AoC responds to the autumn budget

David Hughes, Chief Executive, Association of Colleges, said: “It was good to hear the Chancellor talk about the vital role further education has in the government's ambitions and aims. It was even better that in a very tight budget she has announced £300m for further education, £40m from the growth and skills levy, and £950m for skills capital funding. These are a good start to turning round 14 years of severe cuts and under-investment in colleges and they show that the Treasury recognises the need to invest more in FE colleges in order to deliver on the government’s missions. It gives me hope that there will be a better, longer term investment plan set out in the spring 2025 spending review to ensure that colleges can thrive and make an even bigger impact in coming years.

“We have already started detailed conversations with the Department of Education to understand the implications for colleges and will communicate more when we know more. An urgent question is whether the national insurance increase, which we believe will cost colleges around £50m, will be funded in addition to the £300m.

“We made three headline asks in our pre-budget submission: funding to support pay and 16-18 growth, which might both at least partially be supported, and VAT reimbursement which has not been addressed. Multiple independent research reports published in the past few weeks have painted clearly the grim reality of the college sector's finances that will take some time to turn around. The Institute of Fiscal Studies found that since 2010/11, both income and expenditure have fallen by almost a third, largely been driven by cuts to public funding, which accounts for 83% of college income. The Education Policy Institute found that despite the public discourse on higher education providers operating in deficit, a greater proportion of FE providers have been running deficits.

“Financial health is not the only consequence of 14 years of under-investment. Our young people receive only about 16 hours of teaching per week, compared to over 25 hours in most OECD competitor countries, opportunities for adults to learn outside of work and higher education have plummeted from over five million per year to around one million and the pay gap between school and FE teachers now stands at around £10,000.

“We do not expect this picture to change overnight, but we do want the government to set out an investment plan for the next three to five years. Two simple steps for that plan would be the reimbursement of the £210 million a year colleges spend on VAT and a government guarantee for college membership of local government pension schemes.”

For more information, please contact Kate Parker, Press and PR Manager, at Kate.Parker@aoc.co.uk. A full A-Z of further education can be found here, and a cheat sheet of key policies and issues in FE can be found here.