Implementation Of, And Timetable For,

The National Funding System

To: /
  • All providers of post-16 learning in Wales (including higher education institutions with provision funded by the National Council).
  • Fforwm, National Training Federation, Local Education Authorities, Welsh Local Government Association, CCETs, Sector Skills Councils, Ufi, Secondary Heads Association, Teaching Trades Unions, Estyn, HEFCW, Regional Committees.

Summary: / This circular provides information on:
(i)The developments in the implementation of the National Funding System for post-16 learning (except HE) in Wales; and
(ii)The redefined implementation timetable.
No response is necessary, although observations are welcome
Reference: / NC/C/03/08SLD
Publication date: / 8 August 2003
Further Information: / Elaine Allinson, Head of Funding Policy & Special Projects;
e-mail
Mark Beauchamp, Senior Funding Policy Manager (Sixth Forms and Informal Learning);
e-mail
Bethan Cowan, Senior Funding Policy Manager (Learning Support and Special Educational Needs);
e-mail
Julie James, Project Manager;
e-mail
Tel: / (029) 2068 2287
Address: / National Council – ELWa
Linden Court
Ilex Close
Llanishen
Cardiff CF14 5DZ

INTRODUCTION

1The National Council’s remit from the Minister for Education and Lifelong Learning includes undertaking a comprehensive review of the funding arrangements for post-16 learning and developing a National Funding System (NFS). The development and implementation of a transparent and equitable National Funding System is a major objective of the Council’s Corporate Plan.

2After a formal consultation period, which ended in October 2002, the National Council – ELWa submitted its recommendations for an integrated single National Planning and Funding System to the Minister for Education and Lifelong Learning. Following the Minister for Education and Lifelong Learning’s response to the NPFS consultation outcomes further research, testing and informal consultation was undertaken.

3Background information to this circular, including Frequently Asked Questions, can be found at for the NFS, and for the Credit and Qualifications Framework for Wales (CQFW). A glossary of terms is set out at Annex A.

RESEARCH, TESTING AND INFORMAL CONSULTATION OUTCOMES

(i)Definitions and processes for the four funding streams have been outlined

4The framework for the new system comprises four funding streams:

Learning Provision Purchasing

Secures the delivery of high quality units of learning and achievement in response to national, regional and local priorities agreed by the National Council - ELWa using a transparent, predictable and unified funding formula, reflecting value for money

Learning Network Investment

The investment of funds to support significant infrastructure development of buildings and equipment as well as non-infrastructure development activity such as investment in staff, curriculum and materials, merger and collaboration initiatives

Learner Commissioned Purchasing

Gives learners purchasing power over learning provision and learning providers, thus increasing their influence over the learning that is being delivered

Learner Financial Support

Is available to assist the development of inclusive learning environments which support and empower learners to achieve, regardless of ability or personal circumstances

5The distribution of existing budget lines into these four funding streams is exemplified at Annex B.

(ii)Further research into the rationale for sparsity, deprivation and learning activity area cost weightings in the pricing model has been shared with the External Stakeholders’ Group ().

The pricing model

Cost Weightings which relate to the Learning Provision (Uplift A)

6Learning Activity Area Weights (LAAWs) are used in the Pricing Model to reflect relative average cost differentials relating to the delivery of different subject areas. Included in the LAAW are costs borne by the provider, where they can be directly related and/or reasonably apportioned to learning activities, such as:

  • Premises maintenance costs
  • Materials
  • Equipment
  • Trainer’s/Assessor’s travel costs in workplace learning
  • Group size restrictions due to health and safety requirements or support needs such as for learners with learning difficulties and/or disabilities and basic skills provision

7The regulatory authorities (QCA, ACCAC and CCEA) are developing a single framework of sector/subject areas across relevant education agencies and departments in England, Wales and Northern Ireland. The primary purpose is to develop a more rational system which:

  • is comprehensive enough to cover all qualification types, subject areas and employment sectors;
  • is flexible enough to be adopted and used by all agencies and departments, meeting their specific needs;
  • complements and supports the National Qualifications Framework;
  • will reduce confusion amongst users with regard to the multiplicity of sector/subject frameworks currently in use by various education bodies;
  • will facilitate, where appropriate, the supply of information between agencies and departments, for example, data exchange and common reporting mechanisms; and
  • complements and/or replaces existing classification systems.

8The regulatory authorities developed an initial proposal in 2001 on the first tier of sector/subject areas that would be fit for the purposes outlined above. The first tier areas are as follows:

1Health, Public Services and Care

2Science and Mathematics

3Agriculture, Horticulture and Animal Care

4Engineering and Manufacturing Technologies

5Construction and the Built Environment

6Information and Communication Technology

7Retail and Commercial Enterprise

8Hospitality and Catering

9Leisure, Travel and Tourism

10Arts, Media and Publishing

11History, Philosophy and Theology

12Social Sciences

13Languages, Literature and Culture

14Education and Training

15Preparation for Life and Work

16Business, Administration and Law

9This framework of sector/subject areas will be adopted for funding purposes. However, it is anticipated that certain learning activities will need to be re-classified from the proposed framework to reflect the agenda in Wales; for example, Basic Skills and Welsh for Adults programmes and provision for learners with learning difficulties and/or disabilities.

