Post-School Education and Skills Reform legislation: consultation analysis

Apprenticeships and student support

The first part of the consultation sought views on proposals to streamline funding for colleges, universities and apprenticeships:

Proposal 1: Business as usual. Post-school education and skills funding would continue to be delivered through the three public bodies (SFC, SAAS and SDS).

Proposal 2: SFC manage all provision funding and SAAS manage all student support funding. National Training Programmes (NTP) would move from SDS to SFC, and further education (FE) student support from SFC to SAAS.

Proposal 3: Consolidate all provision and student support funding within SFC. NTP would move from SDS to SFC, and all SAAS student support to SFC.

Respondents were asked to indicate which of the three options they preferred, and to indicate the reasons for their preference including key advantages and disadvantages for each option.

Support for proposals

Question 1. Which of the three proposals do you prefer?

The most commonly preferred option was proposal 2; this was selected by 44% of the 155 respondents those who answered the question. There was also support for the other options, with 35% preferring proposal 3 and 21% preferring proposal 1.

Responses show some variation in preferences across respondent types, with individuals most likely to prefer proposal 2 and organisations generally preferring proposals 2 or 3. In terms of specific organisation types, local authorities/schools and other public bodies were most likely to prefer proposal 2, fundable education bodies supported either proposal 2 (preferred by a mix of universities and colleges) or proposal 3 (primarily supported by colleges), and sector/business representatives were most likely to support proposal 3. In contrast, training providers, private businesses/employers and trade unions generally preferred proposal 1.

Note: 39 respondents (20% of the total) did not answer Question 1. Percentages may not sum to 100% due to rounding.

Around 165 respondents provided further comment at Question 1. Some of those providing written comment – including fundable education bodies, other public sector and sector/business representative respondents – expressed their general support for skills reform objectives as set out in the consultation paper. Reforms were described as necessary to deliver against the Purpose and Principles and recommendations of the Withers Review.

Support for skills reform also included reference to a range of issues and priorities that respondents wished to see addressed through proposals. These included: perceived inefficiency and duplication of effort across the skills landscape, especially given what were seen as fragmented skills funding and delivery arrangements; potential for inconsistencies in support provided to learners and a need to ensure equity of access for learners; a perceived need for more streamlined and coordinated funding of apprenticeships specifically; a need to ensure learners are at the heart of the system; calls for more intensive collaboration with employers and industry to build the required skilled workforce; and a need for an ambitious policy of growth and renewal to guide skills reform. It was suggested that change was urgently required to address these issues.

Support for proposal 1

Of the 33 respondents who supported proposal 1 (21% of those answering the question), 29 provided written comment in support of their view. Key points from these and other respondents who did not select a preferred option are summarised below.

Comments from these respondents – including from businesses/employers and training providers – highlighted the value of proposal 1 in ensuring stability for providers and learners, and enabling SDS to retain a singular focus on skills development and work-based learning (including apprenticeships). This stability and clarity of focus was seen as important in ensuring skills provision is responsive to learners' needs.

Those expressing support for proposal 1 also suggested that the current skills landscape works well for learners and employers, and referred to evidence of positive outcomes. Specific current positives highlighted by respondents included reference to SDS as having the necessary knowledge and experience, having established effective working relationships with training providers, and as having proven more agile and responsive to the needs of the economy. Modern apprenticeships were also described as the most efficient and cost-effective pathway to support individuals into the labour market, including praise for SDS administration of these programmes. There was also positive reference to SAAS as operating effectively, including good communication and a strong public profile.

Proposal 1 was supported as a means to retain key aspects of the current approach that were working well, while making necessary improvements across existing organisations and systems. This included from respondents who agreed that reform was required – for example with reference to duplication of effort across agencies, and a view that the system has become too bureaucratic.

For a substantial number of those expressing support for proposal 1 – especially training providers and private businesses/employers – this was based on objection to alternative proposals. Some questioned the direction of wider skills reform policy, and disagreed with the Withers Review regarding weaknesses and complexity in the skills system. There was also reference to what were seen as significant challenges in delivering the required level of change for proposals 2 or 3, and concern that disruption associated with implementing proposals 2 or 3 could distract from the urgent need to address current skills challenges. A small number felt that proposals were driven by a desire for simplification and cost savings, and questioned whether proposals would lead to improvements for learners, employers or others.

