Lsect update

UPDATE 15-04-11 (click here for MS Word version)

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Guidance Note 7 published
It is no secret that Guidance Note 7 (http://tinyurl.com/652d9ql) has been long awaited, as there have been many funding related policy announcement since Guidance Note 6 was published more than four months ago. Also, Guidance Note 7 is only the second one that relates to 2011/12, and Guidance Notes 1-5 relate to 2010/11. All SFA Guidance Notes can be found here: http://tinyurl.com/639m74h

Perhaps what was more interesting about Guidance Note 7 was the number of new policies which are being diluted. It seems to me that this demonstrates a theme at the moment, where the Government is announcing policies before really understanding the speed and depth of their impact (hence the need to subsequently water them down). This is something I have been saying for a while, and am quoted again today on the topic in the TES’s FE Focus.

Let’s count the dilutions in the order that they appear in the document:

1. Minimum Contract Level (MCL) policy exemptions
The £500k MCL policy for 2011/12 was first announced in November 2010, and since then we have been waiting to hear whether 16-18 Apprenticeship provision would be included. On the 24th March 2011: “The Agency received confirmation that ministerial clearance had been given for MCL policy to apply to 16-18 Apprenticeship provision”, but with plenty of opportunity for exemption. Read the statement in full here: http://tinyurl.com/64z9m3u

Aside from the automatically exempt (colleges, employers working with the NES, Universities and Schools) “the Minister has agreed circumstances where providers can make a case for exemption”. These include:

~ Where there is a risk to specialist provision being lost
~ Where entering into subcontracting arrangements is detrimental to delivery
~ Where entering into subcontracting arrangements is less efficient in terms of resources which are focused on learners

And “where new arrangements are in process, but require more time to finalise, the SFA will consider a temporary extension to allow this to happen”. Oh, and where a non-temporary exemption has been agreed, it will apply for the next three years (until the end of 2013/14)!

Requests for extensions will need to be made to the relevant SFA Account Manager by the 3 May 2011 “in order to be considered as part of a specifically convened case conference.”

I have seen few (if any) subcontracting examples where the provider without the direct contract with the SFA would say they are more ‘efficient in terms of resources which are focused on learners’ (mainly owing to the contract top-slice). Therefore, it will be interesting to see how many small providers seek an MCL exemption for this reason. It is for this reason that I said in the FE Focus last week that I thought the MCL policy was now unlikely to achieve its aims of helping the SFA reduce their administration costs by 33% over the three year spending period: http://tinyurl.com/6eyuc3x).

Also, the SFA have published an April 2011 version 4 of the MCL Frequently Asked Questions (although you would struggle to find version 1-3 in the public domain) which contains 42 FAQs. Download it here: http://tinyurl.com/69nnh4x

2. Maximum delivery threshold for sub-contracting removed (at what risk?)
Paragraph 25 states that the SFA have removed the maximum delivery threshold for subcontracting, which means there is in theory no limit on the percentage of delivery that a prime contractor can sub-contract. Thankfully the SFA “recognises that increased levels of subcontracting can present additional risks”, however whilst the SFA significantly reduce their own staffing levels, it remains to be seen how they will be able to manage the additional risk.

As you may know, I am genuinely concerned that the sector is being put at significant risk in terms of subcontracting fraud (on a greater scale than those of the 1990s) because: a) MCL policy endorses/encourages sub-contracting; b) there is more funding available than prime contractors can deliver on their own; c) providers are rushing into new partnerships without doing proper due diligence and contracting (for fear of having their allocation reduced during quarterly review meetings with the SFA); d) with single line budgets it opens up the FE funding pot to all training organisations (see paragraphs 34-39); e) SFA over-sight will reduce as their running costs are cut by 33% over the spending period and f) there is now no limit on the percentage of provision which a prime contractor can sub-contract.

As one CEO of another funding agency said to me, “MCL policy could cost a lot more than it saves, given the risk to public money and/or the cost of managing that risk.”

3. Skills conditionality and success rates
Following public consultation the Government announced on 29 March 2011 they were going ahead with their skills conditionality policy. The DWP press release had the delightful title: “Take up offer of training or face losing benefits, jobseekers told” http://tinyurl.com/4mxleeh

If you wish to read more about this legislation visit: http://tinyurl.com/3l4kq6c

As para 44 of the SFA Guidance Note 7 says: “providers will need to consider the likely operational impacts of the roll out of the skills conditionality”. What the SFA should have made clearer, is that this is likely to impact on many full time learners (studying less than 15 hours per week), who may be forced to withdraw and enrol on a short pre-employment course, else lose their benefit (for example, Access to HE provision is looking particularly vulnerable, and I suggest, may require a Skills Conditionality exemption).

