Select Committee on Innovation, Universities and Skills Written Evidence

Memorandum 57

Submission from the Association of Colleges


  1.  The Association of Colleges (AoC) welcomes the opportunity to comment on the issue of funding for equivalent or lower qualifications (ELQ). AoC is the representative body for the 400 further education colleges in England, Wales and Northern Ireland.

  2.  Further education colleges have a significant role in higher education:

    —  colleges provide 46% of entrants to higher education;

    —  colleges account for 200,000 higher education students, including 54% of foundation degree students and 86% of those taking higher national certificates; and

    —  37 mixed-economy colleges have more than 500 full-time equivalent students each (ie more students than the average Oxbridge Colleges).

  3.  AoC's response to this enquiry focuses on the specific issues relating to the funding of students taking equivalent or lower qualifications (ELQ). We also identify some issues of principle and general lines of enquiry which we encourage the new Committee to follow up.


  4.  AoC has no specific comment on the desire by Ministers to make savings of £100 million in the £7 billion higher education teaching budget. Colleges support many of the Government's aims for higher education, for example:

    —  to make the higher education system more responsive to economic needs;

    —  to make higher education courses more flexible and accessible to those in work;

    —  to promote diversity and choice for students; and

    —  to improve access by people from families on low incomes or no history of higher education study.

  5.  If the ELQ decision is the only way to release funds for these national objectives, then colleges will understand and accept the right of Ministers and Parliament to make that decision.

  6.  AoC does, however, have the following concerns about the decision to make this saving by cutting grant funding for students taking equivalent or lower qualifications:

    —  it will be more difficult for middle-aged and older people to reskill;

    —  the cut will mainly affect Government funding for part-time higher education. This will further weight HEFCE's budget even more in favour of full-time residential higher education taken by the young;

    —  it is administratively complicated to ration education funding by the prior qualification of the student. As the committee may be aware, the Learning and Skills Council prioritises funds for first level 2 and 3 qualifications but it does not withdraw all funds for those taking second qualification at this level—partly because of the difficulties involved in collecting wholly reliable data on prior qualifications; and

    —  some colleges will lose significant funding from the change but may not be able to access the £100 million because of the restrictive ways in which HEFCE allocates funds. Much of the £1+ billion HEFCE funding for initiatives can only be claimed by universities because of the priority placed on stability over competition. Universities have been given the first call on funds for work with employers despite the longer track record of many colleges in this type of course.

  7.  AoC understands that HEFCE presented as many as five options for making the £100 million saving in its discussions with Ministers over the 2007 spending review. The other options might have been less damaging to the Government's overall objectives.

  8.  In the House of Commons debate on 8 January 2007, there was some debate over the impact of re-distributing £100 million in higher education funding between 2008-09 and 2010-11. The Committee may be interested to note that the redistribution is relatively small compared to the changes that will be made in adult learning funding over the same period. The following facts illustrate this point:

    —  The November 2007 grant letter to the Learning and Skills Council (LSC) requires it to cut funding for developmental learning from £400 million to £100 million between 2008/09 and 2010/11. Developmental learning covers adult learning courses which do not lead to level 3, level 2 or skills for life qualifications. This £300 million funding cut will release funds for priority qualifications but is likely to significantly reduce LSC funding for level 4 qualifications.

    —  This LSC redistribution comes on top of a similar change between 2005 and 2008. Over a six year period—from 2004-05 to 2010-11—the LSC will increase the share of adult learning funding spent on priority qualifications from 45% to 95%. AoC estimates that this represents a redistribution of £1 billion, ie ten times the size of the ELQ change.

    —  The changes in adult learning funding has created difficult challenges for colleges because the LSC used competitive methods to allocate the redistributed funds and has acted under Government instructions to encourage new providers.

    —  Colleges respect the right of Ministers and Parliament to set policy. They have responded effectively to the new priorities outlined in the Government's skills strategy. Nevertheless the redistribution of funds has not been without cost. The number of adult learners funded by the LSC in further education fell by 1.4 million between 2004-05 and 2006-07.

  9.  Many of the differences in Government policy towards higher and further education can be explained by history or by the existence of different policy-making silos. It is not clear why part-time adult learners in further education should bear the brunt of funding reductions while full-time higher education students should receive such a large share of DIUS funds. It is not obvious why HEFCE does so little to link funding to priorities while the LSC should do so much. Ministers have had to make a tough decision on ELQs because they have so little room for manoeuvre in reshaping the existing higher education budget.

  10.  The new department, DIUS, has an opportunity to take a more coherent approach to the funding of post-compulsory learning. AoC encourages the Committee to address this issue as a priority.


  11.  There has been a lot of public comment on the timing of the decision and the amount of consultation. AoC would like to add the following points to those that have already been made:

    —  the Government operates on a three year spending cycle. Budgets have been set for a period running from 2008-09 to 2010-11. Given this, it is reasonable for Government to make decisions which take effect from 2008-09. The fact that there will be review of the regulated fees system in 2009 is only marginally relevant;

    —  having said this, the timing of the decision has left very little time for institutions and students to make proper choices about 2008-09. Our guess is that delays in finalising the 2007 spending review and disruption caused by the Machinery of Government changes explains the timing;

    —  further delays in resolving the position for 2008-09 would be undesirable; and

    —  the lack of consultation about the decision made in September 2007 is also undesirable but it is not unprecedented. Ministers made a decision on the funding for English for Speakers of Other Languages (ESOL) in October 2006 that had equally far-reaching ramifications. The question is whether better consultation makes better policy. In AoC's view, earlier and fuller consultation on this issue would have resulted in better policy.


  12.  HEFCE has set out a number of measures to alleviate the impact of the decision, including a list of subject exemptions, a safety net and an increase in the part-time allocation. These measures will help universities and colleges adjust to the change and are welcome for those reasons. AoC particularly appreciate the plan to protect funding for students taking foundation degrees which will help institutions develop courses to meet economic needs.

  13.  Our main concern is that the list of exemptions proposed by HEFCE is too narrow and does not include some valuable qualifications, for example the BsC in Clinical Physiology offered by City of Westminster College. It is also perverse for the Government to provide full grant and loan funding for individuals wanting to take PGCEs (Schools) as their second qualification but no funding at all if the individual wants to take a PGCE (Further Education).

  14.  We also have one detailed issue of concern which is the reliability of the data used by HEFCE to make the funding adjustments. HEFCE plans to use entry qualification data from 2005-06 to make adjustments but there are difficulties associated with the data obtained from colleges. AoC has taken this issue up with HEFCE and hope that it can be resolved.


  15.  The Committee has received many submissions on the impact of the changes on students. In the interests of brevity, we have nothing to add to these points.


  16.  Subject to concerns about the data mentioned above, the impact on the average college is similar to the impact on the average university. HEFCE modelling shows that the decision will redistribute 4% of the funding of the average institution. A number of colleges are affected disproportionately, including some colleges in London who could lose up to 40% of their HEFCE teaching funding. The full impact on colleges is unclear because the position is obscured by franchising. More than half of the higher education students in colleges study under franchising arrangements with universities.

  17.  The measures taken by HEFCE to alleviate the impact of the decision will help colleges adjust to the new priorities. The key question for colleges will be whether they can access the redistributed £100 million on fair terms with universities.

January 2008

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2008
Prepared 27 March 2008