Understanding the Further Education Market in England
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BIS RESEARCH PAPER NUMBER 296 Understanding the Further Education Market in England JULY 2016 Page 1 This Research Paper was prepared for the Department for Business, Innovation and Skills by Frontier Economics. Authors: Sarah Snelson and Kat Deyes. Contact: Sarah Snelson, Associate Director of Public Policy, [email protected] Acknowledgements: We are indebted to all the stakeholders who gave up their valuable time to contribute to shaping our work. We are especially grateful to Olivia Dorricott (Education and Training Foundation), Julian Gravatt (Association of Colleges), Stewart Segal (Association of Employers and Learning Providers), Lynsi Hayward-Smith (HOLEX and Local Education Authority Forum for the Education of Adults), David Massey (UKCES), Michael Davis (UKCES) and Professor Lorna Unwin (Institute of Education UCL) who provided particular insights as our “critical friends” on this project. The encouragement, support and expert advice, and review comments, of members of the BIS project team are also gratefully acknowledged. The views expressed in this report are those of the authors and do not necessarily reflect those of the Department for Business, Innovation and Skills. Department for Business, Innovation and Skills 1 Victoria Street London SW1H 0ET www.gov.uk/bis Page 2 Contents Executive Summary ...................................................................................................................... 5 Our approach .............................................................................................................................. 5 The FE landscape ....................................................................................................................... 6 Defining the FE ‘market’ .............................................................................................................. 9 Vision for a well-functioning FE market ..................................................................................... 11 Assessment of the market ......................................................................................................... 13 Concluding remarks .................................................................................................................. 20 1. Introduction ............................................................................................................................. 22 Context and objectives .............................................................................................................. 22 Scope ........................................................................................................................................ 22 Approach .................................................................................................................................. 23 Limitations ................................................................................................................................. 26 2. Further Education landscape ................................................................................................. 28 Key findings .............................................................................................................................. 28 Introduction ............................................................................................................................... 29 Types of education and training available within the FE market ................................................ 30 Learners .................................................................................................................................... 35 Providers ................................................................................................................................... 40 The FE workforce ...................................................................................................................... 56 Funding ..................................................................................................................................... 56 Regulation of Further Education ................................................................................................ 61 3. Market definition ..................................................................................................................... 63 Key findings .............................................................................................................................. 63 Introduction ............................................................................................................................... 64 Context to our analysis of the FE ‘market’ ................................................................................. 65 Approach .................................................................................................................................. 69 Demand-side considerations ..................................................................................................... 70 Supply-side considerations ....................................................................................................... 72 Customer segmentations .......................................................................................................... 75 Identifying the relevant FE markets ........................................................................................... 76 4. Vision for a well-functioning market ...................................................................................... 79 Key findings .............................................................................................................................. 79 Introduction ............................................................................................................................... 80 The framework .......................................................................................................................... 80 Demand-side features ............................................................................................................... 81 Supply-side features ................................................................................................................. 83 Facilitating features ................................................................................................................... 84 5. Active consumers ................................................................................................................... 86 Key findings .............................................................................................................................. 86 Introduction ............................................................................................................................... 87 Availability of choice .................................................................................................................. 88 Page 3 Awareness of choice ................................................................................................................. 96 Access to information .............................................................................................................. 104 Confidence and ability to make decisions ................................................................................ 107 6. Responsive providers ........................................................................................................... 109 Introduction ............................................................................................................................. 110 Evidence of responsiveness .................................................................................................... 111 Barriers to responsiveness ...................................................................................................... 118 7. Conditions for entry .............................................................................................................. 122 Introduction ............................................................................................................................. 123 An assessment of market entry ............................................................................................... 124 Market saturation resulting in a lack of entry ........................................................................... 125 Barriers to entry ...................................................................................................................... 126 8. Threat of failure ..................................................................................................................... 132 Key findings ............................................................................................................................ 132 Introduction ............................................................................................................................. 133 Recent exit activity .................................................................................................................. 133 Failure criteria ......................................................................................................................... 134 Barriers to exit ......................................................................................................................... 137 9. Policy and regulation ...........................................................................................................