Further education and skills sector misses out on £250m in FE loans cash

Further education and skills sector misses out on £250m in FE loans cash

Shadow Skills Minister Gordon Marsden has called on the government to “get a grip” after new figures showed that providers missed out on almost £250m in FE loans cash last academic year.

Figures released by the government showed that the total amount awarded for 24+ advanced learning loans in 2014/15 was £149m, which was 62 per cent less than the £397m allocated for the FE loans budget.

Mr Marsden, who was critical of the government’s decision not to create a national marketing budget for FE loans when they were introduced, said the figures showed the “sluggish uptake” on FE loans.

“Ministers need to get a grip urgently before funding, that is crucial for skills and training to give older adults improved life chances and as a key mechanism for improving our productivity, is snaffled up permanently by the Treasury,” he added.

David Hughes, chief executive at National Institute of Adult Continuing Education, said: “Not only has the number of learners making use of the loans decreased, it is also severely under-utilised. Imagine what that £250m of lost learning could have delivered for people if the loans system was functional?”

He called on the government to improve uptake by making loans “available for smaller qualifications, modules, units and professional qualifications”.

The system currently applies to learners aged at least 24 and studying at level three or four — but a government consultation last summer proposed that they should apply to level two and 19 to 23-year-olds.

No changes have been implemented yet, but Skills Minister Nick Boles said in the consultation response that the government would “look again at these proposals” through the spending review.

Independent education consultant Mike Farmer said the £250m of lost funding showed “these loans haven’t been as successful as the government hoped”.

“It’s a shame that more money available wasn’t taken up — it’s one of the few areas of public spending where there is spare cash lying about,” he added.

The latest figures showed that while the number of applications received for FE loans fell from 70,820 in 2013/14 to 67,280 last academic year, applications approved for payment rose from 56,220 to 56,870 over the same period.

But figures also showed that 72 per cent (48,670) of applications were by females and 15 per cent (10,210) by non-UK learners.

Meanwhile, 94 per cent (61,930) were for level three applications — with just 6 per cent (4,320) for level four.

Jonathan Simons, head of education at Policy Exchange which called in June for higher education funding to be diverted to FE, said the figures “illustrate the vicious circle that FE has got itself into”.

“Because loans are little understood, and demand from students is therefore low, colleges have little incentive to put on such higher level courses,” he added.

A spokesperson for the Department for Business, Innovations and Skills said: “The total funding allocation for 24+ advanced learning loans does not represent a target, but is demand–led and designed to ensure that any eligible learner seeking to support their studies will be able to do so.

“The take-up of advanced learning loans continues to increase year-on-year.”


Editor’s comment

Overdue loan action

Back in April last year, Leicester College principal Verity Hancock wrote a very interesting and telling expert piece for FE Week.

The article was headlined “The ‘tantalising’ potential of FE loans”.

And in it, she concluded: “Our experience is that a different approach is going to be critical in enabling us to maximise the potential that loans offer.”

Her comment could not be more apposite nearly 19 months later as we learn that £250m of FE loans funding went unused in these straitened financial times.

While this is a potential funding stream that is being ignored, equally, as David Hughes points out, it’s learning that’s not taking place. It’s skills that are not being developed in the time of a skills gap.

Perhaps now, nearly three years after Gordon Marsden criticised the lack of marketing for FE loans, it’s time for ministers to consider a PR campaign at the very least to increase awareness and the attractiveness of FE loans — before the system is expanded further, only for greater potential to be lost.

Chris Henwood

chris.henwood@feweek.co.uk