QUA0089

Written evidence submitted by the Department for Education

Section 1: The quality of current provision, how this varies by sector, level and region, and the impact of this on learner outcomes

Introduction

1.      This section provides an overview of the key data measuring the quality of current provision of apprenticeships and skills training.

2.      Quality provision may be defined as that which: enables learners to fulfil their potential and progress successfully to further or higher education or employment, supports social mobility, meets employers’ needs and delivers value for money.

3.      The extent to which provision meets this definition can be established using a variety of different quality measures. As well as Ofsted inspection outcomes (which are covered in the Ofsted submission), there are quality measures covering labour market outcomes, learner satisfaction, and qualification achievement rates. Detailed statistics for these are published by provider and geography and available on gov.uk

• Achievement rates:

https://www.gov.uk/government/statistics/national-achievement-rates-tables-2015-to-2016

• Learner satisfaction:

https://www.gov.uk/government/statistics/fe-choices-learner-satisfaction-survey-2016-to-2017

• Outcome based success measures:

https://www.gov.uk/government/statistics/further-education-outcome-based-success-measures-2014-to-2015

4.      The analysis in this section looks at each of these measures, including high level analysis by provider and qualification type, and qualification level.  It concludes with a sectoral and regional analysis.

Quality measures: labour market prospects

5.      An important indication of the quality of provision is the impact on learners’ prospects in the labour market. There are significant returns to further education (FE) qualifications in terms of increased earnings, increased chance of being employed, and a reduced chance of being on out of work benefits.

6.      For example, on average achieving a full level two qualification boosts a learner’s earnings by 11%, increases their chances of being employed by 2 percentage points and reduces the chances they will claim benefits by 2 percentage points (Table 1).

Table 1: Average labour market outcomes by highest level of achievement, 3-5 years after learning

Source: BIS Research Paper No. 195: Estimation of the labour market returns to qualifications gained in English further education[1].

7.      These returns are backed up by further recent research which shows that the earnings differentials for individuals in possession of vocational qualifications are generally positive and especially large for Level 4 vocational qualifications, apprenticeships at Level 3 and 2 and NVQs at Level 3 and 2[2].

8.      The effect is still strong after controlling for early test scores and socio-economic factors. Results for employment and labour market benefits are typically significant and quite large for most qualifications including for the most disadvantaged learners.

Quality measures: learner satisfaction

9.      Learners are generally satisfied with the training that they receive from providers. For learners studying in 2016/17, 83% said they were ‘likely’ or ‘extremely likely’ to recommend the learning provider to friends or family; just 5% said they were ‘unlikely’ or ‘extremely unlikely’[3]. This is an increase from 2015/16 where 81% said they were ‘likely’ or ‘extremely likely’ to recommend the learning provider[4].

10.  Generally, learners studying lower level qualifications were more satisfied. 92% of learners studying at level 1 or below would recommend their learning provider, compared to 83% at level 2 and 78% at level 3 or higher.

Quality measures: achievement rates

11.  Achievement rates measure the proportion of learners successfully completing a specific course of study. In 2015/16 the achievement rate for education and training provision was 86%, and for apprenticeships it was 67%. These have both remained steady over the previous two years, falling 1 percentage point since 2013/14[5].

12.  These headline achievement rates are partly driven by the mix of the type of learning and the qualifications studied, which tend to have very different average achievement rates.

Achievement rates: apprenticeships

13.  In 2015/16 nearly two-thirds of apprenticeships were offered in private sector public funded providers[6], also commonly referred to as independent learning providers.

14.  Table 2 compares achievement rates by main provider group. Comparing like for like provision, they show that on average, specialist colleges are likely to have the highest qualification achievement rates for apprenticeships compared to any other provider group.

15.  Private sector providers, who offer over two-thirds of apprenticeship provision, have lower achievement rates at all levels of apprenticeships than both FE Colleges and Specialist Colleges. Learners that undertook an intermediate apprenticeship at private sector providers are 5 percentage points less likely to have achieved their qualification than those at FE colleges, and 9 percentage points less likely than those at specialist colleges.

Table 2: Apprenticeship achievement rates by provider type

Source: National Achievement Rate Tables, 2015/16[7].

16.  The achievement rate for apprenticeships is not entirely attributable to the quality of the training received by learners. For apprenticeships the two biggest reasons, stated by employers, for why apprentices do not complete are changes in apprentices’ circumstances and problems with the apprentice. Problems with the training was stated as a reason for non-completion for learners by just 10% of employers[8].

