From education to employment

FE funding for high cost and high value provision

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This report sets out the findings of a DfE survey about the cost weightings used in FE funding to support the delivery of high cost education and training. Some subjects such as those that need to be delivered in a workshop, like engineering, cost more to deliver.

The survey also asked about the impact of the premiums used in FE funding targeted at education and training that is high value, such as those subjects leading to higher wage returns.

Executive Summary

In 2021, Department for Education (DfE) circulated an online survey to all colleges, schools and other education and training providers (‘providers’) funded by Education and Skills Funding Agency (ESFA) to deliver further education (FE) and training. The purpose of the survey was to investigate the cost weightings used in FE funding to support the delivery of high cost provision. It also asked about the impact of the value premiums used in FE funding targeted at high value provision.

Cost weightings provide an uplift in FE funding to recognise that subjects with practical content (e.g. engineering) cost more to deliver than subjects with only theory-based provision. ESFA uses a separate funding formula for calculating FE funding for delivering to 16 to 19 year olds (‘16-19’) and those aged 19 and over (‘adults’).2 Both 16-19 and adult education funding formulas use cost weightings, referred to as Programme Cost Weightings (PCWs)3, as one of the core elements to provide uplifts for subjects that cost more to deliver. The purpose of the survey was to assess the cost weightings used by the ESFA for calculating FE funding. This includes the adult education delivered through the non-devolved Adult Education Budget (AEB), the Level 3 Free Courses for Jobs offer and the maximum loan amounts for Advanced Learner Loans (ALL)4, and for 16-19 education in the national funding formula.

DfE announced research about the cost weightings used in the 16-19 funding formula in the now closed T Level funding consultation and the scope of this research has been widened to also examine the cost weightings used in adult education funding. DfE made some increases to the cost weightings in 16-19 funding for 2020 to 2021 based on earlier research on cost weightings, and for 2022 to 2023 based on the interim findings of this research. These cost weightings increases were introduced as interim changes to be checked by this report.

To examine the cost weightings, DfE conducted a survey of FE providers in 2021 that collected data about the class sizes, proportion of practical lessons needed, course running costs, and equipment costs for delivering a sample of different subjects. The survey had 120 responses across a range of provider types, although mainly from FE colleges. Although the sample of 120 is only a small percentage of the around 3,200 ESFA funded education and training providers delivering 16-19 and adult education, because the responses included those providers delivering to large volumes of students, we estimate the sample represents providers delivering to around 20% of the overall education and training in FE.

The purpose of cost weightings is not to weight every episode of learning (i.e. qualification) individually instead each episode of learning is categorised into subject areas and assigned a shared cost weighting based on the typical average relative delivery costs needed for each subject area. Cost weightings are based mainly on 50 Sectors Subject Areas (SSAs) and qualifications assigned to these SSAs by awarding organisations. The survey asked about the typical costs of delivering provision in each of the 50 tier 2 SSAs. It also separately examined typical costs for a sample of A/AS levels subjects as A/AS levels are assigned cost weightings differently in the 16-19 funding formula.

Weighting values

There are currently twelve cost weighting values across six cost weighting bands used in 16-19 and adult funding as shown in Table 1. These cost weighting values are assigned to each of the 50 tier 2 SSAs and in some instances to individual learning aims or programmes that are funded differently to the SSA they are assigned. There are different cost weightings values used in 16-19 and adult funding.

The cost weighting values operate as multipliers to the base rate, so for example a learning aim assigned a weighting value of 1.3 will get 30% uplift in funding. A learning aim assigned the base (1.0) weighting will get no funding uplift and will be funded mainly at the base rate.24 These cost weighting bands provide an approximate rather a precise funding uplift to meet the increased costs related to a subject area. The use of an approximate funding uplift recognises that it is difficult to identify a precise set of increased relative costs for different subjects.

Table 1: Cost weighting values used in the 16-19 and adult funding formulas

19 of the 50 tier 2 SSA are assigned the base (1.0) weighting. 31 of the 50 tier 2 SSAs are assigned a cost weighting above 1.0 or have learning aims categorised within them assigned a cost weighting value above 1.0 in either 16-19 or adult funding.25 The survey focused on the increased costs for those 31 SSAs and the A/AS levels categorised within those 31 SSAs.

It is estimated that around half of the funded learner hours of adult provision26, and around two-thirds of 16-19 overall provision are funded at the base (1.0) weighting. This means the need for a cost weighting value above 1.0 in the 16-19 and adult funding formulas, is estimated to be for only half of the funded learner hours for adult provision and a third of 16-19 provision.

Read more here.

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