LSC chief, Geoff Russell, responds to FE funding crisis

"The recent Budget settlement provided a further endorsement of the importance of the further education sector. Since 1997, investment in further education has increased by 53% in real terms and since 2001 an additional 2.4 million adults in the workforce have achieved qualifications at level 2 or higher. The Government recognises that cutting spending in a recession would harm economic recovery and would prove more costly in the long term. Continuing to upskill the workforce remains a high priority and, because of this, additional resources are being made available. However, the growth in public spending will inevitably be slower than in the past and it is essential that every pound is used as efficiently and effectively as possible.

"We are now coming to the end of the settlement process for 2009/10 funding. Final allocations are always subject to past performance and/or changes to the mix and balance of provision and this year, we have also had to take into account the economic climate and late release of funds via the Budget statement. I trust you will agree with me that this increased investment by DCSF and DIUS in post-16 learning and skills is most welcome.

"I know that some of you have been concerned about aspects of this year’s process and I appreciate the difficulties it may have caused some of you. However, because of your collective success in delivering to young people and providing Train to Gain, projected demand has increased to a level which if not managed effectively, would be greater than the budget available. This in turn has led to our need to discuss with you your actual and forecast position and to include within that discussion a review of performance.

"I want to be absolutely clear with you on a number of specific issues around future allocation that I know have caused some anxiety over the past few weeks. I am therefore setting out below the current position on funding allocations. I also want to reassure you that we will guarantee that there is funding available for you at the agreed rates to support learners who were legitimately in learning before 1 April 2009 through to completion."

Young People

"Thanks to the £655 million funding announcement in the budget, we are able to fund learning for 54,500 additional young people in each of the next two years. This is on top of the funding announced to support 17,500 additional 16-18 Apprenticeship places.

"We have written to school and college leaders giving them the immediate reassurance their allocations will fund the learners they have planned for, supporting the growth in the number of young people wanting to continue learning. The increased funding also means that we can fund a further 20,000 young people who are yet to make their choice of learning place in order to deliver the September Guarantee.

"We are working with schools, colleges and independent providers to advise the Department where the funding for the further 20,000 young people should be allocated. The additional places funded will be focused on young people who are most vulnerable in these difficult times and not in education, employment or training, as well as those who will make a late choice to enter education or training in light of their local labour market opportunities. We expect to be able to confirm the allocation of these additional places and therefore confirm final allocations shortly.

"We are aware that there is an increase in demand for Entry to Employment in 2008/09 above the levels set out in the Grant Letter and we expect this demand to continue into 09/10. We are making provision to fund additional places for the remainder of 08/09 and for 09/10, where need and quality of provision is evidenced. I would therefore urge you to continue to discuss Entry to Employment performance and any changes to your Maximum Contract Value with your Partnership Manager."

Adults

"Last autumn we announced £3.3bn of planned investment in learner participation for 2009-10. This represents an increase in expenditure over the expected outturn for 2008-09, even with the strong performance on Train to Gain and apprenticeships over the last 12 months. In addition, since the LSC Grant Letter, we have announced additional training places for apprentices, those unemployed for six months or more and pre-employment training for young adults. This represents over £100m of new investment in adult learner participation in 2009-10 alone.

"Budget 09 announced £122m of new money for extra pre-employment training places, to help young adults (aged 18-24) who have been unemployed for 12 months. This is part of a wider guaranteed offer for unemployed young adults and will ensure that they gain the skills and experience they will need to find work and progress into work. More information about allocation of funding and the types of training this will support will follow in the next few weeks with the intention that training places will be available by this autumn. This investment builds on the money already allocated for responding to the short and longer term needs of unemployed adults and complements the additional investment which will deliver 17,500 more adult apprenticeship places as part of the expansion of the apprenticeship programme."

Adult Learner Responsive

"Adult Learner Responsiveness allocations for 2009/10 have been made. We expect soon to be able to announce opportunities for some colleges to expand their provision for priority adult learners and we have already been able to make available additional funds to meet the needs of the long term unemployed."

Employers

"I would like to thank all providers for the dramatic improvement in Train to Gain performance. We are on track to deliver far in excess of our expectations: looking at this year and next together, we expect around 100,000 more learner starters than we originally planned. ESF funding has also been made available to enable an additional 30,000 starts akin to Train to Gain next year.

"Indicative contract values have been issued and we are currently in the process of revisiting allocations and, where possible, increasing them. When reviewing allocations, we will of course take into account starts and successful outcomes. Where performance has been poor, providers will receive reduced MCVs, and funding will be reallocated to higher achieving providers, in accordance with normal contract management disciplines. We will also be taking a firmer approach to overstayers as already happens on the adult learner responsive side.

"Finally, turning to apprenticeships, we know that next year we will have 250,000 starts across all ages. On adult apprenticeship, once we have fully gauged the extent of the over-performance and completed the national allocation of budgets, we will come back to you to address any current shortfalls and, where possible, agree new starts.

"As noted already, I can assure you that all learners legitimately starting training before 1st April 2009, whether apprenticeships programmes or Train to Gain courses, will be funded to complete their training at the agreed rates

"I do hope that this note reassures you that we are resolving some of the legitimate concerns many of you are expressing to me, and others.

"If you feel that there are issues that still need attention, can I please ask that you raise these specific issues through the relevant LSC Director as appropriate."

Statement issued by Geoff Russell, chief executive of the Learning and Skills Council (LSC)