"Our estimates show that substantial savings can be made by reducing bureaucracy in further education, and demonstrate the need for focused and systematic management of these costs to drive sustained improvements in efficiency. The Department for Business Innovation and Skills and the Skills Funding Agency have the ambition to make changes to simplify the system, but they must get to grips with the issues we have raised in order to achieve value for money and prevent colleges being embroiled in red tape."
Amyas Morse, head of the National Audit Office, 16 December 2011
The Department for Business, Innovation and Skills and the Skills Funding Agency are pursuing a range of initiatives to simplify funding, qualification and assurance systems in further education as part of their wider reform of the skills sector. However, they do not know the scale of the problem faced by further education colleges and other providers.
The National Audit Office has estimated that the administration of funding, qualification and assurance systems is costing general further education colleges around £180 million a year. The NAO has further estimated that this cost amounts to around £250 million a year for all types of further education colleges and other providers, even assuming the other providers bear only half the costs of general further education colleges.
The Department and the Agency recognise that some of the administration of funding, qualifications and assurance systems is unnecessary. However, they have not yet measured the size of this burden on further education colleges and other providers. The NAO’s £180 million a year estimate of the cost to general further education colleges of administration equates to £150 per student.
Working with the Department for Education, the Department and the Agency have developed a series of initiatives to simplify the system, which target the most costly burdens. Colleges themselves suggested that large savings can be made through cutting administration. The Department and the Agency should set a clear, ambitious target for the scale of the burden reduction they are seeking to provide more impetus to change.
The Department lacks a complete picture of its final operating model for the funding, qualification and assurance system, supported by a detailed plan of how to get there. Nor does it know how much the new system will cost or the impact of the reductions proposed.
There are various initiatives underway but they are not well coordinated and further education colleges and other providers, although welcoming the changes, do not have confidence that the simplification of the system of administration will be sustained.
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HC: 1590, 2010-2012