Several specific objections were raised for proposals 2 and 3 as set out in the consultation. These included: a view that proposals were likely to incur significant implementation costs, and a preference for these resources to be used to improve existing structures; a perceived risk that significantly expanding SFC's remit could reduce the organisation's effectiveness; and concerns from training provider and local authority respondents that proposals 2 and 3 could prioritise funding of further education (FE) and/or higher education (HE) provision at the expense of other sectors and provision models (including apprenticeships and other work-based models). This was seen as a particular risk given SFC's longer track record in dealing with the FE and HE sectors.

Some also felt that the consultation paper lacked detail on how proposals 2 and 3 would work in practice, such that it was not clear how proposed reforms would generate the anticipated benefits. This included reference to a lack of information on how SFC would operate funding across sectors, and questions around whether a reformed SDS would offer additional value. A trade union respondent also suggested that there had been insufficient engagement with front-line staff around proposed reforms, and wished to ensure that staff had a voice in determining the best approach and that Fair Work principles were applied going forward.

Support for proposal 2

A total of 68 respondents supported proposal 2 (44% of those answering the question), and 60 of these provided written comment in support of their view. Key points from these and other respondents who did not select a preferred option are summarised below.

Those in favour of proposal 2 – especially fundable education bodies and individuals – expressed a particular preference for the proposal as a means of simplifying the skills landscape while retaining the expertise of both SFC and SAAS. This approach was seen as being better aligned with the recommendations of the Withers Review in terms of enabling a more joined-up approach, and better supporting objectives set out in the Purpose and Principles including the commitment to a "colleges and universities first" approach. Maintaining the separation of provision and student support funding was also seen as a particular positive in terms of ensuring clarity of focus, although a small number of those who supported Proposal 2 suggested that a single funding body could be the best option in the longer term.

There was support for proposal 2 as enabling each funding body to focus on their respective roles and sectors, simplifying funding flows, and avoiding potential for confusion. The proposal was seen by some fundable education bodies and sector representatives as having potential to ensure greater clarity of purpose for SFC and SAAS (including favourable comparison with proposal 3 in this regard). These respondents wished to ensure SFC retains the current focus on provision funding, and recognises the distinctiveness of each stakeholder. Support for retaining separate roles for each funding body was also linked to particular confidence in SAAS, including from a number of individual respondents.

The specific proposed reallocation of responsibilities between the two public bodies (SFC and SAAS) was referenced by respondents, including support from fundable education bodies and sector representatives. For example, respondents saw centralising post-school learning and training with SFC as a positive in terms of streamlining apprenticeship funding (described by a fundable education body as the 'top priority' for skills reform). This was also seen as important in enabling FE and HE sectors to diversify skills provision to better support regional skills needs, and in maintaining strong links between skills provision and research.

Consolidating all student support within SAAS was also supported as ensuring a clear focus on student needs. This was highlighted as important in maintaining access to the necessary expertise in student support, and in ensuring independence of approach. There were also calls to maintain localised face-to-face student support arrangements for FE college students, seen as especially valuable for disadvantaged or vulnerable students in the college sector.

Support for proposal 2 included several fundable education bodies in particular who were opposed to 'business as usual', and saw proposal 2 as preferable to proposal 3. These respondents suggested that proposal 3 would require significant structural change and associated investment of time and resources, with potential to divert SFC's energy and focus at a critical time. The SFC and skills sectors were seen as facing significant financial and other challenges requiring SFC's full capacity, including the new Tertiary Quality Enhancement Framework, Knowledge Exchange and Innovation Framework. There was also concern that proposal 3 would create a single funding agency with too many competing roles and responsibilities. A small number of fundable education bodies also suggested that proposal 3 could lead to the institutional autonomy of universities being undermined over time, with potential to negatively impact the sector's diversity.

Caveats and clarifications

A number of respondents qualified their support for proposal 2 with concerns or requests for clarification.

Potential concerns were most commonly related to the scale of change required, and the importance of ensuring that organisations have the necessary resourcing. This included reference to anticipated challenges in redefining funding body duties and powers, the time and resources required to implement legislation change, and ensuring SFC in particular is adequately resourced to manage reforms alongside ongoing operation. It was also noted that proposal 2 would still require reform of SFC and SAAS to enhance their effectiveness, ensure alignment of purpose, and improve transparency on allocation of funding.

Transfer of FE student support to SAAS was also identified as a potential risk, including comments questioning whether this change would benefit students. The distinctive needs of FE learners were highlighted, and questions raised around whether these could be fully met by SAAS.