Achievement rates: education and training

17.  In 2015/16 over 60% of education and training provision was offered by General FE and Tertiary Colleges[9]. The achievement rates for these colleges are relatively high in comparison to private sector providers, and as much as 12 percentage points higher for learners undertaking Diplomas. The achievement rates for FE colleges are broadly similar to specialist colleges, except for English and Maths and ESOL where the achievement rates are around 10 points lower at specialist colleges.

Table 3: Achievement rates for education and training provision by provider type

Source: National Achievement Rate Tables, 2015/16.

Quality measures: outcome based success measures

18.  In addition to understanding the longer term returns, outcome based success measures record the proportion of learners that were in sustained employment or further learning after completing their training. For learners that completed training in 2014/15, 71% were in a sustained positive destination, of which 62% were in sustained employment and 21% were in sustained learning. Learners that completed higher level qualifications were more likely to be in a sustained positive destination than those that completed lower level qualifications (Figure 1)[10].

Figure 1: Proportion of learners in sustained employment or learning by level

Source: Outcome based success measures, 2014/15

19.  New experimental analysis attempting to compare like-for-like provision across providers shows that private sector providers are similar to general FE colleges in terms of the proportion of learner outcomes with sustained positive destinations into employment and further learning.

Quality: Sectoral Analysis

20.  The main quality indicators described above can also be analysed by sector.

21.  Analysis of the labour market outcomes suggests that the largest returns are across qualifications in construction and building services, transport and engineering / manufacturing, which boost earnings on average by at least 12% at level 2 and at least 19% at level 3. However other qualifications that are sometimes perceived as delivering low benefits, such as hair and beauty, deliver significant wage returns (Figure 2)[11].

Figure 2: Wage returns by subject and level

Source: BIS Research Paper No. 195: Estimation of the labour market returns to qualifications gained in English further education.

22.  Qualifications in engineering and manufacturing technologies have a large number of completers across all levels and provision types, and also have high sustained positive destination rates, with at least 87% of apprentices in sustained employment or further learning after completion (Table 4).

Table 4: Sustained positive destinations by Sector Subject Area

Source: Outcome based success measures, 2014/15

Quality: regional variation

23.  The complexity in provision in terms of training undertaken and the socioeconomic backgrounds of learners makes it difficult to interpret quality measures in a regional context. This is particularly true of labour market returns where for example, the local labour market may also impact on wage returns.

24.  In terms of achievement rates there is limited difference across regions, with achievement rates for education and training provision varying by just 3 percentage points across all regions in 2015/16. For apprenticeships the difference is slightly larger at 5 percentage points, with London at least 2 percentage points lower than any other region.

Table 5: Achievement rates by region

Source: National Achievement Rate Tables, 2015/16.

25.  There is more evidence of variation by location in terms of learner satisfaction.  Across all Local Enterprise Partnership (LEP) areas the satisfaction of learners varies by 12 percentage points, as measured by how likely it is they would recommend their learning provider.  Tees Valley, Cornwall and Isles of Scilly and the North East have the highest satisfaction ratings of 88%. The LEP area with the least satisfied learners is Greater Cambridge and Greater Peterborough. Some of this variation will be due to the training undertaken, as for example those that studied at lower levels are generally more satisfied than learners that studied at higher levels.

Figure 4: Learner satisfaction by LEP

Source: 2017 learner satisfaction survey: ‘How likely is it that you would recommend the learning provider to friends or family?’

Section 2: The effectiveness of the quality monitoring system, in particular the role and capacity of Ofsted

Introduction

26.  A robust system for monitoring the quality of provision plays a critical role in enabling all learners to fulfil their potential, meeting the needs of employers, and providing value for money for the taxpayer. 

27.  This section focuses on how the Department with works all bodies with a responsibility for monitoring the quality of apprenticeships and skills provision, including Ofsted, the Education and Skills Funding Agency (ESFA), the Further Education Commissioner, the Higher Education Funding Council for England (HEFCE) and the Institute for Apprenticeships. Ofsted will be submitting their own evidence to the Committee on its role. 

Ofsted

28.  The Department holds regular meetings with Ofsted to inform it of further education and skills policy developments, to ensure that these can be taken into account in Ofsted’s work.

29.  For example, the Department is currently working closely with Ofsted on the development of a monitoring and accountability regime for T levels. Ofsted works closely with the Department on issues related to the apprenticeship reforms and Ofsted will conduct some early monitoring visits to a sample of new apprenticeship providers.

30.  Funding for Ofsted is secured at each spending review as part of the Department’s submission. Ofsted’s budget is provided directly from HMT and the Chief Inspector is the Accounting Officer. Where new or additional activity is undertaken by Ofsted, for example as the result of a policy change or other development, additional funding would be required. In those circumstances, the Department works closely with Ofsted to resolve resourcing issues.

