MD2654 AEB Financial Management 2019/20 and 2020/21

The overall allocation from the Department for Education (DfE) for the 2019/20 AY was £306,444,875 which was split across financial years as follows:

• £191,987,714 (2019/20 – sum received March 2019); and
• £114,457,161 (2020/21 – sum received in April 2020).

The actual expenditure as at March 2020 was £184,899,714 which means £7,088,000 is carried forward into the 2020/21 FY to recognise the pace of delivery of the procured providers who are paid by results over the four-year contracts.

DfE also confirmed the 2020/21 AY settlement as £318,580,139 across financial years as follows:

• £199,048,871 (2019/20 – sum received in April 2020); and
• £119,531,268 (2020/21 – sum to be received in 2021).

The above means a total of £320,594,032 is available for spend in the 2020/21 FY.

Revised AEB Academic Year 2019/20 expenditure profile

Based on actual expenditure as at end of March 2020, the table below shows the updated forecast for the remaining 2019/20 AY allocation. The profile spans over three Financial Years due to the SfL Innovation Fund payments that spread across two Academic Years (2019/20 and 2020/21).

2019/20 FY actual expenditure on Management and Administration is reduced slightly due to accrued income of £36,303 for AEB staff who also work on European Social Fund (ESF) 2019-23 programme up to December 2019 and the £75,000 Skills Advisory Panel (SAP) income.

The forecast above makes a provision under the Management and Administration for developing and piloting the London-wide Learner Survey. It is considered prudent for the GLA to incur cost directly as against making funding available to providers to run the survey. The GLA can coordinate the survey centrally more efficiently and effectively to achieve the required survey size at a lower cost. Where the pilot is successful, the full roll out options will be considered by the Mayor ahead of a possible start in 2020/21 academic year.

AEB 2020/21 Academic Year - Forecast

The table below shows the forecast expenditure for the AY 2020/21.

The forecast makes provision for up to £11m as a COVID-19 Response Fund to support the Adult Education sector and learners who may have been severely impacted by the current pandemic. This will be paid to providers to cover delivery from June 2020 either as one-off payment or added as an increase to existing grants or procured contract values.

Where the total value of bids received through Strand 2 of the Fund is lower, then the unallocated funding will be added to the budget available for further growth or innovation funding to be considered at the December 2020 performance point.

There is a proposed marginal increase of c£218,000 between the Management and Administration for 2019/20 and 2020/21 academic years. The increase will account for full complement of staff approved to support the delivery from Academic Year 2 after delegation of the AEB to the Mayor. Where this is not required, savings will be made available for further delivery growth.

The actual expenditure on AEB Management and Administration will be further reduced by income of up to £100,000 received for AEB staff who also work on ESF 2019-23 programme. Since the Mayoral Board on July 1, 2020, the profiles have slightly changed to reflect the new Education and Skills Funding Agency (ESFA) National Profile used for paying grant providers. In addition, the grant allocation for Richmond and Hillcroft Adult and Community College has been amended.

It is proposed that the AEB allocation to Richmond and Hillcroft Adult and Community College (RHACC) for the 2020/21 academic year is increased in line with the two-year transitional arrangement (2019/20 and 2020/21) regarding RHACC between the Department of Education and the Mayor of London. The funding increase has been shared with the AEB Mayoral Board.

Implications for 2020/21 Financial Year

The table below shows the forecast for the 2020/21 FY:

* includes a contingency provision of c£330,000 (0.1% of total budget) which will be available to ensure that direct provision is not reduced in-year where a need arises. Where this is not required, savings will be made available for further delivery growth.

A breakdown of the Management and Administration forecast was considered by the AEB Mayoral Board on 1 July 2020 covering staffing, research and evaluation, contract management system, provider audits, provider engagements and legal services.

From the sum of £320,594,032 available for the 2020/21 FY (paragraph 1.4), £319,240,010 is profiled for current year whilst the balance of £1,354,022 is committed for the Innovation fund in 2021/22 FY (see table in paragraph 2.1 above).

Based on the commitment of the GLA to improve efficiencies across its operations, the total Management and Administration budget is planned to be maintained at the same level of the overall budget available.

Any savings achieved will be allocated for direct learning provision following approval by the Mayor. Last financial year, £900,000 was added to the Skills for Londoners (SfL) Innovation Fund to increase provision for direct learning of Londoners.

The overall objectives of the AEB remain unchanged as a result of the forecast. The outcomes expected from the SfL Innovation Fund are clearly set out under cover of MD2581 including achievement of 6,000 qualifications to be met by the Fund. MD2638 describes the outcomes expected from the COVID-19 Response Fund.

Section 149(1) of the Equality Act 2010 provides that, in the exercise of their functions, public authorities, of whom the Mayor is one, must have due regard to the need to:

• eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the Equality Act 2010;
• advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it; and
• foster good relations between persons who share a relevant protected characteristic and persons who do not share it.