Further detail on how proposal 2 would work in practice was sought by several fundable education body and other public sector respondents. This included reference to:

• How equity of access to funding would be ensured across all institutions and skills providers, including third and private sector organisations.
• Whether the funding body would retain its Non-Departmental Public Body status and independence from Ministers.
• How the university sector's Office for National Statistics (ONS) classification would be maintained.
• Whether reforms would merge HE and FE student support arrangements.
• Calls to retain specified budgets for universities and colleges.
• Whether key aspects of the current administration of fees would be retained, including 'fees only' university places.
• It was suggested that proposal 2 should also involve SFC taking responsibility for HE tuition fee administered by SAAS – this was described by one public sector respondent as provision funding rather than student support.

Support for proposal 3

Of the 54 respondents who supported proposal 3 (35% of those answering the question), 49 provided written comment in support of their preference. Key points from these and other respondents who did not select a preferred option are summarised below.

Support of proposal 3 included a view from some fundable education bodies that significant reform was required to address challenges facing the post-school skills system, and to deliver Withers Review recommendations. There was also a preference for proposal 3 over proposal 2 in terms of further streamlining the skills landscape and maximising potential efficiencies.

Comments in support of proposal 3 also reflected benefits noted above in relation to proposal 2, such as around simplifying apprenticeship funding and functions within SFC. Centralising all student support within SFC was also seen as having potential to enable a more holistic view of funding provision and student support. It was suggested that consolidating FE and HE student support funding would ensure a fairer and more consistent approach.

Other anticipated benefits highlighted in support of proposal 3 included: improved clarity of purpose; greater equity of funding approach across learner groups and provision models; a simplified landscape that is easier to navigate for learners; greater transparency and accountability, including specifically in relation to the apprenticeship funding model; other specific benefits for apprenticeship programmes; and potential cost savings associated with consolidation of roles and operational efficiencies.

Caveats and clarifications

The most common concerns raised for proposal 3 were around the range of responsibilities proposed for SFC and the challenges this may present for ongoing operation, and potential for proposal 3 to give SFC a "monopoly" over post-school skills funding. It was suggested that a move to a single funding body may not be to the benefit of the sector, and for example may hinder a more person-centred approach. One public sector respondent wished to ensure that the reform process, and selection of a preferred option by Scottish Government, was driven by outcomes rather than the structure of the new body.

Respondents also saw substantial challenges in delivering the level of change required by proposal 3, especially in the context of significant budgetary pressures. There was concern that modern apprenticeship funding could be "diluted" amongst SFC's expanded funding streams, reflecting a view that this has been the case for foundation and graduate apprenticeships under SFC. It was suggested that modern apprenticeship funding should be ringfenced if proposal 3 was taken forward.

Those expressing support for proposal 3 – including a number of fundable education body and other public sector respondents – also identified areas where further detail is required around how reforms would work in practice. These are summarised below:

• How specific powers and duties will be defined for SFC, including the relationship between SFC and recipients of funding (for example how this may differ from the existing relationship between SFC and universities).
• The approach to engagement with stakeholders, including reference to specific groups such as industry bodies and managing agents (a third party organisation managing apprenticeship programmes on behalf of industry and employers). There was a perceived need to ensure that good working relationships established by SDS were not degraded.
• How the implementation approach would prevent proposal 3 from having a negative impact on existing staff in terms of pay/conditions and job security, and ensure that unions are consulted.
• Whether any efficiencies and savings would be reinvested into skills funding, including into apprenticeship funding.
• Calls for the consolidated funding approach to allow multi-year tendering for apprenticeships, seen as providing greater certainty and encouraging investment.

Other issues raised

Respondents raised several other issues at Question 1 that were not specific to the three proposals, but which had informed their views on proposed reforms and/or were relevant to the selection of a preferred option.

Implementation was seen as a significant issue by a range of respondents including fundable education bodies, other public sector respondents, sector/business representatives and other organisations. Some recommended a staged approach to ensure that public bodies could continue to fulfil their roles and meet their responsibilities throughout the process, and that changes to provision funding should be prioritised. Several fundable education bodies, sector representatives and other public sector bodies suggested that proposal 2 could be a step towards proposal 3. It was suggested that this approach would reduce disruption, and allow time for SFC to embed the integration of SDS functions before adding SAAS functions (transfer of the latter was seen by some as more likely to result in disruption).

Linked to concerns around implementation, resourcing was seen as a significant issue. This included reference to wider resourcing pressures facing sector bodies and institutions, and a view that reforms alone will not resolve these. It was also suggested that proposed reforms were poorly timed and should be delayed, including to allow for effective engagement with industry.