31.  For example discussions are continuing between the Department and Ofsted on potential additional inspection demands arising from the increase in the number of registered providers of apprenticeships. The Department will revisit the question of Ofsted resources once there is a clearer indication of how many of the new providers will be receiving funding, and what the inspection requirements will be.

Education and Skills Funding Agency

32.  ESFA is responsible for the day-to-day risk and intervention activities in the further education sector. It operates an integrated monitoring and risk framework covering finance, quality, leadership and governance. In many cases, there is a correlation between problems with leadership and governance, financial difficulties, and poor quality of provision. 

33.  ESFA uses the performance data related to quality alongside other performance data related to finance and governance to make risk assessments and take proportionate action where it has the authority. ESFA intelligence and data on performance is shared regularly with Ofsted to inform the prioritisation of inspection activity.

34.  ESFA helps secure high quality provision through controls on new providers, conditions included in relevant funding agreements and contracts. As well as responding to whistle-blower allegations and complaints from learners.

35.  Further information on a number of these ESFA functions is provided in the discussion of value for money in Section 3 of this document.

Intervention

36.  ESFA Intervention can be triggered on either quality or financial grounds, or both.  In respect of quality, the two key triggers are:-

• an Ofsted inspection judgement of “inadequate” for overall effectiveness; and/or
• failure to meet national minimum standards of education performance for 16-18 year olds, post-19 adult education, and apprenticeships (all ages of learner)

37.  The intervention action undertaken by ESFA varies according to provider type and the scale and seriousness of the risk or failure that is evident.

38.  Independent learning providers that fall below intervention thresholds would normally be subject to additional conditions of funding or, in the case of an “inadequate” judgement from Ofsted, would have their contract terminated and learners transferred to a better quality and/or more financially viable provider.  Exceptions are normally only for niche provision or continued delivery to vulnerable students.

39.  Colleges that fall below any intervention threshold and present a significant risk may be escalated to the Further Education (FE) Commissioner.  In all cases, ESFA will issue a notice to improve, which may cover targets for improvement, winding down a specific area of provision, or delivering improvements in teaching and learning.

40.  The intervention process for colleges has been shown to be effective in addressing instances of serious quality failure.  For example, of the six colleges whose overall Ofsted rating declined to inadequate in 2015, all have since been resolved (either through improvement or merger). Of the 11 colleges that declined to inadequate in 2016, all but two have been resolved.  

41.  In addition to intervention, if a provider receives an Ofsted inspection judgement of “inadequate” for their apprenticeship provision, or (if a separate grade for apprenticeships is not given) “inadequate” for overall effectiveness, it will be removed from the Register of Apprenticeship Training Providers[12]. Once removed from the register, providers will be unable to take on new apprenticeship starts and employers will be given a choice about whether to move their existing apprentices to another provider.

Complaints and whistleblowing

42.  If a learner wishes to make a complaint about the training element of their apprenticeship, the first step is to issue a formal complaint to their training provider or college and fully exhaust its complaints procedure, including any appeals process. Colleges and training providers are required to have a published complaints procedure.

43.  If the learner remains unsatisfied with the outcome, they can contact the ESFA who will review whether the college or provider has properly investigated the complaint in line with procedures.

44.  The ESFA’s complaints procedure covers training providers, colleges and employers who are funded by it. A complaint regarding a sub-contractor should be issued to the lead provider, who have responsibility for the subcontractor’s delivery.

45.  The ESFA also has a dedicated investigation team responsible for managing allegations of fraud and financial irregularity. We recognise that making allegations of this nature can be very difficult so to aid reporting we have a detailed policy in place including dedicated whistleblowing procedures.

46.  The investigations team’s role is to clarify if allegations or information from any source indicate financial irregularity or if the organisation being funded may have broken the funding rules. The ESFA will consider all information to determine the appropriate action as well as providing confidentiality and support to whistleblowers.

Further Education Commissioner

47.  The FE Commissioner’s role is principally focused on colleges, including general further education and sixth form colleges. His role is to support improvement in colleges that are at risk of failure, and to intervene formally in colleges that have failed (on either quality or financial grounds).  It does not extend to the activities of colleges as providers of higher education, or to non-college providers of further education and apprenticeships.

Support for quality improvement

48.  Since November 2017, the FE Commissioner has been working with colleges judged by Ofsted as requiring improvement to monitor and support quality improvement through a process of “diagnostic assessment”. This operates alongside ESFA approaches to early intervention and risk assessment.

