1. Policy, funding & finance Julian Gravatt, Assistant Chief Executive AoC Yorkshire Principals, 3 March 2016

2. What I’ll cover Outline Spending review 16-18 funding BIS/SFA issues (apprenticeships, devolution, simplification) College finances / area reviews / mergers Some concluding thoughts – plus time for questions

3. A recap on UK politics The May 2015 election A majority Conservative government Thin majority (12 seats), fixed term (5 years) Focus on implementing the manifesto Promises (“EU referendum” “lower immigration” “a surplus”) What the manifesto said about FE/Skills 3 million apprenticeships Switch away from low value classroom courses Public spending cuts in order to reduce the deficit

4. 2015 spending review headlines Further education and skills National 16-18 base rate for fixed for four years Sixth form college academy conversion option Adult education budget fixed in cash terms for four years Apprenticeship levy 0.5% on payrolls over £3 mil FE loans extended to 19 to 23-year-olds Assessment Better than many expected (£27 billion “found down sofa”) Effective AoC & College lobbying helped Government recognised role of colleges in its policy There will be no let-up in reforms

5. DfE revenue spending Notes 6.5% more cash, 6.4% more primary, 7.7% more secondary pupils School funding per pupil up c95% between 1998 and 2014 National school funding formula (from 2017-18?) Savings in 16-18 outside base rate (£160 million out of £6 billion) DfE RDEL (£ bil)2015-162016-172017-182018-192019-20 Schools budget 41.2?41.8 16-18 7.0?6.9 All other DfE 5.4? DfE RDEL 53.654.455.556.457.1 +1.4%+2.0%+1.6%+1.2%

6. 16-18 Education – EFA Funding The spending review decision National base rate accounts for 2/3 rd s of the 16-18 budget (£4 billion) Funding 2015-16 AY £ millions Prog £ mil Of which Disad High Needs £ mil Bursary & Free Meals £ mil Total £ mil FE colleges2,5913651051032,800 Sixth form colleges721491024754 Academies & schools1,96110649432,053 Free, studio & UTC756-277 Special schools1841322115 Commercial, charity, council and HEI 20440612222 Total5,5705693031866,059

7. Formula protection funding General FE and Tertiary includes specialist designated colleges.

8. The EFA 16-18 Funding Formula Total Programme Funding BandHoursTotal 5540+£4,000 4 (*)450+£3,300 3360+£2,700 2280+£2,133 1< 279 Programme% Base0% Medium20% High30% Specialist60% Land- based 75% Disadvantage% 1 (GCSE Maths / English)£480 per GCSE 2 (27% most deprived)8 to 33% extra Programme Cost Weighting Disadvantage Funding Area Cost Allowance (up to 20%) Student Numbers National Funding Rate per student Retention Factor (< 1) ()

9. 16-18 student numbers drive funding

10. EFA funding in 2016-17 and beyond Funding formula & process Only marginal changes in 2016-17 New index of multiple deprivation for Band 1 disadvantage Business cases by 8 April 2016 Changes in the pipeline Revised qualifications (new A-levels, GCSEs graded 1-9 etc) New 16-18 performance tables (January 2017) Distribution method for student support needs an update Policies on routes to technical education

11. *Students can appear in more than one cohort so numbers in the A level and vocational cohorts can sum to more than the total number of level 3 students. Source: DfE SFR A level and other level 3 results (provisional): 2014/15 Level 3 vocational participation (16-18) has increased rapidly, there is often a misconception that this everyone in this cohort is studying A levels

12. and/or GCSE English & Mathematic s + GCSEs in core subjects Optional subjects At least three of: and/or Other GCSE subjects Technical Awards + Other qualifications for students with particular needs that do not count in performance tables. E.g. Entry level certificates + A-levels Technical Certificates: Currently 2 technical certificates available in healthcare support Technical Levels (‘Tech Levels’): Currently 2 tech levels in Clinical Healthcare Support Clinical Healthcare Support Workers/Assistants, including those working in specialist areas Clinical Healthcare Support Workers/Healthcare Assistants with delegated responsibility. Sometimes in a supervisory role. Assistant Practitioners in Healthcare Advanced Apprenticeship in Health (Clinical Healthcare Support) Qualified practitioner (e.g. Nurse, Allied Health Practitioner, Healthcare Scientist) Higher National Diploma (L5) for Assistant practitioners in healthcare Undergraduate degree to allow you to register as a professional 14 to 16 16 to 18/19 18/19+ Employment TECHNICAL Traineeship Administrative/Assistant roles WORK-BASED ACADEMIC Intermediate Apprenticeship in Health (Clinical Healthcare Support) But the system is still complex for young people

13. Plans for ground-breaking reforms to set England’s TPE system on a par with the best in the world  We will simplify the current over-complex system by introducing up to 20 new TPE routes from schooling to skilled employment.  These will be genuinely owned by employers who will specify the technical knowledge, practical skills and behaviours they require, in line with reformed apprenticeships.  The new TPE routes will shift the focus away from a system driven by qualifications to one that develops and certifies occupational competence.