10A different approach is proposed for provision delivered in the workplace to that proposed for centre-based delivery. The basis for this approach is that providers who deliver in the workplace face a different set of costs to centre-based providers. Providers engaged in centre-based learning are subject to equipment and maintenance costs in delivering learning whilst providers delivering learning in the workplace are not. However, such providers will incur tutor/trainer travel costs and increased per unit costs due to small groups of trainees. Therefore, the relative costs for provision delivered in the workplace are less likely to vary by LAA than for centre-based delivery. It is proposed that a generic LAAW, greater than 1 but set at a constant will be applied to workplace learning.

11Further work will be undertaken to identify appropriate LAAWs. In the meantime, the weightings applied in the current FE Methodology will be used for modelling purposes.

Cost Weightings which relate to Learner Characteristics (Uplift B)

12The additional learning supportneeds weighting is intended to recognise the additional support a provider must make in order to render mainstream provision accessible to learners with learning difficulties and/or disabilities. Both the National Council and the National Assembly are planning research over the coming year into current post-16 provision for learners with learning difficulties and/or disabilities. The information gathered from this research will inform the National Council’s decisions relating to this type of provision.

13The Measure of Disadvantage of particular interest to the National Council is educational deprivation. This can be defined as the lack of support, resources or opportunities for individuals to engage in learning and/or to achieve learning outcomes. The pricing model will apply a deprivation weighting to each learner from an electoral ward with a level of educational deprivation above a specific threshold, as defined in the Welsh Index of Multiple Deprivation 2000.

14These weightings:

  • recognise that there are additional costs related to the location and quantity of the provider’s target learners;
  • give weightings to learners from sparsely populated and educationally deprived areas as a proxy for the additional relative costs of delivering in these areas;
  • reflect the diseconomies of scale when operating within sparsely populated or educationally deprived regions;
  • support providers engaging in collaborative activity (as the weighting will not change if the location of provision changes);
  • support outreach and multi-location activity;
  • are sophisticated in recognising differences at a sub-Unitary Authority level through the use of small geographical units;
  • avoid information collection exercises that may stigmatise or discourage potential learners;
  • keep bureaucracy to a minimum as post-code data is collected via the LLWR and ISR; and
  • can be applied consistently across all providers.

15Sparsity is defined as low population density and lack of access to services in an area which reduces the opportunity for economies of scale. The pricing model will apply a sparsity weighting to each learner from an electoral ward with a population density below a specific threshold and where people (particularly those on low incomes) are disadvantaged through lack of access to services, as defined in the Welsh Index of Multiple Deprivation 2000. Exemptions, for example distance or e-learning, will be considered as part of the future modelling activities.

16A weighting to recognise enrichment activities undertaken by learners as part of their programmes of learning has been included. The learner development factor in the pricing model is currently applied to 16-18 yr olds in full-time learning. In this way, activities such as religious instruction, sports, music, drama, community involvement and other recognisable learning experiences are funded. A standard allocation applied to this cohort of learners will facilitate transparency, allow providers to be flexible with regard to the opportunities offered to learners and keep bureaucracy to a minimum.

17Further work needs to be undertaken to identify appropriate weightings for sparsity, deprivation, learner development, and additional learning support needs, including whether there should be different levels of weightings.

(iii)The allocation of CEUs to NVQs has been explored with providers and in the context of QCA research;

18The unit of currency used in the pricing model is the Credit Equivalence Unit (CEU). One CEU equals the assessed learning outcomes achievable in 10 hours of learning time. This unit of currency is based on the development of credit values within the Credit and Qualifications Framework for Wales. In the long term, it is anticipated that all programmes of learning will have ascribed credits. In the meantime, for funding purposes only, CEUs are being allocated to programmes of learning as a measure of the volume of learning undertaken.

19It is recognised generally that not all NVQs at each level are the same size. Therefore, a process for allocating CEU values to NVQs has been devised. This process has included qualitative and quantitative data. Qualitative data was arrived at through consultation with the training provider network at a two-day seminar. Twenty five delegates recommended CEU values for key NVQ programmes. Quantitative data, which provided median lengths of stay, was drawn from the National Trainee Database (NTD). The outcomes of these exercises have been compared with the first phase of QCA’s work to differentiate between NVQs on the basis of volume.

20Initial findings suggest that NVQs can be banded into three lengths (large, medium, small) across levels 1-3. It is clear that higher levels require more completion time. Also, there is a noticeable difference in volume of learning between small and large NVQs at the same level.

21This can be represented diagrammatically as:

NVQ 1 / NVQ 2 / NVQ 3
Large
/ x / x + / x + +
Medium / y / y + / y + +
Small / z / z + / z + +

22Where x, y and z are CEU values; absolute values for NVQs are currently being modelled. These findings will be tested informally with providers.

