plans have been developed
in consultation with other co-financing organisations such as
Jobcentre Plus, Connexions and local authorities. This has meant
that through Co-financing organisations working together the strategic
priorities in any given area have been systematically addressed
without the dangers of overlap and duplication.
3.7 Following approval as a Co-financing
organisation, each local LSC has applied open and competitive
tendering arrangements to seek providers to deliver the required
activity or outcomes, but without imposing pre-determined solutions.
This is an essential element of the strategic opportunity presented
by co-financing, and one which the LSC believe is fundamental
to the success of ESF co-financing. The range of activities has
been varied and innovative, designed to supplement and complement
existing learning delivered through mainstream government funding.
Many projects are designed to reach disadvantaged and hard to
help communities and groups for whom learning and associated activities
are not traditionally accessible. They often combine other sources
of LSC funding to supplement the activity and help achieve the
overall objective.
3.8 As a result of this Co-financing activity,
it is envisaged that over £600 million from the European
Social Fund will be made available to finance a large and varied
range of additional local learning and skills projects across
England for the period 2001-06 and help us to achieve our mission
to raise participation and attainment through high-quality education
and training which puts learners first.
4. THE CHOICE,
ADMINISTRATION AND
MONITORING OF
OBJECTIVE 3 PROGRAMMES
4.1 Following a national evaluation carried
out by Fraser Associates on behalf of the Department for Work
and Pensions, the report "Evaluation of the Initial Implementation
of ESF Co-financing in England" has been published. The report
concludes that the LSC has made an encouraging start to Co-financing,
and that provision is being supported well and targeted on priorities.
It also concluded that Co-financing offered the opportunity for
a more strategic quality to ESF planning and spend, giving organisations
a clearly defined idea of activity requirements required to address
local needs. Some examples of LSC co-financed projects are attached
at Annex 1. It saw a better service to providers, who were getting
far more direct support from local LSCs under Co-financing, than
previously existed under the direct application to Government
Office approach. It was also encouraging to find that Fraser Associates
found that local LSCs had shown a great deal of sensitivity in
engaging partners, particularly in dealings with the Voluntary
Sector. (Example 1, Annex 1)
4.2 Co-financing has also given LSC the
opportunity to work with non-traditional providers who are better
able to access disadvantaged communities, and for whom co-financing
has removed the substantial administrative burdens that were present
in the previous direct bidding ESF. Small organisations have been
encouraged to work with the LSC, and even for larger organisations
the identification of match funding by the LSC has removed what
used to be a difficult and resource intensive part of the activity.
(Examples 4 and 5, Annex 1.)
4.3 There were some initial concerns from
the voluntary sector that they would not benefit from the introduction
of Co-financing. Current data on the involvement of the voluntary
sector on LSC Co-financing shows that approximately 30% of ESF
funds to date have been committed to this sector and represents
a major investment in the sector as a whole.
4.4 There has also been opportunity to work
with further education colleges to use ESF funding to enhance
their provision and deliver learning to identified groups or communities.
(Examples 2 and 3, Annex 1.) This has raised some difficult issues
relating to match funding and perceptions of increased administration
bureaucracy that we are still working through with the sector.
4.5 The LSC has worked closely with the
ESF Division of DWP throughout the introduction and implementation
of ESF Co-financing. This has been necessary to ensure that we
have had a common understanding of the detailed requirements of
the new approach. ESF Division supported many LSCs in their initial
consultation events and has continued a series of regular keep
in touch meetings with the national office ESF team as well as
attendance at the England Programme Monitoring Committee for Objective
3. They have also acted as a major communications conduit to GOs
to ensure that key messages from the LSC have been given to GOs
consistently.
4.6 Inevitably, because of the major changes
brought about with Co-financing, it has been necessary to work
with ESF Division of DWP very closely to achieve understanding
and agreement on some of the complex issues surrounding ESF co-financing.
This has been an honest and fruitful relationship which has resulted
in some clear policy development relating to ESF co-financing.
Early discussions between DfES and DWP about the clear strategic
reasons for LSC being involved in ESF and the support for co-financing
have set the framework and tone of the partnership working.
Open and Competitive Tendering
4.7 The LSC has always understood and applied
the need for open and competitive tendering. Defining competitive
tendering within the structure of co-financing has been more problematic.
There has been a risk that LSC would be driven back down the road
of defining individual projects and seeking competitive bids rather
than setting out our objectives against which organisations can
propose differing solutions in their bids. We have worked closely
with ESF Division to develop additional guidance and examples
of competition within the framework of the co-financing plan,
which have been agreed by the European Commission. This has enabled
the LSC to continue its broad strategic approach to ESF and we
continue to promote this strategic approach since it unleashes
the power and energy of local bodies.
