The next item is a statement by the Minister for Welsh Language and Lifelong Learning on the review of the funding formula for further education. I call on the Minister, Eluned Morgan.

Thank you, Deputy Presiding Officer.

The Welsh Government is seeking to build an economy that works for everyone. Now, more than ever, we need to ensure that we do all that we can to boost living standards, encourage growth and productivity, and also address deeply ingrained regional economic and social inequalities.

The FE sector is at the heart of this agenda, yet over the past five or six years it is also one of the sectors that has been hardest hit by the austerity measures imposed on us by the UK Government. With this in mind, I commissioned a review of the FE funding methodology to ensure that it is fit for purpose to deliver what learners need and what employers want, and also to ensure fairness across the whole of Wales, not just for full-time learners but also for part-time learners.

The changes introduced in 2014 have achieved their objectives. We no longer deliver isolated qualifications, but we have in place a comprehensive, skills based, learning programme, courses that have a defined purpose and outcome, and a redesigned and sharpened curriculum offer. Generally, our institutions are financially stable. However, in 2017, a Wales Audit Office report recommended that we should review the funding methodology to reflect the changes in demography and local need.

To deliver this recommendation, the Welsh Government has been working with the FE sector to align funding for full-time learners more closely with the approach adopted around sixth-form funding, thus reflecting relevant demographic changes. While the current programme approach to funding delivers the main qualification and underlying skills that employers in each sector require, learner choice remains the main driver for which programmes are delivered at each college. The choices that learners are currently making do not necessarily chime with the needs of local employers or the economy, and therefore it’s possible that some people choose courses where there is no clear progression pathway, which could lead to people being trapped in low-paid jobs. 

To bring change to this position, and to move towards a situation that closer aligns the needs of our economy with the training delivered, officials have worked to align college courses with the recommendations of the regional skills partnerships. The aim of these partnerships is to ensure that employer needs are considered in the recommendations. These are used to influence the planning processes provided at every college. If colleges introduce plans that do not reflect the RSP recommendations, they will not be approved. Furthermore, my officials will ensure that delivery is in line with those plans and will adjust funding when appropriate.

I intend to appoint an independent advisor to review how we can enhance the current arrangements in terms of the partnerships and their ability to have an impact on skills provision in their regions that meets employer need.

The FE sector is a responsive sector and I fully expect them to embrace this improved methodology, to work collaboratively and regionally, and to ensure that each and every one of our FE learners is given the best possible start in the world of higher education or employment. 

We need to be constantly striving for improved learner outcomes, and I am keen to see an increase in the trend of successful completion and we will explore options, in consultation with the FE sector, to incentivise colleges to ensure they meet annual targets for learning outcomes, ensuring improved standards year on year. And where a college does not meet that target, I'll withhold funding in the following year. I'm pleased to say that, in the past decade, the outcomes achieved by colleges have improved by 20 percentage points. But we must be constantly striving to improve the standards.

Alongside the changes to full-time provision, I'm also proposing to change the way part-time provision is funded, planned and delivered. The introduction of funding frameworks in 2014-15 I'm afraid coincided with a 37 per cent decrease in the funding available for part-time learning, with a further 50 per cent the following year. So, since 2015-16, the volume of part-time provision has varied depending on the numbers of full-time learners, and the offer is inconsistent across Wales.

Part-time funding is prioritised for basic skills, including digital and English for speakers of other languages provision, as well as giving all learners the opportunity to attain GCSE English, Welsh and mathematics. Delivering to those with the lowest level of skill has long been a core part of each college’s mission. In future, part-time provision will be prioritised to the proportion of the population who only hold a level 2 qualification. That'll ensure that all learners with a qualification level below level 3 will have equal access to the amount of part-time funding that is available wherever they live in the country.

As with full time, I expect colleges’ part-time provision to be influenced by the regional skills partnership recommendations. This review has also refined the sparsity uplift to reflect the increased costs of delivering in rural areas, although additional work will be undertaken in 2019 to refine the sparsity uplift to ensure we identify and fund the optimum curriculum entitlement in rural areas

I'm also changing the way we fund the post-16 Welsh baccalaureate. Currently, A-level and equivalent programmes are funded at the same value whether the Welsh bac is being delivered or not. This is because, where the Welsh bac is not being delivered, providers are expected to deliver, as a minimum, three Essential Skills Wales qualifications. However, data has shown us that this is not necessarily happening as expected, with learners missing out on important skills development. Therefore, from 2019, the Welsh bac will be funded as a separate qualification and funded as equivalent to an A-level. I'll also be looking at how we can implement this change within vocational programmes from 2020.