49.  The main focus of the ‘diagnostic assessment’ process is the progress being made by the college in securing improvement. Where progress needs to be accelerated, the Commissioner may make recommendations for further action, to strengthen existing improvement plans. This may include the brokering of support, or a recommendation that the college should apply to the Strategic College Improvement Fund.

50.  In certain exceptional circumstances in which the college does not have the capacity to secure sustainable improvement in financial health and/or quality, and enhanced oversight is required, the college can be escalated to formal intervention.

51.  All colleges that have an Ofsted overall effectiveness grade of “requires improvement” and/or an apprenticeships grade of “requires improvement” or “inadequate” – a total of 72 institutions - are in scope for the diagnostic assessment process. The Commissioner and the ESFA work together to prioritise engagement with that group, taking into account a range of information and risk factors including, for example successive “requires improvement” judgements from Ofsted.

Formal intervention

52.  Commissioner intervention initially assesses the ability of a College’s leadership and governance to deliver the necessary quality improvements. If concerns are identified, the Commissioner will make recommendations. This may include changes to governance and/or leadership, restrictions on funding, or the appointment of ESFA observers on the Board. The additional use of a “Structure and Prospects Appraisal” may help determine the way forward that is in the best interest of local learners and employers. 

53.  The FE Commissioner oversees the monitoring and review process for all the colleges that are subject to formal intervention, ensuring this process aligns with normal ESFA monitoring and review arrangements. If a college fails to deliver improvement to the agreed timetable or subsequently breaches another trigger the FE Commissioner may recommend further intervention actions.

HEFCE

54.  There are over 90 higher education institutions on the Register of Apprenticeship Training Providers[13], with over 2,500 starts on degree apprenticeships since their introduction[14].

55.  HEFCE is responsible for assuring the quality of provision of degree apprenticeships (level 6 and 7). In the case of apprenticeship providers delivering prescribed HE as part of an apprenticeship standard, HEFCE and Ofsted will reach a judgement, informed by joint working.

56.  HEFCE quality assures the relevant providers through the Annual Provider Review and risk assessment. Providers that are assessed as high risk are investigated by the Quality Assurance Agency for Higher Education. 

Institute for Apprenticeships

57.  The primary role of the Institute for Apprenticeships is to ensure that employer-designed apprenticeship standards will provide an apprentice with the knowledge, skills and behaviours they will need to become occupationally competent.

58.  The Institute for Apprenticeships also chairs the Quality Alliance, which brings together a number of organisations to provide an overall view of quality in the apprenticeships system, including those bodies with responsibilities for monitoring the quality of provision.

59.  The Institute reports monthly to the department on the progress it is making in delivering its strategic objectives.  In addition, there are formal, quarterly governance and performance reviews undertaken between the Director General and the Chief Executive, and the Minister meets bi-monthly with the Institute’s Chair and Chief Executive.  In addition, the Minister aims to attend 2 Board meetings a year, most recently in early December 2017.

Section 3: The role of the Education and Skills Funding Agency (ESFA) in ensuring value for money, and the impact of different funding models

Introduction

61.  This section explains the processes and systems the ESFA has in place to ensure value for money and the impact of different funding models. It covers:

• controls over market entry;
• how providers are funded; and
• related functions such as compliance, audit, and fraud prevention.

62.  There are important differences between the approaches taken to allocating funds and regulating provision for 16-19 year olds, for 19+ learners, and for apprenticeships.

63.  Since the raising of the participation age to 18, the arrangements for 16-19 provision are more closely aligned with those for schools. For 19+ learners, where participation is not compulsory and the potential population is much larger, supply can never match potential demand.  Public funding is targeted at Ministerial priorities which requires arrangements which utilise in-year management of funds in order to ensure funding supports policy intent. In contrast, the apprenticeship levy has introduced a new funding model led by employer demand.

Market entry 

64.  The ESFA places a strong focus on assurance at market entry stage to secure high quality provision and deliver value for money. The approach used varies, depending upon both the provider type and provision offer.

19+ provision

65.  The Register of Training Organisations is the ESFA’s market entry point for 19+ education and training services (other than apprenticeships). Existing providers, subcontractors and new entrants to the market are required to pass a number of tests when applying to gain entry to the register, including due diligence and capacity. An existing Ofsted overall judgement of “requires improvement” or better is the minimum quality requirement. This allows providers whose performance is slightly below a “good level” an opportunity to improve, but also keeps those out of the market whose provision is unacceptable. For those without an Ofsted grade, applicants are assessed based on the Ofsted Common Inspection Framework

Apprenticeships

66.  The new Register of Apprenticeship Training Providers is designed to open up the market and increase competition. There are three application routes: main, employer-provider and supporting (subcontractor) route. Providers are ineligible to apply to the register if they have an Ofsted “inadequate” rating for their apprenticeship provision. Organisations with an Ofsted “inadequate” overall but a higher grade for their apprenticeship provision remain eligible. All new apprenticeship providers are subject to further checks to ensure compliance and those deemed highest risk will be subject to early funding audits.

