Train to Gain planning and funding: what went wrong and how to fix it Nick Linford NTRL Autumn Conference Monday 26 October (my birthday!) ER Funding - 17/09/09

TtG funding history National roll-out from Aug 2007, and by August 2008 £100m under-spend went to HE FE Focus 08/08/08 and 29/08/08 TtG ‘flexibilities’ introduced from Aug ’08 and in less than a year demand outstripped supply FE Focus 03/07/09 and 04/09/09

TtG funding pressures The flexibilities 1 Payment profile 2 More providers 3 “it is unlikely that there will be sufficient funding to meet the high level of demand from employers and learners for new starts, particularly in the August-March period of the 2009/10 academic year” Source: Geoff Russell’s LSC letter to providers (11/06/09)

1st Pressure: flexibilities For 2008/09 ‘flexibilities’ were introduced to stimulate both demand and supply. These included: > Skills for Life at Entry Level > Non-first full level 2s fully-funded (free) > Level 3 (incl.19-24 ‘first’ fully-funded) > Selection of thin and unitised QCF quals The policy worked too perhaps too well! and 3% TtG premium has already been scrapped

Example for 1 NVQ in Construction 2nd pressure: profile Achievements, new profile and higher rates Example for 1 NVQ in Construction Consequences Monthly instalments Instalments quickly ramp up Funding for achievement is now starting to be claimed in big numbers Big ‘carry-in’ funding commitments £100 £200 £300 £400 £500 £0 Jan Feb Mar Apr May Jun Jul 09/10 08/09 07/08 Also Cumulative instalments Qualification rates simplified for 09/10, which will be expensive for LSC £0 £400 £800 £1,200 £1,600 £2,000 Jan Feb Mar Apr May Jun Jul 09/10 08/09 07/08 LSC and providers really struggle to forecast monthly instalment profile

2nd pressure: profile £925m 09-10 TtG budget in Grant Letter (more than last financial year but less than last academic year) Financial year Grant Letter (government budgets) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Academic year provider contracts (MCVs) About half of 09-10 financial year spent on last four months of 08/09 academic year. The eight months (67%) left of 09-10 financial year only covers 47% of 09/10 academic year commitments

3rd pressure: more providers Number of 19+ ER contracts (TtG and Apprenticeship) 2035 1212 920 2006/07 2007/08 2008/09 Nearly all the additional contracts have been for new providers of TtG Source: LSC provider Allocations Spreadsheet (Feb 2009)

Solution p1: prioritisation > Stop funding 19-24 year-olds who should be apprentices > Stop funding Level 3 in many, if not most cases > Stop funding Level 2 repeats in the same sector > Co-fund Level 2 repeats if new to the sector > Continue to fully-fund first full Level 2 > Review numeracy and literacy/language rates > Marginal funding rate for large employers Return Train to Gain to its original model of a broad training offer, to suit a range of employer needs (including real fee contributions and full-cost)

Solution p2: payment profile > Simpler and better understood instalment plans > Trusted and well organised contract management > Long-term plan to move to financial year contracts Need to do everything to avoid

Solution p3: No. of contracts Train to Gain contracts 1200 1000 53% 50% 800 47% 43% Contracts 38% 600 35% 30% 400 25% 200 18% 10% £20k £40k £60k £80k £100k £120k £140k £160k £180k £200k Contract size less than What if the SFA only gave £200k+ contacts? Source: LSC provider Allocations Spreadsheet (Feb 2009)

TtG future is uncertain > Providers waiting for confirmed 09/10 contracts (MCVs) > Lack of funding and cash-flow issues mean many likely to go out of business > Government will scrap some flexibilities (claw-back 3% uplift and remove fully-funded non-first L2) > Uncertain impact of QCF and interim ‘fullness’ definitions > NAO report said poor value for money (21/07/09) > Conservatives say they would scrap TtG > Skills Funding Agency (SFA) will take it over from LSC from April 2010

The pre-employment market For many providers TtG presented an opportunity to offer a package of support to SME and large employers The biggest opportunity is for those that can act as both recruitment, induction and training agencies New pre-employment programmes: > Employability and Skills Programme (LSC) > Response to Redundancy (LSC) > Six Month Offer (LSC) > Flexible New Deal (DWP)

Other stuff… The hands-on guide to post-16 funding > 2009/10 edition with new chapters (160 pages) > Find out more at www.fundingguide.co.uk > Now working in partnership with The Data Service on The hands-on guide to post-16 performance and data > Find out more at www.dataguide.co.uk Funding masterclasses and free resources > Training events around the country > Sign-up online for access to a variety of free resources > Find out more at www.planningandfunding.co.uk

Any questions? These slides will be sent to you and are a free resource on www.planningandfunding.co.uk