Source · Select Committees · Public Accounts Committee
Recommendation 19
19
The ESFA acknowledged that the FE funding system was complicated and said there were a...
Conclusion
The ESFA acknowledged that the FE funding system was complicated and said there were a range of reasons for this including the complexity of the college sector itself, with colleges offering very different programmes and catering for very different groups of students. It told us that it was reviewing various aspects of the funding system including how it used lagged data. It expected the forthcoming White Paper on further education would include a commitment to try to make funding as straightforward as possible.34 Intervention
Government Response
Acknowledged
HM Government
Acknowledged
5: PAC conclusion: The Department’s funding decisions are based on previous years’ student numbers, which risk holding back colleges that are growing. 5: PAC recommendation: The Department should consider a change to the formula for funding colleges which takes account of real time or more recent information about student numbers. It should report back to us by the summer about how funding could be delivered that better reflects colleges’ real time position. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: June 2021 5.2 Each year, the department looks at in-year recruitment by providers of students aged 16-19 years and, subject to affordability, provides top-up ‘in year growth’ funding to help those that have seen a particularly large increase relative to their funding allocation. This helps with the additional in-year costs of supporting extra students, typically at 50% of the normal funding rate. However, to ensure institutions do not need to cut back in-year, there is no downward adjustment in-year if there is a shortfall in student recruitment. 5.3 In this academic year 2020-21, there has been a significant recruitment of students over and above not only allocations but also what had been expected from increased numbers of young people in the population. It seems likely this is due to the COVID-19 pandemic. 5.4 In response, the department has lowered the thresholds for the in-year growth exercise, to recognise the funding pressures that many institutions are facing in 2020-21 academic year. Institutions with significant levels of growth will receive the same level of growth funding this year (academic year 2020-21) as they would have under last year’s process (in academic year 2019-20), but this year institutions with more modest levels of over-delivery will also receive some growth funds. 5.5 By end February 2021, institutions eligible were notified of an updated allocation based on the student numbers they reported at the start of December 2020. 5.6 For 19+ funding, the department agrees that funding could be delivered better, and this is set out in the Skills White Paper. As such, the department is currently developing a consultation on how a change to the formula for funding colleges could help reduce burdens, improve stability and increase high-value provision. The policies under development are being tested with the sector, and the department is considering the advantages, disadvantages and possibilities of a system based on real time activity.