Mark Dawe was, like many in FE and skills, hanging on Chancellor George Osborne’s every word as he delivered today’s Budget. This is what he made of the announcements.

There will be an FE sector sigh of relief as 16 to 19 funding is protected, but only in cash terms, adult funding protected, again in cash terms, and apprenticeship funding set to double — but we are still awaiting the real detail.

The sector couldn’t ask for any more and demonstrates the power of the sector both in terms of lobbying and the service it provides to the economy and society.

I would argue that this gives the breathing space allowing significant reform rather than an opportunity to continue doing what FE has been doing for the last decade.

Adult funding has been under attack for the last decade — ever since the ill-fated and poorly thought through Train to Gain programme and obsession with the full level two, adult funding has been eroded.

If we are planning for the future of FE with limited resources we have to assume there will be a continued erosion of real terms government adult funding with a greater and greater focus on apprenticeships and English and maths.

The levy, the most un-Tory policy we have ever seen, is the hook that all providers will have to open the doors to the thousands of large employers

It doesn’t mean there shouldn’t be any education and training for the over 19s, but it has to be based more and more on employers and individuals contributions, in some cases supported by loans as we have seen with the 19-plus level three and four loans.

This finally allows for the delivery of the policy aim of higher education in FE — an exciting opportunity for the sector. There may be local grants for local needs — but these can’t be relied upon for the long term sustainability of colleges.

Ahead of Prime Minister’s Questions before the Spending Review announcement, David Cameron said all 18-year-olds should have the choice to take on an apprenticeship or go to university — apprenticeships have never been so central in government education and skills policy.

Skills Minister Nick Boles talked about colleges stopping independent learning providers (ILPs) “nicking their lunch”. This isn’t about colleges verses ILPs — it is about shifting the focus of vocational training to apprenticeships or pathways into apprenticeships, if university is not the pathway a student is choosing.

The debate about one-year programmes is that learners at 16 should have a programme of study that leads to higher education or work with an apprenticeship and students should move into the latter as soon as they are ready. This requires a much deeper engagement of employers in the training of our young people and there is now a clear responsibility for the sector and employers.

The levy, the most un-Tory policy we have ever seen, is the hook that all providers will have to open the doors to the thousands of large employers who don’t engage in the apprenticeship and traineeship programme and have a payroll over £3m, raising an additional £3bn per annum of apprenticeship funding for the FE system.

FE is going to have to change significantly. There has been much talk about mergers. While there are some savings to be made through scale around administration and systems I don’t think this is the real benefit.

Large institutions allow the spreading of outstanding leaders and their teams across a larger area and more students — expertise is a scarce resource and we have to use it effectively.

We are also seeing a digital revolution. We have been talking about this for the past 15 years but I think it has finally arrived. And the timing couldn’t be better — with loss of real terms student funding per learner and number of learners funded.

To continue to enhance the learning experience and increase the number of learners FE reaches, colleges must fully engage with the digital agenda.

There are some excellent examples around the country — but this needs to be the norm not the exception. Fundamentally, delivery needs to change and staff in colleges will have to change how they deliver learning and support students.

The investment needed is significant on the technology and staff development and I do not believe will be achieved in small institutions. The leadership demands and investment in digital delivery can only be achieved through substantially larger colleges. This will preserve delivery across the country not erode it.

The devolution, regional and local agenda requires high level engagement in the locality — this is not achieved by large numbers of FE college sitting around the table, they wont be invited — look at the size of the Strategic Area Review groups. It requires a single voice from the colleges, not some intermediary, and therefore college need to merge or create hard federations to have a seat of power at the table — otherwise colleges will be forgotten.

On a final note sixth form colleges are being allowed to become academies — escaping VAT and in reality, post-16 area reviews.  I am sure this will be the final goodbye to sixth form colleges from the FE sector. It may be great for the colleges, but it’s sad for FE.