Other elements of the FE funding methodology will continue to be considered during the next academic year for implementation in 2020-21. For example, the Coleg Cymraeg Cenedlaethol was tasked with developing an action plan for Welsh-medium education in FE in partnership with Welsh Government officials. I have this week received the final action plan and I'm considering the advice, which will be the basis for future support for the sector. So, to align this with these new developments, a review of the Welsh-medium uplift will take place next year, bringing a more cohesive direction to Welsh-medium and bilingual education and training. Research will also be carried out on the deprivation uplift, and we'll review the additional funding for learning support for those with additional learning needs, with a revised allocation to this budget being announced.

In line with the announcement of these changes to the FE methodology, I intend to write to each of the FEIs to set out my expectations for engaging with this new methodology and to broaden its inclusivity, in particular in relation to people with disabilities and their access to FE provision and apprenticeships. I'd like to recognise the commitment that the FE sector has given to this review, and I believe that the new arrangements will better suit both learners and employers.

Finally, I'd like to take this opportunity to confirm that the Welsh Government will be providing funding to enable further education lecturers to be awarded a pay deal in 2018-19 and 2019-20 that is commensurate with that received by school teachers. I'm pleased to say that funding will also be provided to extend the pay deal to other FE staff, which highlights the recognition that FE makes an important contribution to the economy of Wales.

I'm so sorry to have taken so much of your time, but I think it was important to set out exactly what the changes will be in future. Diolch.

I thank the Minister for her statement today. Further education is crucial for the future development of the skills base of the Welsh workforce and for the future development of the Welsh economy as a whole. According to ColegauCymru, the economic impact of FE colleges in Wales to the local business community is £4 billion a year. However, the FE sector has been chronically underfunded for many years by Welsh Government. Make no mistake, this has been a deliberate policy decision and responsibility lies with the Welsh Government also. So, can I ask the Minister, given the importance of the further education sector, if she regrets the lack of support it has received from the Welsh Government?

I welcome plans to improve the methodology, what she's been saying a few times in her statement—what the Minister referred to. Does she agree that any changes should not be introduced in such a way that they destabilise the sector or otherwise impact negatively on learners' outcomes and meeting business needs? Colleges have been successful in attracting income from outside the core Welsh Government budget, but this is no substitute for core Welsh Government funding. Will the Minister join me in congratulating colleges on funding innovative ways of attracting commercial income and what is she doing to support their efforts?

Central to the funding question is the benefit it delivers for training and skills. So, can the Minister say how the review fits with the employability strategy and its focus on helping people return to work? The Minister referred to part-time learning—the number of part-time learners at further education institutions has fallen by nearly a quarter. Could the Minister expand on her plans to reverse the serious decline in the number of part-time learners in the FE institutions?

Finally, the Minister will be aware of the threat of industrial action currently facing the FE sector. How confident is the Minister that her proposed pay deal will address the problem of low morale that has seen lecturers leaving the sector due to the in-year budget cuts faced by the sector since 2015? I look forward to her reply. Thank you.

Well, nobody wanted to see the kind of cuts that were imposed on the FE sector, but that was a deliberate decision by the UK Tory Government in relation to austerity. That is the consequence of the cuts. We have to make decisions, we have to prioritise, and this was the decision that was forced upon us, that we did not want to take, but we had to take, because of that austerity decision, which is a political decision. That was a political decision that you did not have to make. But let me tell you about the sector itself. Compared to England, our FE sector is the model of stability, and I think that the coherence and the financial stability of those FE colleges is something that the Welsh Government has been working very diligently on over the past few years. So, I am confident that those colleges are in a much, much better place than any of the FE colleges are in England.

In relation to colleges being able to derive additional income, I'm very open to that. In fact, I would encourage them to do a lot more of that, but in order to do that, I think they need to become a little bit more flexible to respond to the needs of learners, who may not be able to fit into the hours that colleges currently provide. So, I'm hoping that they will be more responsive. One of the things we've done to try and encourage that is to put £10 million on the table to say, 'You can access this pot if you can provide learning to people that coincides with the kind of priorities and the local skills that we've identified are needed.' And we've asked them to provide that and they've been really responsive and that's good. But I think that's the first step. I would certainly like them to become a little bit more flexible, so more than anything, I would like the public sector to really take a much better role in terms of engaging with the private sector so that they can be delivering these courses, rather than the private sector.

You're talking about part-time learning again. The cuts have been significant and that's why what we've had to do is focus on specific areas. So, we've focused on basic skills, on digital and on English for speakers of other languages learning because we've had to, because that is what has been forced upon us by the UK Government. 

Just finally on the industrial action, I'm really delighted that we have been able to come to a conclusion on the industrial action. There will now be parity in terms of pay for FE college lecturers with sixth-form lecturers, but we've gone further than that—we've also helped to make sure that it's not just college lectures, but other people who are in the support services, some of whom are on very low incomes, who will also benefit from this additional support that the Welsh Government has put on the table.