Claims from LLSCs to GOs
4.8 The LSC has been at the forefront of
implementing co-financing and as a consequence has had to develop
new and complex IT systems to support some of the processes associated
with being the final beneficiary for ESF monies. One of the most
important developments has been the IT system which will identify
and quantify match funding to support ESF projects.
4.9 The LSC was created on 1st April 2001
and the speed of our engagement in co-financing has led to the
supporting ESF IT systems being developed in parallel with live
running projects. Because of this, LSC is not yet able to verify
match funding for ESF projects and have not yet been able to submit
full claims including the match element to GOs against committed
spend by the LSC. This will be rectified over the next 6 months
as the new IT system becomes available although it remains a risk
for the LSC and GOs. ESF has been identified as one of the twelve
key risks on the LSC risk register.
Government Office Consistency
4.10 The relationship between GOs and LLSCs
has been critical to the success of ESF co-financing and relationships
are generally positive and constructive. The fact that local LSCs
were quickly able to become approved as CFOs is testimony to the
hard work of both GOs and LLSCs. There is however an issue around
the ability of nine GOs to both give and receive consistent messages
relating to the LSC and ESF. Until recently LSC nationally has
not had a direct relationship with GOs, and has worked through
ESFD to give and receive messages relating to ESF. We have now
accepted that LSC will attend meetings between ESFD and GOs to
speak directly to GO representatives about any concerns or issues
as they arise.
Assurance
4.11 LSC Internal Audit and Provider Financial
Assurance Divisions have undertaken negotiation with DWP Verification
and Audit Team on delivery of audit assurances in respect of co-financed
ESF.
4.12 Assurances are required in a form acceptable
to the European Commission under two Articles within Regulation
438/2001. Article 4 of the Regulation requires independent assurance
on the effective operation of systems and controls within the
Beneficiary Organisation (in this case the LSC) and the proper
disbursement of funding in accordance with the contractual agreements
between LSC and Government Offices (on behalf of DWP) and all
appropriate EC Regulations. Article 10 provides that DWP will
arrange for independent spot checks to confirm the probity of
use of structural funds.
4.13 Throughout negotiations in respect
of Article 4 assurance, DWP has adopted a realistic approach to
obtaining assurance through the existing control framework within
the LSC and through its sponsoring Department, DfES. This has
facilitated, through use of the LSC Chief Internal Auditor's specific
certification of assurance for each local LSC, provision of assurance
acceptable to DWP and the EC as a part of the LSC's normal conduct
of its business.
4.14 The position with regard to Article
10 inspections has been less easy to resolve because the assurances
obtainable under Article 4 of the Regulation are, according to
EC guidance, not usable for the purposes of independent spot checks
under Article 10. This has led to considerable debate culminating
in our agreement to accept a spot-checking regime which is considerably
more rigorous than would ordinarily be expected within the normal
conduct of UK Government business. In all our discussions, DWP
have been open and fair and we have accepted their arguments that
such rigorous review is necessary to manage the risks inherent
in the rigour with which the EC's own auditors conduct their business.
Impact on Providers and Final Beneficiaries
4.15 There have been undoubted benefits
derived from co-financing. These include the ability to ask for
bids based on solutions rather than imposed approaches; provision
of match funding by the LSC rather than each provider seeking
match individually; and the ability to identify match from across
the whole of LSC provision rather than that directly related to
the provision.
4.16 This has, at the same time, led to
some tensions for providers. Where match has been identified within
a provider not directly involved in an ESF project, they have
expressed some resentment over the additional work needed to identify
match funding to individual learner level, and to collate the
management information required. This is an issue for FE colleges
in particular who, because of their size and broad mix of learners,
offer an important source of match funding.
4.17 This is compounded in some circumstances
by a lack of understanding of ESF and in particular ESF Co-financing.
5. CONCLUSION
5.1 The development of ESF co-financing
has been rapid. This has meant that a number of issues have had
to be resolved with DWP and GOs at speed. The good working relationship
between LSC and DWP has meant that we have largely solved some
major issues through close working and careful interpretation
of European directives. There still remains a number of challenges
as identified in this submission and we cannot assume the future
will be without difficulty.
5.2 ESF is complex and regular changes in
emphasis or interpretation means that we can never be wholly confident,
however, the LSC has judged that the prize of over £0.5 billion
of extra public spending on learning is worth the effort. The
LSC has drawn down significant sums to invest in innovative learning
programmes and for beneficiaries who would not otherwise have
been funded or guided towards learning.
Chris Minett
Assistant Director, Structural and Learner Support
4 April 2003
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