Government policy and College funding Julian Gravatt, Assistant Chief Executive

1. Government policy and College funding Julian Gravatt, Assistant Chief Executive Association of Colleges 11 March 2013

2. What this presentation covers Issues in national government and public spending 16-18 education reform, 19+ FE/Skills, Loans High need pupils, Financial support Some conclusions Julian Gravatt Assistant Chief Executive Association of Colleges Julian_gravatt@aoc.co.uk @JulianGravatt

3. The last five years .

4. The Coalition Government Coalition in place until 2015? School reform key Coalition priority Some long-term reforms (eg Universal Credit, public sector pensions) No economic recovery -> Short-term fixes Document to read The Coalition’s Mid-Term Review January 2013 49 pages Number 10 website

5. UK govt deficit 2010 plan (“Plan A”) - close deficit 80% by spending cuts Some tax rises (eg VAT to 20%) Spending cuts 2011 to 2015 2011-12 Spending & income less than plan 2012-13 Deficit likely to be going up

6. The UK govt budget The plan Deficit reduction via An economic recovery Real-terms spending cuts Balance of spending Pensions, benefits & interest continue to rise Cuts in overall DEL Spending review Totals revised in Dec 2012 Review planned in 2013 Source: Autumn statement

7. 2013 spending review issues Protected departmental budgets NHS, Schools, Overseas aid Hard to cut budgets HMRC, Devolved, Defence Looking pretty vulnerable Local Govt, Post-16 education Still to be decided 2013 Spending Review may only cover period to 2015-16

8. Post-16 education budget Annual budgets HE teaching grants replaced by student loans to pay fees but also for maintenance SFA funding protected in 2010 spending review At risk post-2015 16-18 education budget static since 2010 Lack of clarity about future Source: BIS/DFE statements plus OBR loan projection

9. Funding challenges in 2013 16-18 and 19+ budgets will both be smaller in 2013-14 AY Two new funding formulae (16-18, Skills) Delegation of 16-25 high cost pupil budgets to Councils New FE Loan system (24+ Advanced Learner Loans) Other initiatives (Employer Ownerships, City Deals, Traineeships etc) The squeeze on household and company finances

10. 16-18 education budget DFE has ensured 5-16 Schools budget rises with inflation Tough 2010 16-18 settlement Lagged number funding system 16-18 numbers down in 2011-12 and down in 2012-13 New 16-18 funding formula in 2013-14 is cost-neutral but will redistribute funding Yr 1 numbers drive Yr 2 budget 2012-13 allocations vs 2011-12 FE Colleges down 3% Sixth Form Colleges down 2% Source: EFA funding team

11. New 16-18 formula Designed with care to create a different way to do thi £ = ((Students * Rate * Retention Factor + Disadvantage) * Area Cost) + Formula Protection Grant Funding per student rather than per qualification 1 full-time student band (>540 hours/year) 4 part-time student bands Study hours count if relevant, planned and/or organised, quality assured and timetabled

12. Understanding 16-18 funding . Document to read “Update on the 16-19 funding formula review” December 2012 28 pages DFE website

13. 16-18 education policy 16-18 Study programmes GCSE Maths, GCSE English compulsory for those who lack them A new 16-18 funding formula Compulsory participation for 16 year olds in 2013 Education Funding Agency New institutions (UTCs, 16-19 free schools etc) Key Stage 5 Performance Tables New A-levels taught from 2015 Consultation on 16-18 vocational qualifications due Minimum standards for 16-18 provision (40% floor targets) .

14. 19+FE and skills policy The “Department of Growth” Big % of BIS budget spent on HE, Research FE/Skills cut by 25% from 2011 to 2015 Freedom to use budget but budget falls Various priorities in FE/Skills Apprenticeships (for under 25s) Those who are unemployed Growth sectors

15. 19+ FE/Skills budget SFA’s spending review cuts backloaded until loans start in 2013 + Two year’s of underperformance + Top-slicing for Employer Ownership Pilots + A really tough allocation round in 2013-14 Source: AoC analysis of allocations and estimates

16. New SFA funding approach • Single Adult Skills Budget • Simpler funding formula £ = (Rate + Disadvantage) * Area Cost • Rates based on credit value of qualifications • Same rules for apprenticeships/employer and adult provision • Funding still linked to qualifications • Simpler set of rules for learning support and learner support

17. Understanding SFA policy Document to read “Skills Funding Statement” December 2012 24 pages (plus an annex) BIS website Due out soon SFA funding system explanation BIS skills statement in response to Heseltine & Richard review, plus info on Traineeships etc

18. 24+ Advanced Learner Loans Rules Aged over 24, UK/EU resident, England-based study SFA-approved provider QCF Level 3+4, Access to HE, A-levels, Adv/Higher Apps Anyone allowed up to 4 loans Money Loans – from £300 to £11,500 Apprenticeship loans at 50% of maximum rate Repaid at 9% of income over £21,000 following completion Processing loans Online application to SLC from April 2013 College confirms enrolment/attendance/course details Equal monthly payments which stop if student withdraws

19. Loans - (1) setting fees Pricing rules Colleges able to set own fees (SFA rates are not a price list) Little useful pricing data Many 24+students & apprentices pay nothing at moment Low public awareness Some positives – remove up-front fees, no “firstness” rules Some tips Focus on maximising Fees * Group size * Retention Calculate impact on rest of the College’s L3 and L4 provision Prepare to be transparent about costs

20. Loans – (2) advice to students Responsibilities to students and employers Loans not a regulated product but.... Important not to sell loans Help students make decisions – accuracy, fairness, listening Separate duties and disclose interests Information students will want to know Course costs (all of them) Loan details (eligibility, process, timescale, t&c’s, repayment) Alternatives (if they pay fee in full, other grants or loans) NIACE “Protecting the student during and after the implementation of 24+ Advanced Learner Loans”

21. High cost pupils Policy Overhaul of assessment of Special Education Needs Ofsted (2010) and NAO (2011) critical of 16+ arrangements DFE decision to hand £600 mil budget to Councils Three different funding approaches merged into one Implementation Little time to agree budgets/numbers EFA’s 2013-14 spending is increasing but so is demand Quick and complex reform Students need to have Learning Difficulty Assessments (LDA)

22. Learner support • Areas where there are cuts • Education Maintenance Allowances (£500+mil) ended Councils reducing support for transport Tax credit cuts, benefit caps, housing benefit changes Some budgets, relatively protected Bursaries (£180 mil) and Care to Learn (£30 mil) here for a while 19+ Financial Support Budget (£160 mil rising to £200 mil) Higher ed maintenance grants (£1.5 mil), Bursaries, HE loans etc Some policy challenges Fewer rules, decision-making delegated to Colleges Greater student and family need

23. Policy & funding.... Economic stagnation + Politics = Constant policy changes Some continuing themes (eg standards, tackling unemployment) Annual public spending cuts for next 5 years (to 2017-18) driven by long-term trends with very real threat in 2015-16 (Year 3) Competition, complexity and speed are unavoidable Opportunities remain for Colleges who are nimble Best to do things well or not at all

24. ...implications for managers Resilience Ability to work with people inside and outside organisation Intelligence – working out what on earth is going on • Judgement Efficiency/Task completion/Maximum effect for minimal resources Speed – no time for procrastination A positive attitude needed