Flexible Workforce Development Fund (FWDF): evaluation

Independent evaluation of the Flexible Workforce Development Fund.

4. Finance and Performance Review


Based on budget allocation figures provided by the Scottish Government, the total Flexible Workforce Development Fund (FWDF) budget allocation between 2017/18 to 2020/21 was £50 million. Industry contributions, while not a current requirement, have been limited.

In the first three years of the Fund, the annual budget allocation was £10 million. Most funding has been aimed at Levy-payer employers, with the college network responsible for the delivery of training in the first few years of the Fund. This increased to £20 million in 2020/21 as per Scotland's Future Skills Action Plan published in September 2019. In 2020/21 the Fund was also opened up to non-Levy-payer Small and Medium Enterprises (SMEs) and non-college training provision. The college network continues to receive the largest share of FWDF funding in line with a key purpose of the Fund.

Total spend to date is £39.1 million. There has been an underspend of £10.9 million (or 22% of the total budget). There has been an underspend in each year, most notably Year 1 (pilot year) and Year 4 (when changes were introduced). The main factors identified from this evaluation for this include: limited lead-in time; time taken to raise awareness; time taken to put processes in place; a lack of funding at a national level for marketing and promotion; and the impact of COVID-19.

Spend varies by college/region. This reflects factors such as: the process for budget allocation; the proportion of Levy-payer and non-Levy-payer SMEs in each area; and resources, capacity and commercial focus of the college. For Year 4, there are large underspends on the non-college provider side.

Around 1,350 unique Levy-payer employers have been supported to date, and the total number supported has increased in each academic year when compared to the pilot year. (Note: we do not know the actual percentage penetration rate as the data has not been made available by HMRC). The number of employees supported has also increased, from around 9,000 employees (2017/18) to around 27,000 employees (2020/21). There has been a good level of repeat business. There is, however, a large proportion of Levy-payer employers who have not accessed the Fund. Stakeholders report that good progress is being made on the non-Levy-payer SME side. Over 900 non-Levy-payer SMEs and more than 2,000 employees have been supported to date with workforce development. The Year 4 changes are still in their relative infancy and delivery has also been affected by COVID-19 and limited marketing.

From the equalities data provided by SFC and SDS, age and gender appear to be well represented in the profile of employees that have participated in FWDF supported training.

Other protected characteristics, such as disabled workers and minority ethnic workers are under-represented. This therefore tends to reflect the employment profile in the employers accessing the Fund.


This section provides an overview of the take-up of the FWDF across the two routes into the Fund, and covers finance, employer uptake, and employee participation.

Data issues

The information in this Section is largely based on a review of raw data provided by colleges and The Open University in Scotland (OUiS) to the Scottish Funding Council (SFC), and by Skills Development Scotland (SDS). The exception is the SFC data on employees supported by the FWDF which is collected through SFC's usual data collection processes, i.e. annual Further Education Statistics (FES) returns. Based on a review of the data available we would raise the following points.


  • The range of data captured has increased over time. For example, data on sector and subject superclass was not collected in 2017/18.
  • Data entry across years is inconsistent, particularly with regards to employer name. This likely reflects manual data entry issues (e.g. spelling mistakes, name inputted slightly differently each time, multiple individuals responsible for data entry), and some employers' names may have changed.
  • This makes it challenging to provide an accurate assessment of the total number of unique employers supported by the FWDF.
  • There have also been changes to the employee data captured in FES returns.


  • The £2 million budget allocation covers financial year rather than academic year.
  • The budget allocation covers two financial years, that is 2020/21 (Year 4) and 2021/22 (Year 5). While the evaluation covers Year 1 to Year 4, we have provided analysis of funding allocated to date.
  • Data provided on learners and training relates to Year 4.
  • Some data on employer sector and type was suppressed due to small numbers and to prevent disclosure.

Budget and expenditure

Table 4.1 provides a high-level summary of the FWDF budget and funding allocated over the first four years of the Fund. Over and above Scottish Government investment, employer contributions have been limited. There is, however, not a current match-funding requirement for the FWDF.

Where employers have contributed some of their own funds towards the total cost of the training, this has been where the total cost agreed with the training provider has exceeded the annual funding cap.