Several training providers, sector representative and third sector respondents expressed a view that the consultation provided insufficient evidence to judge whether proposals were likely to achieve the expected aims. This was linked to a perceived need to ensure that reforms were informed by evidence, and supported by effective monitoring to ensure anticipated benefits were being delivered, and to identify any unintended negative consequences.

Reflecting some of the issues noted above – and a view that proposals will be insufficient to achieve policy outcomes – respondents suggested a number of amendments or alternatives to proposed reforms. Most were additions or modifications to specific aspects of the three proposals, but a small number of respondents set out more comprehensive alternatives. Amendments and alternatives suggested by respondents included:

• Reform of SDS to lead on the just transition and workforce growth/renewal, including collaboration with employers, colleges and training providers, and co-investment in vocational education, apprenticeships, upskilling/reskilling.
• Reform of SFC to enable more intensive collaboration with the university sector, building on what was seen as the 'high value' of Scotland's university sector and research activities.
• Transferring administration of the HE tuition fee from SAAS to SFC, seen as improving transparency and insight into Scottish Government investment in the HE sector.
• Transferring some or all SFC resources for vocational training to SDS.
• The creation of Regional Employer Boards to help direct funding decisions.
• Reference to ongoing or proposed reform at a regional level, and calls to ensure these could be supported by the preferred national approach.

Advantages of proposals

Question 2. What do you think are the main advantages of your preferred proposal?

Around 160 respondents provided comment at Question 2.

A small number of respondents felt unable to comment on the potential advantages of proposals without further detail on how they would operate. This included a particular focus on the changing role of SDS and the transfer of responsibilities, the level of funding for modern, foundation and graduate apprenticeships and how funding would be administrated, and whether careers advice functions would remain with SDS. Respondents also sought further information on how Scottish Government would ensure that implementation of proposals would not adversely affect other aspects of education and skills reform.

However, most of those making comment identified advantages associated with proposals.

Advantages associated with proposal 1

Advantages identified by respondents in relation to proposal 1 most commonly related to a view that existing systems work well, and that proposals 2 and 3 would incur significant resource and opportunity costs. These and other advantages are summarised below.

Retaining key strengths of the current skills system was a significant motivation for some respondents, including training providers and trade unions. These respondents noted specific areas where they would like to see further improvement, but suggested that the current approach is effective and well understood. Existing skills systems were described as robust, equitable, responsive to needs, well-trusted, and supported by effective collaboration. SDS was highlighted as having a strong track record in development of work-based learning, and there was reference to specific functions including SDS administration of apprenticeships, contract procurement and information reporting systems such as the Funding Information and Processing System (FIPS). These respondents wished to retain SDS expertise and experience, and established relationships with skills providers and industry.

Proposal 1 was also supported for avoiding what were seen as "unnecessary" resource and opportunity costs of proposals 2 and 3, and enabling these resources to be invested in existing systems. There was concern that implementation of proposals 2 or 3 would distract from work to address current skills challenges. Respondents pointed to experience of other significant reform as demonstrating how difficult this process can be, including a view that Scottish Government had a poor track record in delivering this scale of change.

Other perceived advantages for proposal 1 included:

• Maintaining personalisation and choice for learners, ensuring access to the providers best placed to meet these needs, and enabling approaches to be tailored across different forms of provision. This was linked to concern that a single body could be less flexible and responsive than current systems.
• Suggestions that proposal 1 would best support work-based learning and apprenticeships, linked to concerns around a move to a "colleges and universities first" approach, and potential for work-based learning to be devalued if provision funding was centralised.
• Providing stability and certainty for stakeholders, reflecting a perceived lack of clarity around how proposals 2 or 3 would operate and whether anticipated benefits would be realised.
• Concern that consolidation of provision funding under proposals 2 or 3 could expose work-based learning to "financial contagion" from within the HE and FE sectors.

Advantages associated with proposal 2

Key advantages highlighted by those supporting proposal 2 were most commonly focused on ensuring a more coherent strategic approach across a simplified skills landscape, while retaining clarity of focus.

Scope for proposal 2 to enable a more coordinated and streamlined skills system was highlighted primarily by organisation respondents, including fundable education bodies, local authorities/schools, other public sector respondents and training providers. This was linked to a view that a centralised funding system could support a more coherent strategic approach, including greater coordination across public sector bodies and partners. Proposal 2 was also seen as enabling greater consistency in management of funding, with potential to improve equity and parity of esteem across sectors and provision models.

