From education to employment

Report Makes for Interesting Reading, says FE News Repo

The Learning and Skills Council (LSC) released its yearly financial report recently for the year 2004-5. It made for interesting reading, especially with regards to the comparisons with expenditure from that year to the year before. And as always when it comes to financial reports, people want to know if it was money well spent.

All in all, the LSC had a budget of £9.2 billion, with more than 50% being spent on the younger learners. Fair enough, being as it is that they make up the single largest group of LSC dependants. The majority of the LSC income is made up from Grant-in-Aid. For the 2004-5 period, this added up to £8,941.9 million, (2003-4 = £8,588.4 million). The largest source of other income was £243.7 million (2003-4 = £224.2 million) received from the European Social Fund (ESF).

The Good”¦

We can already see that there has been an increase in the budget from last year, which is a positive sign (as a £353 million raise always is!). Presumably, this has had a direct influence of the performance of the LSC itself (and vice versa), seeing the improvement in results in most areas. We also received more money than ever from the European Social Fund last year. Again, a positive sign.

For the 2004/5 period, LSC expenditure increased by 5% (to £9.2 billion) from the previous year. The change in priorities that were announced in the autumn of 2004 resulted in expenditure on young people increasing by 6%. Expenditure on adults rose by under 4% but funding for apprentices rose significantly. There were also increases in expenditure on Employer Training Pilots (170%) and capital expenditure on college building and infrastructure projects (24%).

In contrast expenditure for local initiatives decreased by 16% as funding was redirected toward LSC priorities. Research and Development expenditure was £4.1 million (2003-04 = £2.6 million). Capital expenditure (mainly on computer systems) totalled £15.1 million (2003/4 = £15.9 million).

The Mix

So, a mixed bag. There was an increase in overall budget and spending on young people, infrastructure and equipment, and a massive uptake in training pilot schemes. But there was also a decrease in local spending due to a change in “priorities”. We wonder about the priority choosing process – if they were priorities last year, would they not be again?

From the report, it was clear that one of these priorities was equality and diversity, with the LSC spending a whopping £1.1 billion on the area. Included in the scheme was the Learner Support Fund (£141 million), support for learners with learning difficulties or disabilities (£125 million), disability access (£45 million) and neighbourhood learning programmes for deprived communities (£20 million). Many would balk at the initial expenditure, but it could be agreed that facilities such as the Learner Support Fund (who help learners through education that may not have been financially able to afford it) are a worthwhile and necessary facet.

Still, £45 million on disability access while only £20 million on improving entire communities? Remember that the Chancellor pledged an extra £350 million for investment in FE buildings between 2008 and 2010, not to mention a 24% increase in college building and infrastructure projects in one year. So could that money have been spent better elsewhere?


In keeping with the theme of deprived communities, the Entry to Employment (E2E) scheme had £246.6 million spent on it to help the disaffected youth back into education, showing an increase of 18,000 people from the year before (2005 = 1,298,000). It could be argued that the significant rise in the number of people using it can justify the cost. That is to say, it isn”t going to waste. It is clearly a scheme that works. And if it works, it is worth funding and funding properly.

This idea was introduced on a regional scale as well, with the east of England running an employer training pilot which spent nearly £40 million on identifying skills shortages in Essex, Cambridgeshire, Suffolk, Norfolk, Bedfordshire and Hertfordshire. This scheme helped to train people in the region after identifying what skills were lacking/were needed. Taking in to account this year’s 16% drop in local funding (due to a change in priorities), £40 million is quite a small amount to be spent on an entire region, given the nine-figure sums that other LSC projects have received.

The Grand Scheme

It is all well and good being given a list of figures for earnings and expenditures, but what does it mean for the LSC as a whole? The report showed that on 31st March 2005, the LSC held cash balances of £207 million (2004 = £111.6 million) including funds from the European Social Fund and Grant-in-Aid. The LSC also had creditors of £381.9 million (2004 = £345.8 million). The rise in creditors reflects the increase in the LSC budget.

However, on the same date (March 31st 2005), the LSC owed £352.2 million (2004 = £412.5 million). The decrease reflects a lower level of FE college clawbacks and a continuing reduction in the mounts owed by work-based learning (WBL) providers due to the quarterly reconciliation process. In layman’s terms, we have a little more money than last year, and we owe a little less than last year, too. Top marks to the LSC for not only improving results in the classroom, but at the same time managing to regulate budget expenditure in an effectively planned and productive manner.

Paul Keely

Ready for the FE roar? Coming soon – Trisha the Tiger Talks Back!

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