As a result (and perhaps several year later than many would have liked), the SFA share “concerns about the impact that taking unemployed learners could have on success rates (for example, if someone leaves a course to take up a job). The SFA is keen that this does not discourage providers from recruiting unemployed learners and we are reviewing this as a matter of urgency”.

Also, in relation to transfers (such as from one provider to another, or between funding streams), para 52 states the SFA are concerned that their success rate policy is “stopping and limiting the transfer of learners into Apprenticeships…and will consider the issue of learner transfers in the context of this”.

4. Foundation learning, progression funding and ESOL
It should come as no surprise that the changes to the fee remission and eligibility policies (such as co-funding those on ‘inactive benefits’ as defined by the DWP, such as working tax credit, from 2011-12) is unravelling. As you may know, I wrote about this in the Guardian a few weeks ago: http://tinyurl.com/5ugmsda

The first example of this is dilution ~ on the afternoon of the same day as my article was published (http://tinyurl.com/4e6s74t) ~ and again outlined in Guidance Note 7 ~ is that in 2011/12 learners on Entry and Level 1 provision (Foundation Learning) will remain fully funded “where a learner has an entitlement to a Level 2 qualification, and where they need a step up from basic skills in order to progress to Level 2”. Also see this SFA update to their fee eligibility summary: http://tinyurl.com/6bkrlkp

Unfortunately this Entry and Level 1 provision excludes ESOL, and at this point in time it remains unclear whether there will be a further (and welcome) dilution of the inactive benefits policy. However, BIS say they are still working on an ESOL specific impact assessment, and David Cameron’s recently said yesterday “there have been significant numbers of new people arriving in neighbourhoods . . . perhaps not able to speak the same language as those living there . . . on occasions not really wanting or even willing to integrate . . . that has created a kind of discomfort and disjointedness in some neighbourhoods. This has been the experience for many people in our country – and I believe it is untruthful and unfair not to speak about it and address it.” Read the full speech here: http://tinyurl.com/3nkjdfl

As a result there has been further pressure on persuading the Government to avoid the rate cuts to ESOL provision. See the top education story (‘Anger over English lesson funding cuts’) in the Guardian yesterday: http://tinyurl.com/66j5842

And, it seems related cracks are starting to show between the coalition partners (see news from today): http://tinyurl.com/6yhy9mq

So, like Foundation Learning, will some or all of ESOL provision be ‘exempted’? Watch this space.

5. Transitional support owing to rule changes
As reported on in the FE Focus today, the SFA have announced in Guidance Note 7 that: “given the scale of challenge, the SFA will consider some transitional flexibility”. For those providers considered in need “the SFA will agree a manual adjustment to the final claim, to reduce the amount of funding that would otherwise be subject to claw-back” (see paragraphs 53-55). It seems likely that those most affected by “the new rules on learner eligibility and fee remission” will include big ESOL providers (see item 4 above).

6. Removing (or not) Programme Led Apprenticeships (PLAs)
The new rules on Apprenticeships kicked in from April 6 2011, which would have meant that there could be no more PLAs. This would have been particularly damaging to 16-18 Apprenticeships, where many of them are following a PLA model (not employed at the start of the training). Para 61- 76 in the SFA Guidance Note 7 for the first time describes how there will be PLA ‘transitional arrangements’ between April and July 2011, and a that “NAS and the SFA will be monitoring the effectiveness of transitional arrangements from April 2011 onwards to inform the forthcoming “Access” strand of the programme which we expect to operate in a similar way”.

7. State Aid rules not to apply for Apprenticeships
Guidance Note 7 (para 78) states we “are now able to advise that the funding of Apprenticeships is not generally regarded as State Aid because it is part of the State’s social obligations to the workforce”.

So, it seems, the “cap of two million Euros for provision covered under the Block Exemption” (either via a directly funded contract with the employer or for those who receive support through training providers) has been scrapped. Tuck-in!

Kind regards,

Nick
www.twitter.com/nicklinford

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