How funding for Adult Education and Training is changing.

Over the next few years we will see significant changes to the funding of adult learning in England, and the most recent funding guidance and rules published by the Skills Funding Agency reflect this direction of travel.

The SFA funding allocations for 2016 to 2017 brought some good news for providers, with some stability in the Adult Education Budget for the next four years, increases in allocations to apprenticeships and traineeships, and also increases in advanced learner loans facilities.

Instead of government grants funding significant numbers of adult learners for a wide range of learning activities, the future will be more about adults paying tuition fees funded by loans, large employers making compulsory contributions to the apprenticeship levy, and public funding being channelled through local commissioning agencies.

The Spending Review last November announced the extension of advanced learner loans to 19-23 year olds, and to all 19+ year olds for qualifications from level 3 up to level 6. This means that from next August adults who want to study for qualifications such as A levels, higher technical and vocational certificates and diplomas can do so by applying for a loan to pay their tuition fees. Currently advanced learner loans are only available for learners aged 24 years and over. It is hoped that the demand for these loans will rise and so deliver the Government ambition of raising the levels of technical and professional skills. However, there are some doubts that this shift in emphasis to learners paying for their own learning will actually lead to the expected rise in demand.

Although the introduction of the apprenticeship levy was announced in the first budget of the new administration, more detail was provided in the Spending Review and Autumn Statement. The world of apprenticeships is changing in several ways. With the introduction of Trailblazer Standards employers are getting more control over the content and design of apprenticeship programmes, and at the same time more control over their funding. Unlike existing frameworks where employer contributions for apprentices aged 19 years and over are often less than the expected 50% of the cost and also sometimes in kind rather than cash, the new Standards will require employers to contribute £1 cash for every £2 of government contribution channelled through training providers, with a range of incentive payments that will be paid directly to employers. The introduction of a compulsory apprenticeship levy of 0.5% from 2017 for larger employers with annual paybills over £3 million, will raise about £2.5 billion in England to fund apprentices by 2020. In March of this year the Government also announced that employers will receive a 10% top up to their monthly levy contributions in England which will be spent on apprenticeship training through their digital accounts. A lot of the detail about how the levy will work and how small and medium sized employers will fund apprentices has still to be decided, but it is clear that the emphasis is less on training provider control over content and funding of apprenticeships, and that employers will have more control over both.

With the expansion of loans and the introduction of the levy, the funding environment for adult skills shifts purchasing power increasingly to the customers for learning, and providers will have to respond to this change. They will have to be more focussed on meeting the needs of the learners, delivering high quality outcomes for them and delivering value for money.

This shift in the market will also apply to the funding of adult education outside of loan funded provision and apprenticeships. The Adult Education Budget will still fund some statutory entitlements for adult with low levels of skills, including English and maths, who will continue to be fully funded for eligible programmes, including qualifications, as well as other provision where learners will make a contribution to the cost of their programmes. However, this budget will be increasingly devolved to local commissioning agencies, such as Local Enterprise Partnerships and Local Authorities with devolved powers. After 2018/19 these agencies will increasingly commission provision that meet local needs and priorities. Local outcome statements will identify these priorities and providers will have to respond to these priorities and, if commissioned, deliver their outcome agreement, e.g. the number of adult progressing into employment, the number of English and maths qualifications achieved. As a result we may see a wide range of approaches to allocation mechanisms, funding rates and payments systems.

One thing is for certain, as budgets get tighter and expectations of the funders and customers rise, providers of education and training will have to change, and become more responsive, flexible and customer focussed, and deliver good value consistently, if they want to survive and grow.

Beej Kaczmarczyk is director at Learning Curve Group