67.  The introduction of the Register of Apprenticeship Training Providers enables employers to choose from a wide range of apprenticeship training providers, to find one that they are confident will meet the training needs of the individual apprentice and the needs of the wider business. If a provider is not delivering high quality training in line with an employer’s expectations, the employer is free to choose a new provider – encouraging a market that competes to deliver quality provision.

68.  We are exploring options for how more frequent learner and employer feedback can be added into the apprenticeship service to provide additional assurance of the quality of delivery and experiences, identifying any problems at an earlier stage.

16-19 provision (excluding apprenticeships)

69.  There are a number of ways to enter the 16-19 market dependent on the type of institution and the type of provision proposed. A mix of local negotiation and tendering is used appropriate to the circumstances in each case.

70.  ESFA will fund new provision where it adds value and is a high quality addition to the existing offer for young people. That includes, for example, provision through independent learning providers with an Ofsted rating of “outstanding” for overall effectiveness.

19+ provision (excluding apprenticeships)

71.  For non-procured provision, ESFA allocates funds to providers directly from the budget given to it by the Department. Providers’ track records (e.g. Ofsted grade) are taken into account when setting allocations and in managing those allocations throughout the year. 

72.  To be awarded ESFA-funding through procurement, a provider must be on the Register of Training Organisations. Awards are then made as set out in the invitation to tender.  If, during the course of the procurement exercise, a provider becomes ineligible for inclusion on the register, for example because of an “inadequate” Ofsted rating, the ESFA will not make an award. 

19+ and apprenticeships funding

73.  The funding system for adult learning and apprenticeships has a range of features to ensure value for money. These include:

• not paying in advance of need;
• withholding a percentage of funding to be paid when a learner completes or achieves;
• using a set of national funding rates that underpin the adult education budget, European Social Fund, apprenticeship frameworks (where these started before 1 May 2017), and Advanced Learner Loans; 
• application of funding rules that ensure providers reduce the price if the learner has prior attainment of learning that does not need to be repeated; and
• expecting employer/learner contributions for certain aspects of learning;

74.  To ensure the value of government funding is maximised, 19+ providers that are performing strongly can, subject to funding availability, apply for funding growth. 

75.  The ESFA also ensures value for money through compliance, audit, assurance, and prevention and investigation of fraud.  Activities include controls for risks that are applied through ESFA’s contracts and funding rules, as well as desk-based analysis of data which is used to make risk assessments and inform decisions on which providers should be visited, or be subjected to formal audit.

76.  For the apprenticeship programme ESFA has established a counter-fraud panel, including representatives from across government and industry to critically review our compliance approach.

77.  The ESFA carries out an annual programme of audit to assure the proper use of public funds. Where errors are identified, the funds are recovered. If the information indicates that funding rules have been broken or financial irregularity has taken place, an investigation will determine the appropriate actions to take. 

Apprenticeship funding

78.  The apprenticeship levy, which came into force on 6 April 2017, requires all UK employers with an annual pay bill of £3 million or more to pay 0.5% of their pay bill to invest in apprenticeship training.

79.  Each employer in England who pays the levy is able to register for an apprenticeship service account. They can use funds in their apprenticeship service accounts to cover 100% of the training and assessment costs for their apprentices.  

80.  The Government is required to procure training provision for employers that do not pay the apprenticeship levy and do not use the apprenticeship service to manage and pay for training and assessment. Non-levy payers get at least 90% of the negotiated price met by Government and pay the remaining balance directly to providers.  In July 2017, the government launched a procurement for the provision of training to non-levy payers with the objectives of ensuring good geographical coverage and stability in apprenticeship training provision.

81.  The Government is committed to reviewing the apprenticeships funding policy, including the levy, on a continual basis to ensure it supports growth in quality apprenticeships and opportunities for all in an affordable and sustainable way, delivering value for money for the taxpayer.

82.  The new funding approach has 15 funding bands, ranging from £1,500 to £27,000, which set a Government funding maximum for every apprenticeship standard and framework. The employer must meet all the extra training and assessment costs above the funding band.