14. BIS revenue spending Notes Much smaller cut than expected (“17% in real-terms”) Restructuring of the budget. More student loans. The levy. Devolution BIS RDEL (£bil)2015-162016-172017-182018-192019-20 Science 4.6?5.2 HE 3.3Grants go Core adult skills 1.5 Devo1.5 Other FE/skills 0.5 19+ apprentices 0.70.9Levy1.21,4 Other BIS 2.2? BIS RDEL 12.913.414.513.413.2

15. HE spending decisions this decade Spending decisions 2011 to 2015 HEFCE grant DOWN £5 bil to £2 bil Student loans UP £7 bil to £13 bil Total govt HE outlays UP 28% Spending decisions 2015 to 2019 End of HE maintenance grants (saves £2 bil) More student loans (outlays up £7 bil / 60% in 5 years) Mechanism for fee cap to rise above £9k (via TEF ) Protection for high-cost teaching (c£1 bil) Cut to national HE funding, HE student opportunity etc

16. SFA’s 19+ budget (grant letter) Finai a£ mil2015-162016-172017-182018-192019-20 19+ apprenticeships 7409261,0761,2471,423 19+ FE (“other ASB”) 1,105) Community learning 2161,4941,5031,5111,512 Learner support 173) Offender learning 130 Support budgets 373390340267239 Total 2,7372,9403,0493,1553,304 Single Adult Education Budget (AEB) Less emphasis on qualifications, more on outcomes Devolution in stages between 2016 and 2018 to local government

17. AoC briefing on the apprenticeship levy (19 Feb 2016)

18. Apprenticeships and colleges The opportunity and the issues for colleges Apprenticeship spending due to rise – to £2.2 billion by 2019-20? Colleges: “profile, relationships, town centre facilities, qualified staff” Purchasing decision entirely in hands of employer from 2017 Digital voucher system not yet written Apprenticeship content changing fast Employers may want to keep voucher funds in-house CollegesApprenticesFundingSub-contracted 16-1871,000£280m22% Adult (19+)220,000£273m41% Total290,000£553m31%

19. Skills devolution Devolution deals (pre & post election) *Greater Manchester (October 2014) Sheffield City Region (Dec 2014, Oct 2015) *London (Mayor) (February 2015) *West Yorkshire (March 2015) Tees Valley (October 2015) North East (October 2015) Liverpool City Region (Nov 2015) West Midlands (November 2015) Promises “Further deals with other city regions”

20. SFA funding in 2016-17 Funding formula & process 2016-17 is last year before the levy/voucher system starts Adult Education Budget (AEB) merges budgets More flexibility on what can be offered - outside the entitlements, courses do not need to lead to qualifications More available money in 2016-17 because of FE loan extension and cut to workplace learning Local commissioning discussions start Changes in the pipeline Skills devolution in 2018-19 subject to pre-conditions

21. Education funding landscape 16-18 Education Apprenticeship vouchers (16+) Apprenticeship vouchers (16+) FE Loans Adult Skills (devolved) Adult Skills (devolved) HE Loans Fees, Contracts and International High Needs HE Teaching Dedicated School Grant (centralised)

22. Area reviews & timetable Worth thinking about timetable issues Most Wave 1 reviews won’t finish until May-July 2016 SFC conversion 6 months from application to completion College mergers need 9-12 months Restructuring fund timetables unknown; money front-loaded a bit StartReviewsSFCsFECsColleges Autumn 2015 1733488126% Spring 2016 2155410015450% Summer 2016 3226715021770% Autumn 2016 4298318526886% Spring 2017 53792218310100%

23. Mergers Mergers in 2016 High stakes Creditors nervous Colleges complex A merger wave? c15 in 2016 More in 2017?.. but 200+ FECs now so >150 by 2020? More info AoC merger tips AoC guide on new structures

24. Sixth form college conversion Advantages VAT reclaim Insurance @£25/student LGPS guarantee Avoids an FE merger Standardised status New local relationships Others will convert “Join the mainstream” Disadvantages The MAT requirement External financial control Income restrictions HE, SFA and Visa issues Bank, VAT, contract issues Conversion at own expense Distracts leadership “No going back”

25. Some other issues Politics The EU referendum Borough, district elections March 2016 budget Education Ofsted (now and post-Wilshaw) Education White Paper? Student transport Society & Economy Changing demographics Disruptions in the job market Mental health Technology Social media Education technology Digital skills

26. Planning for the rest of 2016 What we know 1.Stability on 16-18 funding but changes in future, linked possibly to policy on routes (ie perhaps not until 2018). 2.Employers, councils & loans for 19+ FE. 3.The apprenticeship levy will have a disruptive impact. 4.Public spending pressure will make decisions on staff (pay, recruitment, restructuring) harder and harder. 5.Conservative majority government means some policies are predictable but politics could change things quite quickly. 6.Colleges will always compete but work better together.