This more coordinated and consistent approach was associated with several key benefits. These included: cost savings including through reduction in duplication of effort; facilitating greater flexibility for skills provision to meet both learner and employer needs, and respond to local and regional skills priorities; better joint working; simpler and clearer funding routes for providers; improved accountability for delivery of outcomes; stronger strategic links between apprenticeships and other parts of the skills landscape; and better links between skills provision, research, innovation and entrepreneurialism. It was observed that a more centralised funding system could enable further change to be implemented more quickly.

Some of those commenting in support of proposal 2 – especially fundable education bodies, local authorities/schools and other public sector respondents – specifically referenced the value of retaining separation of provision and student support funding. This included reference to concerns around disruption associated with the aggregation of provision and student support funding under proposal 3. Proposal 2 was preferred by these respondents as ensuring a clear distinction between the two roles, providing greater clarity of purpose, avoiding potential for confusion, and any perception of competition between funding bodies.

In addition to the above points, respondents also cited advantages associated with specific aspects of proposal 2. These are summarised below.

Bringing post-school learning/training and apprenticeships into SFC was specifically referenced by a number of fundable education bodies. This was seen as improving alignment with recommendations of the Withers' Review, and the Purpose and Principles including a "colleges and universities first" approach. There was also support for SFC as an organisation, including positive reference to the previous transfer of graduate apprenticeship funding. Other specific benefits associated with this aspect of proposal 2 were:

• Simplified engagement for funded organisations.
• Improved access to information for key stakeholders including providers and employers.
• Potential time and resource savings for skills providers in their dealings with funding bodies.
• Improvements for modern apprenticeships including better alignment with needs of employers and economy.

Centralising student support with SAAS was most commonly referenced by individual respondents. This included comments highlighting the value of SAAS' existing knowledge and expertise, noting that the agency was already focused on supporting students and their families, and a view that this role and associated systems were well understood. Respondents drew comparison between SAAS and SFC; it was suggested that SFC was not widely recognised as having a role in supporting students, and that transfer of this role to SFC would require significant work to build expertise and raise awareness. It was also noted that proposal 2 would enable SFC to focus solely on funding providers.

Support for proposal 2 included a number of individuals highlighting potential benefits for learners were student support funding to be consolidated with SAAS. This included a view that a consolidated approach would be more easily understood and navigated by learners, would enable a more consistent approach for learners, and provide scope for more holistic financial advice across the skills and education system.

Advantages associated with proposal 3

Advantages associated with proposal 3 included several of the points noted above in relation to proposal 2. These most commonly focused on: enabling a more coordinated and strategic approach to post-school skills; simplifying and reducing fragmentation of the funding landscape (especially for providers and employers) and improving clarity on roles and responsibilities; ensuring a more consistent approach for providers and learners; and achieving efficiency savings. The latter point was also highlighted specifically in relation to perceived inefficiencies in administration of apprenticeship funding, and potential for savings to enable a greater proportion of the apprenticeship budget to be made available to apprentices and employers.

While the above advantages were associated with both proposals 2 and 3, some suggested that only consolidation of functions within a single funding body (i.e. proposal 3) would deliver the significant reform required. This included a view that proposal 3 was required to ensure proper clarity of purpose, to achieve efficiencies and reduce duplication, and to fully align with the Withers Review and Purpose and Principles. It was also suggested that proposal 3 would be more effective in delivering the four business needs set out in the consultation document – Vision, Clarity, Data and Assurance.

Advantages highlighted more specifically in relation to proposal 3 included a focus on improving access and experience for learners. Respondents suggested that proposal 3 would be more effective in improving responsiveness to individual learner needs, with consolidation of funding seen as enabling more coordinated and consistent access to information across sectors. Proposal 3 was also supported as addressing barriers to participation, enabling a more equitable and transparent approach to financial support, streamlining the learner journey including potential for development of a single point of contact, and improved flexibility for learners for example by making it easier to move between sectors and funding programmes.

Other key advantages associated with proposal 3 are summarised below.

