From education to employment

Underspends and poor value subcontracting necessitate a complete overhaul of the Adult Education Budget

Persistent annual underspends and too much poor value subcontracting under the Adult Education Budget (AEB) are letting down adult learners across the country, according to a new analysis published by the Association of Employment and Learning Providers (AELP).

To replace the now totally discredited system of allocating funds to colleges and independent training providers, AELP advocates that the entire £1.5bn AEB is put out to tender.  ‘Entire’ means the 50% of the budget which is now the responsibility of the Mayoral Combined Authorities and the Greater London Authority as part of the devolution deals with locally elected mayors and the other ‘national’ half which remains under the control of the DfE’s Education and Skills Funding Agency (ESFA).

Doing nothing leaves gaps in provision for learners in different areas and potentially has a detrimental impact on the social mobility of unemployed adults and adults in employment looking to progress.

A budget underspend of £63m in 2016-17 followed by an estimated underspend of £76m in 2017-18 exceeded in total the £110m which was procured by the government in 2017 as the only means of AEB funding available to independent training providers (ITPs) although FE colleges were allowed to bid for this pot as well.  FE Week has released its own analysis which shows that colleges underspent their AEB procured allocations by 26% in 2017-18 while ITPs spent more than their initial contracts by 31%.

AELP estimates that in the same year, just under a quarter of total AEB was subcontracted, essentially by colleges to ITPs for the latter to deliver adult skills provision.  Around 90% of the £1.5bn budget is allocated under grant arrangements to colleges and community learning providers and while good AEB subcontracting plays an important role, it is AELP’s view that too much subcontracting is not being driven by strategic planning designed to benefit local communities.  This results in less money reaching frontline training because funding is being swallowed up by management fees and undesirable brokerage.

AELP is urging the government to address the issue of recurring AEB underspend and to procure funding more effectively to ensure that the delivery of provision reaches the right learners in the right place and at the right time – something which the current system is demonstrably failing to do at present.

Training providers are also calling for much greater transparency around the level of AEB that is being subcontracted with twice-yearly reporting by the authorities and agencies of the relevant data.

MCAs moving in the right direction

With their actions speaking louder than words, the MCAs have recognised that value for money is not being delivered by the current system.  Tees Valley is leading the way by putting 100% of its devolved AEB out to tender, while other MCAs have procured anything between 22 and 30% of their devolved allocations as a first step towards greater commissioning.

In AELP’s view, the action by the MCAs should be warmly welcomed but they, GLA and ESFA should now consider a 100% commissioning model for the total AEB.  All provider groups would be required to bid for realistic funding amounts based on their capability to deliver against the priorities set out under each area’s skills plans and emerging Local Industrial Strategies.

Association of Employment and Learning Providers chief executive Mark Dawe said:

‘The uncertainty over Brexit means that it would be foolish for anyone to get their hopes up on what the Spending Review might yield for further education and skills.  Therefore we can’t afford to tolerate any more the poor value being delivered under the adult education budget.  By moving to full commissioning, more adults in local communities are likely to receive the support they need to secure sustainable employment.’ 


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