16-19 funding (excluding apprenticeships)

83.  Participation funding for 16 to 19 year olds in England is calculated using a national funding formula. Allocations for institutions are based on lagged student numbers[15] and a national base rate of £4,000 per student.

84.  A number of uplift factors are applied to recognise the additional costs of educating students from economically disadvantaged communities, students with low prior attainment at 16 in English and maths, and students following vocational programmes requiring specialist facilities and equipment.

85.  ESFA allocates some additional funding for high needs provision and any additional funding required to support an individual student is provided directly by local authorities, who also have the statutory responsibility for commissioning.

86.  For grant-funded providers that are funded based on lagged student numbers, checks are carried out on the end year data to ensure that the autumn data used was credible and reliable and where it is not, an adjustment is made.

87.  Providers funded on a contract for services are in effect funded on actuals. Each year a lagged allocation is made and there are three points during the year when both positive and negative adjustments are made.

88.  Each academic year ESFA conducts a formal funding formula review to ensure that the national funding formula is operating as intended.

Section 4: Quality and oversight of training provided by subcontractors

Introduction

89.  Subcontracting involves one provider (lead provider) deciding to subcontract-out part of its provision to another provider (subcontractor).

90.  Subcontracting is a significant feature of the FE and skills sector, accounting for £809 million of Government-funded provision in 2017[16], and it can be a useful tool for increasing a provider’s capacity, engaging with new markets and delivering niche provision. However, subcontracting is most common in apprenticeships provision where the nature of subcontracting has been the subject of significant reform. Whilst there is a role for some subcontracting, as set out above, the department has taken steps to see it reduced where, rather than adding value, it adds tiers of costly bureaucracy and dilutes the relationship between the lead provider and the employer.

Quality and safeguards

91.  Accountability for the quality of subcontracted provision rests with the lead provider.  Inspection by Ofsted of subcontracted provision as part of the inspection of the lead provider is an important mechanism through which that accountability is reinforced.

92.  Subcontracted provision will often help deliver high quality provision, however there can be risks where the relationships are not properly managed. We have made changes to increase the transparency and quality of subcontracted provision. There are now a number of rules that the ESFA monitor and where they take action in cases of non-compliance, including:

• prohibition of second-level subcontracting, and a mandatory requirement for legally binding contracts between the lead provider and subcontractors;
• limits to the value of provision that a sub-contractor may deliver without being successful in an application to either the Register of Training Organisations or the Register of Apprenticeship Training Providers[17];
• a requirement on lead providers to report use of subcontractors to the ESFA; 
• conditions around the transparency of the distribution of funding between the lead provider and any subcontractors, including in respect of management fees[18]; and
• a requirement on providers that subcontract beyond a defined financial level each year to commission a report of the effectiveness of their subcontracting controls from an independent auditor[19].

93.  Providers delivering learning to 16-19 year old learners (excluding apprentices) are also subject to additional requirements around, for instance, safeguarding and the ‘Prevent’ agenda. It is also no longer permissible for maintained schools and academies to subcontract the whole of a young person’s programme.

Subcontracting and apprenticeships

94.  The government consulted on reforms to subcontracting for apprenticeship provision in 2016, with the intention of increasing the quality and value of subcontracting, ensuring: that employers can have direct relationships with providers; and that public funds are not diverted away in the form or fees and other charges. Employers and providers generally agreed with the ambition set out in the consultation, but they asked that changes were introduced in a managed way to prevent employer choice being unduly restricted or good practice inhibited.

95.  From 1 May 2017, the ESFA introduced additional rules where providers are delivering apprenticeship training to levy-paying employers:

• The main provider must have written agreement from the employer before they subcontract any provision;
• The main provider must deliver some of the employer’s apprenticeship training needs; and
• At the employer’s request, main providers are able to bring in subcontractors to deliver whole, or parts of, apprenticeship frameworks or standards.

96.  These rules did not apply to provision of training to non-levy paying employers when we extended contracts in May 2017. However, they will apply from 1 January 2018 to providers that have been awarded contracts to deliver apprenticeship training to non-levy paying employers through our recent procurement exercise. 

Section 5: Quality of training received by the socially disadvantaged, and barriers to them undertaking this training

Introduction

97.  The Department wants to ensure that everyone, regardless of their background or gender, has the ability to fulfil their potential and get the skills and training they need to build a successful career.

98.  Unlike other parts of the education system, disadvantaged learners are more likely to participate in further education, including apprenticeships and skills training, than more advantaged learners. For example, whilst 63% of all learners between ages of 16 to 18 participated in FE, this rises to 71% amongst learners previously entitled to free school meals[20]. The most common sustained destination for disadvantaged learners after key stage 4 was further education (45%), compared to a school sixth form destination (43%) for all other learners[21].

