Contact: Sarah Pook (01962) 847045; [email protected], Melanie Saunders, (01962) 846364, [email protected]

1 Summary

1.1 In June 2007, as part of the Machinery of Government changes, it was announced that funding for 16-18 participation would transfer to local authorities, subject to consultation and the necessary legislation. The intention is to give local authorities clear responsibility including funding responsibility for 14-19 provision, in line with their responsibility for commissioning children and young people's services, and enable them to make decisions locally about how services can best be delivered for young people.

1.2 In March 2008 a consultation was issued by the DCSF and DIUS entitled "Raising Expectations - enabling the system to deliver". The consultation recognises the challenge to ensure that an appropriate and engaging learning opportunity is accessible to every 14-19 year-old alongside a drive within the adult education and skills market towards a more dynamic demand led approach. The paper proposes two new systems responding to these challenges and reflecting the different needs of young people and adults. In the system for young people responsibility and accountability is given to local authorities to deliver the right education and training provision for every young person in their area. The system for the adult sector is focused on establishing a market which rewards success and brings together education and skills in a high quality offer to respond to the needs of adults and employers.

1.3 For 14-19 year olds the consultation sets out the Government's preferred approach with four key features

· Local authorities will discharge their responsibilities to provide a place in learning for every young person through strategic commissioning.

· Local authorities will cluster together in sub-regional  groupings reflecting travel-to-learn patterns to commission provision for young people across the wider local area.

· This will be supplemented by a slim national Young People's Learning Agency, which will have responsibilities for budgetary control and for securing coherence in the event that agreement cannot be reached locally.

· There should be progressive devolution of power and authority to the sub-regional level as the collaborative arrangements become stronger, successful and more formal.

1.4 The current proposals on implementation are for legislation at the earliest opportunity so that the transfer of funding to local authorities is implemented for the academic year 2010/11, with the new system fully in place from September 2010. A move to 14-19 funding formula, if agreed, would be implemented from the start of the 2011/12 financial year.

1.5 The consultation closes on 9 June 2008 and the report seeks to explore the key issues and consider the approach to responding to the consultation. It has been difficult to develop the issues and proposed response because of the lack of information on the funding transfer which was the initial basis of the announcement of changes. In the consultation document the funding chapter is a very brief four sides, it asks some significant questions and a supplementary annex was promised giving some essential detail. The annex has yet to be published.

1.6 At this stage it is proposed that the County Council

· Welcomes the consultation and the move of the commissioning and planning role which enhances the corporate priority Maximising Well Being.

· Recognises that the approach to the funding transfer is far from clear, with a national funding formula for 16-18 providers still in place the local authority role on funding is one of administration. The funding of local authorities for the new commissioning role is not clear and as a new burden will be assumed, the provision of commensurate new funding will be essential.

· Does not support the retention of a national funding formulas this does not represent a transfer of funding for 16-18 to local authorities and does not give flexibility to commission locally.

· Rejects outright the proposals for a move to a single national 14-19 national funding system with the loss of local flexibility for locally managed schools, the added complexity of funding streams for 11-16 schools and the timing with diplomas not fully rolled out until 2013.

1 Recommendation

1.1 That the Executive Lead Member for Children's Services (Education) consider the issues identified in the report following consideration of the Government Consultation "Raising Expectations" on the 16-18 funding transfer and agree that the Director of Children's Services make a response to the consultation incorporating these issues for the deadline of 9 June 2008.

2 14-19 proposals.

The role of local authorities

2.1 Local authorities are expected:

· To provide a place in education or training for every 16 and 17 year old (the full legal requirements will not be in place until 2013)

· To do this by strategic commissioning

· To judge demand for different types of provision and commission accordingly

· To ensure that all young people in their area can, by 2013, access their entitlement to the most appropriate provision for them after the age of 16

· To produce a commissioning plan which will provide the basis for funding

· To be funded according to institutions in their area not where students live.

· To fund institutions in accordance with a national formula and the commissioned provision being made by that institution for 16 to 19s

· To be responsible for planning and funding provision for young offenders and up to 25 for learners with learning difficulties/disabilities (LLDD) i.e. those students with special educational needs

· To lead 16-18 re-organisations, expanding strong provision and ceasing to fund weak provision when the issues are more structural and long standing than can be reflected in the annual commissioning round.

