Gg19 d3 9_5_david_corke_v3

1. Markets versus
systems in an
English context
David Corke
Director of Policy
Association of Colleges, UK

3. Markets or systems (or both)?
 Policy makers and practitioners, often through force of habit
refer to a ‘further education system’.
 Block grants are long gone, so the reality is a set of inter-
connected markets or quasi-markets for different streams of
FE (and HE) activity.
 Policy makers still hope for the best of both worlds’ (i.e. a
combination of markets and system, or markets and
governmental ‘steering’).
 AoC research (Keep, 2018) explored the issues raised by
increased marketization and paints three possible scenarios
we could aim for in the future.
 These scenarios reflect insights gained from senior sector
leaders in colleges, AoC, post-92 universities, Ofsted,
Ofqual, funding agencies, the Department for Education and
the Office for Students.

4. Context

5. Backdrop
 Low unemployment, but low employment quality.
 4IR – impending technological and occupational change.
 Brexit.
 Small uneconomic schools have quadrupled.
 Deeply unequal matriculation at age 16 (GCSE system).
 Demographic change. 16-18 dip and an aging population.
 High stakes inspection (Ofsted).
 Other agencies highly interventionist (FEC, ESFA, DfE).
 Constrained by many accountability measures and regulators.
 Declining funding - HMCI, FEC and DfE all agree it is a major
problem.
 Adult participation down 62% over the last ten years.
 Loans required for 24+ plus students on L3 programmes.
 Youth base rate (16-18) same as it was in 2010.

6.  Some funding devolved to already cash-strapped local or
combined authorities (Special Educational Needs funding and
part of the adult education budget).
 Near future policy turbulence with the introduction of
devolution, apprenticeship reforms, the insolvency regime, T
Levels and the National Retraining Scheme.
 New market entrants in FE and HE.
 New overarching regulator for HE (Office for Students).
 Tendering now required for apprenticeships and adult funding.
 Apprenticeship levy has led to a rise in degree
apprenticeships and drops in participation for young people on
apprenticeships.
 Universities making unconditional offers.
Backdrop

7. Many funding streams, all contestable
£6.7 bil Income
83% public (46% 16-18)
63% staff cost ratio
0.1% surplus
Higher EBITDA
*16-18 only remaining block grant
16-18*
£3.1 bil
HE
£0.5 bil
Apprentices
£0.6 bil
Fees
£0.3 bil
Teachers
£2.4 bil
Supplies and
services
£1.9 bil
Other staff
£1.8 bil
Debt interest
£0.1 bil
AEB
£0.8 bil
FE loans
£0.1 bil
Depreciation
£0.5 mil
High Needs
£0.2 bil
Grants (incl
ESF)
£0.5 bil
Catering etc
£0.5 bil

8. Many organisations try to tell
colleges what to do….
Ofsted FE
Commissioner
Education
& Skills
Funding
Agency
Office for
Students
Institute for
Apprenticeships
The
College’s
bank
External
auditor
Awardin
g bodies
Home
office

9. Results in four overarching tensions
1. FE’s role in dealing with social inclusion
versus a role as a provider of high-status
vocational courses.
2. Market or quasi-market versus a more
systems-based approach (with tensions at
both national level, and between national
and local levels).
3. National versus local and institutional
priorities and choices.
4. A long-standing three-way tension between
the pattern of provision that employers claim
they want, individual students choose and
government aspires to.

10. Three 2023 scenarios

11. Scenario 1 – Markets rule!
 Policy rhetoric around for profit education.
 Systems thinking is nostalgia!
 Policy aims for a ‘healthy marketplace’.
 Customer is king, with employers as primary
end user – ‘smaller gap between what
employers say they want and what they say
they are getting’.
 Fiscal constraint post-Brexit.
 Lots of new for-profit apprenticeship/HE
market entrants.
 Adult loans, scandals ongoing – the ‘new
Australia’.

12. Scenario 2 – new tertiary integration
 Low tariff universities under intense pressure
– response – vertical integration – Institutes ,
MATs, UTCs, ITPs, FE level provision down
to L3 and T-levels.
 Degrees, sub-degree, technical and upper
secondary. Lower levels (L2) left to FE.
 Hybrid institutions, local ‘semi-monopolies’ or
systems emerging.
 FE trying to move in reverse direction.
 Devolution stalled.
 Regulation and governance very difficult.

13. Scenario 2 – a mixed economy and
tensions
 2 steps (marketization) forward, 1 step
(system) back.
 Desire for best of both worlds – market
with elements of cooperation.
 Tension between individual student choice
and employer demand and employer
leadership.
 Market (choice) and planning (SAPs).

14. Scenario 3: the re-invention of a
system
 National Education Service (NES) implemented.
 More £££s, but less than desired.
 Apprenticeship funding, AEB, other adult FE and
new upskilling funds all devolved.
 Still working through what ‘local democratic
accountability’ means (not the LEPs!)
 Re-incorporation wielded as a threat.
 Huge debates about what to do with 14-19 and
schools.
 Accountability users, attempts to join up education
with other public services.

15. Strategic lessons and policy
asks

16. Big questions?
 What are the benefits of competition over cooperation?
 What incentives are needed to create and sustain
collaboration?
 What are the dangers of a single regulator over diffused
regulation?
 How do colleges grow their role as anchor institutions
whilst competing in national market and still meeting
local priorities (local versus national rewards)?
 Should we abandon lower level provision (and therefore
the social inclusion agenda) in favour of higher level and
higher status provision?
 How can we introduce greater equality (in all its forms)?

17. Key questions:
Should a young persons education
ever be a commodity?
What produces the best outcomes,
markets or systems?
Does it really matter to young
people?