The devolution of the adult skills budget has led to a dramatic drop in the number of providers receiving funding in the seven mayoral areas of England, Tes analysis has shown.

A total of 334 providers received adult education budget (AEB) funding from combined authorities in 2019-20, the first year of skills devolution - down by 45 per cent from the 608 funded for provision in these areas in 2017-18 by the Education and Skills Funding Agency.

However, with many providers previously receiving funding in more than one region, that figure masks the much more significant impact of devolution on the provider base regionally.

In Greater Manchester, the number of providers in receipt of funding reduced from 315 to 36 - a drop of over 88 per cent.

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Missing out on millions

In the Cambridgeshire and Peterborough Combined Authority, 181 providers received some form of AEB in 2017-18 - this year’s list of organisations funded by the CA lists 13. Liverpool City Region, according to the data, shows 33 providers receiving AEB - down from 253 two years ago.

In the West of England Combined Authority, the number of providers receiving any funding has dropped from 169 to 31, while in the West Midlands, it reduced from 297 to 48. Similarly, in the Tees Valley, the number of providers funded is down from 197 to 33.

In Greater London, the combined authority which in 2017-18 saw the largest number of institutions receive AEB funding, the number dropped from 421 to 135.

In March 2019, £630 million of the AEB was passed to seven mayoral areas across England, as part of the first wave of skills devolution. Previous work by Tes indicated that the devolution of the skills budget, had benefited smaller, regional providers over national ones, with many missing out on millions in income.

Mark Dawe, chief executive of the Association of Employment and Learning Providers, said: “More of the messaging from the combined authorities was that they want this to be transitional, but not disruptive. That seems to have been the case for colleges, but not for the independent sector.

“It has knocked out a lot of providers. In some cases, it feels a bit like those that wrote the best bid got the most money.”

He said a case could be made for some rationalisation, “but there were particularly small providers that were doing a great job who were cut out.

Some of the ones that work across regions say they are having people wanting t sign up and having to say no, sorry, you are in the wrong region. That is maybe a consequence of devolution.

“I would feel a lot more comfortable if all of it would have been procured, and there would have been no grant funding.”

While in some areas large colleges have received the same amounts of funding as in previous years, Mr Dawe said that independent providers had been disproportionately hit. “Some have shut down, some have been scrambling around trying to find someone to subcontract from. We have a system change here that is pushing people into a subcontracting model while at the same time the government is saying they want to restrict subcontracting.”

Providers have told Tes they were also concerned around the focus on a small number of so-called growth industries like digital at the expense of other parts of the economy, and the lack of funding for level 2 provision which is particularly important for older learners looking to re- or upskill.

The London College of Beauty Therapy has been in existence for over 25 years, but chief executive Christianne Cavalier told Tes the day the organisation found out it had not managed to secure any AEB funding from the Greater London authority was “a dark day”.

“We have been directly funded by the DfE for years and had a really good relationship with them. We are a specialist college and cover all age groups. About 80 per cent of our learners are women. When the devolution process started, we were actually quite enthusiastic. We had had years of cuts so we thought the local agenda could be really good. We really serve London.”

“We thought we might get a little bit less, but we were shocked when we found out we didn’t secure anything. It has devastated us. We were told to go and form partnerships, but that has been really difficult. We have had to make redundancies. And at the end of the line, those people that we were getting into jobs now are not.”

“I implore the authority to let us have another go. What do you want us to do? Employ a bid writer? We have one subcontracting contract, and that is about 10 per cent of what we had before. I am keeping on keeping on and making sure we are still here.” She says she was keen to engage in dialogue with the authority and work together to make sure learners have access to the right provision. “I want to help find a solution for the sector.”

However, she is concerned that further devolution would make things worse: “Going on what has happened, I am terrified at the thought of more devolution.”

One chief executive of a national provider said that while it had until recently delivered courses for adults right across the country and had applied for funding from all combined authorities, it had only managed to secure direct funding in two regions. As a result, it had stopped provision in one CA completely - and further provision was at risk, she said: “In two areas, we have no funding left, and we continue to have significant demand.”

Securing subcontracted provision was also getting more complicated as new rules were introduced and primes, as well as funders, were getting more “controlling” around their subcontracting.

She said she had been disappointed by the large number of established providers who had not managed to secure funds, compared to the number of newer providers without a full Ofsted inspection under their belt. “That says something about how experienced they are. It is absolutely for sure about who wrote the best bid.”

Overall, the provider has lost 27 per cent of its annual funding as a result of devolution. “I am currently running one of our academies unfunded. If this continues, it might mean stopping provision completely and that would be catastrophic for some of those skills areas.”

Another provider told Tes that it had only a number of years ago set up a dedicated team for its adult education provision, raising millions in funding. But having built capacity for about four million worth in provision, it had only managed to secure around one million last year  - none of it in direct funding from devolution areas. 

One reason for this was its missing local infrastructure. “We are a truly national provider who offers truly employer-based provision wherever it is required,” the provider said, explaining that this lack of locality had meant they missed out on contracts. “It has felt like there are potentially a number of unintended consequences in terms of who is now delivering that provision.”

“I am sitting here looking at next year - I may not have this team.”

Shane Chowen, area director for the East and West Midlands, said the adult education budget devolution was “now a reality and we are pleased to see devolved authorities developing relationships with colleges in spirit of partnership and trust”. He added: “For some colleges, particularly those with historic delivery in a devolved area but who are situated outside, we know that changes in policy locally have created challenges. For others, we are starting to see devolved authorities using their powers to flex the funding rules to allow funded FE for adults that would otherwise be ineligible under the ESFA rules.”

“In some areas, there is a concern that top-slicing of the budget for administration is diverting resource from students. It is too early to say definitively that AEB devolution has been a success and so we expect to see authorities working with independent partners to assess the added impact local control is having on meeting the skills needs of adults and businesses in their areas.”

Andy Burnham, mayor of Greater Manchester, said: “It is early days, in some ways, and it is the first full year of devolved control. We want to make changes without being too disruptive. The big change has been a greater focus [on] work and the economy. We are employing a more strategic approach. I was quite shocked by how many organisations were funded by AEB in the area. It was scattergun, to be honest.

“We have an economy where some of our citizens are in quite low wage employment without great chance of advancement. We are looking to help people to side step into more growing parts of the GM economy… The AEB is a stone not many people have turned over in recent times and it has never really attracted much attention in Whitehall. Finally, we have now turned it over.”

A DfE spokesperson said: “We are focused on levelling up skills and opportunity across the country. Through the Adult Education Budget (AEB) we are supporting adults to progress within and into work, further study, or an apprenticeship.

“Devolving the AEB is about ensuring local areas are able to best shape local provision to meet local needs, reduce skills shortages and support communities.”