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
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
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 levelpartly 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
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
periodfrom 2004-05 to 2010-11the 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
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
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
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
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