2.2 The concept of the commissioning local authority with responsibility for all provision for 16 to 19 fits well with the concept of Every Child Matters and the obligations to meet all needs. However the existence of a national formula is a real constraint on meeting local needs.

2.3 It seems as though the local plan will have to incorporate decisions about individual courses or groups of courses and the potential consequences for individual institutions in coming to a whole local authority plan. As institutions often serve students from more than one local authority area some effective collaboration will be needed and this is covered next.

The role of sub-regional groupings

2.4 Local authorities will be required to cluster together in sub-regional groupings to commission provision for young people across the area. This mechanism is expected to enable coherence across travel to learn areas and to ensure that a college or other provider that is meeting the needs of students from several authorities has a coherent, clear and comprehensive commission as to the provision required. Either a nominated lead authority within the sub-region or the authority where the institution is located will have the role of discussing the commissioning requirements, including those from the whole sub-region, with the provider. There is considerable emphasis in the paper on one commissioning dialogue with one lead authority.

2.5 The White Paper itself and Government briefings make it clear that if robust groupings with clear decision making frameworks do not come into existence then commissioning decisions will be retained centrally.

2.6 It is hoped that the emerging multi- area agreements (MAAs) which bring authorities together with a focus on economic prosperity may provide a good basis for these groupings as the Government sees a real link between appropriate educational and training provision for young people aged 14 to 19 and local prosperity. Conversely, in some areas it may be that the 16 to 19 sub-regional commissioning arrangements become the trigger to establish effective MAAs.

2.7 Although sub-regional groupings may cross Government regional boundaries there is an expectation that there will be a collective examination of the plans for each region to ensure coherence, consistency and complete coverage of the needs of all young people.

2.8 The sub-regional emphasis is obviously an attempt to steer a middle course between retaining a national system and having a wholly local one. The wholly local solution is seen by the Government as unworkable given the size of travel to learn areas with substantial numbers of students crossing local authority boundaries. This problem is emphasised by the comparatively small size of many urban authorities. It is perhaps worth noting that many existing Learning and Skills Council (LSC) areas could be assimilated into sub-regional groupings, thus transition and shadow planning in the two years from 2008 to 2010 might be easier.

2.9 The creation of these regional and sub regional groupings, combined with a number of new national agencies leads to real concerns about the levels of potential bureaucracy to be created and the lack of a democratic mandate.

The role of colleges

2.10 Colleges will remain independent incorporated bodies with their own VAT registration. However there will be a new legal sub-division between "Sixth Form Colleges" and "Further Education Colleges".

2.11 The White Paper says " that a college should be deemed to be a Sixth Form College if:

· it predominantly caters for students aged 16 to 19; and

· it is designated as a Sixth Form College by the Secretary of State".

Although Sixth Form Colleges will still be able to offer adult provision they are expected to have a close relationship with their home local authority and a single commissioning and performance management relationship with that authority. Thus, effectively, the Learning and Skills Council functions with additional but undefined responsibility for standards, transfer to the local authority. The White Paper does not envisage any alternative for predominantly 16 to 19 colleges.

2.12 In the case of Further Education (FE) Colleges the lead authority will be expected to coordinate with the Skills Funding Agency (a new post 19 skills and training body) to link the 16 to 19 commissioning requirements with the post 19 ones. Where the sub - regional groupings are not deemed effective the new Young People's Learning Agency will conduct the commissioning dialogue with the FE Colleges and other major and specialised providers.

National Bodies in the new system

2.13 The White Paper says "there will also need to be a slim Department for Children, Schools and Families national agency - the Young People's Learning Agency". Its functions seem to be :

· to exercise budgetary control by setting budgets for the total regional costs of commissioning in that region

· managing a national funding formula setting the rates for commissioned places for school sixth forms, sixth form colleges and the 16 to 19 provision of FE Colleges

· drawing up regional commissioning contracts with specialist and third sector organisations serving 16 to 19 year olds which operate at national or regional level

· brokering specialist provision for LLDD

· to provide a strategic analysis service which supplies consistent data to support local authorities in carrying out their commissioning duties

· responsibility for the flow of 14 to 19 management information to meet commissioning needs

· to hold reserve powers on the delivery of entitlement.

