| 28 February 2007 |  |
| To | Heads of HEFCE-funded higher education institutions Heads of HEFCE-funded further education colleges |
| Direct Line | 0117 931 7300 |
| Direct Fax | 0117 931 7203 |
Circular letter number 03/2007
For further information contact HEFCE regional consultants or regional advisers
Dear Vice-Chancellor or Principal
Allocation of additional student numbers in 2008-09 for employer engagement
1. This letter sets out how institutions can request additional student numbers (ASNs) for 2008-09 that are co-funded by employers, and provides an update on employer engagement following the publication of the Leitch Review of Skills. 1
2. We have also published a circular letter on ASNs for 2008-09 (CL 04/2007). This outlines how we will allocate an additional 10,000 full-time equivalent (FTE) places, which we have made available to support our key policy objectives.
Supporting employer engagement
3. In May 2006 we invited the higher education (HE) sector to develop pilot projects which would test models of engaging employers in HE learning, and would trial provision co-financed by employers (see Circular letter 06/2006). We have also established three regional Higher Level Skills Pathfinders which will enable employers to access higher education services alongside the Government's Train to Gain scheme.
4. To support our objectives on employer engagement, our Board has agreed that for 2008-09 we should allocate 5,000 FTEs, on a co-funded basis (normally 50 per cent). This will be in addition to 10,000 fully funded FTEs allocated to support our policy priorities.
5. We expect that any proposals for funding to support employee development for a specific employer (at any level, and including for foundation degrees), will only be supported by HEFCE on a co-funded basis.
6. To help institutions that are considering co-funded provision, we have provided answers to frequently asked questions.
Responses from institutions
7. We had a positive response from institutions to our invitation to develop project proposals. It is clear that there is already a broad range of employer engagement activity in the sector, and demand in particular for enhancement of graduate employability, continuing professional development, and curriculum development with employers. Some institutions are already expanding their activity targeted at those in the workforce. However, some types of provision are more challenging for the HE sector to provide, in particular experiential or work-based learning, and learning which is tailored to employer needs and requires greater flexibility from institutions in their systems and approaches.
8. Following the Leitch Review of Skills - which sets out challenging targets for increasing the proportion of the workforce with Level 4 skills by 2020 - a key long-term priority for HEFCE will be to increase delivery of accredited provision at Level 4 and above for learners already in the workforce. 2
9. We want the HE sector to be as effective in its provision for the workforce as it is for younger full-time learners. We will provide funding to facilitate change as follows:
- allocation of 5,000 FTE ASNs for 2008-09, normally on a co-funded basis, in response to proposals from higher education institutions (HEIs) and further education colleges (FECs)
- development funding to support preparatory work, available for HEIs to request and for FECs as part of a collaboration led by an HEI.
10. We have also tasked the organisations funded by HEFCE, including the Higher Education Academy, Foundation Degree Forward and the Quality Assurance Agency, to develop an action plan to support the sector in making the step-change required. A key priority for the group will be to develop a quality assurance system which reflects the needs of more flexible, employer-led forms of learning.
HEFCE approaches to employer engagement
11. Employer engagement is part of our approach to delivering flexible lifelong learning. 3 Flexible lifelong learning and employer engagement present the sector with a range of complex issues, for example in curriculum development, funding, modes of delivery and engaging with learners. We believe there is no single approach, and that therefore in this first stage of our strategy we should offer the sector different ways of building on its strengths, for example through Lifelong Learning Networks, Train to Gain, or knowledge transfer mechanisms.
12. We will ensure that this approach does not lead to duplication and that closely related projects are designed to complement one another. This is particularly the case where an HEI is part of a Lifelong Learning Network or Higher Level Skills Pathfinder, and is also developing proposals for co-funded provision with employers. The award of ASNs or money from our Strategic Development Fund (SDF) will only be approved where institutions have addressed the relationship between their proposal and other initiatives, and are able to show that what they propose adds value to other work in the field. Institutions and partnerships should review connections between related initiatives in developing any new proposal.
Co-funding with employers
13. For 2006-07 and 2007-08, we have already allocated co-funded ASNs to a small number of institutions. For these ASNs we will assume that employers will contribute both the fee and a proportion of the ASN costs. Institutions have reported that in the short term it is difficult to secure substantial employer contributions in addition to the fee. Although the target for co-funding is a 50 per cent employee contribution, in our pilot phase we have typically funded ASNs at 70-80 per cent. Through this invitation for co-funded ASNs, we will continue to explore how we should treat co-funding within our funding method, in a way which will minimise burdens of reporting.
