The Skills Funding Systemanum
The Adult Education Budget (AEB)
The Adult Education Budget is the primary means by which the West Midlands Combined Authority funds adult education courses. It is available to fund course fees for adults aged 19+, and from August 2019 was devolved to the West Midlands, having previously been managed by the Education and Skills Funding Agency (ESFA).
In the long term, this gives the region flexibility to tweak funding rules to suit local requirements. For instance, this may include pilot schemes, shifting the way we think about the effectiveness of FE provision to focus more on impact, co-locating provision with other public services, and making use of risk-sharing to support new courses and new methods of teaching.
With the funding comes the responsibility to secure provision of appropriate facilities and education and training suitable to people aged 19+, except those under 25 who have an educational, health, and care plan. As well as meeting the age requirement, people in receipt of the funding must also not already have a comparable or higher-level qualification than the one they are applying to study. For study to be free, the applicant should be aged under 24 on commencing the course. Those earning less than £17,004 also have co-funding support for access to levels 1 and 2.
The WMCA’s function is to determine worthy courses of study and providers, for which it can pay tuition fees on behalf of the student. According to the statutory instrument which devolved this power to the region, the WMCA must also ‘encourage’ uptake of this education
and training and ‘encourage employers to participate in the provision’ and ‘contribute to the costs’ of it.
The WMCA can also work concurrently with the Secretary of State to provide funding directly to providers, people proposing to receive education or training, for encouraging provision, for supporting student costs (such as transport, childcare.)
In total, the WMCA is responsible for AEB funding of around £130million per annum. It aims to rapidly prototype, test, and mainstream new and improved provision across further and higher education estates, targeted at new emerging sectors and supporting those currently with low/no qualifications.
T-levels
T-levels are new certifications aimed at pupils aged 16+ and intended to provide a rigorous vocational alternative to three A Levels, including work placements and guaranteeing a basic level of English and Maths competency. They are a framework which can include existing vocational qualifications within it. 24 subjects will ultimately be covered, with the first three having been launched in September 2020 and the first ten now available for new starters.
These will use the existing funding arrangements, with new bands based on the hours spent on the T Levels. There will be a flat rate of Industry Placement funding, and funding for students who need to retake level 2 in maths and English to meet the exit requirements of the T Level.
16-19 Funding
A national funding formula is used by the ESFA to provide funding to sixth form colleges, FE, and special schools/academies as well as some specialist institutions. This formula considers the number of students, depth of study, a ‘retention funding’ component based on how many students stay on the course, level 3 maths/English, and ‘disadvantage funding’.
Disadvantage funding is aimed at students from areas of high IMD (Index of Multiple Deprivation). A second block supports students with moderate learning difficulties and other additional needs, based on low prior attainment in maths and English. The WMCA has some discretion about how disadvantage funding is allocated.
This 16-19 funding also supports a few other bonus funding elements for particular course content, placements, or student costs.
The funding is calculated using the Individualized Learner Record for FE, plus the school Census conducted each autumn.
Total funding for 16-19 year-old provision in the West Midlands (3LEP) area, 2018/19 academic year (below).
- FE and tertiary - £291.53
- Academy - £157.83
- Private - £37.12
- 6th form school - £22.53
- 6th form college - £20.25
- Special post-16 - £8.30
- Academy special - £7.10
- UTC - £6.74
- HE - £5.04
- Free school - £1.48
- Studio school - £1.27
Local authority |
total (millions) |
| Birmingham | £134.76 |
| Coventry | £33.00 |
| Dudley | £57.52 |
| Sandwell | £38.42 |
| Solihull | £41.92 |
| Staffordshire | £78.36 |
| Walsall | £46.55 |
| Warwickshire | £63.79 |
| Wolverhampton | £29.83 |
| Worcestershire | £36.31 |
| Total | £560.46 |
Table 1 - Total 16-19 funding by Local Authority, 2018/19 academic year
Apprenticeships and Traineeships
Apprenticeships and traineeships are not devolved.
Apprenticeships are funded by the Apprenticeship Levy, in which employers
with an annual wage bill of over £3m are required to pay into an Education and Skills Funding Agency (ESFA) fund. This can then be recouped by employers for up to two years to fund training of apprentices.
Traineeships are still funded by the ESFA (they are unpaid but expenses can be paid) and put young people qualified below Level 3 through
a course of up to 6 months, during which they have work experience to prepare them for work or an apprenticeship. This may be coupled with English and maths support if needed.