2.14 This apparently slim body seems to retain many of the functions of the national LSC particularly as regards strategy, information and funding. Thus it implies that local authorities are not wholly trusted to deliver and that national consistency is seen as important, not least in the context of post-19 provision.

2.15 In 2010 when the LSC ceases to exist there will also be a new Skills Funding Agency (SFA) responsible to DIUS for its performance and its functions seem to be:

· To route public money for post-19 provision through Train to Gain and Skills Accounts whereby the choices of employers and post 19 learners as to the provision they take up secures the release of funds directly to FE colleges and other providers

· To provide performance management for FE Colleges and intervention where either pre or post-19 performance doesn't meet national minimum standards

· To manage the National Employer Service (NES) and the National Apprenticeship service (NAS)

· To develop an England-wide careers and advancement service for adults.

· To be responsible for financial support for adult learners

· To monitor the Offenders Learning and Skills Service (OLASS)

· To use Train to Gain approaches to support the training of 16 to 19s in employment but not on apprenticeships.

2.16 The two areas of SFA work which most impinge on the provision for 16 to 19 year olds are the performance of FE colleges and the National Apprenticeship Service.

2.17 In drawing up the local and agreed sub- regional commissioning plans the need for apprenticeships must also be included and NAS commissioned to provide them. The NAS must then contract with local employers so that, by 2013, every suitably qualified young person can access their entitlement to an apprenticeship. Where there are performance concerns about FE colleges then the lead authority in respect of 16 to 19 provision will work with the SFA on a solution whilst the overall responsibility rests with SFA.

3 Funding transfer

3.1 The consultation confirms that the commissioning process drives the funding. Once plans have been agreed, and with a national funding formula in place, funding flows according to the provision set out in the plans. In effect this means that the funding transfer announced in June 2007 doesn't take place in practice. The Young People's Learning Agency will provide budget allocations for the commissioning plans agreed and the local authority will receive a budget for the institutions which it will then pay over to the institutions. This is a very different arrangement to that of school funding and DSG where the local authority gets a pupil led allocation from the DCSF which it then distributes according to local priorities using a local funding formula all agreed through the schools community (Schools Forum) and the Executive Member. It is also unclear how the academic year funding basis for 16-18 will fit with financial year funding and accounting for local authorities and schools.

3.2 The aim is to build on the current LSC approach to funding. The consultation then proposes extending the national funding formula to create a national 14-19 funding system. This is seen as supporting the delivery of the 14-19 entitlement.

3.3 Alongside this consultation, a national review of the DSG funding formula has been started by the DCSF with a view to reviewing the formula for implementation in 2011. This review is considering the 14-19 implications and in a recent report has gone beyond the consultation and asked whether the funding split at 14 makes sense, and whether there should be an 11-19 national funding formula.

3.4 There are a number of issues which these proposals raise for the County Council

· Is the rational sound for aligning funding with diplomas for 2011 when they aren't planned to be fully rolled out until 2013 and even then will not form the major part of 14-16 education?

· The LSC formula works on forecast pupil numbers, DSG and local formula on lagged pupil numbers. A move to forecast pupil number funding in secondary at a time where rolls are falling could be disadvantageous. Lagged pupil numbers were introduced for school funding specifically because of the destabilising funding impact of falling rolls. Modelling is required to show move of secondary pupil numbers nationally over the time period to understand the potential impact.

· 14-16 alignment makes little sense for a county like Hampshire where the great majority of secondary schools are 11-16, it will add to the complexity of dual funding streams and formula

· An 11-16 national funding formula means adopting a LSC type approach across the board and means a loss of local formula which can be seen as an efficiency gain, but is less sensitive to local needs

· With a move away from the national curriculum to local curriculum and school specialisms the flexibility of local funding formulae become more important, a move to a national funding formula would seem to run counter to the curriculum changes.

