April 2009

1. Post-19 Further Education and Skills Organisation Landscape and the role and creation of the Skills Funding Agency • April 2009 1

2. Context and ChallengePolicy Led - response to 07 Machinery of Government announcements and the White Paper:-Raising Expectations: Enabling the system to deliver tackling education and skills challengesby:-giving Local Authorities the leadership for delivering new entitlements for all young people in parallel to their Connexions and integrated youth services roles-streamlining the adult skills system to better support World-Class Skills and make faster progress on delivering a demand led system and achieve our 2020 skills ambitions The change will benefit learners and employers Funding in the hands of learners and employers (demand led system) Streamlined and integrated service for employers Integrated advice and guidance services for learners More young people and adults with the skills employers need Coherent offer for all young people

3. Understand market Set objectives Set regulatory framework Operate Assess performance UK Employment and Skills Commission Sector Skills Council Skills Forecasting Ofqual Determining the qualifications on offer Regulating the offer DIUS Skills Funding Agency Colleges and Providers Policy Investment strategy Funding andSettlement Advice Demand-side focus Funding Via DCSF Learning and Skills Improvement Service Regulatory focus Providing Learning Programmes for Students Ofsted Supply-side focus Supporting colleges and providers Data Inspection Further Education and Skills ModelA new landscape to support a demand led systemOpportunity taken to clarifyand confirm new roles and responsibilities

4. National, Regional and Local Landscape: National priorities reflected in regional and local strategies with customised local delivery Defining Demand Supply Response UKCES “State of the nation” defines national needs, progress, gaps SFA Funding is learner and employer driven SFA Skills “Co-ordinators” Within business support match demand supply and take up in line with needs RDAs/SFA/DWP Identify skills demands to meet regional economic needs SFA “Fixers” Ensure strategic skills needs addressed eg responding to inward investment, redundancies etc. MAAs with ESBs Identify skills demands to meet city / regional economic needs Local self-organised networks Networks of providers work with local partners to align local demand and supply LAAs with LSPs Identify skills demands to meet local community needs Define funded qualification of QCF and sector compacts Define priorities for broker / providers in delivering Train to Gain SSCs Identify sector skills needs

5. Leading the system Determining Overall Investment and Priorities Determining Performance System (Framework for Excellence) Responsible for meeting the Skills PSA Responsible for the Further Education Sponsorship and colleges’ and learning providers’ contribution to DCSF targets Responsible for Advising DIUS on the Skills needs of the Country, including regional strategic needs Monitor and challenge performance of employment and skills system Managing the FE and Skills Research Function Managing the SSCs and ensuring their effectiveness Advising on re-licensing Determining the Skills offer for their vocational area With the SFA raise employer demand for Skills With SFA raise employer demand for skills Determine with SFA and Jobcentre+ the Regional Skills strategy and manage the Skills brokerage service Further Education and Skills Landscape New Roles and Responsibilities DIUS UKCES SSCs RDAs

6. Lead and provide the four client gateways (Train to Gain, Apprenticeship, Advancement Service and the direct learner responsive service) and underpinning systems Fund colleges and learning providers Co-ordinate action on strategic skills regionally and sub regionally Work with LA’s on MAA’s/ESBs Colleges and Learning Providers meeting student and employers learning and skills requirements Cooperate with LAs, ES Boards and each other to respond to demand Collaborating with each other to provide a range of support services of their choice which could include peer assessment, staff development programmes, shared service and procurement Regulate the qualifications offer Support college and learning providers performance and facilitate self-regulation Sector Innovation Provide an independent view of college and learning providers Performance. Further Education and Skills Landscape New Roles and Responsibilities (2) SFA Colleges/ Providers Ofqual LSIS Ofsted

7. Objectives for a ‘demand-led’ market MOG created the opportunity to accelerate the introduction of a demand led system- as outlined in World Class Skills and the FE White Paper. A radical vision for a ‘demand-led’ FE market where we establish a new Skills Funding Agency which acts as the regulator, funder and commissioner for a much more active and transparent market. The challenge is to translate words into practical, agreed solutions. • Target outcomes for the FE and Skills market include: • Economic growth through global competitiveness • Reduced unemployment/unemployability • Social inclusion and cohesion • Culture of life-long learning • Efficient use of public funds • Market management objectives include: • ‘Light touch’ regulation - risk based, low burden, intervention to support the countries needs • Demand-led, funding following recruitment • Greater self-regulation • Support focused on government priorities Supply Market Management Demand Target Outcomes • Objectives for demand side include: • Informed customer choice • Increase in employer-led demand • Greater alignment between individual and employer demand • Increased and more effective take up by disenfranchised and disadvantaged groups • Increase % of population with Leitch Level 2 & 3 qualifications and apprenticeships • Objectives for the supply side include: • Demand-led, responsive provision • More innovation and diversity of provision • More self-direction and support • Higher quality and stronger reputation • Integrated, simpler interface with government regardless of funding source

