MD2958 Adult Education Budget Allocations and Funding Adjustments

1.1 In November 2021, the Mayor approved indicative AEB and NSF allocations for the 2022-23 academic year (under cover of MD2904). The final AEB and NSF grant allocations for the 2021-22 academic year were used as the basis for the 2022-23 indicative allocations.

1.2 Under cover of MD2763, the Mayor also approved the allocation of up to £6 million of the total NSF funding available per year to deliver NSF eligible provision including the Good Work for All programme. Allocations awarded for this purpose were ringfenced to spend on NSF eligible provision only. In addition, MD2763 approved the allocation of NSF grant funding of six independent training providers (ITPs). This funding totalled £2.3 million for the 2021-22 academic year.

1.3 On 4 February 2022, the Department for Education (DfE) wrote to the Mayor to confirm London’s delegated AEB and NSF for the 2022-23 academic year. The delegated AEB for the period 1 August 2022 to 31 July 2023, is £318,266,810. The delegated NSF for the period 1 August 2022 to 31 July 2023, is £26,437,879.

1.4 In line with the funding approach adopted by the Mayor in 2019-20, 2020-21 and 2021-22 academic years, providers were sent letters communicating their indicative AEB and NSF grant allocations in December 2021, in order to provide grant-funded providers with an early indication of funding for the 2022-23 academic year.

1.5 Providers were also invited to submit a business case with supporting evidence, where they considered there were exceptional circumstances, which required an increase in funding above their indicative 2022-23 AEB allocation.

1.6 The approach for the December 2021 performance review of the AEB Procured Programme was set out under cover of MD2894, which took into account a programme-wide reprofiling exercise that took place in the 2020-21 academic year.

1.7 Providers whose projects performed at 90 per cent or above their profiled contract targets and spend based on December Individualised Learner Record (ILR) (R04) data, were invited to request contract increases of up to 10 per cent of the original contract value. Projects that were underperforming against contractual targets were reviewed to consider possible reductions to contract values.

AEB Grant and NSF Allocations – 2021-22

2.1 The GLA received three business cases from AEB grant providers requesting in year funding adjustments to the AEB and NSF 2021-22 grant allocations, of which two were partially or fully recommended. Additionally, due to significant under delivery in 2020-21, three provider allocations are recommended for reductions. These reductions have been discussed with the providers.

2.2 In addition, GLA officers reviewed current NSF expenditure for the 2021-22 academic year, based on R06 data of NSF delivery, to ensure utilisation of the NSF budget. As a result, it is proposed that 2021-22 NSF allocations are increased by 50 per cent where providers deliver above 90 per cent of their allocation. The increase will be funded by unallocated NSF funding and projected underspend. Changes to 2021-22 AEB and NSF allocations based on business cases and NSF allocation increases lead to reductions of £21,938 to the total value of AEB allocations, and a £2,737,980 increase in total NSF allocations as reflected in Appendix A.

AEB Grant and NSF Allocations – 2022-23

2.3 In response to the 2022-23 indicative allocation letters, seven providers submitted business cases requesting an increase to their 2022-23 AEB or NSF allocations. Officers considered the business cases in line with the criteria set in paragraphs 305.1 to 305.6 of the GLA AEB Grant Funding Rules on provider quality, history of high performance and alignment with the Mayoral priorities. As a result, it is proposed to support four business cases.

2.4 In order to support growth in the NSF programme in 2022-23, it is proposed that a 30 per cent increase in 2022-23 NSF allocations is applied to providers who have delivered above 50 per cent of their NSF allocation, based on latest learner record data. This increase will be funded by a £4.2m increase in the GLA NSF budget for 2022-23 academic year, and projected underspend by providers.

2.5 Taking into account the AEB funding adjustments for 2021-22 academic year and the business cases for the 2022-23 academic year, the overall 2022-23 AEB allocation will increase by £577,062 while the total NSF allocations will increase by £6,545,214. Final AEB and NSF allocations for grant and ITP providers in 2022-23 academic year are set out in Appendix B. Final allocation letters will be issued to providers in March 2022.

2.6 In Autumn 2022, it is further proposed that a funding growth request template is introduced for 2022 23 academic year, which sets out the criteria for providers to request increases in grant allocations based on past and current performance, evidence of local need and alignment with the Mayoral recovery missions and priorities.

AEB Procured

2.7 There were no AEB contract increase requests received from eligible AEB Procured providers.

2.8 AEB contract reductions are proposed for AEB Procured projects that delivered below 80 per cent of their reprofiled allocations in the 2020-21 academic year and are delivering at below 80 per cent of their 2021-22 year to-date allocations.

2.9 Providers in scope for contract value reductions were offered an opportunity to submit a business case to retain funding where they can demonstrate their ability to deliver against it. One business case was received and after careful consideration GLA officers recommend endorsement of the case.

2.10 It is proposed that 2020-21 academic year reconciliation reduction values are applied to the 2021 22 and 2022-23 academic years. These reductions amount to £671,797 as set out in Appendix C.

2.11 One provider also submitted a business case regarding the adjustment to their contract following the 2020-21 reconciliation process. GLA officers recommended endorsement of this case.

Grant agreement template

2.12 An updated grant agreement template is set out in Appendix D. This agreement contains minor revisions to update from the previous version following review by external, specialist education lawyers on behalf of the GLA. This includes additional clauses for support and intervention, the Transfer of Undertakings (Protection of Employment) (TUPE), termination rights and exit arrangements.