Table 4.1: FWDF budget allocation and spend
Academic Year Employer Lead Delivery Agent Budget Spend Underspend/ Overspend % Spend
2017/18 Levy-payer SFC Colleges £10m £6.2m -£3.8m 62%
2018/19 Levy-payer SFC Colleges £10m £9.7m -£0.3m 97%
2019/20 Levy-payer SFC Colleges £10m £9.0m -£1m 90%
2020/21 Levy-payer SFC Colleges £13m £9.6m -£3.4m 74%
SME SFC Colleges £4m* £3.2m -£0.8m 80%
SME SFC OUiS £1m £0.3m -£0.7m 30%
Levy-Payer SDS Independent Training Providers £2m £1.1m -£0.9m 55%
2020/21 sub-total   £20m £14.1m -£5.9m 71%
Total £50m £39.1m -£10.9m 78%


1. Sources: College/OUiS/SDS supplied employer data to SFC

2. *£0.16 million was retained by SFC for programme management, monitoring and reporting purposes.

3. Please note data has been rounded.

4. Year 4 (2020/21) figures are interim figures and are based on end September 2021 returns. Delivery was, however, continued to the end of March 2022.

5. SDS data is based on delivery implemented for half the academic year.

Total FWDF spend is circa £39.1 million. This equates to an underspend of £10.9 million, or 22% of the total £50 million budget allocation.

There was a significant underspend in the first year of the FWDF of £3.8 million (38% of the total budget). The pilot year evaluation and consultation with training providers as part of this latest evaluation confirmed that this was primarily due to factors such as:

  • Limited lead-in time for SFC/college network to get the Fund off the ground.
  • It took time for the college sector to raise and build awareness of the FWDF among Levy-payer employers (e.g. there was no funding for a national campaign, no accessible list of Levy-payer employers). Some funding was redistributed from a small number of colleges to those colleges who have requested additional funds based on their experience of delivery in the previous year.
  • It took time for the college sector to put processes and systems in place to support delivery.

The level of underspend was reduced in Year 2 and Year 3.

Year 1 was a learning curve for all involved. Feedback from training providers in this evaluation is that the issues described above were largely addressed in the next two academic years as momentum and understanding developed on the supply and demand side. The increase in the funding cap in Year 2 also helped, as the average spend per Levy-payer employer increased by 42% (i.e. from circa £9,000 in Year 1 to circa £13,000 in Year 2).

There was, however, an underspend in Year 4 (2020/21), totalling £5.9 million. There are several reasons reported by training providers for this underspend with the most notable being the disruption caused by COVID-19. The efforts of colleges in adapting to new ways of working should, however, be recognised.

The SME strand is worthy of further comment. All providers experienced an underspend albeit to varying degrees: college SME strand (20%) and OUiS (70%). Although they did not have a specific SME strand SDS underspend was 45% of the allocated budget. This element of the FWDF was introduced in 2020/21 and partners would have been constrained in their ability to expand reach as originally envisaged. Contributory factors include COVID-19, timing of finding out allocations, and raising awareness of the Fund, in particular among SMEs. The college SME strand performed more strongly and is indeed on an upward trend and it reflects that the college network has been involved in the FWDF since it was first introduced and they have established good relationships with local businesses.

Within the college sector, it is also important to consider factors that impact on variation in reach and engagement and therefore performance in spend:

  • Budget allocation process. Funding is allocated based on the estimated number of Levy-payer employers (and now also SMEs) and employment in each college region. There are many more Levy-payer employers in large urban areas (e.g. Aberdeen, Edinburgh, Glasgow). The make-up of the business base in rural areas is predominately micro and SMEs.
  • Internal resources and capacity. Colleges vary in size and scale. Some but not all have well-resourced Business Development (or similar) functions to support implementation (i.e. marketing, promotion, employer engagement, administration, monitoring and reporting).
  • Extent of commercial orientation. Aligned to the point above, some colleges are much more commercially oriented than others.

College and OUiS FWDF provision

Note: The following sub-sections are all based on a review of the raw data provided by colleges/OUiS to SFC as part of the secondary research undertaken as part of this evaluation.


