FE sector responds to the 2015 Spending Review

The Comprehensive 2015 Spending Review has been announced.

Highlights from the review include:

By 2019 to 2020, government spending on apprenticeships will have doubled in cash terms compared to 2010 to 2011 including income from the new apprenticeship levy. Funding for the core adult skills participation budgets will be protected in cash terms and five National Colleges will train an estimated 21,000 students by 2020 in industries central to the productivity agenda such as digital and high speed rail.

So how has the sector responded to the announcements by the chancellor, George Osborne?

Stewart Segal, chief Executive of the Association of Employment and Learning Providers, said:

“The Apprenticeship Levy will be set at the rate of 0.5% of payroll which will mean that the majority of large employers will be encouraged to increase their Apprenticeship programmes.  It will also apply to more businesses than we expected because the £3m benchmark means that employers with less than 150 employees could be included in the Levy.  We need to understand a lot more of the details but we have recommended that the rules around the Levy need to be very clear and simple if we are to see an effective implementation by April 2017.

“We are pleased that the 16 to 19 non schools budget and the non-Apprenticeship budget for adults have been protected in cash terms although that does mean real terms cuts for the next five years as costs increase.   This will mean that budgets need to be prioritised towards key programmes such as Traineeships, English and maths and support for the unemployed.  We are also pleased that early support for the unemployed is important through JCP and that the new programme for the long term unemployed will be an integrated Work and Health Programme.  The new programme must recognise the important lessons learnt from the current programmes. ‘

Martin Doel, chief executive of the Association of Colleges (AoC), said: 

“Today’s Spending Review will be a huge relief for further education and sixth form colleges following five years of stringent budget cuts.

“In protecting the core funding rate in cash terms for 16 to 19-year-olds it shows that the Government recognises the key role of colleges in driving the country’s economic prospects, closing skills gaps and raising productivity.

“Sixth form colleges will welcome the news that they can choose whether to become an academy enabling them to reclaim VAT as schools have done so for many years. We have long campaigned for colleges to be able to reclaim VAT.

“Following a massive 28% cut to the adult skills budget earlier this year we had real concerns for the future of this essential training that provides the nation’s future workforce including nurses, social care workers and construction workers. It is a positive step in the right direction that Mr Osborne has chosen to spare the adult skills budget in today’s announcement. Enabling 19-year-olds to access further education loans will also provide additional support for this vital training.

“The apprenticeship levy is a genuinely bold move by the Government that will impact on the future of skills training in England by creating a new independent funding stream for apprenticeships. Setting the levy at 0.5% of an employer’s payroll will help to ensure high-quality training is available, creating a new era of opportunities for colleges and providing high-quality training for many more apprentices. Although the Government needs to remember that apprenticeships are a job with training so they must continue to encourage employers to provide these roles.”

Chris Jones, chief executive of the City & Guilds Group, said:

 “We are pleasantly surprised by the Chancellor’s commitment to professional and technical education and his recognition that this is essential to our economy. Although apprenticeships are important, they will not solve the nation’s skills shortages in isolation. We need a holistic commitment to professional and technical education to achieve the Government’s commitment to one million new jobs. Perhaps this is a start, but time will tell.

“We welcome the protection of the adult skills budget, the investment in University Technical Colleges and provision of loans to help individuals develop their skills. This commitment needs to be maintained.”

On the apprenticeship levy:

“With annual productivity gains from training an apprentice averaging £10,280 per year, continued investment in apprenticeships makes sense. But the real challenge is increasing the number of high-quality apprenticeship placements and for that we need a sustainable, long-term funding solution.

“The levy could be that solution, but it will only be successful if employers support it. The Government needs to get the right balance between rigour and bureaucracy to make sure employers create quality apprenticeship places.”

On infrastructure / devolution:

“The Government’s investments in the UK’s infrastructure and housing is welcome. But such large-scale projects will depend on skilled workers to ensure they are delivered to a high-standard, on time, and on budget. Skills gaps pose a huge barrier to the Government’s ambitions.

“We welcome the Government’s move to give local communities and cities more decision-making power around how they spend their skills budgets. It will help align the skills system to the local job markets, such as the job opportunities that these infrastructure projects create. Councils need to work with their Local Enterprise Partnerships to strengthen the link between education and employment.”

James Kewin, deputy chief executive of the Sixth Form Colleges’ Association, said:

 “The Chancellor has delivered better than expected news for Sixth Form Colleges today. First, he has listed to our representations and promised to maintain the base rate of funding for 16-19 year old students for the rest of this Parliament. As our recent funding impact showed, a further round of cuts would have had a devastating impact on the life chances of sixth form students. We look forward to seeing the finer detail of this announcement and await confirmation that there will not be reductions in other areas of 16-19 education such as funding for disadvantaged students or 18 year olds.