Thank you for the advanced notice—it's timely, given that we have a debate on further education this time tomorrow also. We've always recognised in Plaid Cymru that, to have a successful highly skilled and productive economy, we need the facilities and the institutions that are world class, competitive with a clear mission and a plan to deliver. And further education is something that needs to be available to everyone throughout their careers and not just at school. So, it's one of the reasons, as part of the most recent budget agreement that Plaid Cymru pushed for, where we could, to secure extra money for FE, although we recognise that it's not enough and we understand the challenges that remain.

We do welcome the announcement of funding to allow a pay deal for college lecturers, which is commensurate to those achieved by teachers, and we have been calling for this for some time. It's also good to hear that funding will be available to extend that to FE staff as well, as we know that we have to achieve parity of esteem between vocational and academic qualifications and a fairer pay structure. But I would just like to probe the Minister further. We still know that there's going to be the potential for strike action in December. Do you think that this pay deal will go far enough in relation to the wider workload issues that are facing the sector?

So far as the other elements in the statement go, I am puzzled on some of the other announcements. The current funding and allocation framework was put in place in 2013. Today, we have this announcement covering the next few years, but there's no information as to how long colleges can plan ahead based on this announcement. How long a period do you envisage that the announcement today will actually last for?

The purpose of the proposed tertiary education and research commission for Wales is to provide oversight, strategic direction and leadership for the post-compulsory education and training sector, so why are you bringing forward piecemeal reform of funding for the sector now, rather than waiting for the commission to be in place to strategically review the needs of the sector? We know, based on the Hazelkorn review and other statements made by the education Secretary, that the whole of the post-16 landscape is being proposed for a major legislative overhaul. Will this mean that these announcements today, in reality, will be up in the air as soon as or if that process begins? Can you give us some more detail on when the wider legislative agenda is being planned for?

According to the statement, and I quote:

'College plans that do not reflect the RSP recommendations will not be approved.'

You also say that you intend to appoint an independent adviser and to review how we enhance the current arrangements with regional skills partnerships and their ability to have an impact on skills provision. Is the Minister confident that RSPs are equipped to make the right recommendations to colleges to ensure that employers' needs are met in those plans? Some in the sector have told me that they have no real power, no real accountability and no real direction from Welsh Government. It's my understanding that only one of the three RSPs currently have staff. RSPs need to be hardwired into the wider post-16 landscape in the way that they currently are not. Will an independent adviser be able to provide a better way forward? Although, again, I think it's something that could and should be done as part of a wider strategic change in the sector. How, for example, will the John Graystone review be worked into this announcement? They've already reviewed the RSPs—how will you be taking this into regard? There seem to be further reviews into aspects of the uplift to the formula, but I want to understand why you feel that's necessary. Have we had enough reviews in this area, or have they had enough time yet to bed in? I'd like to understand why you've made that decision.

My final question is: you've explained in the statement that part-time provision has seen drastic cuts over the last few years, and we would obviously agree with that—not agree with the fact that it's been done but agree with the statement. You say that part-time provision will be prioritised to the proportion of the population who only hold a level 2 qualification. Have you carried out an impact assessment on how this will affect different groups of learners at different levels, and have you discussed this with the sector?

Yes, just first of all on lifelong learning—I think it is critical. I think the role of FE in lifelong learning is terribly important. One of the key issues we have in our society today in terms of problems is in-work poverty, so the question is: how do we get people out of that situation? The answer, I think, is to upskill them while they are still at work. To do that, we need to provide a more flexible system. So, I'm trying to encourage the FE sector to try and get into that position so that they can be responsive and not just leave it to the private sector, as I said earlier. 

I am very hopeful that the money that we've managed to put on the table today will avoid strike action, but then that is a matter—the relationship between the college lecturers is one between the unions, the college lecturers and ColegauCymru. So, that's the relationship. What we can do—. We're kind of slightly outside the system, but we've been very pleased to be able to support them in this instance.

In terms of planning ahead, I understand what you're saying: the Hazelkorn review is coming. The problem is, it's still quite a way out, and what I don't want to do is to wait before we incentivise, before we start moving these colleges. If we wait for the Hazelkorn review, we could be waiting a significant number of years, and I don't want to be in that position. So, some of this is about getting us to the situation where we're on a par with sixth forms. We're looking at the methodology, for example, in relation to how they're paid, related to demographic changes—that's something. That's what's done in sixth forms. So, we're gradually getting into the same kind of position. And, of course, we needed to respond, I think, to the National Audit Office report. So, that was another incentive for us to get moving on this particular issue. 

On the RSPs, we have of course had the review by Dr John Graystone. That was specifically targeted at governance. It was specifically looking at governance. The RSPs have responded, are responding, to that. The terms of reference are now clear for the public. There was an issue about public accountability. Minutes of the meetings are now being put on websites and things. So, the transparency of the process is much better. I hope that in appointing somebody to overlook the RSPs, we will get a better degree of consistency between the RSPs. I think they're doing a good job, and I'd like to encourage them to keep going, but I'd like to have somebody who has an understanding of both the RSP, the employment situation, and the further education sector, to really make sure that we are in the right place on this. It's critical, I think, that we get this right. 