The Mayor is required to comply with the duty set out above in making the decisions set out in this report and any future decisions relating to the AEB made pursuant to those arrangements which will be subject to separate decision forms.

In determining the GLA’s grant allocations approach for 2019/20 due consideration was given to its impact on learners with protected characteristics to ensure no groups of learners should be disadvantaged as funding will continue in line with prior actual delivery.

The Mayor’s SfL Innovation Fund will fund a range of different projects across each of the priorities set out in the SfL Strategy. This includes a number of projects which aim to address the Mayoral priority in relation to disabled Londoners.

The aim of the AEB and ESF is to improve opportunities for people who are disadvantaged in the labour market. Many potential AEB participants have protected characteristics listed above. The GLA’s AEB provision will support a range of groups, particularly the most disadvantaged people not currently receiving sufficient support into employment or education. These include young adults who are not in employment, education or training, people without basic skills and people who are workless. It will also support Londoners in low-paid/low-skilled jobs.

Financial reprofile: Future reprofiling will generally be agreed by the Mayor through the AEB Mayoral Board and then the GLA’s budget management processes. Any virements between the top-level AEB budget lines (see table at paragraph 2.10 above) or matters reserved within the AEB Assurance Framework will continue to be sought and recorded by way of a Mayoral Decision form.

MD2634 approved the reduction to 2019/20 AEB grant allocations for 11 providers due to underperformance. The Decision form agreed that the 2019/20 reduction in grant values will be achieved by clawing back from the remaining 2019/20 provider payments and from 2020/21 payment profiles via GLA OPS. All such clawbacks will be added to the budget available for further growth or innovation funding to be considered at the December 2020 performance point and presented at the November AEB Mayoral Board meeting.

The AEB Mayoral Board endorsed the proposals set out in this decision on 1 July 2020.

The overall AEB programme risks are included on the GLA’s corporate risk register with appropriate mitigations. This includes proactive management of budget by identifying under performance and proposing options to utilise underspends.

The successful delivery of the AEB is a commitment made in the Mayor’s Skills for Londoners Strategy to:

• empower all Londoners to access the education and skills to participate in society and progress in education and work;
• meet the needs of London’s economy and employers, now and in the future; and
• deliver a strategy city-wide technical skills and adult education offer.

There are no conflicts of interest to declare from those involved in the drafting or clearance of this decision.

This Decision form is seeking approval for the following:

• Reprofile of the forecast financial performance against the £306m AEB budget for the 2019-20 Academic Year as detailed in the table below:

• • • Update on the forecast budget for the 2020-21 Academic Year of £318m received by the DfE as detailed below:

• Award of additional funding to AEB providers under Strand 1 of the COVID-19 Response Fund. And increase in the COVID-19 Response Fund total amount from £9,000,000 to a maximum of £11,000,000, both to be funded by the utilisation of the uncommitted AEB funding.
  • • Contained within the revised AEB expenditure profile of £306,444,875 for the 2019-20 Academic Year and the £318,580,139 forecasted expenditure for the 2020/21 Academic Year, is expenditure for Management & Administration of the AEB as profiled below. This highlights the sum of £4,933,214, which is covered under the forecast for the 2020/21 Financial Year:

As outlined above, the Management & Administration budget line includes a contingency provision of c£330,000 to ensure that direct provision is not reduced in-year where need arises. Subject to further Mayoral Approval, any underspend will be reallocated to direct AEB provision.

Section 39A of the Greater London Authority Act 1999 permits the delegation of ministerial functions to the Mayor, subject to certain limitations and conditions. This forms the basis of the delegation to the Mayor of AEB functions from the Secretary of State for Education. A particular limitation of the delegation is that the usual power of delegation by the Mayor is not available in respect of s39A delegated functions.

In taking the decisions requested, the Mayor must have due regard to the Public Sector Equality Duty - namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity and foster good relations between persons who share a relevant protected characteristic (race, disability, sex, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not share it (section 149 of the Equality Act 2010). To this end, the Mayor should have particular regard to section 3 (above) of this report.

Should the Mayor be minded to make the decisions sought officers must ensure that:

- to the extent that the re-profiling of the AEB budget for the 2019/20 academic year, necessitates the variation of any funding agreements or contracts for services with AEB funding recipients or contractors respectively: (a) those funding agreements and contracts for services are varied in accordance with the provisions of the same; (b) no commitment is made to the re-profiled expenditure until variation documentation has been entered into and executed by the GLA and the funding recipients and contractors in question; and (c) such variations correspond with the GLA’s Contracts and Funding Code and all applicable procurement law; and

- the GLA continues to comply with the London Guidance and Delegation of certain adult education functions to the Mayor of London: Memorandum of Understanding’ liaising with the Department for Education and ESFA as necessary from time to time.

The profiles to be reflected in GLA Management accounting process.