“And we are delighted that Sixth Form Colleges will have the opportunity to become academies – this will help to move the sector from the margins of education policy to the mainstream. Many Sixth Form Colleges are interested in academy status, as it will allow them to foster closer relationships with schools. It will also ensure that they no longer have to pay VAT – we have long campaigned for an end to this learning tax that leaves the average Sixth Form College with £317,964 less to spend on the front line education of students each year.”

David Hughes, chief executive of NIACE, said:

 “I am delighted the Chancellor has recognised today that investment in adult skills is as important to our national growth, security and productivity as spending on health, defence and education. It’s clear that the Skills Minister and his officials have fought hard and skilfully in the difficult negotiations with the Treasury in a tough spending environment. Cash protection over the parliament will provide colleges and training providers with the stability and certainty they will need to invest in new approaches to adult skills. There is a lot of work to be done now so that learners across the country get access to learning opportunities they want and need. Devolution, the Apprenticeship Levy and the extension of loans all require innovation, collaboration and investment.

“I’ve said previously that the Apprenticeship Levy is a game changer. It will raise around £3 billion per year and it is so important that a proportion of this, perhaps our suggested 1%, is dedicated to a Quality and Access Fund. This would address the twin requirements of improving access into apprenticeships for under-represented groups and achieving higher quality programmes. Our Apprentice Charter, a new mark of recognition for employers offering high quality apprenticeships, is a simple idea which employers and apprentices want to see put into action. We will work with the new Institute for Apprenticeships as we roll out the Apprentice Charter.

“Extending eligibility of learning loans to younger learners and to higher level learning could easily exacerbate market failures in the 24+ advanced learning loan system. This change makes it even more important for Government and providers to work together to make the loans system much more flexible and provide better information to learners. Our work in London, starting in the New Year, to test and evaluate new ways of delivering loan funded learning will help find ways to make loans work better for adults.

“We welcome the Chancellor’s announcements on devolution, which closely mirror our shared ambitions for more responsive local delivery of learning, skills and employment services. Now we need to use the next 18 months to develop good ideas into great practice so that local labour markets, employers, young people and adults all thrive through joined up commissioning and service delivery.”

Sir Peter Lampl, chairman of the Sutton Trust and Education Endowment Foundation, said: 

“While the cuts may not be as much as some feared, the Chancellor’s real terms cuts to further education and sixth form studies still pose a threat to the Prime Minister’s laudable social mobility goals. Those cuts could harm university access by cutting opportunities for young people to study key A-level subjects and reduce second chance college opportunities.

“We welcome the real terms protection for overall school budgets, though its terms mean many schools will still face significant cuts, and support the continuation of the pupil premium. However, in the light of our recent research, we urge caution in the introduction of the national funding formula so that those facing the double disadvantage of being poor in disadvantaged areas don’t lose out.

“We are also concerned about plans to cut the student opportunity fund, which supports disadvantaged young people getting to university. But we welcome his positive response to our call for greater collaboration between universities to ensure that the £730 million of university access and outreach support is invested effectively, better co-ordinated and is well understood by young people and their teachers. A strong independent access regulator is vital to ensuring this happens.

“We welcome the new part-time maintenance loans, and extra help for post-graduates. But we deplore his plans to replace student grants with loans, leaving poorer students with greater debts than richer students. We also deplore his decision to confirm a freeze in the repayment threshold for graduates, including retrospectively for existing students, something that damages trust in the loans system.

“We welcome the Chancellor’s renewed commitment to apprenticeships and to the levy on employers. But if they are to be a true engine of opportunity, it is vital that every apprentice is expected to work towards a good qualification. There’s no point in having three million extra apprenticeships if two million of them leave young people without the skills to succeed. Quality as well as quantity must be built into their delivery.”

On the extension of 24+ Advanced Learning Loans to 19+ learners, Theo Ege, qualifications development manager at AAT (Association of Accounting Technicians), said:

“Because they have been unable to access either government funding available for 16-18 year olds or the 24+ loans, individuals aged from 19 to 24 have previously been left unable to access funding for further education study unless they were doing an apprenticeship; it is a positive step to see that this is being ended. The change will help widen access to education for 19+ learners from less well-off backgrounds who want to study further education courses to help them in their career but may not have had the money to do so before.”

“While welcoming this announcement, AAT would also encourage potential students to ensure that if they do decide to take out the loan, they ensure that the course they have chosen to do will maximise their employability, and give them all the skills they need to be successful.”