David Willetts promises to simplify the new funding system for further education under a Tory government.

Should David Willetts become the next secretary of state responsible for further education, he expects to inherit a skills landscape “something between a bombsite and a building site”. Indeed, talk of building sites remains a sore point with college principals, whose expectations of funding for ambitious new campuses were dashed when the Learning and Skills Council (LSC) budget suddenly ran dry.

The future for FE and skills, like so much else, has never been so uncertain. Cuts loom; but no one knows how severe. The accountants KPMG conjure a grim scenario in a report prepared for the LSC, predicting that colleges could face budget cuts of 20% unless the shortfall can be plugged by other means. Fifty of the worst strugglers are at real risk, it warns.

The final draft has yet to be published, but Willetts has seen a summary and admits to being taken aback by KPMG’s predictions. “Colleges have proved incredibly resilient,” he says. “I thought it might be a bit on the pessimistic side.”

Merger has often been the knee-jerk response to funding shortages, though the shadow university and skills secretary warns against “the weak swimmer rescuing the drowner”. Nor does he favour monolith giants dominating a large area. “I believe in diversity,” he says. “I’d be willing to look at alternative providers running colleges. If one came in which had quite a lot of capital behind it, that might be a way.”

One of the first things Willetts would do is scrap the new funding system. From 1 April , funding for FE switched from the LSC to local authorities, the Skills Funding Agency and the Young People’s Learning Agency. The Tories would revert to a simplified further education funding body. More upheaval then, just nine years after the LSC was itself established to replace 72 Training and Enterprise Councils and the Further Education Funding Council?

He says not. “This is a year of transition – if we move fast, we can get a new, simpler system in place before the existing one is bedded down,” says Willetts.

In line with the Conservative emphasis on cutting waste, he also thinks colleges could “pool back-office costs”. “There are potentially savings to be made without going through a full-blown merger. You could set up a cooperative that delivers back-office functions, or alternatively a private supplier to do some of those.”

Willetts has no desire to be a great central planner. He seems more inclined to let colleges get on with it, and for employers and individual learners to shape what goes on. There’s an element of laissez-faire in his approach to resolving the funding crisis over revamping FE campuses. “We’ve been discussing whether it’s possible to liberalise the college borrowing/financing regime – increasing their capacity to borrow and easing the procedures,” he says.

“There’s also the question of alternative providers – maybe as part of the deal, whoever gets the contract to manage a college will say, ‘I’ll do a complete refurbishment or a rebuild’. They’re not ideas we’re committed to, but we’re looking at them very carefully.”

He wants to jettison a lot of targets so colleges can become more locally responsive – no more diktats from on high for colleges and training providers “to turn out another 10,000 plastering NVQs”. “With a more flexible funding regime, colleges should be doing deals with local employers and meeting the needs of individuals.

“We’ll have a kind of per capita funding. I hope we’ll be able to develop the government’s skills accounts, learning lessons from the past. We need better advice and guidance – we should have simple data for individuals to see.

“We can try to link online so that young people can find out the best way to get a qualification in IT or become a plumber. They’d see what opportunities are available at college, and what the outcomes and performance were.

“There are several different ways we can make learning more responsive, but the most important single way is not just to pay [colleges] via planning for churning out qualifications. It’s encouraged manipulation of results – everyone has been complicit in this game.”

In Willetts’s world, welfare-to-work providers would deal much more closely with colleges and alternative training providers “so you don’t just get straight into a job if it’s not what you want to do”. “We need colleges to be more work-focused and welfare-to-work providers more skills-focused,” he says.

He would also reform Train to Gain, the government scheme designed to encourage employers to increase the skills of their workforce. This was another grand plan that ran out of money when it became too popular. It has also been condemned as offering poor value for money and wildly variable standards.

Willetts would focus the money on youth unemployment – a “fairer deal for apprenticeships”, part of which would entail backing more training places at colleges. He’s also identified £100m of Train to Gain money specifically for adult and community learning.

“Adult learning is an important part of the mission of a community college and it’s a great pity that the qualification-driven agenda has meant that socially worthwhile activities, and sometimes economically worthwhile ones that don’t lead to a paper qualification, have been abandoned,” he says. “We need to relax a bit on qualifications.”

One scheme Willetts holds up as a prime example of what worked well has been forced to close through being starved of money. Aimed at young people not in education, employment or training (neets), it got them involved in a project repairing motorbikes. “But because they weren’t getting an NVQ level 2 fast enough for the LSC, it wasn’t funded.

“We can learn from welfare-to-work providers – they aren’t so obsessed with paper qualifications and are more bothered about getting people job-ready. It may be the best way of getting work experience – just sufficient to get them helping out in the local garage. Then there may be an apprenticeship down the track. If we’re too impatient and expect too much formalised too soon, some [neets] won’t go through the door.”

Willetts says he has the regulatory environment firmly in his sights. He wants to end the system whereby one college found itself playing host “to an inspection or audit body checking their books for something or other on 101 days in the academic year – this is absurd”. A simpler funding regime would help, he says.

But what would that mean for Ofsted’s inspection role within the FE system? There’s no big answer. “I have no final proposals – I’ve an open mind about how its function can be improved,” Willetts says. “If it can be less intrusive … anything to make life simpler, I’m interested.”

Of course, whatever ambitions government has for the FE sector depend on lecturers and trainers at the sharp end having the morale and goodwill to do the business. Yet the sector is rife with discontent, as some colleges aim to impose new contracts that appear to erode pay and conditions. Lecturers’ union UCU claims staff will see teaching hours increase, while others will be put on short-term contracts. The union believes some principals are using the recession as an excuse to change terms and conditions and has warned of possible industrial action.

Willetts, although not someone to man the barricades on their behalf, recognises the insecurity they feel. He has sensed the difference between colleges “where there is pride among the staff, and places where they seem demoralised”. “Part of my belief in the value of colleges is also a belief in the value and status of what lecturers and teachers do,” he says. “But what I can’t offer is any neat financial solution.”

Guardian News & Media Limited 2010

Last updated 16:44, Wednesday, 24 March 2010 

The pressure on the public finances is throwing down some tough challenges to everyone involved in further education and skills. At the same time, the recession has made little difference in the demand in our sector for provider services, such as training and employment placement, which remains as strong as ever.

The current public service requirement of delivering more for less has certainly been applied to the FE system. Colleges have responded fantastically well to the challenges while independent providers too are showing tremendous capacity to deliver value for money for both employers, learners and the taxpayer.