• Greater flexibility for providers and potential to facilitate development of new provision models. Specific examples included timely short courses in response to employer demand and flexible credit allocation across apprenticeships and FE/HE provision.
• Ensuring a more equitable funding approach across sectors, and to support greater parity of esteem across academic and vocational or apprenticeship routes.
• Potential to support greater regional collaboration and skills planning.
• Benefits for widening access, including a more coordinated approach to support mechanisms and improved monitoring and reporting of access.
• Greater certainty for providers in relation to anticipated funding, linked to concerns that SAAS could be slow in confirming funding information.
• Specific benefits for administration of apprenticeship funding including greater transparency and accountability (seen as important for promotion of apprenticeship programmes to employers), improving equity in allocation of apprenticeship funding, and greater efficiency in administration of modern apprenticeship funding in particular.
• A consolidated approach to data collection, analysis and reporting – also seen as a positive in providing greater transparency.

Challenges for proposals

Question 3. What do you think could be the biggest challenges with your preferred proposal?

Around 150 respondents provided comment at Question 3.

Common challenges

Respondents were asked to comment specifically on challenges for their preferred proposal. However, several common themes emerged as potential issues for all three proposals; these are summarised below.

Minimising disruption to learners, employers, institutions, providers and other users of the skills system was one of the most commonly mentioned challenges, raised primarily by organisations (especially fundable education bodies, other public sector respondents and sector representatives). These respondents highlighted the potential scale of change required, particularly in revising current roles and responsibilities, and operational issues such as technical and staffing changes. There was also reference to challenges in achieving the change of culture required across funding bodies, and potential for disruption and frustration for staff within SFC, SAAS and SDS. Implementation of previous change to funding flows was cited as demonstrating the potential for significant disruption.

Concerns around potential disruption included a perceived risk that implementation of proposals could impact ongoing education and skills reform, and work to address existing skills challenges. This included specific concerns that ongoing reform of apprenticeship programmes could be lost amongst wider reforms.

Ensuring sufficient flexibility of approach in a more centralised system was also a commonly raised issue, especially for proposal 3 but also more generally. This was primarily highlighted by fundable education bodies and sector representatives, and reflected a view that the funding approach will require to be tailored for different skills sectors. These respondents noted differences in operating procedures and regulatory environment across sectors and providers, and highlighted institutional autonomy as an important consideration. There was also concern that a more centralised system may be less responsive to individual learner needs, and that achieving flexibility while realising the benefits of a more consistent and coherent approach will be a challenge. It was noted that the Welsh Government faced similar challenges in implementing skills reform, and that their approach may offer learning points.

Equity of funding was a key concern for some respondents, in terms of ensuring fair access to funding support across learner groups, and access to provision funding for different provider types. This included a particular focus on equity of funding across universities, colleges and private providers. There was concern that prioritisation of colleges and universities could adversely impact access to funding for other providers, including those delivering apprenticeship and other work-based provision. It was also suggested that SDS's work to raise awareness of the value of apprenticeships could be lost.

Ensuring sufficient resources to successfully implement the preferred proposal was also seen as a key challenge; this was raised across a range of organisation types including fundable education bodies and sector representatives. These respondents highlighted resourcing as a particular issue in the context of what were seen as significant financial challenges across all sectors. It was suggested that substantial additional investment in systems and personnel will be required to successfully implement proposals, with some also of the view that an increase in overall provision funding is required. Respondents referred to existing issues around funding for specific programmes and key agencies, and to the time that may be required for efficiency savings to be realised especially if significant change was implemented too quickly. There was also concern that transfer of apprenticeship funding should not be used as an opportunity to reduce budgets.

Challenges associated with proposal 1

A small number of respondents suggested that proposal 1 would not present any significant challenges. However, most of those expressing support for the proposal identified challenges; these are summarised below.

• Addressing existing issues across the skills landscape, including reference to a cluttered landscape, variable understanding of provision, and the balance of spending across sectors. Ongoing financial pressures were highlighted, with concerns raised around the sustainability of some providers and funding for modern apprenticeships.
• Specific challenges around the reform of SDS, including the need for clarity of direction to guide SDS reform, and concern around overlap with Education Scotland and awarding bodies in relation to quality assurance and monitoring. Some of those in favour of proposal 1 suggested that work to reform SDS would be preferable to removing the organisation from the funding landscape.
• Ensuring effective collaboration with skills providers, learners, employers and others was seen as a potential challenge.
• Respondents wished to see apprenticeship contribution rates reviewed as part of reforms, suggesting that SDS would be well placed to administer apprenticeships once rates were revised.

Challenges associated with proposal 2

As was the case for proposal 1, a small number of respondents (primarily individuals) suggested that proposal 2 should not raise significant challenges. This view appeared to reflect confidence in the ability of SAAS to take on additional student support funding responsibilities.

Most of those providing comment raised potential challenges for proposal 2 and these are summarised below.

