Issue details

Proposed decision

For KCC Community Learning and Skills (CLS) to change its delivery model to meet its contractual obligations as set out under the new Education and Skills Funding Agency (ESFA) rules which come into effect from 1^st August 2024.

Reason for the decision

Following funding changes by the Department for Education (DfE) / Education and Skills Funding Agency (ESFA), which will come into effect from 1^st August 2024, KCC Community Learning and Skills (CLS) must undertake significant reform if it is to continue to deliver vital core skills to the residents of Kent and remain within the new terms of the funding contract.

While much of the provision will remain the same, it is expected that the reforms would alter some of the types of courses offered, the customer base and the delivery locations particularly for the Creative and Personal Development components.

A decision is required in response to the Department for Education (DfE) reforms in relation to further education funding, which will require a change to KCC CLS service business model.

Background

Community Learning and Skills (CLS) is KCC’s internally commissioned department to deliver Education and Training to adults and young people over 16. It delivers core subjects like English and maths, and has a long history of a creative arts curriculum as well as languages, fitness and humanities. CLS are responsible for delivering the Education & Skills Funding Agency Adult Education Budget (AEB) on behalf of KCC, which support the goals and objectives of Framing Kent’s Future. 

CLS provide and secure learning opportunities for Kent’s residents which:

·         engage and build confidence, preparing them for further learning and employment,

·         improve essential skills in areas such English, ESOL, maths, digital skills,

·         equip parents/carers to support children’s learning,

·         improve health and wellbeing to develop strong, integrated communities.

From the new academic year, starting on 1st August 2024, the DfE/ESFA are changing the AEB to become the Adult Skills Fund (ASF) which introduces significant alterations to the funding rules and how the funding should be utilised.

These reforms refocus how funding is used with the new focus being to reskill and upskill adults for work, and to move funding away from courses taken purely for leisure / pleasure purposes. The reforms will benefit learners through the stronger link between the training available to them and the employment opportunities in their local area. New Annual Accountability Statements for grant-funded FE providers, like KCC/CLS, requires them to outline their plans to contribute to local and national skills needs.

Other key points to note from the funding reforms:

·         Learning for leisure and pleasure is no longer fundable or to be subsidised via the Adult Skills Fund.The courses impacted include many of the creative (art / crafts) and language courses.

·         Learners classified as repeat learners (learners who have attended the same type of course, completing a full level) will be expected to progress to the next level, move to a different type of course or move into ‘self-organised learning’ which may be at an increased cost to the learner.  This accounts for around 41% of KCC/CLS current learners.

·         All learning by an individual must be categorised into a ‘Primary Purpose’ from one of the following seven areas: Engaging and/or building confidence; Preparation for further learning; Preparation for employment; Improving essential skills including English, ESOL, Maths and Digital; Equipping parents/carers to support children's learning; Health and well-being; Developing stronger communities.

KCC CLS is proposing to make changes to its delivery model to ensure itmeets contractual obligations and gives even more focus to Local Skills Improvement Plan (LSIP) priorities around skills gaps, and local needs. This would also include qualification and non-qualification courses leading towards working in Creative industries, as well as for example, language courses to support work in employers who require bi-lingual skills e.g. Border Force. Whilst learning for leisure/pleasure would not be included in this option, Creative and Fitness courses as a vehicle to support health and wellbeing would be delivered, and Creative and language courses would still be included for an individual for a defined period, as they sit within ESFA funding rules. Examples of the learning aims possible would be provided in the report presented to Cabinet Committee.

Sub-contracting opportunities will be explored where CLS do not have existing staff base, for example, particular vocational sectors.

This is the preferred option, on the basis that this option holds fewer financial risks for KCC long term and will also enable an undivided focus on achieving the KCC strategic aims and those outlined within the ESFA contract.

Options (other options considered but discarded)

Option 2 – Contract plus Learner Funded Business Unit

This would be as option 1, alteration of our business model to meet the terms of the new contract, but with the addition of a commercial unit in the form of Learner Funded Business Unit (LFBU). The LFBU could help replace the offer for learners whose courses are now excluded from ESFA funding. These learners would pay for their courses without recourse to concessions or discounts. KCC CLS would deliver in each district according to identified demand and building suitability. Estimates for fees are variable, but biggest increases would be for specialist courses requiring specialist equipment at circa 100% higher than the equivalent subsidised course rate.

Option 3 – Close KCC CLS

This option has two variables, as KCC could a) return the contract to DfE/ESFA or

b) commission/sub-contract delivery to external providers. With ‘b’, KCC would still, as the contract holder, retain the responsibility for quality, data, compliance, OFSTED inspections etc.

