There can be little doubt that public funding for FE will fall by a lot. The question is where.

Further education in England is on the brink of the greatest transformation it has seen in a generation.

The die was cast in May when the Conservatives were returned to office after the election on a manifesto setting out, explicitly, an intention to prioritise elimination of the budget deficit through further austerity. Almost immediately the Department for Business, Innovation and Skills (BIS) and the Department for Education (DfE) made in-year cuts of £900m and when plans for the spending review were published in July, all departments were asked to model two scenarios, to save 25 per cent of their budget and 40 per cent.

Although Chancellor George Osborne will use the lower of these figures, it is scant consolation since FE is squeezed within both funding departments: A combination of rising school rolls and a promise to protect per-pupil spending on school children to Year 11 means the DfE 16 to 19 budget is even more vulnerable while, in BIS, defenders of 19+ skills funding are in competition with advocates for science, research and higher education.

Things are worsened by the paucity of people in the Treasury elite and the increasingly shrunken ranks of BIS mandarins who have direct experience of FE. Neither appreciate nor value its complexity and diversity. Things are compounded by the absence of powerful ministerial champions able to defend the sector. HE matters like part-time and overseas students simply attract more attraction as policy challenges.

With the Comprehensive Spending review moving ever nearer (on November 25), Alastair Thomson considers Chancellor George Osborne’s FE cuts options.

There can be little doubt that public funding for FE will fall by a lot. The question is where.

In the case of DfE 16 to 19 budgets, it is worth watching what happens to policies which sometimes saw efficient use of public money take second place to ideological dogma and political expediency.

A canary in this particular coal mine will be popular but increasingly hard-pressed sixth form colleges are given any kind of relief (on VAT or more widely) or whether they are left to an inexorable decline while small sixth-forms proliferate.

Within BIS budgets the biggest decisions will be around apprenticeships and loans but how the smaller budgets fare may give important signals about broader government priorities.

In 2010, community learning defied expectations and was preserved uncut and ring-fenced. This time it may simply be swept away, although any mention of ESOL or basic literacy/numeracy might be seen as recognition that FE promotes community cohesion and social inclusion as well as skills. Similarly offender learning budgets will give an important clue about whether Justice Secretary Michael Gove has convinced his party of the importance of prison education.

Looking at the bigger picture, a judgement will have been taken about when the expansion of advanced learning loans (whether by dropping the age threshold or including level two provision), becomes more expensive than it is worth. The fact that either would result in a decline in numbers which could destabilise whole institutions may be seen simply as collateral damage.

At the centre of government’s vision though are apprenticeships and colleges are increasingly exhorted to secure a greater share of this funding stream. Here the intention of the spending review to introduce a payroll levy on large employers has been well-signalled. This will generate cash but whether it will stimulate the offer of new apprenticeship places and a culture of business investment in training among smaller enterprises is less apparent.

The spending review looks increasingly likely to precipitate a wholesale re-engineering of the FE sector.

Shrinking the overall funding envelope and focusing it more on apprenticeships risks decimating the volume and range of other college courses. In some cases this will result in whole institutions becoming financially unsustainable

At this point area reviews (described memorably as turkeys being asked to vote for Christmas and pay for their own stuffing too), will provide the mechanism for shrinking the sector and re-orienting it to serve the needs of fewer learners in narrower ways.