· Would an 11-16 national funding formula mean the local authority becomes a post box for funding, School communities would no longer get DSG as now with headroom for local and ministerial priorities. What flexibility would there be for funding local priorities for the schools or more broadly for every child matters outcomes?

· There is a concern at what would be left behind once the 11-16 element was taken out of the current DSG formula arrangements. What would be the impact on primary schools and DSG? What funding would be taken back nationally and how would central spend issues be covered (would early years, SEN high cost placement and other issues all fall on remaining DSG headroom?)?

· A change to 14-16 or 11-16 would create winners and losers at school and local authority level which will require damping or floor arrangements again to prevent instability.

· There is a very real concern underpinning all this that there could be real potential for funding gaps which impact on the Council Tax and sufficiency and adequacy of funding for new burdens and through funding and responsibility transfers will be key for success.

3.5 There is no mention of funding for SEN or special schools in the 16-18 consultation. SEN has never been addressed through the LSC formula for post 16 funding, with historic funding arrangements in place that don't recognise need. It will be essential that this area is properly addressed during the proposed changes to ensure there is an appropriate funding base to deliver post 16 education and training for those with special needs.

3.6 The funding chapter also discusses the proposals for capital. This will be administered nationally by the Young People's Learning Agency and will be deployed to create places in support of commissioning decisions. Regional planning groups will be a source of advice on priorities. It is not clear therefore what role local authorities will have, nor how funding will join up for 14-19 provision.

3.7 It is frustrating that the detail required to properly consider the funding issues is not yet available, two months in to the consultation process, through the delayed issue of the annex to the consultation. This does cast considerable concern over the adequacy of the time available for a response to the consultation.

3.8 In responding to the consultation questions therefore it is proposed that the County Council

· would not support the retention of a national funding formula based closely on the existing one,

· nor is it content with the proposal that funding flows to institutions as described as this does not represent a transfer of funding for 16-18 to local authorities and does not give local flexibility to commission locally.

· is wholly opposed to the move to a single national 14-19 funding system.

· does not agree with the proposals for capital funding as they are not clear and appear to work nationally and regionally but not at local authority level.

4 Adults proposals

4.1 A new Skills Funding Agency (SFA) will be created and will be the route for funding post-19 provision directly to FE colleges etc in response to customer choice. The SFA will not be a planning body but will provide performance management for FE and intervention where either pre or post-19 performance doesn't meet national minimum standards. The new SFA will manage the National Employer Service (NES) and the National Apprenticeship Service (NAS).

4.2 The SFA will develop an England-wide careers and advancement service for adults. It will be responsible for financial support for adult learners and will monitor the Offenders Learning and Skills Service (OLASS).

4.3 A sector-wide FE self-regulation group will be established.

4.4 An FE sector owned improvement organisation will be created by bringing together the Centre for excellence in Leadership (CEL) and the Quality Improvement agency (QIA).

4.5 The issues raised by the consultation are

· If the SFA is only a funding body, who is doing the planning?

· If the SFA does start planning from a remote perspective, how will it be responsive to local skills and employer issues?

· How will this body be sufficiently focussed and streamlined to play a meaningful role in the performance of GFE colleges and other providers?

5 Legal implications

5.1 The legal implications are unclear whilst the funding annex is awaited.

6 Financial implications

6.1 These are set out in the funding section above.

7 HR implications

7.1 The HR implications will arise principally from the need to create a strategic planning and commissioning role within the local authority.

8 Impact assessment

8.1 An impact assessment will be required once the final transfer proposals are known. At this stage the concerns are around the sufficiency of funding and provision for young people with specials educational needs which was not addressed with the original transfer out of funding and provision to the learning and Skills Council and is not yet covered in the consultation proposals.

Section 100 D - :Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB: the list excludes:

1. Published works

2. Documents which disclose exempt or confidential information as defined in the Act.

(Quote list of documents here: either "none" if 1 or 2 above apply; or list the relevant letters, memos, etc and their location).

DSCF consultation paper - Raising Expectations http://www.dfes.gov.uk/consultations/conDetails.cfm?consultationId=1520