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


Supplementary evidence from the Department for Business, Innovation & Skills

  At our recent evidence session I agreed to send you some further information, which I now enclose. I hope it may be of some assistance to the Committee in producing its report.

  Firstly, I agreed to send the Committee a list of the bodies involved in the delivery of skills in England from 1 April 2010. Please find this attached as Annex A.

  I also agreed to confirm the costs of the transition to the Skills Funding Agency and local authorities (supported by the Young People's Learning Agency) as well as details of the savings made through the reduction of the LSC estate.

  The new system is expected to be cost neutral for the exchequer. Public updates on transition costs were provided during the passage of the Apprenticeships, Skills, Children and Learning Act (two letters were sent to the bill committee in May 2009 and October 2009) and long-term plans have been set out in the Skills Investment Strategy 2010-11, including an indicative 2010-11 Skills Funding Agency budget. Local authority 2010-11 budgets are also published.

  We anticipate some transition costs, currently estimated at £3 million to standardise transfer terms to local authorities; £2-3 million for pensions; and £36.8 million for premises. Premises costs will only be incurred where there is a value for money case to do so. Over time, these changes are expected to generate net annual savings of some £17 million from rationalisation of premises, IT and shared services, and streamlined contracting and data collection processes. Costs will be met from within current budgets.

  Finally, I undertook to provide an update on the details of the staff transition and any costs or savings involved.

  In December 2008 details of staffing plans for the Skills Funding Agency and YPLA were published in the 16-19 and post 19 Funding Transfer: Bulletin No 5 as follows:

    "DIUS and DCSF Ministers have agreed an overall staffing need of some 3,300 for the new 16-19 and post-19 systems. These numbers are in line with existing LSC staffing levels and reaffirms our commitment to retain the expertise of LSC staff in the new arrangements wherever possible.

    We expect around 1,000 posts to transfer to local authorities, 500 to be in the YPLA and 1,800 to be in the Skills Funding Agency including 400 posts in the National Apprenticeship Service."

  Since then, as part of the new role for RDAs in regional strategic skills, over 50 posts have been transferred to them.

  In doing this, we were clear that we were not seeking to make staffing reductions at the same time as implementing this complex change.

  In the Apprenticeships, Skills, Children and Learning Act 2009 impact assessment it was outlined that we expect ongoing costs of operating the new system to be revenue-neutral compared to the current system in the short term, with savings and efficiencies through a more integrated service at local authority level in the medium to long term.

  In comparison to retaining the LSC (£210 million admin allocation in the LSC grant letter for 2009-10), the Skills Funding Agency is expected to operate with an admin budget in the region of £81 million (Skills Investment Strategy 2010-11) and will be responsible for managing staffing within this budget.

  The rest of what would have been the LSC's baseline will transfer to other bodies, principally local authorities and the YPLA.

Annex A

ORGANISATIONS INVOLVED IN THE DELIVERY OF ADULT SKILLS AND THEIR RESPONSIBILITIES

  The Department for Business, Innovation and Skills (BIS):

    —  Determine overall investment and priorities.

    — Determine performance system (Framework for Excellence).

    — Meet the Skills Public Service Agreement.

    — Sponsorship of colleges and training organisations and their contribution to Department for Children, Schools and Families targets.

  The UK Commission for Employment and Skills:

    — Advise BIS on the current and future skills needs of the country, including what is identified in the Single Integrated Regional Strategies.

    — Monitor and challenge Government performance on employment and skills.

    — Manage the Further Education and Skills Research Function.

    — Manage Sector Skills Councils and ensuring their effectiveness.

    — Advise on Sector Skills Council relicensing.

  Sector Skills Councils:

    — Determine the Skills required within their vocational area.

    — Raise employer engagement with, demand for, and investment in skills.

  Regional Development Agencies:

    — Work with employers, local authorities, sector skills councils, Jobcentre Plus and all other relevant sources to identify demand at the regional, sub regional and local level.

    — Produce Single Integrated Regional Strategies incorporating skills priority statements.

    — Ensure that sub-regions and city-regions are able to shape policy in line with their own priorities.

    — Spearhead multi-agency action to identify and resolve mismatches in the demand for, and supply of, skills.

    — Be an advocate for skills. Actively engage with employers to raise their demand for, and investment in, skills (eg through the Skills Pledge).

    — Manage the Skills brokerage service.

  Skills Funding Agency:

    — Fund colleges and training organisations through a Single Account Management System.

    — Lead and provide customer focused services and underpinning systems (eg Train to Gain, the National Employer Service, the National Apprenticeship Service and the Adult Advancement and Careers Service).

    — Design and manage the underpinning systems for funding, settlement, data collection and exchange etc.

  Employment & Skills Boards:

    — Set the strategy for delivery of adult (post 19) skills in their area, taking into account key national priorities in Skills for Growth and other relevant strategies, such as the Single Integrated Regional Strategy.

    — Actively engage with employers to raise their demand for, and investment in, skills.

    — Provide feedback to Skills Funding Agency assessing how well the skills and employment system is responding to employer demand in its area.

  Local Authorities:

    — Statutory responsibility for assessing the economic needs of their areas, including skills and employment.

    — Convene local area agreements, bringing together the action of other public bodies and colleges.

  Colleges and Training Organisations:

    — Meet the requirements of learners and employers.

    — Collaborate with relevant bodies and each other to respond to demand.

    — Collaborate with each other to provide a range of support services to the sector, including peer assessment, staff development programmes, shared services and improved procurement.

  Ofqual:

    — Regulate the qualifications offer.

  LSIS:

    — Support college and training organisations performance and facilitate self regulation (owned by the bodies it supports).

  Becta:

    — Champion use of technology to support learning.

  Ofsted:

    — Provide an independent view of college and training organisation performance.

4 March 2010





 
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