The Skills Funding Agency and further education funding - Business, Innovation and Skills Committee Contents


In this Report we consider the new structures which the Government has put in place to administer further education. In particular, we assess the new Skills Funding Agency (SFA), one of two organisations—the other being the Young People's Learning Agency (YPLA)—created to replace the Learning and Skills Council.

We are not convinced that the new system is a step in the right direction. There are now significantly more organisations and bodies involved in the delivery of further education which will increase complexity in the system rather than simplify it. As a result it could be both cumbersome and unwieldy.

At the heart of this complexity lies the division of responsibilities between the Skills Funding Agency and the Young People's Learning Agency. We have grave concerns about the logic or probable effectiveness of having two organisations running further education, and we have yet to be presented with a convincing argument in support of this approach. We are particularly concerned that the need to co-ordinate the work of the SFA and YPLA on issues of policy, administration and shared services will lead to unnecessary long-term bureaucracy. Furthermore, we are highly sceptical that the creation of two agencies to replace one can possibly achieve long-term cost savings expected by Government.

The Government's ambition to reducing the number of bodies involved in the skills world "by up to 30" is welcome. We recommend that the Government provide us with detailed information on the work it has done to realise this aspiration, together with an indicative list of those bodies it believes it can remove from the system.

The National Apprenticeship Service will now be housed within the Skills Funding Agency, but it will retain its autonomy—including budgetary control. We do not see the logic in this decision. We believe that having a separate entity working within the SFA will only add to the already complex structure of further education delivery. It will also pose significant management and accountability issues for the Chief Executive of the SFA.

There are certain aspects of these changes which we welcome. The single account system for colleges, together with dedicated Account Managers, has the potential to simplify the administration of funding for colleges and to simplify their contact with the funding bureaucracy. We also note that the Department has introduced additional controls over the further education capital budget which it believes will avoid any repeat of the mismanagement of that budget which was evident under the Learning and Skills Council.

We give a cautious welcome to the National Skills plans, produced by the UK Commission for Employment and Skills, and regional skills plans, produced by Regional Development Agencies and Local Authorities. These plans have the potential to provide a valuable insight into the skills needs of the UK at a national, regional and local level. However, the lines of communication appear both complex and highly concentrated on public sector organisations. It is vital that the views and needs of business are represented to the fullest extent and that the Government needs to demonstrate that the business community is fully involved in the process plans.

The Government's transition plan for this change has been well managed. We welcome the genuine consultation that took place with delivery partners and their confidence that the hand-over on 1 April will run smoothly. We also welcome the evidence of a change in approach towards colleges at the top of the organisation, but recognise the need for this to take place throughout the organisation.

We recognise the benefits of retaining experienced and specialist staff within the further education structure. However, given the level of shared services in the new structure, we are surprised that the reorganisation of further education did not deliver a solitary reduction in overall staffing levels.

It must never be forgotten that complexity and repeated organisational change almost inevitably deter the users of any public service, and this is especially true of those most in need of help from those services, in this case learners and smaller businesses. Ultimately the success of the new structure will be judged on its ability to deliver the demand-led service for skills, not on the efficiency of the component parts of the new structure. The two new organisations may work perfectly well but the unanswered question will be whether it would not have been preferable from the point of view of the people and organisations that really matter in all this—colleges, learners and businesses—to stick with the devil they knew, which was the Learning and Skills Council.

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