Option 4 - Do nothing:

CLS would continue with the present offer including courses for learners which will be precluded from funding but with equivalent course pricing structures as now and in the buildings presently occupied.

How the proposed decision supports Framing Kent's Future - Our Council Strategy 2022-2026

The changes will support KCC’s ambitions by:

• focussing on demographics within local communities to deliver improvements in adult educational attainment, skills and employment rates and economy.
• forging a greater relationship and joint working with Public Health to improve the health of the population.
• supporting KCC Infrastructure in strategic planning of new housing developments to ensure the provision of education is available at the point of need.
• supporting rural communities in their access to education
• providing opportunities for people to develop their confidence and ability to build a stronger community.
• reviewing the CLS occupied KCC freehold estate and relocate to more carbon efficient premises.
• offering more provision within local communities, thereby reducing carbon emissions through customer travel.
• continuing to deliver the highly successful Family Learning and Response programmes which support many of the most vulnerable.

How the proposed decision supports Securing Kent’s Future

Implementing the proposals will contribute towards Objective 3 of securing Kent’s future:

- The transformation of the service, in line with the requirements of the grant funding and in response to changes in Government priorities, will aim to return the service to a self-funded model of delivery within 3 years and achieve financial sustainability in the longer term (recognising there will be a short-term pressure whilst this transformation takes place). The proposed model of delivery was considered the most cost effective option over the next 3 academic years. 

Financial Implications

The proposal involves changing the delivery model to adhere to the changes in funding. A restructure would be required which would result in a financial pressure to the Council in the region of £0.6m - £0.9m in 2024-25 financial year whilst the service adjusts to the new delivery model, with the expectation this pressure would be reduced in 25-26, and the service returning to a self-funded model by 2026-27 

It is anticipated there will be an initial reduction of enrolments but there would be future growth across the three years to mitigate the risk of contract reduction.

This model of delivery would still expect KCC CLS to seek opportunities to attract additional funding and additional fee income, through delivery of bespoke courses, for example to employers. There would be some fee income (earned outside of ESFA contract, where courses/need aligned with the Primary Purposes) and estimates circa £1.3m. Based on this assumption and the occupation of buildings suited to the new offer, it is anticipated that KCC CLS would be returning to a small surplus within three years.

The Revenue Budget for 2024-25, agreed by the Council in February 2024, expected CLS to be fully funded from a combination of external grants and fee income with the delivery of a small surplus of -£0.1m to support wider indirect overheads. When assessing the different options for the future of CLS, due to the estimated impact of the government funding from August 2024, it is likely there will be a short-term financial pressure on this service during 2024-25, this will be reported in the financial monitoring report presented to Cabinet. The Directorate will look to see what mitigating actions could be taken to offset this possible overspend. 

Staffing

There will be an impact to the CLS staffing base and particularly for tutors in the biggest impacted areas of Creative/CPD courses.There would be no implementation of staff changes prior to 1st August 2024, and headcount changes would not likely take place until the end of the year. This would add financial pressure which will be managed through a programme of activity to best utilise paid hours.

Property Assets

A reduction in set property assets will be vital for CLS to return to financial viability. Currently the dedicated fixed assets represent an annual revenue cost of over £2m in addition to the ad hoc facilities charges. Moving forward, under the preferred option, the service would require more short-term community-based venues that will alter based on the areas of most need. Moving to this more agile model of delivery would free up space to be considered for other KCC uses, and if the assets were surplus to KCCs requirements, they could return a significant capital receipt and also avoid the longer-term maintenance costs of those assets.

Equalities implications

An EqIA has been undertaken and will continue to be reviewed through the decision process. The EqIA has identified that the biggest, and most detrimental impacts to service users in the long term would have been from Options 3 (close the service or sub-contract provision) and Option 4 (do nothing).

Options 1 and 2 also identify impacts on those with protected characteristics these being:

·         Potential reduction to the service offer, particularly in learning for leisure with mitigation provided by either the introduction of a Learner-funded offer and/or signposting to alternative learning providers and the promotion of self-organised learning.

·         Potential reduced access, particularly for those who may, because of their protected characteristic, have limited financial means. There is limited mitigation by access to funding via tailored learning.

·         Older people may be more greatly affected because of their proportional representation within CLS and because they most often use classes for leisure purposes. Mitigation would be provided by either the introduction of a Learner-funded offer and/or signposting to alternative learning providers and the promotion of self-organised learning.

·         Those identifying as women may be more greatly impacted, again due to the proportional representation. For 23/24 thus far, participation is 78% female, 22% male.