The issues play out in the context of a model of policy making that is immensely centralised.  Over the last 35 years or more, the UK government, under parties of all political persuasions, has effectively nationalisation and de-localised decision making, with power migrating upwards from local authorities to central government departments.  Education has not been, by any means, the only area of activity where this has been the case.

This shift of power upwards and London-wards has been coupled with a move from systems-based block grant funding and governance, to marketisation, contestability and funding following learner choice.  Thus, when policy shifted from system to market – what emerged reflected prior choices about centralisation and were therefore nationally designed and regulated.  Local voices were silenced as power relationships mirrored a belief that ‘the centre knows best’.

There are several problems with this settlement.  First, although it embodied the supposed virtues of contestability and the superior resource allocation power of the ‘invisible hand’ of market forces, there remained a belief by some in national government that it is still possible to engineer a set of incentives that balances elements of cut-throat competition (which results in institutional collapse) with elements of local cooperation.  The nature of this balance and the design of the incentives to support it remain clouded in obscurity, but for policy makers it remains tantalisingly just around the corner.  In a recent speech by Anne Milton, the Skills Minister, to the Association of College’s conference, she suggested that she wanted “to see more and more apprenticeship training offered by colleges and where possible, possibly in collaboration with independent training providers”.  An interesting sentiment, but one that runs counter to much that her department have spent the last few years doing in terms of creating a market for apprenticeships.

Also, just in case the invisible hand’s guidance proves inadequate or misdirected, there is also a hankering to superimpose on the marketplace a ‘lite-touch’ version of the ‘plan and match’ model of synchronising skills supply with skills demand that the Learning and Skills Council (LSC) sought to deliver in its early years – witness the proposals for the new Skills Advisory Panels (SAPs).

This best of both worlds approach is problematic and the SAPs appear liable to face a difficult birth.  They are expected, using largely nationally-managed data sets (such as the Employers Skills Survey), to generate detailed forecasts of future skill need at Local Enterprise Partnership (LEP) and MCA level, and then (and this is the hard part) to use this data to influence the shape of local provision to help meet projected demand.  The central problem is that in the LEP areas there are no significant funding incentives available to the SAP or its LEP to support this, and in the MCAs what is left of the devolved adult education budget (AEB) is probably too small to provide a sufficient lever. More generally, the MCAs’ attempts to use the AEB to establish localised post-19 skills systems are liable, at best, to create islands of systems thinking in a sea of fragmentation and marketisation.

National policy also struggles to get its head around the fact that the realities out on the ground are complex and differ markedly across England.  For example, in some places the rationalisation of college provision via the Area Based Reviews (ABRs) has largely been implemented.  In others, such as the Tees Valley, the ABR’s recommendations have largely come to nothing.  Even where the ABR has been implemented, it is unclear whether college mergers will solve underlying issues of fiscal instability.  In recent months some very large colleges, including England’s largest college group, have found themselves facing financial difficulties.  More generally, evidence from the private sector is fairly unequivocal – most mergers between firms fail to deliver positive results for management or shareholders.

As a result of the issues outlined above, three key questions loom.  First, will devolution of the rest of the AEB to areas not covered by a MCA ever take place?  At present, devolution seems to have stalled.  If it does not regain momentum, this will lead to a strange patchwork model of post-19 funding and governance whereby people in some large conurbations will have one set of local arrangements, and those residing in smaller towns, cities and rural areas will continue to ‘enjoy’ national control.  Second, if localities and some in government want to see a broader pattern of cooperation in FE provision, what local incentives, arrangements and behaviours will be needed to help this emerge in the face of nationally-determined incentives that continue to encourage competition, and what role can colleges play in helping develop these new local systems and in finding ways to build elements of inter-institutional cooperation?  How, for example, can localities engineer greater financial stability for their providers and can this be achieved without coordination with DfE and the ESFA?

This leads to the third and most fundamental issue.  Is there any means of establishing a new balance of power between national and local levels?  The current lop-sided arrangements are dysfunction, but devolution as yet has not been seen as extending as far as any kind of ‘dual-key’ model of policy formation, where national and local levels need to reach agreement before reforms can proceed.  This kind of national/local policy space would be a useful arena for helping clarify and perhaps even resolve a range of issues, not the least of which concern the relative merits of the market thinking being advocated by government and systems thinking championed by some of the MCAs.  What should happen next?

– Professor Ewart Keep