What happens next?

In six months time we will have a new government. Whether it will be more of the same or a coalition of a different hue another coalition is likely. Certainly when examining the polls this is the only conclusion to be drawn. And whatever parties form a government one thing is certain. Austerity is here to stay. Indeed it is not just here to stay. It is about to be heavily ramped up post May 2015.

As Chris Giles of the Financial Times says, you can forget Euro referendums and the like. The most important job awaiting the next administration is a thorough comprehensive spending review. And here’s the bad news. If George Osborne’s plans are to be delivered then the cuts to spending over the course of the next five years will need to double. We are not talking £25 billion a year between 2015 and 2020 but nearer £48 billion. The Conservative party have stated that the ratio they will use to reduce the deficit is 80% public spending cuts to 20% tax rises. Labour are not intending to cut as much but they too want to eliminate the deficit which is why they talk more about soaking the rich through measures such as mansion taxes. The Lib Dems are aligned with the Conservatives in terms of their current plans to achieve Deficit annihilation.

In truth whatever the next government does it will be painful for all those in un ring-fenced spending areas and that includes FE. Indeed it is likely that on George’s plans FE would need to cut a further 30% of its publicly funded revenue streams. This is a major headache for all those leadership and governance teams out there currently scratching their heads as to how to balance the books, meet Ofsted’s changing demands, and shape their organisations to face this rapidly changing operating environment.

The government seem to have three strategies to mitigate this impact. The first is to get employers and individuals to cough up more cash for the skills they need through ensuring the ‘system’ is demand-led. This means Colleges need to be better at attracting fees and commissions than they are at present. The soundbite is that colleges need to move from funding to earning. The second strategy is that digitisation is the future for learning. Low cost mass open courses and online lessons mean costs can be slashed in terms of estate and personnel. The final strategy is to devolve spending to local LEPs for spending on infrastructure and on what might be described as building skills eco-systems.

All of this presents a massive challenge to governing bodies and senior leadership teams to develop the right strategy. Remaining as they are is not a long-term sustainable position when faced with public funding cuts on the scale planned. But FE Colleges are not yet there in the main when it comes to developing the entrepreneurial instincts that a private training provider with their simpler mission may have. Colleges offer a far richer weave of opportunity to many of the people education left behind first time around. They create niche provision for the local market which clusters of smaller employers may not be able to afford to invest in. Perhaps most of all they are fundamentally public value institutions committed to delivering great outcomes for local citizens. These outcomes are not always profitable for the institution itself.

Having said all that I believe the future is full of promise for our best FE institutions. All political parties have woken up to the fact we need more and better technical education; that that education should be more aligned to local patterns of industrial growth and that the system should be demand-led. But the system also needs more hard cash than it looks like it will get. To do this FE Colleges must be free to develop the employer links and relationships that employers need. They need more autonomy from the centre and thus to be primarily accountable to their local stakeholders. Local skills strategies need to align with national industrial strategy and bring together the local LEPs, relevant SSCs and local authorities. Every student needs to have good workplace experience. This alone would help deliver higher levels of employability and a better start to their working careers for many young people.

Will any of this happen? I hope so. One thing we can all be certain of come next May spending will be going down not up.

Nick Isles is deputy principal of Milton Keynes College – follow him on Twitter at @dpmkcollege