Historically the base funding rate for 16–18-year-old students is around 20 pc less than for 11-16 pupils. The adult funding rate has not had an increase for 15 years and revised apprenticeship funding bands have in many cases reduced while colleges bear the burden of increased bureaucracy. This leads to an incredibly tight budget for colleges.
In practical subjects, group sizes tend to be smaller than for more academic subjects to ensure proper access to equipment and that health and safety measures are followed. These classes often need to be supported with a technician in addition to teaching staff to ensure equipment is kept in good order and appropriate resources are resourced and supplied. A 2019 report by the AoC clearly outlined that even with group sizes recommended for financial sustainability by the FE Commissioner, funding is now insufficient to cover the running costs of courses. This issue has occurred as a direct result of the cost-of-living crisis, however current rates of inflation are compounding the challenges.
The settlement from the Comprehensive Spending Review (and 8-9 pc increase on the 16-18 funding line) was designed to maintain funding per under-18 student in real terms. However much of this comes with expectations of additional delivery through catch-up funding, and in T levels, and while the number of 16-year-olds entering the further education system increases with demography.
The inflation rate was 2.4 pc when colleges set their budgets in July 2021. Rising inflation is a challenge for students, college staff (a fifth of whom earn less than £10.50 an hour), and colleges as institutions.
AoC released a report on college staffing issues last March with a much more detailed analysis on this matter, which you can see here.
Staff will return to industry or go teach in a school to pay their mortgage and feed their family
What the new ministerial team can do
In the short-term, there are several measures that would help inside the current restricted spending envelope, including:
Business case processes from the ESFA and combined authorities 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 available funding, 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 clarifying the nature of the FE Commissioner’s 65 pc 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 extra costs fall to the college)
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 the first rate increase on AEB in over a decade, learning from the approach taken in London by the GLA.
Considering a rate premium on priority courses and qualifications, where colleges have the most difficulties recruiting skilled staff, and for T Levels, HTQs and other courses which the government wishes to grow.
For the next Comprehensive Spending Review, ministers should:
Match the promised £5,000 per secondary pupil funding rate for post-16 education and training
Remove the discounted rate for 18-year-olds, acknowledge these are often students who need more support, not less
Increase funding rates to adult qualifications to reflect inflation
Align hourly teaching rates in apprenticeship delivery with programme weighting
Remove the requirement for colleges to pay VAT
Increase financial support for hard to recruit roles with additional funding for market premiums
Provide funding increases to enable colleges to have the financial confidence for meaningful increases in staff pay
Staff retention
We are hugely worried about staff retention in the sector, largely due to pay. College leaders were, as far back as 2019, closing provision in some areas due to staff shortages linked to low pay compared to industry wages
Last December, we surveyed our members and found the proportion of colleges unable to fill long term vacancies is very worrying: 65 pc reported long term vacancies in construction, 60 pc in engineering, and 27 pc in health and social care.
With significant incentives to move to warehousing and hospitality, many lower paid roles are now becoming hard to fill with 39 pc of respondents reporting long term vacancies for additional learning support, 36 pc in estates roles, and 23 pc in learning mentoring.
With rising rates of inflation and impact of increased NI contributions in their pay packet, staff will return to industry for significantly higher pay in some subject areas, or go and teach in a school, to ensure they can pay their mortgage and feed their family.