Outcomes for disadvantaged learners

99.  Learners in further education from more deprived areas are more likely to be satisfied with their training provider. 86% of learners from most deprived areas would recommend their training provider, compared to 81% in the least deprived areas[22].

100.          Disadvantaged learners also see strong labour market returns, with little difference to their less disadvantaged peers.

Table 6: Increased earnings in employment, according to extent of learners’ disadvantage

Source: Bibby et al (2015) “Further Education: Social Mobility, Skills and Second Chances”[23].

101.          FE also helps the unemployed get into sustainable employment.  For the long-term unemployed aged 25 and over, those that undertook an FE qualification at level 2 or higher were more likely to be in employment by 8 percentage points, and reduced the chance of being on benefits by 4 percentage points.

Table 7: Impact on employment and benefit dependency for individuals who were unemployed at the time of learning

Source: BIS Research Paper No. 158: Impact of skills and training interventions on the unemployed[24].

Notes (1): STU – Short-term unemployed; LTU – Long-term unemployed

* Increases in benefit dependency seem counterintuitive, so these should be treated with caution.

102.          A Department-commissioned project is currently underway to gather further evidence on the barriers learners face in accessing and completing FE learning. The results are due summer 2018. In the meantime, Government continues to address barriers and improve outcomes for people from disadvantaged backgrounds.

Support for disadvantaged learners

16-19 provision

103.          The Department provides financial support to 16 to 19 students (16 to 25 students with EHC plans and 19+ continuers) through a number of schemes, including the 16-19 Bursary Fund.

104.          In 2017/18, discretionary bursary funding of around £130 million is allocated to providers, who make awards to students to cover costs such as transport or books. It is up to institutions to set their eligibility criteria for these bursaries and decide how much each student receives. Students in defined vulnerable groups may receive bursaries of up to £1,200 per year dependent on their circumstances and receipt of benefits.[25]

105.          An evaluation of the bursary fund found that in 2013/14, 23,900 students from vulnerable groups received bursaries, and estimated a further 357,300 learners were awarded discretionary bursaries[26]. Young people most commonly reported spending their bursaries on equipment for their course (59%), travel passes (54%), meals (51%) and books (48%).

106.          While bursary funding can support students with travel costs, statutory responsibility for transport to education and training for 16- to 19-year-olds rests with local authorities. 

19+/adult learning

107.          19-24 year olds with low-level skills are prioritised through funding arrangements. A range of ‘second chance’ provision exists, including funding from the Adult Education Budget and supported by statutory entitlements to full funding for:

• English or maths, up to and including level 2, for individuals aged 19+ who have not previously attained a GCSE grade A* - C or grade 4, or higher, and/or
• a first full qualification at Level 2 (equivalent to 5 GCSEs at grades A*-C) or Level 3 (equivalent to 2 ‘A’ levels) for those aged 19-23

108.          The Digital Strategy published in March 2017 confirmed a new entitlement for adults who lack basic digital skills to undertake fully-funded training. This will mirror the approach taken for adult English and maths training. The Department is working with the Further Education sector, employers and other stakeholders to develop the details of the new entitlement.

109.           Government also fully funds a range of support for all those who are unemployed, up to and including Level 2 qualifications and non-regulated learning. The Department works closely with the Department for Work and Pensions to support more people into work or training. 

Apprenticeships

110.          The Department is committed to ensuring that high-quality apprenticeships are a prestigious option, accessible to all people from all backgrounds.

111.          In support of its social mobility objectives, Government has recently announced an increase to the National Minimum Wage (NMW) for apprentices from April 2018 from £3.50 - £3.70 per hour - a record high in nominal and real terms. The Low Pay Commission estimates that the increase will benefit up to 34,000 apprentices.[27]  The Department is also working with the Department for Transport to explore the practicability of supporting apprentices’ travel costs. 

112.          To support widening participation, apprenticeships funding policy includes additional payments to support apprentices who live in the top 27% of disadvantaged areas, who are 16-18, have Education, Health and Care plans or who were in care.  Whilst around 25% of apprentices come from the 20% most deprived areas, the Department’s ambition is to see an increased proportion undertake them at higher levels and in particular sectors. Over the next two years, the National Apprenticeship Service (NAS) is focusing on raising the value of apprenticeships in disadvantaged areas working with local partners and through an employer engagement campaign.

113.          The Department is also widening take-up of degree apprenticeships - the £10million that has been allocated in the Degree Apprenticeship Development Fund includes a focus on widening participation among under-represented groups in disadvantaged areas.

