Skills Minister announces Local Government Pension Scheme for FE Colleges and National Insurance support

Skills Minister Jacqui Smith confirms National Insurance support and Local Government Pension Scheme for FE Colleges 

FE Colleges to be given Employer National Insurance support

Skills Minister Jacqui Smith confirmed that Further Education Colleges will be given Employer National Insurance support, as Employer National Insurance increases that were announced in last month’s budget. The AoC had previously calculated that the Employer National Insurance contribution from Colleges alone would cost around £30 Million per year.

Jacqui Smith also announced that FE Colleges will be included in the Local Government Pension Scheme Guarantee. 

Local Government Pension Scheme for FE Colleges

In the Skills Minister’s speech at the Association of College’s Annucal conference also announced that colleges will be included in the Local Government Pension Scheme (LGPS). The estimate is that the FE College Local Government Pension Scheme guarantee alone will save colleges around £30 million a year.

FE Lecturer Pay 

The first question from the audience was around FE Lecturer pay being more closely aligned to the increase seen by school teachers. She said she would like to see it matched, but explained that the architecture of FE lecturer pay made this more complex. So she was not drawn on how or when this could be improved. 

David Hughes, Chief Executive, Association of Colleges, said:

“It’s great to have Skills Minister Jacqui Smith speak directly to college staff here at the AoC Annual Conference and Exhibition, and set out her vision for the future of the sector. It’s a vision which resonates well with the way colleges view their roles, strengths and opportunities.

“Colleges are rightly frustrated about the pay gap between schools and colleges, as am I. It is encouraging to hear the Minister recognise that this gap needs to close and to share our frustration, as well as the discrepancy on VAT rules which is not fair on college students. We will work hard to make the case on this ahead of the spending review in the spring.

“I welcome her announcement on both the LGPS guarantee and national insurance contributions, both of which show that this government wants to support colleges more. This will make a huge financial difference to colleges; we estimate that the LGPS guarantee alone will save colleges around £30 million a year, with a lifetime saving of more than half a billion and the NIC funding will be over £100m per year.

“I welcome her confirmation that a new post-16 education and skills strategy is on it way; it’s refreshing to hear that we will have a long-term vision for further education, which is a direct contrast to the short-term thinking that has come out of past governments. I am thrilled to hear her recognise that skills and colleges are essential to each of the government’s missions, not just to breaking down barriers to opportunity, but to economic growth and productivity, net zero, community cohesion and the future of the NHS.

“I also agree with the Minister that there is a big job to be done, and I am pleased to say that AoC and college leaders are being engaged to help across this new agenda, including around the establishment of Skills England to ensure that it truly delivers system change for further education, and has value for colleges, their communities and wider society.

“The minister is spot on that a cultural shift is needed, and a national conversation about skills, with the sector, not to the sector, will be music to college leaders’ ears. We look forward to working with the Minister and the DfE to make this a reality.”