03 December 2015 Walsall College Steve Sawbridge, AoC West Midlands

A generally positive picture: Growth up

Inflation down

Employment up

But … Increased growth and employment are not generating the anticipated

level of tax receipts … at least we thought so six months ago

Debt continues at high levels so interest on debt remains high

Borrowing is slow to fall

So … Continued austerity and cuts to public funding but not as bad as we

thought

Source: Office for Budget Responsibility, Nov 2015

National base rate for 16-19 years maintained for 4 years

Core adult skills participation budget fixed in cash terms

Apprenticeship levy 0.5% on payrolls over £3 million

FE loans extended to 19 to 23 year olds on Level 3 and 4 courses

Sixth form colleges given an option to convert to academy status

But

£160million savings to be made in 16-18 budget

£360million savings from the adult skills budget

The commitment to maintain the 16-18 base rate together with the lagged funding methodology helps

Some certainty on the aggregate adult skills budget

But

Increased competition and a declining 16-18 cohort don’t

Continued shift towards apprenticeships with some funding uncertainty

Introduction of loans for 19-23 year olds

Devolution of the non-apprenticeship budget to Combined Authorities

Devolution and localism

Growth and productivity

3 million apprenticeships over lifetime of this Government

National colleges (and Institutes of Technology)

Area reviews and financial viability

Academisation - 500 more free schools and a UTC within reach of every city

Funding protection for 5-16 education along with a national funding formula

Source: SFA, College Finance Record/Financial Forecasts

85.2%

8.9% 0.4% 5.3% 0.2%

Funding body grants

Fee income

Research grants and contracts

Other income

Endowment and investment income

Source: Skills Funding Agency analysis of college financial records 2013/14

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

GFEC SFC All

EFA income

Skills Funding Agency income

European income

Higher Education income

All other income

Source: Skills Funding Agency analysis of college financial records 2013/14

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Source: Skills Funding Agency analysis of college financial records 2013/14

Some or all of the following:

Positioning the college to deliver apprenticeships

Managing the cost of curriculum delivery

Property sales to release cash (only open to some colleges)

Relentless focus on student/employer demand and quality

Collaboration and / or restructuring – Area Reviews

Robust strategy and sound strategic planning

Managed diversification …

… or retraction from adult provision

Planned risk-taking

Strong, positive, realistic leadership

Higher education (full-time and part-time)

International activity (here and overseas)

Pre-16 education (14-16, school partnerships/sponsorships)

High need pupils (16-25 or even younger age groups)

Back-to-work programmes (eg Work Programme)

Offender learning (prisons and probation)

Full-cost courses

Non-education revenue

On-line learning

Financial

How well does the college understand its current and future financial position, and what steps is it taking to remedy any issues identified?

Operational

How does the college identify, monitor, benchmark and respond to financial Key Performance Indicators?

Strategic

What steps has the college taken, or have planned, to respond to internal and external influences that impact on its capacity to offer appropriate and high quality provision ?

Constituent members

Birmingham City Council

Coventry City Council

Dudley Metropolitan Borough Council

Sandwell Metropolitan Borough Council

Solihull Metropolitan Borough Council

Walsall Metropolitan Borough Council

City of Wolverhampton Council

Non constituent members

Cannock District Council

Nuneaton and Bedworth District Council

Redditch District Council

Tamworth District Council

Telford and Wrekin Council

Black Country LEP

Greater Birmingham and Solihull LEP

Coventry and Warwickshire LEP

An overarching Strategic Economic Plan for the West Midlands

Access to finance and a Collective Investment Vehicle

Getting the transport offer right for the long term to improve connectivity and access to HS2

Creation of an economic policy and intelligence capacity to generate an evidence base

A joint programme on skills

Plus

The West Midlands Productivity Commission

The West Midlands Land Commission

The West Midlands Commission on Mental Health and Public Services

West Midlands Combined Authority launched July 2015

Submission of devolution deal September 2015

Shadow Board established September 2015

Devolution deal agreed November 2015

Vesting date April 2016

Elections for Mayor May 2017

Addressing poor skills and economic exclusion

System simplification

Strengthening the connectivity between supply and demand

Devolution of all employment and skills funding

Alignment with the WM CA Employment and Skills Strategy

Devolution deals (pre* & post election)

*Greater Manchester (Oct 2014)

Sheffield City Region (*Dec 2014, Oct 2015)

*London (Mayor) (Feb 2015)

*West Yorkshire (Mar 2015)

Tees Valley (Oct 2015)

North East (Oct 2015)

Liverpool City Region (Nov 2015)

West Midlands (Nov 2015)

City regions that want to agree a devolution deal in return for a mayor by the Spending Review will need to submit formal, fiscally-neutral proposals and an agreed geography to the Treasury by 4 September 2015.