114.          The Department has also set targets to improve the representation of both people from black, Asian and minority ethnic (BAME) backgrounds and people with learning difficulties and/or disabilities (LDD) in apprenticeship starts by 20 per cent by 2020. In 2016/17, 50,900 of those starting an apprenticeship declared a learning difficulty or disability[28]. This is 10.3% of the total starts, up from 9.9% in 2015/16. In 2016/17, 55,000 of those starting an apprenticeships were from a BAME background. This is 11.2% of total starts, up from 10.5% in 2015/16.[29]  The target is to reach 11.9% overall for both groups by 2020.

115.          We are working with a collection of more than thirty employers who have pledged to make a positive change in their approach to apprenticeship diversity – the Diversity Champions Network. We have ambitions to grow the network to 100 employers by March 2018.

116.          Our Social Mobility Action Plan recognises that we need a new approach to business to ensure our ask of employers is coherent across careers provision, technical education, apprenticeships and retraining. Measures in our new Careers Strategy are also aimed at encouraging more young people to consider apprenticeships.

Traineeships

117.          Traineeships play a key role in improving the life chances of young people aged 16 to 24 who are unemployed, qualified below Level 3 and lacking work experience, by providing them with the skills and experience they need to get apprenticeships and other jobs. Traineeships are successfully supporting disadvantaged learners, for example 72% of 19-24 trainees were on benefits at the start of their learning[30] and 22% of trainees identified themselves as having a learning difficulty or disability[31]. The programme is achieving good outcomes, with 66% of trainees progressing into a positive destination after their traineeship[32].

Community Learning

118.          Community Learning plays another vital role within adult provision, and its national objectives require providers to prioritise disadvantaged learners. It is a flexible offer, including basic skills, employability and well-being courses. Ofsted’s inspection data indicates that 83% of community learning and skills providers were judged good or outstanding at their most recent inspection[33].

Basic Skills – English, maths and digital skills

119.          Securing good standards of maths, English and digital skills increases individual productivity, improves earnings and employment opportunities. We are working with a range of sector and research partners to improve the evidence base on the best ways to support adults to secure basic English, maths and digital skills. The Department funds community-level provision for those furthest from formal education, works with the Good Things Foundation to support disadvantaged adults to improve their basic digital skills and works with Unionlearn to encourage low-skilled people in the workplace to access funded literacy and numeracy provision.

120.          The Department supports Functional Skills qualifications because they are flexible and have a real-life and work problem-solving approach to developing literacy and numeracy skills and delivering the courses. We are currently in the process of reforming these qualifications to improve their rigour and relevance and provide leaners with the skills that employers say their employees need in work and in every-day life.

Career learning

121.          In order to respond to changes in the labour market and improve social mobility it is increasingly important that adults up-skill and retrain throughout their career. To help understand how barriers to such learning may be overcome, the Spring Budget 2017 committed up to £40million to test new approaches.

122.          Through the first of these pilots – the Flexible Learning Fund - the Department is making available up to £10million to support projects which test flexible ways of delivering learning to working adults with low or intermediate skills.

123.          A second set of pilots will run in Leeds, Devon and Somerset, Lincolnshire, Stoke-on-Trent and the West Midlands to test the best ways to reach working adults and incentivise training. The lessons will help target the National Retraining Scheme - an ambitious programme to drive adult learning through partnership between business, workers, and Government, which will be fully in place by the end of this Parliament.

Support for specific groups

Special Educational Needs and Disability

124.          Education, Health and Care (EHC) plans can be maintained up to age 25 to enable a young person with Special Educational Needs and Disability (SEND) to complete their education and training, and the Children and Families Act 2014 brings post-16 education providers into the SEND system for the first time.  The reforms also require all children and young people with SEND to be prepared for adulthood, and programmes such as supported internships are helping young people with SEND into paid work.

Care leavers

125.          The Government’s care leaver strategy, Keep on Caring, articulates five outcomes that Ministers want care leavers to achieve, including support to live independently, to have better access to education, employment and training and to achieve financial stability. Care leavers receive support to engage in and achieve in education, including the 16-19 bursary for looked-after children and care leavers which is worth £1,200. We are introducing the care leavers’ covenant, which will provide opportunities for private and voluntary sector organisations to pledge offers of support (including work experience, apprenticeships and mentoring) to help care leavers gain the life skills they need to thrive. Having run a procurement exercise we are about to appoint a delivery partner to run the covenant. In addition we are using social impact bonds to improve care leavers’ engagement in education, employment and training.

January 2018