Shaping the participation market

In this blog, I argue that the funding model for schools and colleges might create pervasive incentives which make participation of NEETs in learning more difficult.

Since 2008, the government has been working on engaging more young people in education under the Raising the Participation Age policy. All young people are now required to participate in learning until their 18th birthday.

This will be no big deal for the majority who voluntarily choose to stay in learning regardless of the new requirement. The problem is those 16 and 17 year olds who would like to work full time, and those who spend most of their time not in education, employment or training, also referred to as NEETs.

A recent report by the spending watchdog National Audit Office took stock of all the initiatives the government has put in place to facilitate a smooth transition to compulsory learning, including options to combine learning and work.

The report sends three important messages:

  • Schools have taken the additional responsibility of providing young people with career information and advice guidance, but have not received any additional funding for that
  • Partly as a result of this decision, young people are being poorly advised
  • Learning providers, such as schools and colleges, no longer get funded per course, instead they receive £4,000 per learner

The National Audit Office highlighted the positive implications of this last point. Whereas before learning providers had incentives to encourage young people to take on short and easy courses so that they could get new funding each time a course started, now the funding is attached to the young person and can only be used by the learning provider that supplies services to the young person.

According to Funding guidance, more than one learning provider may receive funding if the young person withdraws from one course and joins another course half way through the academic year. The funding each provider receives is in proportion to the amount of time the young person uses their services.

I find it concerning that learning providers are being given the additional responsibility of advising young people about their learning participation choices at the same time as they are moving from a per-course to a per-learner funding model.

I fear a new pervasive incentive might have been introduced by this funding model: provision of partial advice to better align young person choices with learning provider interests.

For example, if struggling to fill up its Sixth Form places, a school may make the mistake of advising a young person who dislikes formal education to join a Sixth Form course. Whilst this young person is likely to withdraw from the course sooner rather than later, at the beginning of the academic year the school will be in a better position to gather sufficient numbers to start a Sixth Form course and throughout the year it will also receive at least a proportion of the funding associated with the withdrawing learner.

If true, this pervasive incentive would make even more difficult the situation of those who would not voluntarily choose a learning option that complies with the Raising the Participation Age policy.

To clarify, my interest lies in how the government shapes markets and behaviours, rather than pointing fingers to learning providers that might or might not be responding to pervasive incentives.

If you have taken the time to read this blog, I would be keen to know your views.