Rob Elliott, UK products manager at Capita’s further and higher education business

Now the frantic deluge of enrolments are coming to an end, further education colleges up and down the country are concentrating on getting their students and staff settled in for another academic year.

A year ago, the majority of these FE institutions were holding their collective breath about funding allocations and how cuts would affect the sector, only to discover that overall the final allocations were slightly better than originally feared. We all know the FE sector isn't a place that stands still and the coming months are no exception. With a number of alterations to policy and funding on the horizon, it's worth looking at where we are now and what we can expect to change so colleges can get the processes they need in place to handle any potential implications.

1. Structure

Along with a new director of funding policy at the SFA, change is afoot at the YPLA. From April 2012 it will be replaced with the Education Funding Agency (EFA),

The EFA's remit will be broad, directly funding the growing number of schools, academies and colleges that are not maintained by local authorities and administering bursary support for 16-19 year olds.

Funding will now be delivered to each provider from a single source. Maintained schools with sixth forms will be funded from the YPLA through LAs, and general FE colleges will receive funding from the YPLA through the Skills Funding Agency.

2. Funding Reviews

Both the YPLA and the SFA have recently undertaken separate funding reviews, with the 16-19 review consultation and the funding system for adult skills launched within days of each other at the beginning of October.

Both reviews show moves towards simplification and transparency, enabling 'colleges and training organisation to more easily meet the needs of their local communities and businesses' and 'greatly simplify accountability arrangements through reducing the data-collection burden', as the SFA review puts it.

The SFA document deals directly with concerns from the sector that simplification runs the risk of a negative impact on the most vulnerable learners, so both area cost and disadvantage uplifts will be retained as part of the new formula.

John Bolt, senior manager at KPMG, comments: "The SFA has proposed a simple matrix to fund qualifications and QCF (Qualifications and Credit Framework) units, with a reduced number of uplifts. Similarly, the YPLA are proposing to move away from 'payment per qualification' to funding programmes at the level of the learner. In terms of timescale, the SFA changes will be implemented fully in 2013/14, with a 'dual running' year in 2012/13. This is to enable alignment with changes to the 16-19 funding methodology and also the introduction in 2013/14 of FE loans. "

Once the outcome of the YPLA review is clear, colleges will need to ask themselves three main questions. Firstly, what do the changes mean for the way we design our curriculum? Secondly, what transition arrangements are in place to help us get from where we are to where we need to be? Thirdly, do we need to modify how we monitor our students' attainment in courses to ensure internal bureaucracy is minimal and funding correct?

3. NEETs

Moving from per-qualification funding to per-student falls in line with the ongoing battle to widen participation and reduce the number of young people not in education, employment or training figures, currently at 18.4% of 16-24 year olds or nearly 1 million individuals.

Around 12,000 of 16-19 year olds, made up of children in care, care givers or those on income support, will be given guaranteed bursaries of £1200 this year. Colleges are able to distribute the rest of the £180 million bursary fund at their discretion. This may be to support those in financial hardship and they can choose to link it with behaviour and attendance. Whichever way individual colleges choose to run this, they will need to ensure they have appropriate systems in place to manage this new responsibility.

4. Fee Remission

This financial year has already seen colleges coping with a number of significant changes regarding fee remission, including restricting it to those in receipt of Job Seekers Allowance. However, remission policies have now reverted to their previous state, i.e. those receiving any means tested benefit are eligible for reduced fees providing their application is supported by a letter confirming that the training will aid pursuance of a job.

5. Student Retention

The increase in the compulsory age at which young people can leave learning or training won't necessarily see an increase in the number of students applying for a college place, as a drop in birth rate for those of college age makes it likely that one will offset the other.

However, free courses for GCSE-like Maths and English qualifications, however, have been announced as a result of the Wolf report. Its 'English and Maths until you pass' recommendation could provide colleges with an opportunity to retain students who come in with a lower level of literacy or numeracy but who would like to follow a course of further education.

In conclusion, there's clearly some weight behind the desire for a clearer progression from education to successful job outcome, which suggests that a major challenge for the FE sector and beyond will be keeping adequate track of the path a student follows.

Last year, David Willetts, the shadow skills minister at the time, argued that the connection between funding and success rates should be reduced in order to lessen the incentive for colleges to manipulate their results. However, in the current economy, it seems likely that we will see an increased link between funding and a student's success with eventual employment, not just completion of qualifications. It could be that colleges are asked to collate data to monitor progression even after a student has left college or run the risk of their future funding being negatively affected.

The FE sector is well-used to being flexible and adapting to new ways of working but, in order to get prepared for whatever the future might hold, it's essential that colleges keep a close eye on all the new developments and get ready to respond appropriately.

Rob Elliott is UK products manager at Capita Further and Higher Education, which provides fully integrated student management systems for FE and HE organisations

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