Control of an additional £36.5 million per year funding allocation over 30 years focused on economic growth

A directly elected Mayor by May 2017

Significant responsibilities for transport including public transport and highways

Fully devolved funding for adult skills from 2018/19

Joint responsibility with DWP for employment support for ‘hardest to reach’

Creation of a further Enterprise Zone around the HS2 terminus

Support for extensions of the Metro in Birmingham and The Black Country

Planning powers which mirror those of the Homes and Communities Agency

Further public service reform including possible devolution of the youth justice service

Almost identical to proposals in other devolution deals (Liverpool, Sheffield, Tees Valley etc.)

Devolution of ‘other’ Adult Skills Budget i.e. not Apprenticeships nor 16-18 funding but does include funding for 19+ continuing students

Creation of an Employment and Skills Strategy taking into account the wider LEP geography

Outcome agreements with providers about ‘what should be delivered in return for allocations’

Employment and Skills Strategy developed in partnership with colleges and providers following Area Reviews

CA responsible for chairing subsequent Area Reviews which will include analysis of all post-16 education and training

For 2016/17:

Development of a series of outcome agreements with providers in return for 19+ allocations

‘Single block’ allocation for 19+

For 2017/18:

Freedom to vary allocations within an agreed framework

For 2018/19:

A new funding formula for allocation to Combined Authorities

Fully devolved responsibility for allocations to providers set against agreed outcomes

Contingent on readiness conditions being met

Legislation to transfer responsibilities is in place

Completion of Area Reviews

Agreed arrangements to secure a sustainable and financially viable post-16 provider base

Arrangements to share with central Government financial risk and management of post-16 providers

Arrangements for funding and provider management including financial assurance and minimum standards

The Mayor Who is this likely to be?

Level of public mandate / support

The political geography Metropolitan council versus three LEP geography

Telford and Wrekin Unitary Authority included as non-constituent member but is outside both the West Midlands metropolitan area and the three LEP area

Some district councils within the three LEP geography have not yet and may not opt for non-constituent membership

The position of Warwickshire County Council (in the LEP but not the CA)

Relationship with the three LEPs at individual and CA levels Creation of a single LEP?

Splitting Telford and Wrekin from The Marches LEP?

Public engagement Little sign of any meaningful consultation to date

Timescale Widely anticipated to slip

Outcome agreements At individual provider level or agreed collectively with groups of colleges / providers?

How will success be measured?

CA knowledge and capacity to agree and implement these effectively

Tendency for micro-management

New Employment and Skills strategy

An opportunity for colleges?

Evidence base drawn from existing strategies / Strategic Economic Plans

Area reviews Position of the Birmingham and Solihull review in relation to a future Combined Authority wide

review

Reviews chaired by the lead authority for skills across the CA (currently Chief Exec of Solihull MBC)

All post-16 provision to be included in the initial phase but recommendations focused only on colleges

Future funding methodology

A locally determined allocations methodology (‘agreed framework’) from 2017/18

Capability to develop this locally

Apprenticeships are now the cornerstone of the skills system

3 million apprenticeships will have started by 2019/20

Government spending on apprenticeships including income through the levy will be double that in 2010/11 (circa £2.2bn)

Employers in control of funding through a new levy

A new employer-led body to set standards and ensure quality

0

100000

200000

300000

400000

500000

600000

2010/11Not comparable with

subsequent years

2011/12 2012/13 2013/14 2014/15

Appr

entic

eshi

p St

arts

Academic Year

16-18

19+

All ages

Standards designed by employers will replace existing Frameworks, target date 2017/18.

New standards clear and concise, written by employers and no more than a few pages long.

All Apprenticeships will last a minimum of 12 months.

All Apprenticeships will have an independent end-point assessment.

Apprenticeships will be graded for the first time.

Employer-led ‘Trailblazers’ are leading the way in implementing the new apprenticeships.

They are working together to design apprenticeship standards and assessment approaches for key occupations in their sectors. More than 1000 employers in over 70 sectors are currently involved.

More than 230 standards have been developed, or are in development

More than 100 employer groups have been established

£2 from government for every £1 that an employer invests in delivery and assessment, up to a pre set cap

English and maths (Level 1 & 2) fully funded and additional learning support is available as needed.

Employer Incentive Payments (16-18s. Small business, completion)

Unclear what happens regarding incentives within the Levy