20 November 2018
Later this afternoon the Minister for Welsh Language and Lifelong Learning will make a statement in Plenary regarding the review of further education funding, followed on Wednesday by a Member Debate on further education funding.
This blog post looks at the latest 2018/19 academic year Welsh Government allocation to further education institutions (FEIs, or colleges) and briefly discusses some points of interest regarding it.
The allocations to colleges for 2018/19
The Welsh Government, on 29 October 2018, published its allocation to further education institutions in Wales [PDF: 188KB] for the 2018/19 academic year.
The allocation shows an overall 2.47% increase from £286.4 million to £293.4 million across the sector, but with significant variation across institutions (ranging from a 0.41% reduction to a 12.56% increase compared to 2017/18).
There’s more money than this available to the sector
The above table does not represent all the income potentially available to further education institutions for the academic year – it represents only the so-called “core-grant” to institutions.
On top of this core-grant, colleges receive income from a variety of sources including EU funding, winning Welsh Government work-based learning contracts, receiving hypothecated funding for particular projects, delivering higher education programmes, and from developing their own sources of commercial income which the Welsh Government encourage colleges to develop.
The Auditor General for Wales [PDF: 2.8MB] showed that in 2015/16 out of a total income of £447 million, only 67.3% was from the core-grant, whilst another 11.1% came from work-based learning contracts.
The consolidated overall income for the sector for 2018/19 won’t be known until institutions publish their financial reports for the academic year. This means it is not currently possible to know how reliant FEIs are on the core-grant for this academic year.
The table doesn’t show the split between full and part-time allocations
The table above does not show the split in core-grant allocation between full and part-time learning provision.
Between 2011/12 and 2016/17, within the context of a 13% real-terms cut in the overall core-grant to colleges, the Welsh Government prioritised the funding of full-time study.
This policy resulted in a £23.4 million cash reduction to part-time learning between 2011/12 and 2016/17, representing a 70.9% real-terms reduction when compared to a 2.9% increase in real-terms for full-time learning. This saw part-time funding drop from making up 12% of the core-grant, to 4%.
The current allocation methodology relies on historical settlements as its basis, rather than future predictions for demands
Working out the allocation of core-grant available to further education colleges each year is currently relatively simple.
Broadly speaking it involves taking the previous year’s core-grant, (which includes additional money for deprivation and population sparsity for some colleges), adjusting it based on average past-performance, and then applying a uniform percentage increase to the adjusted amount. In the table above it is shown as a 1% increase. This methodology, the Auditor General for Wales writes:
may provide a degree of certainty for colleges, [but] it means that funding allocations cannot reflect changes in the level of need across Wales, for example in the population of young learners
The method was therefore the subject of a recommendation within the Auditor General for Wales report, calling for the Welsh Government to make allocations more demand-responsive, particularly as each college will experience different regional demographic changes making demand inconsistent across the sector.
Currently, past performance matters when it comes to working out the allocations
The amount of each new core-grant allocation depends, broadly speaking, on the performance of the college in meeting its delivery targets over the previous two years (within a 2.5% margin).
As can be seen in the table above, the average performance of both Bridgend College and Grwp NPTC Group in 2015/16 and 2016/17 was below target, meaning their core-grant allocations for 2018/19 were adjusted downwards by 2.36% and 1.74% respectively before the 1% uniform increase was applied. This is what has resulted in their smaller allocations for 2018/19 when compared to 2017/18.
The trends and the future
Since 2011/12, the further education sector has managed a reduction in Welsh Government core-grant, but at the same time has diversified its other income sources, including commercial and international sources, whilst consolidating into a smaller number of larger further education institutions.
It remains to be seen at the time of writing, to what extent the statement by the Minister for Welsh Language and Lifelong Learning on the further education funding review will meet the recommendations made by the Auditor General for Wales in 2017.
The Employability Action Plan Update [PDF: 1.4MB] shows that the review has considered linking funding to regional demand differences (potentially in relation to learner demand and skills demand), as recommended by the Auditor General for Wales, and has considered changes to part-time funding.
Finally, colleges are increasingly using the findings and information stemming from the three Regional Skills Partnerships to develop their annual plans and decide the programmes and provision it will lay on. At the same time the Welsh Government has also begun to explicitly link funding to these findings, as shown by the £10m Skills Development Fund. It remains to be seen how far this development will be taken in future policy.
Article by Phil Boshier, National Assembly for Wales Research Service