14. In increasing Level 4 skills within the workforce, it is important that employers contribute to the costs of provision, as they benefit directly from the increased skills of their employees. We recognise that the HE sector may need additional up-front support in making the changes required to deliver more of this provision. In addition, provision which is co-financed by employers represents a more high-risk and unpredictable market for institutions. Long-term culture change is required to encourage employers to invest in HE provision initially and to maintain their investment. We therefore wish to encourage, through the SDF, approaches which will enable costs and risks to be shared between the institution, the employer and the learner.
15. In the short term, co-funded ASNs will be treated separately from institutions' overall growth targets and subject to separate monitoring and holdback arrangements.
National priority areas
16. We believe some types of provision are more likely than others to drive up demand from employers and employees. These will be our priorities for support (see below). We would expect funding to deliver accredited HE which will count towards an HE qualification of at least 120 credits. We would also expect all new provision to have been developed in discussion with Sector Skills Councils and employers.
17. The priority areas for HEFCE support are:
- work-based learning (learning derived from undertaking work)
- accreditation of prior experiential learning (APEL)
- enhancement and accreditation of employers' in-house training programmes
- short courses tailored to employers' needs
- flexible provision (at a time and place to suit employers and employees; and credit accumulation and transfer systems)
- e-learning, blended learning
- new types of programme which embed skills that are relevant to employers (for example, HE programmes with NVQ Level 4 embedded)
- programmes designed or delivered in conjunction with employers.
18. Some institutions that are already delivering these types of provision may be interested in expanding their employer engagement activity across the institution. For institutions that can deliver more substantial levels of co-funding, but may require support to adapt their systems and processes, we would be willing to develop a more substantial funding package on the basis of longer-term outputs. Institutions interested in such an approach should contact their HEFCE regional consultant or regional adviser.
19. For workforce development projects, that is, provision which is for employee development for a specific employer (including foundation degrees), we expect to allocate ASNs on a co-funded basis only. Institutions that wish to deliver foundation degrees for other learners (for example as a progression route for learners in school or FECs) may still request fully-funded numbers.
20. We have awarded fully-funded ASNs to Higher Level Skills Pathfinders for 2006-07 and 2007-08 on the basis that they will test employer funding contributions. We would expect pathfinders who require ASNs for 2008-09 to deliver them on a co-funded basis.
Co-funding with public employers
21. HE is playing an important role in the development and professionalisation of the public sector. Co-funding with public sector organisations offers an opportunity for employees to secure accredited HE qualifications, and a way to maximise the benefits of public funding resources. We wish to support institutions working with public sector employers to promote co-funding opportunities where there is added value for learners.
Lifelong Learning Networks
22. Lifelong Learning Networks (LLNs) are already facilitating HE employer engagement, through credit frameworks underpinned by progression agreements and curriculum development. We wish to encourage LLNs, who are ready to do so, to extend their role in workforce development, where they can demonstrate added value and that they complement other employer engagement initiatives. LLNs that wish to request additional funds from the SDF or co-funded ASNs to support employer engagement should contact their HEFCE regional consultant or regional adviser. Priority for further development funding for existing LLNs will be given to proposals that are also seeking to deliver co-funded ASNs.
Train to Gain
23. Building on the experience of the pathfinders, we will continue to work with the Learning and Skills Council (LSC), the HE sector and key partners during spring 2007 to identify how we should deliver the core objectives of the Train to Gain scheme within an HE context. We are also working with Foundation Degree Forward to extend the LSC's National Employer Service so that large national companies' training needs at Level 4 can be routed through to HE and other providers.
24. Any future roll-out of Train to Gain in HE is contingent on the outcome of the Government's Comprehensive Spending Review, which we expect to be announced in late summer 2007.
Further education colleges
25. Further education colleges are making a strong contribution to employer engagement and workforce development, particularly through foundation degrees. Many are already delivery partners for Train to Gain at Levels 1-3 and have long-standing relationships with employers. We wish to support their continued role, particularly through local collaborative activity. Directly-funded FECs are invited to signal their interest in co-funded ASNs to their HEFCE regional consultant or regional adviser, and we would welcome proposals from HEIs with FECs as partners. We would not expect to receive proposals for co-funded growth from FECs with fewer than 100 directly-funded FTE higher education students, but would encourage these institutions to submit proposals in collaboration with other providers.
Additional information
26. Answers to frequently asked questions about provision co-funded with employers are on the web. For further information, institutions should contact their HEFCE regional consultant or regional adviser in the first instance.
Yours sincerely
Professor David Eastwood
Chief Executive
Notes
1. Prosperity for all in the global economy: world class skills', HMSO, 2006.
2. Level 4 within the National Qualifications Framework.
3. Our employer engagement strategy is available on the web.