Monday, 6 January 2014

The end of 16-18

by Mark Corney

The combination of fiscal austerity and Raising the Participation Age (RPA) is bringing to an end 16-18 as a distinct system of further education and training.

2014 is the year when schools, colleges and independent providers will need to think in terms of 16-17 year olds on the one hand and 18 year olds on the other.

But it is the treatment of 18 year olds in full-time further education and on apprenticeships by the Coalition Government which will test its belief in fairness and its competence.

The key point to make at the outset is that in the state system the cost of provision for 16-18 year olds in full-time further education and on apprenticeships is fully funded. Additionally, taxpayer support takes the form of fee-grants rather than fee-loans.

Against this background, however, the Coalition has taken two decisions which is leading to the breakdown of the 16-18 system in English education and skills..

The first decision was not to protect 16-18 funding within the DfE budget. The second was to raise the participation age to 17 in September last year and make a commitment to increase it to 18 from September 2015.

Given the unwillingness of the Coalition to protect 16-18 funding but its commitment to raise the participation age to 18, its decision to target scarce resources on fully funding 16-17 year olds in full-time further education at schools and colleges is logical.

But joined-up policy implies that 16 and 17 year olds on apprenticeships should also be fully funded. The Coalition should announce in very short order that compulsory employer cash contributions should not apply to 16 and 17 year olds on apprenticeships.

The rationale is simple. Only 25,000 16 year olds and 35,000 17 year olds are on apprenticeships compared to 53,000 18 year olds and 165,000 19-24 year olds. Compulsory employer cash contributions for 16-17 year olds on apprenticeships could reduce employer demand still further. It is bad RPA policy and bad skills policy.

The logic of government policy, however, is clearly to treat 16 and 17 year olds differently from 18 year olds, and to fully fund the former but only partially fund the latter.

A funding rate of 82.5% has been announced for 18 year olds in full-time further education. To create a level playing field, the obvious read-across is that the funding rate for apprenticeships should be 82.5%.

Yet, there is a critical difference between full-time further education policy and apprenticeship policy at 18. The Coalition is not expecting the customer in full-time further education - the 18 year old young person – to make a compulsory cash contribution. By contrast, it is expecting the customer for 18 year olds on apprenticeships - the employer – to do so.

As the Coalition at last attempts to join-up RPA policy with apprenticeship policy, a common sense approach would be to fund 18 year olds on apprenticeships at 82.5% without compulsory cash contributions from employers.

Once again, the rationale is simple. Only 53,000 18 year olds start apprenticeships in England even when they are fully funded. Compulsory employer cash contributions for 18 year olds risk lowering employer demand for apprenticeships. It is bad employment policy and bad skills policy.

The estimated savings from reducing the national funding rate for 18 year olds in full-time further education to 82.5% has been put at £150m.

To argue that the cut in the funding rate for full-time further education students aged 18 undermines RPA simply misunderstands the policy. In September 2015, the participation age will be raised to the 18th birthday and not the end of the academic year in which a young person is 18.

An alternative way of saving the estimated £150m would be to reduce the £4,000 funding rate across the entire 16-18 age range. Yet this misses the fact that RPAis a government priority and the FE college sector has championed the policy partly because more 16 and 17 year olds are likely to attend colleges than school sixth forms.

Although the decision to reduce the funding rate for 18 year olds is logical the key issue is whether it is fair.

Some 150,000 18 year olds in state funded full-time further education will be affected, with 70% attending general FE, tertiary and specialist colleges. Around 48,000 will be studying for qualifications at Level 2 and below, with 112,000 on Level 3 programmes, mainly vocational Level 3 courses.

If the majority were studying 3 A levels at school sixth forms, the funding rate cut to 82.5% would not have got past the relevant Special Adviser.

Clearly the Coalition needs to come up with a funding principle which is fair to the taxpayer and to young people, and is also seen to be fair with respect to RPA.

Surely if a young person starts a full-time further education course or an apprenticeship at a given level before their 18th birthday, they should expect to be fully funded until completion (or they drop-out). It would follow that those who start full-time further education and apprenticeships after their 18th birthday should be partially funded.

It is unclear how many of the 150,000 18 year olds in state funded further education start before their 18th birthday.

An intuitive guess, and it is only a guess, is that perhaps 80% will have started their course before their 18th birthday. To fully fund this group of 18 year olds the Coalition would have to reinstate £120m of the estimated £150m cuts.

Yet, this is not an impossible task if the Coalition looks widely enough.

For example, DfE could contribute by refocusing the 16-19 discretionary bursaries on those starting full time courses before their 18th birthday.

The Treasury could also restrict the payment of means-tested child benefit and universal credit/tax credits on a similar basis.

Any shortfall could be met in the Budget in March.

More fundamentally, however, Budget 2014 needs to explain where 16-17 RPA policy ends and 18-21 ‘earn or learn’ policy begins.

From the perspective of funding provision, starts before the 18th birthday should surely fall under RPA policy and starts after the 18th birthday should fall under ‘earn or learn’ policy.

From the perspective of welfare and maintenance, we might equally expect that payment of child benefit, child tax credit and the Bursary should fall under RPA policy and the payment of JSA/Youth Allowance should fall under 18-21 ‘earn or learn?’ policy.

Mark Corney is a policy consultant and adviser to CfL.

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