And then, on your last point, which was about—I can't remember what it was about.

The part-time provision—

Part-time provision. Yes, part-time provision—absolutely, we are concerned about this and that's why we've had to prioritise. We have done some analysis to have a look at how this would impact. Of course we've been speaking to the colleges about this. We've had to prioritise. We're really making sure that there's consistency. When we've decided where to prioritise, though, we've decided that we want to upskill and focus on those with the lowest levels of qualification in relation to part-time.

Can I thank the Minister for her statement, and can I also basically applaud the Welsh Government's decision to actually fund the pay awards both for lecturers and for support staff? Because so often support staff are not thought of in these discussions, and they are the crucial pin that actually allows the whole process to work. So, I'm very much pleased with that.

A couple of quick questions for you, Minister. I agree with Bethan in the sense that part-time provision is crucial. We need to look at how we address this issue. Now, your statement says you're going to prioritise those who only hold level 2 or below, but we can't ignore the level 3s, because they are the ways in which we can upskill our workforce and provide people opportunities to move on and, as you highlighted in your answer, to actually better themselves out of in-work poverty situations. So, can you give us reassurances that you will also be supportive of programmes above level 2 if there's evidence to demonstrate that that need is there by the regional skills partnerships as well?

In the RSPs, will you also confirm that they will look not just at regional needs, but national needs, because very often what is good in a part of Wales might not be appropriate for another part of Wales? But we don't want to stop the social mobility of the students to travel. For example, something in south-east Wales—if it's only delivered in south-east Wales, we shouldn't deny people in south-west Wales or west Wales the opportunities to actually gain skills that might allow them to move into those types of professions.

You also indicated that you will be doing the financial or checking the financial—funding, basically. You won't pay if the plans are not delivered. How often will you assess those plans to ensure that they are being delivered? Are you also going to assess the financial management of the colleges to ensure that they are delivering on the outcomes that they should be delivering on? We've seen how FE colleges grow, some of them quite large, and some have spin-off businesses as a consequence of putting extra funding in, so what I want to make sure is that they are delivering on the objectives set by Welsh Government for the funding from Welsh Government.

Could you also tell me—? In your statement you highlighted that you've done some of these things—parts of the uplift have been looked at—but then you talk about that other elements will be looked at in the next academic year. Well, what elements will be looked at in the next academic year? Will they be all the remaining elements, or will they be a proportion of those elements, and some looked at in the year after that? I suppose the most important thing is: how are you going to ensure that the hit that FE took—and we all recognise the hit that FE took—is not irreversible, that we are going to deliver? Because there are many people out there who need access to those access courses, to return-to-work courses, to get them back into the opportunity of working. That is an area sometimes we forget about—the adult education aspects, which bring that person back into the world of educational learning and give them the enthusiasm to move on and gain work places.

I'm also delighted that we've managed to find the money in terms of the support staff. Some of these people are on extremely low pay, so I think it's really important that we've managed to find that money and to support them. As you say, they are essential staff in terms of making the colleges work, so I'm delighted that that has happened.

In terms of upskilling, I think everybody recognises that this is the sector that's taken a huge hit. Nobody wanted that to happen, and, if austerity ever ends, I'm sure that this will be a sector that will be considered in terms of really trying to re-instigate the kind of priorities that we had for the sector. I think, particularly in terms of our commitment to adult education, this is a historic thing that we've really stood by, I think, in particular in our party, and I think what we need to do is to try and re-instigate that situation. But that's very difficult unless austerity is lifted, so—.

But, in relation to sparsity and rural, one of the things that we'll be looking at is making sure when we revise this further—is to ensure that people have access to a broad curriculum. So, how far away do you live from a plumbing course? It costs a lot more to put on a plumbing course in a rural area simply because you can't perhaps get the numbers you would get in an urban area. And yet people in rural areas need plumbers. So, we are looking at ensuring that there's a kind of baseline of courses that are necessary, and it may be that we'll be saying, 'Well, we will subsidise those so that there is a broad curriculum', and that's one of the things we want to examine further.

On the planning functions, there's the funding formula, but that goes hand in hand with the planning formula for these colleges, which now have to interlink with the regional skills partnerships. And what we're saying is, 'You have made an agreement. These are the things that you agreed in your plan that would be delivered. If you then don't deliver, then there will be clawback.' That will be done on an annual basis. And I think you're absolutely right: FE has had a hit in the past and, when possible, I'm sure that we will find the money to be able to reinstate the money that, sadly, has had to be cut.

Thank you very much, Minister.