Conclusions and recommendations
1. The
single account system has the potential to simplify the administration
of funding by introducing national standards for the allocation
of resources which were absent under the Learning and Skills Council.
However, the fact that funding will no longer come from a single
Government source but from two Departments has the potential to
seriously undermine any benefits which may accrue from this change.
(Paragraph 24)
2. Equally, the introduction
of SFA Account Managers for individual colleges has the potential
to assist colleges and to simplify their contact with the funding
bureaucracy. That said, SFA Account Managers have been presented
as the single point of contact for colleges and providers. This
is not the reality of further education, as colleges already deal
with account managers from other organisations, especially Local
Authorities. It is vital that SFA Account Managers work in a way
that simplifies the process rather than adds to its complexity.
We recommend that the Government provide an early update on the
effectiveness of this single point of contact for colleges.
(Paragraph 25)
3. We note the Government's
assertion that additional controls have been introduced to manage
the further education capital budget. It is vital that these new
controls stop the possibility of a repeat of the Learning and
Skills Council's lamentable mismanagement of the capital budget.
We expect the Department to update our successor Committee, on
a regular basis, on the management of that budget. (Paragraph
29)
4. The new structure
for further education was due to go live on 1 April—shortly
after we agreed this Report. It would therefore be premature for
us to pass judgement at this time on its ability to deliver a
seamless and efficient service. However, the restructuring undertaken
by Government has clearly increased the complexity in the system
rather than simplified it and there is a danger that this will
make it more difficult for the system as a whole to deliver the
Government's objectives, or to meet the expectations of learners
and employers. (Paragraph 37)
5. We would welcome
the realisation of the Government's commitment to reducing the
number of bodies involved in the skills world "by up to 30",
but we are highly sceptical that this will be achieved. Indeed,
the current expansion in the number of bodies involved in the
skills agenda has been brought about by the Government itself.
We recommend that the Government provide us with details 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. (Paragraph 38)
6. A key aspect of
the new structure is the creation of the Skills Funding Agency
and the Young People's Learning Agency to administer the role
previously held by the Learning and Skills Council. These two
organisations represent the division of responsibilities between
the Department for Business, Innovation and Skills and the Department
for Children, Schools and Families, although the existence of
different departments is not the justification given for having
two agencies. We have grave reservations about the logic or probable
effectiveness of having two organisations running further education,
given the degree of overlap between the two. We have been given
no 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 many issues of policy, shared services and management
will lead to unnecessary long-term costs and bureaucracy. (Paragraph
47)
7. We cannot yet come
to a conclusion on the efficiency of this approach, because neither
the SFA nor the YPLA have a record to judge. However, we urge
our successor Committee to monitor closely the relationships between
the SFA and the YPLA at an early point in the next Parliament.
(Paragraph 48)
8. Simplification
of funding for colleges is a very important objective, so we welcome
the steps that the Government has taken to build flexibility into
the system. However, we are fully aware that the Government's
plans fall short of the expectations of colleges. Not only will
they now have separate funding streams from the SFA and the YPLA,
they will also have to deal with multiple numbers of Local Authorities.
We look to the Government to build on its plans and to introduce
greater flexibility in the future, including the ability to transfer
funds between Local Authority provision and SFA provision. Should
these separate funding streams cause difficulties, we will expect
the Government to review the relationship between the SFA and
YPLA as a matter of urgency. (Paragraph 59)
9. The previous mismanagement
of the capital fund by the LSC resulted in significant damage
and disruption to colleges. Although the Government is confident
that it has strengthened oversight of the capital budget, it has
also introduced a more complex system, with many more stakeholders.
It is vital that the various funding streams which make up a college's
capital budget do not affect a college's ability to expand or
enhance its estate. While we welcome the close working between
the YPLA and the SFA we remain deeply concerned that capital funding
streams from both organisations, together with Local Authority
involvement, just cannot deliver a simplified or efficient system
of capital investment for colleges. Indeed, the management of
capital budgets at college level has been made significantly more
complex. (Paragraph 66)
10. We do not see
the logic behind bringing the National Apprenticeship Service
within the Skills Funding Agency whilst allowing it to retain
its autonomy—including budgetary control. Either the NAS
should be part of the delivery service of the SFA or it should
be a separate body. 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 which
concern us deeply. (Paragraph 70)
11. The national and
regional plans produced by the UKCES, the RDAs and Local Authorities
have the potential to provide the Department and the SFA with
a valuable insight into the skills needs of the UK at a national,
regional and local level. However, the structures which have been
put in place appear complex and cumbersome. They also appear to
be highly concentrated on public sector organisations. It is vital
that the views and needs of business are represented to the fullest
extent, not just through the Sector Skills Councils, which are
also part of the process, or through their involvement with RDAs,
but at local level as well. If they are not, then the plans will
be of little use to learners, employers or colleges and will not
be able to inform the priorities of the Government and the SFA.
The Government needs to demonstrate that these plans have the
full engagement and support of the business community. (Paragraph
87)
12. The Government
must also be prepared to move quickly to simplify the process
underpinning the national and regional skills plans should the
fears of some of the partners in that process be realised and
the increased complexity prevent effective delivery of a skills
strategy in specific local labour markets. (Paragraph 88)
13. We welcome the
fact that, on the whole, the delivery partners consider that the
Government conducted genuine consultation with them in the design
stage of the Skills Funding Agency. Although we have serious reservations
about the ability of the new structures to deliver a streamlined
funding system, we welcome the fact that the Government has sought
to engage with its delivery partners at an early stage. (Paragraph
94)
14. We welcome the
confidence of both the Government and the delivery partners that
the handover of responsibility to the SFA on 1 April will run
smoothly. However, mistakes and errors at the outset have the
potential to undermine confidence in the new structures. We expect
the SFA to update our successor Committee on its experience of
the handover early in the new Parliament. (Paragraph 102)
15. We note that the
"re-prioritisation" of adult education is not without
its own significant consequences and has involved some painful
choices for FE colleges. While we appreciate that, in a tough
climate for public spending, difficult choices must be made, we
are not convinced that, in a rapidly changing world where the
Government seeks an increasingly flexible labour market, it is
right to pay for bureaucratic change by denying many adults the
new skills they need to meet the challenges of that world. (Paragraph
105)
16. The Department
is confident that not only will the transition process be cost-neutral
but that the new structure will make year-on-year savings. The
transition process will conclude on 1 April. We are deeply sceptical
that the creation of two agencies to replace one can possibly
achieve long-term cost savings. We recommend that the Department,
at the earliest opportunity, provide our successor Committee with
a full breakdown of the costs of transition together with confirmation
that these costs were borne out of existing budgets. This breakdown
should also include an assessment of any additional costs imposed
on Local Authorities and on individual colleges, both transitional
and on-going. (Paragraph 109)
17. 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. The Government has confirmed that administrative
savings will be made in the future and we recommend that it provides
our successor Committee with an early update on proposals for
those savings early in the next Parliament. (Paragraph 114)
18. It is clear from
our witnesses that for the new Agency to be successful there will
need to be a significant change in its culture, and in its staff's
engagement with colleges. We welcome the Association of College's
endorsement of a change in approach at the top of the organisation.
Equally we recognise that this needs to be forced through the
entire organisation. (Paragraph 118)
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