Key messages from the data review regarding employer uptake of the FWDF included:

  • In the first year of the FWDF, 687 Levy-payer employers accessed the Fund.
  • This increased in 2018/19 to 755 (+10%), as the Fund gained more traction and awareness. Engagement with Levy-payer employers has increased every year when compared to the base year.
  • In absolute terms, Levy-payer employer engagement has declined since the peak of 755 in 2018/19. Year 3 and Year 4 have been impacted by COVID-19.
  • A total of 911 non-Levy-payer SMEs accessed the Fund in 2020/21. The vast majority were supported by the college network with the remainder supported by the OUiS.

Unique employers supported

From a review and analysis of the available employer data relating to the FWDF (e.g. including employer names) provided by the SFC (which is provided to SFC from colleges) and SDS, we estimate that approximately 2,224 unique employers have accessed the Fund via the SFC route (1,313 Levy-payer employers and 911 non-Levy-payer SMEs). The Levy-payer employer data should be treated with some caution due to data quality issues noted above.

There has been a considerable level of repeat business for the FWDF:

  • Almost two-thirds of Levy-payer employers have accessed the FWDF on multiple occasions (62%).
  • Almost one-fifth of Levy-payer employers have accessed the Fund in each of the first four years of the Fund.
  • A relatively high proportion of Levy-payer employers have accessed the Fund once (38%).

Average employer spend

Key points to note from the data review on average FWDF spend by employer are as follows:

  • For Levy-payer employers, average spend has increased over time, and now stands at circa £13,000. In part, this reflects the increase in funding cap.
  • While the average spend by Levy-payer employers has increased in absolute terms, average spend as a proportion of the funding cap has fluctuated from a low of 82% to a high of 90%.
  • For non-Levy-payer SMEs supported in 2020/21, the average spend per SME for colleges was around three-quarters of the funding cap (£3,771) and was lower for OUiS (£2,467).

Industry sector

The FWDF has supported employers across a wide range of sectors (23 sectors in total). Key messages from the data review are:

  • The main industry sectors for Levy-payer employers have been Manufacturing, Food and Drink, Business Services, Construction, and Oil and Gas.
  • While there is some cross-over, the Care and Hospitality sectors have also been prominent for non-Levy-payer SMEs, as has the third sector more generally.

Training subject areas

Although captured and reported in different terms (and different levels of detail), there continue to be similarities in the most popular subject areas of training undertaken. The most popular subjects of training are: Business Management; Care; Computing and Information Technology; and Health and Safety.

A majority of those enrolled on courses supported by the FWDF have been on short, bite-sized courses of up to ten hours. This is certainly the case for Levy-payer enrolments (circa 66% in most years).

Employees supported by the FWDF

In the first year of the FWDF, colleges delivered training to 9,067 employees within Levy-payer employer organisations. This increased significantly in Year 2, with 23,695 employees supported (+161%). Enrolments on FWDF training have grown each year since then, and in 2020/21 stood at 25,124 Levy-payer employees (Source: SFC Further Education Statistics returns).

The total number of SME enrolments in 2020/21 was 2,189 – bringing the total number of FWDF enrolments across colleges/OUiS that year to 27,313. The recent SME involvement in the FWDF has driven much of the growth reported between 2019/20 and 2020/21.

The key messages from the data review on the demographic profile of employees that have participated in FWDF training delivered by colleges/OUiS are that:

  • There has generally been a relatively even split between male and female employees. There is, however, a higher representation of female enrolments among SMEs (63% in 2020/21 compared to 54% for Levy-paying employers).
  • Enrolments span a wide age range – younger and older workers alike (i.e. under 20 to 80+). The average age of enrolments has been around 40 years.
  • Almost all employees supported have been of white ethnic origin. Employees from black and minority ethnic groups continue to be under-represented in FWDF training.
  • Less than one-fifth of FWDF enrolments live in the 20% most deprived datazones in Scotland and this has been on a downwards trend since the FWDF was launched. This differs markedly from the wider college population.
  • Few disabled workers have been supported by the FWDF and this population group continues to be under-represented in the training. It is, however, four percentage points higher in 2020/21 (7%) compared to 2017/18 (3%). It should be noted that this data relies on self-reporting by participants. As such, the data may be subject to under-reporting.

Independent providers provision

Note: The following analysis is based on a review of the raw data provided by SDS on FWDF grant awards to employers to access training from independent training providers as part of the secondary research undertaken as part of this evaluation.

In years 4 and 5, SDS has managed and administered a £2 million budget allocation (since academic year 2020/21), with the funding used to support Levy-payer employers access training provided by independent training providers. Note: SDS data is based on delivery implemented for half the academic year in 2020/21.

