AoC letter to Education Secretary on pay award negotiations

For immediate release:

College teacher pay is a roadblock to the Government’s skills agenda

• The Association of Colleges has written to Education Secretary Nadhim Zahawi today (Monday 23 May) pushing him to ask the Treasury for emergency funds to fix the worst staffing crisis in colleges for two decades.
• Colleges are struggling to retain and attract top talent because of the widening gap between what skilled teachers could earn in industry or even in schools.
• In order to deliver the rollout of T Levels and Higher Technical Qualifications (HTQs), as well as boost apprenticeships, highly-skilled teachers are needed to pass on their skills to the next generation.

The Education Secretary has been urged to ask the Treasury for extra funds to boost college teachers' pay to ensure the Government is able to proceed with its ambitious skills reform programme.

In a letter to Nadhim Zahawi, the Association of College’s chief executive David Hughes has highlighted there is a risk to the rollout of T Levels and Higher Technical Qualifications, as well as ambitions to boost apprenticeships, because colleges are struggling to retain and attract top talent to teach the skills needed to fill gaps in shortage sectors across the economy.

David Hughes, Chief Executive of the Association of Colleges, said: “The Government’s skills revolution is in danger of stalling because, ironically, colleges cannot compete in the tightest labour market on record. At the very time colleges need to be training more people for the increasing number of skilled vacancies, they find themselves unable to pay enough to attract and retain talented, experienced and skilled people themselves.

“In his landmark skills speech at Exeter College two years ago, the Prime Minister linked his commitment to support colleges and his ambitions on the levelling-up agenda while acknowledging the central role for colleges in filling skills gaps in priority areas including health, engineering, construction, hospitality and logistics across the country and boosting productivity.

“Colleges want to deliver but are not being given the funding they need to do it. Quite simply, in order to provide the next generation with the skills they need to succeed in industry and to meet labour market needs, you need highly skilled individuals teaching them. The gap between what these teachers could earn in industry, or even in schools, compared to working in a college is now at crisis point, limiting capacity just when colleges need to grow numbers.

“I urge the Education Secretary to make representations to the Treasury about the enormous funding pressures colleges are under and to use the department’s recent work in schools, which underlined the impact of pay differentials on staffing, as the basis for boosting college teachers’ pay.”

In March, the Association of Colleges highlighted that as it stands, teachers in schools are currently paid over £9,000 more than college lectures on average, despite many college lecturers being more specialist and having brought real-life industry experience to their roles. The Association of Colleges has previously stressed in a letter to the Education Secretary in March that colleges are suffering their worst staffing crisis in two decades.

Notes to editors:

In the Prime Minister's skills speech at Exeter College on 29 September 2020, Boris Johnson said: “We are short of skilled construction workers, and skilled mechanics, and skilled engineers, and we are short of hundreds of thousands of IT experts.

“And it is not as though the market does not require these skills. The market will pay richly. The problem is one of supply – and somehow our post-18 educational system is not working in such a way as to endow people with those skills.”

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Text of letter to Nadhim Zahawi, Secretary of State, Department for Education:

Dear Secretary of State,

I am writing to you to highlight the enormous funding pressures colleges are under as we enter into our annual negotiations on staff pay with the unions later this week.

Our consultations with college leaders last week have shown that there is a considerable gap between what is affordable for colleges and the cost of living rises being experienced by staff. In a sector which has suffered from a decade of neglect and large funding cuts through the 2010s, this gap will heighten the difficulties of recruiting and retaining staff already being experienced in every college. Your recent analysis of pay in schools underlined the impact of pay differentials on staffing. The only difference in colleges is that college lecturers already lag a long way behind school teachers and experts in industry on pay, so the impact is worse.

I have written to you previously outlining the serious risk this situation represents for your ambitious plans for the role of colleges in delivering T Levels, increasing apprenticeship delivery, the growth in adult Level 3 and the introduction of HTQs. We are at a point now where colleges are being constrained in their abilities to deliver on skills shortages because pay is a long way from being high enough to attract enough skilled people who can earn far more in industry and schools. For many, even maintaining capacity in key industry areas looks unlikely now.

DFE funding decisions for 2022-3 assume 2% inflation for 16-18 courses and 0% for everything else (AEB, apprenticeships and HE) which is some way off the current 9% inflation and even the forecast by the Bank of England of above 5% throughout the 2022-3 academic year. Alongside pay pressures, colleges have to deal with increases in National Insurance Contributions, the National Minimum Wage, pension contributions, utility bills and other costs.

The cost of living crisis is affecting every part of our economy and society, but I would urge you to formally ask Treasury for additional 2022-3 funding given that SR21 was carried out on very different assumptions. The modest inflationary rise in the 16-18 budget and the stagnant other budgets looked challenging last year when they were set , but now look almost impossible for many colleges.

I would also ask you to review other policies which could be adjusted to reduce the financial risks for colleges which, in turn, could help them make a better pay settlement. For instance:

• how the business case processes can be designed to allow more leeway for 2021-2 and 2022-3 AEB and 2022-3 T level shortfalls because colleges risk clawback on both;
• more flexibility on the extra 40 funded hours in 2022-3 which are eating into the funding available, and which are also more challenging to deliver given the widespread difficulties in recruiting and retaining teaching staff;
• suspending intervention action on ESFA financial health assessments and the FE commissioner 65% staff cost benchmark because those measures will severely constrain colleges from making better pay offers to staff;
• a cost increase sharing mechanism for approved DFE capital projects (currently 100% of extra costs fall to the college) because of the large inflationary increases in construction materials and labour costs;
• offering an income guarantee for colleges where the grade inflation in last summer’s exams led to more young people staying in school sixth forms. This impacts through the lagged system on income from the autumn, just when we expect those student numbers to bounce back. The lagged system was not designed for such unique circumstances and needs to be amended for next academic year;
• considering a rate increase on AEB, learning from the approach taken in London by the GLA with it’s devolved powers. The AEB funding rates have not increased for over a decade;
• considering a rate premium on priority courses and qualifications, including in skills shortage areas such as construction, engineering, digital and health where colleges have the most difficulties in recruiting skilled staff and for T Levels, HTQs and other courses which the Government wishes to see grow.

As always, I look forward to discussing these challenges and ideas with you and your team.

Yours sincerely,

David Hughes

Cc AoC members, Paul Kett, FE unions

Update: We've now received a response to our letter - you can read that here.