• Specific resourcing and funding issues, raised especially by individuals and fundable education bodies, reflected a view that proposal 2 could incur significant costs over and above funding for business as usual. However, it was noted that resourcing needs would be less than for proposal 3.
• Issues around potential disruption to skills delivery and ongoing reforms, with some noting that this kind of reform could take time to plan and implement.
• Challenges in implementing a more streamlined and consistent approach including reference to: regional disparities in provision and potential mismatch with skills requirements; achieving the right balance across FE/HE sectors, apprenticeship programmes and smaller training providers; and resolving the current fragmentation and complexity of the skills landscape.
• Challenges ensuring a coordinated approach between SFC and SAAS, including perceived potential for separate funding streams to lead to "silo" working and for SFC to be overly focused on FE and HE provision.
• Retaining current experience and expertise, including concern that avoiding loss of staff and expertise will be a challenge, and calls to ensure reforms took account of SDS staff wellbeing.
• Potential difficulties in reform of existing structures including suggestions that the public bodies affected, and other stakeholders working in the skills system, might be resistant to change.
• Operational challenges for SFC managing a wider range of functions and providers, a perceived need for culture change, and risk of damage to SFC culture (described as a positive for the organisation).
• Challenges relating to specific proposed reforms including: whether SAAS had the capacity to meet the more localised and diverse needs of FE learners and the need for in-person support; resolving differences in current SDS and SFC approaches to apprenticeship funding; and calls for clarity around any ongoing role for SDS in relation to apprenticeships.
• Ensuring sufficient focus on research and innovation.
• Challenges around data and monitoring impact, including the feasibility of an integrated system-wide approach, and how to ensure proper accountability.
• Current skills challenges that will not be resolved by proposed reforms, including limits on foundation apprenticeship places, ensuring employers and learners are at the centre of the skills approach, and reform of the Apprenticeship Levy.

Challenges associated with proposal 3

Key challenges identified by respondents in relation proposal 3 most commonly related to the scale of change proposed, and whether SFC could manage a more diverse set of funding streams and skills providers. These are summarised below.

• The scale of change required including reference to potential for disruption to people, culture, operations and strategic focus, reference to the potential time required to implement reforms, and challenges in managing the transition period especially at a time of multiple pressures on the skills system.
• Ensuring sufficient resources was identified as a key success factor, and there was concern that short-term implementation costs must not negatively impact skills funding, that consolidation of funding could increase risk to individual funding streams, and that full resources and staffing should be transferred to SFC to maintain the quality of service.
• Challenges in ensuring SFC could manage an increased number of funding strands and more diverse range of institutions and skills, including questions around whether SFC could maintain sufficient focus across all sectors, and that programmes needed to be equitable and accessible to all.
• Ongoing operational challenges for SFC in securing the right mix of skills and experience across the organisation, and a risk that a larger organisation could become overly bureaucratic and less responsive to differing needs across sectors and organisations. Potential for SFC to have a "monopoly" on skills funding was seen as adding to the risk of a less responsive approach.
• Transfer of experience and expertise from SAAS and SDS would be necessary to minimise disruption around the transfer of functions, and was seen as a particular challenge if existing structures and stakeholders were resistant to change.
• Challenges relating to specific proposed changes including a perceived risk to apprenticeship funding if pressure on SFC's budget continued to grow, and difficulties associated with the transfer of student support to SFC especially given the more complex needs of some learners.
• Rebuilding relationships and networks developed by SDS and SAAS could require substantial time and resources.
• Effective communication around changes would be needed, especially where existing systems might have been in place for many years.
• Challenges around data collection and monitoring of impact to assess progress and identify any unintended consequences.

Other factors to consider

Question 4. Are there any other factors you think we should consider in making a decision?

Around 150 respondents provided comment at Question 4.

A substantial number of these respondents reiterated issues considered at previous questions such as resourcing, organisational capacity, change management and issues around transfer of specific funding streams and responsibilities. Other considerations highlighted as relevant to the selection of a preferred proposal are summarised below.

Operational and resourcing considerations

Discussion of implementation and operational issues reflected a view that disruption may be inevitable given the potential scale of change. There was concern around the potential impact on existing reform programmes being taken forward by SFC.

Respondents referred to programming of change to minimise disruption, including the importance of a clear timeline to enable planning by the bodies affected, and the need to support public bodies taking on additional responsibilities. Effective ongoing communication with stakeholders – staff, learners, employers, providers – was seen as vital and it was observed that some sectors would be less familiar with SFC. A small number of respondents questioned why proposals did not include an option based on SDS forming a single skills body, reflecting concern that proposal 3 in particular could result in the loss of SDS relationships and respect with industry.

