Alison Wolf: How £2 billion of the Further Education budget is wasted on useless activities - and how we should reform the system

Alison Wolf is the Sir Roy Griffiths Professor of Public Sector Management at King's College London and is a visiting professorial fellow at the Institute of Education, University of London. Her new monograph for the IEA, An Adult Approach to Further Education, was published this week.

England once had a system of education for adults that was highly diverse, locally responsive, and an avenue for social mobility. No longer. As I explain in a new monograph published by the IEA, our further and adult education has been laid waste by Soviet-style central planning.

At a conservative estimate, £2 billion a year is being wasted, spent on activities which do nothing for either the economy or individual learners. Some of this is the cost of quangos which change with dizzying speed;  more than 20 have come or gone in the last four years alone. Some is the administrative burden imposed by government on colleges and training providers. Much of it is because government sponsors and demands narrow micro-managed courses with no labour market value at all. The total is well over a third of total current spending on the sector.

To understand what is happening, compare our further and our higher education systems.  Our universities are world-leaders, with only the US topping us in international rankings, and highly successful earners of foreign exchange, recruiting overseas students in ever-increasing numbers.  British students - undergraduate and graduate - are prepared to pay sizeable fees, because they value the courses on offer. 
In further education, by contrast, fee income is tiny. Local companies, which once commissioned customised training from colleges, or sponsored day-release students, rarely do so today.

Most of the adult courses which are now funded lead to low-level vocational qualifications, designed to tight central government standards, or to the Government’s own basic skills qualifications. Repeated research studies, commissioned by government departments in denial, show that these qualifications are generally of no economic value whatsoever. They do, however, contribute to the qualification targets by which the government measures its own success.

The current regime stultifies individual lives, and the waste is colossal: £2 billion a year would pay for Crossrail in a decade, or fund 300,000 new apprenticeships, or offset the increases in employers’ National Insurance contributions that are currently proposed. The upside is that further education is ripe for enormous improvement. Moving even a proportion of that money into programmes that someone actually wants would leave large numbers of people happier and better off.

To make it a ‘win-win situation’, however, requires radical reform - not just tinkering at the edges. Above all, it means ensuring that provision responds to individuals’ choices and learners’ demands.

Increasing the responsiveness of the school system to family choices and preferences, and ensuring that funds genuinely follow the child, are cornerstones of current Conservative policy. Higher education’s success also rests on ‘choice’ and autonomy. Without students’ ability to choose courses, and universities’ control of their own curriculum, our higher education system couldn’t attract anything like the numbers it does, or respond to new demands from a changing world economy.

Saving Further Education means applying these same principles. Money must follow learners, as it does for universities and, indeed schools. That means a genuine bonfire of both quangoes and planning requirements. Yet current government legislation will leave the typical FE college subject to the whims of between five and thirty local authorities plus an RDA, each with the right to determine ‘skills’ provision and priorities. 

Higher education offers other lessons too. Student support, through income-contingent loans and grants is vital, because without it, many students would not dare to study, and universities would be starved of the fee income they badly need. We need to align student support in FE and HE, so that citizens are treated equally, and so that FE can generate fee income, and become more independent and more creative.
It is a scandal that, in the midst of a recession, FE policy is going backwards, not forwards, in this respect.

More and more money is being channelled into existing, and generally large,  workplaces, where ‘training providers’ are paid to pin certificates on people doing existing and long-established  jobs. The funding system is, in other words, increasingly  and systematically biased against helping the redundant to re-skill,  against small companies, and against new and emerging occupations and sectors.

Both major parties believe - correctly - that university students can and will make better decisions, and drive degree quality up, if they are given good information. That is why David Willetts is working with Microsoft on a website that will do just that.  Yet the current Government treats working adults as children: employees only receive government-funded workplace training when their employers sign them up for it. The implication is that only people with good A levels can make sensible choices: an outrageous position for any government, Labour or otherwise, and completely at odds with the evidence.

Successful FE reform could level the field across all education sectors, complementing reforms in school and higher education policy. It could increase choice, yield tangible benefits for millions of adults - and be good for the economy in the process.