8. Design principles High level design principles which will be used to test effectiveness of final model Demand Led • Be learner and employer driven providing choice, and coherent and accessible services at every level. Core Higher level commissioning • Funding follows learner. Simpler process longer contract time • Co-ordinated target setting and commissioning across government: nationally, regionally and locally Regulatory model Fair and robust intervention role • Clear rules of intervention • No ‘hand-holding’ of providers Efficiency and VfM • Public monies only used to fund high quality learning • Systems standardised and streamlined • Regulation and bureaucracy reduced Coherent set of services • Simple, coherent set of services for learner, employer and provider • Common information, measures, account management • Easy access to third sector Operating model Insight and capability • Use of information, analysis & research • New capabilities aligned to role ‘Shorter’ arm’s length from Ministers • Agency part of DIUS • Rapid response to policy

9. The Skills Funding Agency – Organisational Model There will be four client publicly focused gateways , supported by a set of underpinning functions and internal corporate functions The four gateways are: • National Apprenticeship Service – lead the development and delivery of the new apprenticeship programme, increase employer engagement, manage the apprenticeship vacancy matching service and increase trainee participation. (Implementation April 09) • Train to gain-Employer Skills Service delivering a national skills service to all sizes of business in all sectors and National Employer Service: aimed at raising skill levels of the workforce, secure a culture change that makes employers value skills; a skills system which is demand led and employer choice influences spend and qualifications, employers value and seek brokerage interventions to help them findsolutions. (Existing service enhanced) • Adult Advancement and Careers Service – delivering a outsourced service which is universal, integrated with Jobcentre Plus and coherent with services for young people and HE. ( Pilots taking place 2008/2010) • Learner Skills Service – direct entry -funding Colleges and Learning Providers who are responding directly to the learner. This area captures the new arrangements proposed for greater integration of employment and skills service to those out of work, specialists provision including Offender Learning. (Existing service streamlined and enhanced)

10. Skills Funding Agency • Shared or Joint Service with DCSF and or DWP or between YPLA/SFA/Local Authorities Core/National Functions • In light of budget allocation and guidance from Secretary of State, set and publish skills priorities • Management of the National Apprenticeship service • Management of Train to Gain including national employer service • Set funding rates and guidance • Set up and manage an approved provider accreditation register • Manage the learner responsive system: skills accounts and integrated employment and skills • Through a college and learner provider business account management system:  Run the allocation and settlement system  Manage the performance intervention system and reallocation • Management of the raising demand sideinterventions e.g. Skills Pledge, Compacts, • Sector Skills Councils Agreements • Management of the Adult Advancement and Careers Service and the national advice line • Adult Learner Support, including supporting student from pre-employment into training and work

11. Core/National Functions (2) • Management of the Capital Investment programme • Designing and manage the FE IT architecture including underpinning systems for the Learner Registration service, QCF, Settlement System, Shared Platform etc • Run the FE Data Service including data collection, exchange and reporting • Manage the SFA Corporate Services including Departmental Reporting, Internal Communication, HR, internal finance and property management. Regional • Skills Advocacy, partnership building and Skills Fixer. The responsible agency for ensuring that the strategic skills and innovation needs of every area are being met. • Championing and delivering on the raising demand slide initiatives such as Skills Pledges; working with Business Link. • Determine regional SkillsRequirements, in light of UKCES advice • With RDAs, developRegional Skills and Employment plans through the Regional Skills partnership or implement the Skills and Employment Strategy such as LESB. • Work with central Capital team to draft and publish the underpinning regional Capital investment plan and infrastructure changes. • Support National Office on provider performance • Influence how skills feature in MAAs and LAAs

12. The Apprenticeships, Skills, Children and Learning Bill Introduced in Feb 2009: • As part of this Bill, it is proposed to create a new statutory office holder, the Chief Executive of Skills Funding, who will have specific powers and duties including responsibility for the SFA. • The Skills Funding Agency will be agency of DIUS, with staff provided by the Secretary of State. • The aim is to ensure the autonomy and academic freedom of colleges and providers and in line with best practice in the public sector, ensure decisions are taken as close to the frontline as possible. • To ensure this a duty to collaborate will be placed on colleges and learning providers.

13. Action 2008 2009 h1 2009 h2 2010 To 2012 Role of SFA in SFA commercial Segment providers by Transition Transition wave 2 and 3 providers Post - 19 market defined strategy agreed risk profile and into wave 1 providers Vision Monitor and transition waves Publish FfE improve Benefits Market change plan results on web realisation Add provider groups Market transformation to FfE Completed sharing Launch FfE for major provider groups Shared SFA legislation passed Initial platform sharing and settlement All Customer SFA business NAS launched system processes Interaction model agreed SFA est (Apr) Model operational Benefits Policy/legislation Service delivery model realisation Shared frameworks TUPE complete defined and strategies agreed SFA established Start shard Sharing process in shadow form platform SFA year mechanisms agreed rollout 2 budget Potential outsourced functions specified for Procedures potential providers defined Start shared platform SFA T&Cs and development Partners for sharing grading confirmed SFA starting identified and briefed SFA locations budget Transition to defined Plan for interim confirmed final IM Agree core functions arrangements Roles and processes to be shared and defined outsourced Key capabilities of SFA Optimise interim operating Interfaces, shared functions agreed capability SFA resource Consultation with TUs IS strategy allocations Potential for Interim IM sharing agreed function Budget and Demerger SFA organisation Information management resource allocation