The potential impact of significant change was highlighted as a particular concern at a time of financial challenges across all skills sectors. Respondents saw proposals 2 and 3 as requiring potentially significant resourcing to implement changes, and as having potential to incur substantial opportunity costs. There was also a perceived need for an increase in ongoing skills funding, and concern that reform should not be seen as the main answer to current resourcing challenges.

There was also reference to additional considerations around the proposed transfer of specific responsibilities. This included:

• Calls to ensure that reforms did not result in loss of funding body presence at a local level.
• Disagreement on the definition of tuition fees as student support or provision funding.
• Questions around removal of bursary funding from colleges, and the extent to which colleges would retain their current autonomy in financial support for learners.

Meeting skills requirements and supporting economic growth

Meeting skills requirements and supporting economic growth was a key consideration for some. Respondents highlighted the importance of alignment with labour market needs, and there were calls for stronger partnerships between institutions, providers and employers. There was also reference to the role of Regional Economic Partnerships in regional skills planning, and how this would integrate with SFC planning and funding.

The way in which public bodies engaged and aligned with employers and enterprise agencies was seen as a key consideration for any transfer of responsibilities and/or development of a new funding body. Sector representatives and other skills agencies were identified as having a potential role in facilitating this engagement and ensuring provision met skills requirements.

Monitoring impact

Monitoring the impact of changes was described as a vital element in ensuring best use of public funds, and assessing the extent to which reforms are delivering the anticipated benefits. This included reference to the value of impact monitoring in ensuring the long-term financial sustainability of any new skills structures or systems.

Respondents saw a need for a clear skills policy framework in enabling meaningful monitoring, and in setting the outcomes against which impact could be assessed. The importance of data in assessing the impact of any change was also highlighted.

Learner needs and equalities

Discussion of whether proposals met the needs of learners and communities included concern around the potential impact of reforms on learners, and calls for Scottish Government to ensure that learners were at the centre of any new system. It was suggested that this would require a whole systems approach. There were also calls to ensure that young people had a voice in shaping the approach to skills provision, especially for student support funding.

Reference to meeting learners' needs included comments – primarily from third sector respondents – highlighting specific equalities issues. These included: learners in rural and island communities; a need for greater recognition of challenges facing care-experienced learners in accessing skills provision and student support funding; the impact of mental health stigma and discrimination on access to provision and funding, and the place of Gaelic in education and skills provision (noting that SFC and SDS have Gaelic Language Plans).

Other considerations

Respondents highlighted a range of other issues as relevant to the selection of a preferred proposal. These were most commonly opportunities to use the reform process to review current skills systems and consider potential for change. These are summarised below.

• Support for longer-term financial planning included calls for multi-year funding settlements with organisations in receipt of public funds. This was highlighted by training providers, sector representatives and fundable education bodies as having potential to enable provision to be more closely aligned with the longer-term direction of education/skills reform.
• Consideration should be given to the balance of funding across specific sectors, and issues around parity of esteem.
• Review of apprenticeship funding and contribution rates was suggested most commonly by training providers, reflecting a perceived need to increase current rates and reference to the balance of rates across age groups.
• Expanding the range of work-based learning through the integration of skills and apprenticeship funding.
• Reviewing current processes including a perceived need for more flexible rules and processes associated with NTP procurement and contracting, administration and timescales associated with National Occupational Standards (NOS) and Scottish Vocational Qualifications (SVQ) development, and calls for more flexibility in contracting and performance management.
• Development of a national Careers Pathway Programme, seen as having potential to significantly improve outcomes for learners, employers and communities.
• Consideration should be given to integrating the Student Loans Company under the preferred proposal.
• The relationship between Scottish and English apprenticeship systems should be considered, with calls for systems to allow funding of training for those resident in England who cross the border to work.
• Ensuring skills planning and provision was aligned with climate policy priorities, integrates sustainability considerations and contributes to net zero targets.
• The role and responsibilities of SDS were proposals 2 or 3 to be implemented, including reference to connections and partnerships developed by SDS and careers advice functions.
• Reference to the Organisation for Economic Cooperation and Development (OECD)'s "Innovation in career pathways across five countries" report^‹ Innovation in career pathways across five countries | OECD.› by several local authority and training provider respondents. This was seen as providing valuable insight into the key elements required for an effective education and skills system.