Better news than feared for the FE sector?

Most commentators in the further education sector feared significant funding cuts in today’s comprehensive spending review. Based on the Chancellor’s initial announcements, this doesn’t seem to have happened. In fact, it all seems to be unexpectedly good news even if there does remain a real terms cut for both 16-18 and 19 plus age groups.

Maintaining the funding base rate for 16-19 year olds until 2020 will be welcomed, but with declining student numbers and funding being maintained only in cash terms this will lead to a significant reduction in income to all colleges over the next four years. Perhaps this is why sixth form colleges are being given the 'option of joining a multi academy trust' (it is unclear whether they will be given the opportunity to convert to academy trust status as a standalone academy). Whilst this would save the VAT costs that are currently recoverable, it would put them firmly back in the public sector, with all that it entails in terms of public accountability. This ‘option’ for conversion is mentioned as only a 'part of the government’s one-off restructuring of the post 16 education' so we wait to see what further details are announced.

Similarly, the maintenance in cash terms (£1.5bn) of the adult skills budget is far better than many had feared. Other announcements regarding the employer levy for apprenticeships (0.5 per cent of employers’ pay bills) and the extension of tuition fee loans still give a clear steer as to the direction of travel for all 19+ funding, which will be a challenge for many general further education colleges to respond to.

If you would like some advice the topics raised in this article, please contact Stephanie Mason or your usual RSM contact.