(iv)Secondees from the FE and Work Based Learning sectors have worked with the National Council to model the distribution of credit equivalence units (CEUs) and the impact of the pricing model on the providers using existing data;

232001/02 ISR data has been used for the FE sector. Several FE institutions have been able to compare the pricing model outcomes with RFM outcomes. Issues still under consideration include:

  • Learner contract hours – clarification on the definition of eligible hours is required in the LLWR to ensure that the appropriate number of CEUs are allocated. Such a definition will clarify the learner focus of this data and will cover such issues as assessments, exam weeks and work experience.
  • Short courses/tasters – consideration is being given to allocating a minimum number of CEUs where learners follow a short course only. This will ensure that adequate funding is provided to meet the learning requirements;
  • Weightings – bilingual/welsh medium and sparsity weightings need to be clarified and tested further;
  • VAT – whereas Section 33 of the VAT Act 1994 allows school sixth forms to claim a refund of certain VAT charges, FE colleges are not covered by this. These charges are not insignificant for the FE sector;
  • Non-accredited learning – consideration of the optimum way of allocating CEUs to this type of learning is underway. This issue is being considered from the Community Learning perspective also.

242001/02 NTD data has been used for the work based learning (WBL) sector. MAs, FMAs and MSDAs have been modelled. It is intended to apply the pricing model to 2002/03 data for these programmes as it becomes available in the early autumn. WBLA and Skillbuild programmes need further attention as they contain elements of non-accredited learning. It is intended that the modelling outcomes will be tested with WBL providers in the autumn. Issues still under consideration include:

  • Frameworks – the need to take account of resources required to ensure the completion of full frameworks;
  • Achievement – this element of the pricing model focuses on learning outcomes only and no longer reflects incentives such as job outcomes and progression onto further training or into FE. The impact of this change should be measured and modelled further;
  • Curriculum developments – the review of work based learning programmes including the launch of the All Age Programme will necessitate further modelling and testing;
  • Non-accredited programmes – standard CEUs have been applied for modelling purposes. Further modelling and discussion with providers is required to test out appropriate CEU levels;
  • LAAW – the workplace learning LAAW must be tested to arrive at an appropriate standard weighting for this type of provision;
  • Trainee allowances – these allowances including childcare and transport will be drawn down from a separate budget line (see Annex A). Therefore, they need to be disaggregated from the existing funding allocations to ensure robust modelling;
  • Learner Development Factor – consideration is being given to the application of this factor to learners defined as unemployed in the guarantee group. Consideration is being given on the basis of the learners inexperience in the world of work and the non-accredited activities in place to support such learners.
  • Technical Certificates – the impact of the delivery of Technical Certificates will be measured; and
  • Roll-on roll-off provision – the process weighted allocations system and profile payments will impact on the cashflow of providers of this type of learning in particular, spreading smaller payments over a number of years.

(v)The impact of the pricing model has been tested on live data from volunteer schools and LEAs;

25Schools have submitted manual data to which the pricing model has been applied. The outcomes have been shared with schools and issues arising discussed. Such issues include:

  • Data collection – the perceived speed of introduction of the September PLASC and the additional administrative burden it potentially creates;
  • Attainment - the timing of ‘cashing in’ AS results and fears of negative cash-flow implications for schools (the WJEC has confirmed that the WED database should include all the information to enable schools to receive the appropriate achievement uplift within the Pricing Model);
  • Teachers’ Salaries – the impact of higher salaries paid to teachers when compared with lecturers in the FE sector, and the statutory requirement on schools to pay National Pay Scales and adhere to national conditions of service;
  • Sparsity – the extent to which the proposed uplifts will compensate for the diseconomies of scale in the most sparsely populated areas of Wales, where collaboration is difficult. The implications for welsh medium and denominational schools, which would not meet the criteria in accordance with the Geographical Access to Services index but, nevertheless, may have a limited catchment area;
  • Deprivation – the need to further test the use of the Educational Index of Deprivation, as opposed to the Multiple Index;
  • LAAWs – the need to review the current Subject Area weights which are perceived to be biaised in favour of non-traditional sixth form provision.

26It is intended to use this information in conjunction with the January 2003, and eventually, the September 2003 PLASC data to continue the modelling and testing process.

(vi)Work has commenced with a SEN working group to identify the £spend by LEAs on SEN provision;

27A working group of LEA and school representatives nominated by ADEW and specialising in SEN provision has been formed. This working group will facilitate the National Council’s collection of information and data relating to current and future funding and provision for pupils with learning difficulties and/or disabilities and inform the National Council’s thinking in relation to all aspects of provision for post-16 pupils with SEN in schools.

28At this stage it is not intended to apply the Pricing Model to provision in special and/or residential schools and colleges. The nature and funding levels of this provision in the schools’ sector will be explored with the working group in the coming year.

(vii)external consultants will be engaged to undertake research into a range of issues relating to bilingual, Welsh medium and Welsh language learning, including the relative costs of such provision;

29The National Council is commissioning research into this field and a report is due in the autumn. The research will identify and analyse the costs of teaching solely through the medium of welsh or bilingually, in sixth forms, further education institutions and in work based learning, relative to teaching through the medium of English.