Work and Health Programme
This programme is intended to support those out of work. It is voluntary unless an individual has been unemployed and claiming benefits for more than 24 months. People who are disabled, carers or former carers, former members of the armed forces, refugees, victims of domestic violence, are considered a priority group and also may receive support.
In the West Midlands (cases processed at the Shaw Trust charity and covering the WMCA metropolitan area), there has been a sharp decline in the total number of people admitted to the scheme over the last nine months for which data is available.
Since the scheme was first available in the region, it has enrolled 14,328 people with disabilities, and 3,004 long-term unemployed.
Outcome figures for the West Midlands from March 2018 (when the scheme was rolled out nationally) to February 2021 indicate that 3000 of those enrolled found employment within 12 months, of a total 19,134, a rate of 15.7%.
Age breakdown: while the age of those on the scheme skews young, there are still a significant number of people enrolled in each age group:
Age range |
percentage provision |
| 18 -24 | 15.4% |
| 25 - 34 | 11.0% |
| 35 - 44 | 9.5% |
| 45 - 49 | 10.9% |
| 50 - 54 | 12.1% |
| 55 59 | 12.5% |
| 60+ | 10.2% |
| Total | 14,932 |
Table 2: Proportion of Work and Health Programme provision (2018-2019) by age range, West Midlands Metropolitan area.
High value course premium:
Additional funding has been made available by the government from September 2020, to support Level 3 provision for 18-19-year-olds during the pandemic. This provision derived from a 2019 announcement of an additional £120m of 16-19 funding reserved for key subjects, including level 3 qualifications in:
- Engineering: Including fabrication and welding, engineering technologies, and other specific and general engineering skills.
- Manufacturing: particularly fashion and textiles, and product design.
- Mathematics and Statistics Construction: including digital skills and building information modelling.
- ICT: for practitioners, including coding, cyber security, and computer science including scripting and app programming.
Transport operations and maintenance:
- Including aviation, bus and coach, rail engineering and specific qualifications of maintenance by vehicle type.
- As well as A levels in biology, chemistry, computer science, design and technology, electricity, mathematics, further mathematics, and physics.
Table 2: Proportion of Work and Health Programme provision (2018-2019) by age range, West Midlands Metropolitan area.
Future funding arrangements and asks
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The winding down of the European Structural and Investment Fund, which includes the Social Fund and the Regional Development Fund, will make it important for the region to obtain funding via the new UK Shared Prosperity Fund to make up the shortfall.
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National Skills Fund: The Conservative Government’s 2019 election pledge to make £3bn available over the parliament, starting 2021, is intended as a first step towards a ‘Right to Retrain.’ £2.5bn was put forward in the 2020 budget for this purpose to bolster further education.
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The WMCA aims to support high quality skills provision using a ‘single pot’, targeting skills challenges in the region with AEB,
the UK Shared Prosperity Fund, the Work and Health Programme, the National Retraining Scheme, and the National Skills Fund in tandem.
Table 3
Geography - England
Funding - 15 hours per week provided free to all, 30 hours for families earning less than £100,000 annually
WMCA role - no direct responsibility
Geography - West Midlands Metropolitan area
Funding - department for education per pupil spending averages £5279 versus £5030 on average in England.
WMCA role - No direct funding however some GCSE re-sits are supported through further education funding arrangements.
Geography - West Midlands metropolitan area
Funding - department for education 16-19 funding (ESFA funding formula - £400m allocated in 2019/2020)
WMCA Role - Not responsible for funding, however can support linkages between school and further education and support A level results
Geography - West Midlands metropolitan area
Funding - 16-19 funding and adult education budget (AEB) - WMCA allocated £130m per anum
WMCA Role - management of AEB funding to support the cost of tuition for students aged 19+
Geography - England
Funding - Apprenticeship levy: employers of annual wage bill £3m+ pay into ESFA Fund
WMCA role - organise an apprenticeship levy transfer fund to direct unspent levy to SMEs in the region
Geography - England
Funding - research funding (stable) and teaching funding (failing) from funding councils, Shortfall covered by rapid growth in student fees income.
WMCA Role - None directly, however opportunities exist to support higher education indirectly through linkages with further education
Summary diagram of the West Midlands Skills System in terms of geography, funding, and WMCA responsibilities.