The data review shows that a total of 67 grant awards were made by SDS to Levy-payer employers by the beginning of March 2022. Almost all are unique (individual) employers – only a couple of employers have had multiple awards from SDS. There is little cross over between Levy-payer employers that have accessed training from both independent training providers and college provision. Only five employers that received a FWDF grant from SDS have also previously accessed funding from the SFC route.

Wider points on the Levy-payer employers supported by the SDS FWDF grant programme include:

  • The top three industry sectors are Manufacturing; Other service activities; and Professional, scientific and technical activities.
  • Most are private sector companies, although care is needed when interpreting this observation as much of the data was suppressed due to small numbers and to prevent disclosure.

The data provided to inform the evaluation shows that:

  • Circa £989,000 has been awarded by SDS to Levy-payer employers for workforce development.
  • When set-up and administration costs are included (£95,000), there remains a considerable amount of budget remaining for Year 5 – this equates to £916,000 (46%).
  • Demand has not been particularly strong to date with just less than half of the £2 million budget awarded to Levy-payer employers. It should be noted that this element of the Fund is only available to businesses if there is not a college option available and performance mirrors the initial pilot year of the Fund.

Feedback from a delivery partner and wider stakeholders captured in this evaluation found that performance ought to be viewed in the context of the following factors:

  • It is early days for the SDS route into the FWDF compared with the SFC route.
  • There has been limited marketing and promotional activity.
  • The impact of the COVID-19 pandemic on demand and supply of training.
  • There may have been additional awards made since the data was provided.

The data review found that a total of 1,718 individual learners have participated in training supported by the FWDF through the SDS route in Year 4:

  • Many of these individual learners in Year 4 undertook multiple training courses (i.e. circa 4,400 incidences of training).
  • Employees at various levels within companies/organisations have been supported from entry level to director. Around 61% are professional to director level, i.e. higher skilled and higher paid roles.
  • Just over one-eighth of employees live in the 20% most deprived data zones in Scotland, likely reflective of the high number of professionals and director level employees.

The most common training courses undertaken were in the following areas: Management (General); Management Skills (Specific); Information and Communications Technology (General); Health and Safety; and Business (General).

Taken together, these equate to almost 40% of the total. Further, these subject areas largely align with training selected by employers through the SFC route.

Estimated penetration rates

We have estimated FWDF penetration rates based on comparing the number of businesses that have accessed the Fund with the estimated number of Levy-payer employers in Scotland, Table 4.2.

Table 4.2: Estimated number and percentage of Levy-payer employers supported – SFC (college network) and SDS
  Estimated Levy-payer employers in Scotland in academic year Estimated Levy-payer employers supported by the FWDF in academic year Estimated penetration rate (%)
2017/18 4,260 687 16%
2018/19 4,365 755 17%
2019/20 4,475 731 16%
2020/21 4,340 775 18%
4,360 (Average) 1,351 (unique employers) 31%


1. Source: Scottish Government provided data on estimated Levy-payer employers in Scotland based on Inter-Departmental Business Register, includes all sectors: private, public and non-profit.

2. The number of Levy-payers supported is based on EKOS' review of data provided by colleges/OUiS to SFC.

3. The data on estimated Levy-payers in Scotland is based on yearly figures as at March (e.g. March 2017, March 2018), whereas the data on those supported by the FWDF is based on academic years (e.g. 2017/18, 2018/19). As a result, the data inserted in the table for estimated Levy-payers in Scotland for 2017/18 is the figure for March 2018, and so on.

Key messages from our data analysis and estimates are:

  • The level of engagement with Levy-payer employers has remained relatively stable over the first four years of the Fund.
  • Overall, we estimate around 31% of Levy-payer employers in Scotland have been supported by the Fund to date. Although, as above, the college supplied employer data has not been verified through normal SFC process so caution is needed when interpreting this figure.
  • On the basis of these estimates, it would seem that most Levy-payer employers in Scotland have not accessed the FWDF (circa 69%).
  • It is estimated that 0.5% of SMEs in Scotland have accessed the FWDF. This is low, however, the Fund has only recently started to support these employers in Year 4 in 2020/2021 when it was extended to these employers during COVID-19 when they may have had other challenges to consider.



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