Expected outcomes

2.13 The AEB funds the delivery of education and training for adult learners aged 19+ through a range of provider types including general Further Education (FE) colleges, local authorities, independent training providers, sixth form colleges and universities. The annual objective remains unchanged in ensuring that the funding is fully allocated in time to support Londoners to have the appropriate interventions.

2.14 There were 199,000 GLA funded learners in London during the 2020-21 academic year. Whilst this was a seven per cent reduction when compared to the previous academic year due to the impact of the pandemic on the FE sector, the AEB continued to make a significant contribution to GLA missions. The main grant providers will be asked to present a delivery plan ahead of the start of the 2022-23 academic year to align with the London recovery missions which they will be monitored against whilst the Good Work for All and Procured Providers will continue to deliver against delivery plans for the last year of their grant and contract.

3.1 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
• foster good relations between persons who share a relevant protected characteristic and persons who do not share it.

3.2 Relevant protected characteristics are age, disability, gender re-assignment, pregnancy and maternity, race, religion or belief, sex and sexual orientation.

3.3 The Mayor is required to comply with the duty set out above in making the decision 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.

3.4 The proposed approach to allocations will ensure that funding arrangements will not reduce the existing range and breadth of provision available to London residents. This approach means that no groups of learners should be disadvantaged as funding will continue in line with prior actual delivery.

3.5 The new Level 3 entitlement will enable even more Londoners to enrol on fully funded qualifications and courses, improving opportunities for them to move out of unemployment and progress in work, and supporting London’s Recovery.

3.6 The aim of the AEB 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 education, employment or training (NEET), people without basic skills and people who are workless. It will also support Londoners in low paid/low-skilled jobs.

Links to Mayoral Strategies and priorities

4.1 The NSF Level 3 Adult Offer created a new entitlement for any adult aged 24 and over to be fully funded to obtain their first full Level 3 qualification. The funding supports Londoners to develop the skills needed to move into employment in some of the sectors considered critical to London’s Recovery.

Risks arising/mitigation

4.2 The key risks are:

• Lack of budget to pay required NSF overperformance as a result of significant increase of allocations. The risk will be contained within the AEB financial envelope. Higher NSF spend will be accommodated by projected NSF underspend, the increased NSF budget for 2022-23, and is highly likely to be fully compensated by DfE at the point of NSF reconciliation.
• AEB Procured contract reductions applied to the 2022-23 academic year could affect the ability of providers to meet demand in that year if performance improves. This will be mitigated by the opportunity for providers to request contract increases of up to 10 per cent of the overall contract value if they can demonstrate good performance.

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

4.4 This MD was considered by the AEB Mayoral Board on 10 March 2022.

5.1 Approval is sought for the changes to five AEB and 19 NSF allocations for the 2021-22 academic year as set out in Appendix A for reasons set out in paragraphs 2.1 and 2.2 above. A summary of the adjustments is set out in the table below. The NSF increase in allocations will be funded from underspends and unallocated NSF funding.

Table 1 – Summary of Adjustments to Allocations 2021-22

5.2 Approval is sought for the final AEB and NSF grant allocations for the 2022-23 academic year set out in Appendix B, for reasons set out in paragraphs 2.3 and 2.4 above. The overall 2022-23 AEB allocation will increase by £577,062 while the total NSF allocations will increase by £6,541,356. The increases in expenditure will be funded by increased allocations from the DfE and projected underspends.

5.3 Approval is sought for the proposed AEB Procured contract reductions as outlined in Appendix C for reasons set out in 2.7 to 2.10 above.

Table 2 – AEB Procured December Performance Point Reductions

5.4 Approval is also sought for the new grant agreement template outlined in Appendix D. There are no direct financial implication arising from the adoption of this template.

6.1 The foregoing sections of this report indicate that the decisions it is proposed be requested of the Mayor concern the exercise of the:

6.1.1 GLA’s general powers, falling within the GLA’s statutory powers to do such things considered to further or which are facilitative of, conducive or incidental to the promotion of economic development and wealth creation, social development or the promotion of the improvement of the environment in Greater London and in formulating the proposals in respect of which a decision is sought officers have complied with the GLA’s related statutory duties to:

• pay due regard to the principle that there should be equality of opportunity for all people
• consider how the proposals will promote the improvement of health of persons, health inequalities between persons and to contribute towards the achievement of sustainable development in the United Kingdom
• consult with appropriate bodies

6.1.2 ministerial functions delegated, by the Secretary of State for Education, to the Mayor pursuant to section 39A of the Greater London Authority Act 1999.

6.2 Should such decisions be sought the Mayor must, in making those decisions, 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).

6.3 Should the Mayor make the decisions sought officers must ensure that:

• they do not commit to any expenditure which relies upon delegated AEB before the allocation of the same to the GLA has been confirmed
• all adjustments and reductions are made and recorded in accordance with the provisions of the agreements in question and applicable funding rules before committing to and/or placing reliance upon the same.
  

• Appendix A – Funding adjustments in 2021-22 academic year
• Appendix B – Final 2022-23 AEB and NSF allocations
• Appendix C – AEB Procured contract adjustments
• Appendix D – AEB Grant agreement template