Speaking about the publication of the report the Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said:
"There has been an overall improvement in the educational achievements of 16 to 18-year-olds over the last four years, but more needs to be done to ensure that choice operates effectively in the market.
"Students in larger institutions have generally achieved better results. Smaller providers could achieve some of the benefits of size, such as economies of scale and improvements to quality and choice, through collaboration.
"However, the competitive market in which providers operate can act as a barrier to cooperation.
"If the 16 to 18 education market is to work effectively, there must be relevant and robust information so that students can make informed choices about courses and the Department can assess value for money. There must also be clear criteria for intervention when providers are underperforming. Neither is fully in place at the moment.
"Institutions are currently answerable to a complex web of agencies, governors and students. The Department needs to simplify the accountability framework for the sector to avoid over-burdening providers.
"The Department has announced that the Education Maintenance Allowance will be replaced by a bursary scheme which it believes will offer greater value for money. However, the Department has not yet assessed the potential impact on participation in education and training, particularly for students from disadvantaged backgrounds. The Committee will return to this issue."
Margaret Hodge was speaking as the Committee published its 42nd Report of this Session which, on the basis of evidence from the Department for Education, the Young People’s Learning Agency and the Principals of three education institutions, examined the effectiveness and efficiency of the current education system for 16- to 18-year-olds.
In 2009, over 1.6 million 16- to 18-year-olds participated in some form of education and training at a cost of over £6 billion. Most of these young people studied full-time for Level 3 qualifications (such as A levels or National Vocational Qualifications) at a general further education college, sixth form college or school sixth form. The Government’s approach is to encourage choice and quality of education through a market of providers. Young people choose where they want to study, subject to entry criteria, with funding following the student.
The system governing the education of 16- to 18-year-olds is devolved and complex. The Department for Education (the Department) has overall responsibility, and the Young People’s Learning Agency funds education providers and monitors their performance.
At a local level, local authorities have a duty to secure provision but they have limited powers, and having duties without powers cannot work effectively. The Skills Funding Agency oversees provision for students over the age of 19, on behalf of the Department for Business, Innovation and Skills, and has lead responsibility for general further education colleges. Hence, many colleges report to two Departments and two funding agencies.
The Department cited reductions in funding per student as one incentive to make education providers more efficient, but there is a risk providers simply spend up to this unit price. We took evidence from the leaders of three highly performing institutions, and they emphasised the value of reliable comparative information and benchmarks in enabling them to improve efficiency.
There has been an overall improvement in the achievements of 16- to 18-year-olds over the last four years. Students in larger providers have generally achieved better results. Smaller providers, by collaborating, can achieve some of the benefits of size, including economies of scale and improvements to quality and choice. However, the competitive market in which providers of 16 to 18 education operate can be a barrier to collaboration and aspects of inspection and assessment are not aligned with collaborative delivery.
Value for money
In a market, consistently poor providers should fail because they lose funding as students choose to study elsewhere. For the 16 to 18 education market to work effectively, there needs to be consistent and relevant information so the Department can assess value for money and students can make informed judgements about their courses and what they lead to.
Also, where a provider’s performance is poor, there must be clarity about the criteria for intervention, and the timing and extent of intervention. Neither is fully in place at present, leading to negative consequences for students, and limiting the speed and effectiveness of actions to deal with poor performance.
While participation of 16- and 17-year-olds in education and training has increased in recent years, further increases are required to reach the legislative requirement of full participation by 2015. The Department must assess the impact of recent changes to policy, such as its replacement of the Education Maintenance Allowance, on its plans to have everyone up to age 18 in education or training by 2015.
Read the evidence session transcript.