Sandra McNally considers the possible impact of Chancellor George Osborne’s November 25 Budget.

The Spending Review has brought good news to FE (at least relative to expectations).

Highlights include a commitment to protect the budget for 16 to 19-year-olds in cash terms; an apprenticeship levy on large employers, with a commitment to spend £2.5bn in England by 2020; increased availability of loans for individuals who want to pursue higher levels of vocational education.

FE leaders must be breathing a sigh of relief. However, what matters to the economy is not how particular institutions fare but what all this means for potential learners. Let’s look at funding for 16 to 19-year-olds and apprenticeships.

Research tells us that the level of expenditure matters for outcomes (other things equal). Therefore a cut of expenditure in real terms has potential negative consequences for learner outcomes (although much depends on how this is managed). Furthermore, there is not a level playing field for post-16 provision.

For the same course offerings (for example A-levels), students are probably better resourced in schools than in FE colleges because schools can cross-subsidise their sixth form students from their overall budget (much of which is protected in real terms).

What matters to the economy is not how particular institutions fare but what all this means for potential learners

Also, arguably FE colleges have a tougher task with regard to post-16 provision because an increasing amount of this is remedial, given that learners have to achieve minimum standards in English and maths.

Those who have struggled up to the age of 16 with these subjects are not necessarily easy to teach. The extent to which actual resources per student differs across institutions also matters for the social mobility agenda: a higher share of post-16 learners pursuing non A-level options come from disadvantaged backgrounds.

The increased availability of apprenticeships will benefit young learners provided they are in a position to access them and provided they are of high quality (and seen to be such by whole groups of employers).

In the last few years, we have seen a dramatic increase in apprenticeship numbers, but many of them have been older workers (and a very low percentage have been under 18 years of age).

Presumably, employers are not incentivised to recruit young people that are not in some sense ‘work ready’, finding it easier to train more experienced workers. If apprenticeships are to become a more central part of the gateway to employment for young people, then the pre-apprenticeship phase of education cannot be underestimated. Part of this involves clearer progression pathways for young people.

While the availability of extra funding for apprenticeships is laudable, the efficacy depends on how this is used. The Chancellor has acknowledged concerns about quality and another announcement refers to a new employer-led body which will have an important role in the administration of the new system.

In addition to quality, a major issue is the extent to which additional funds stimulates additional investment in training (as opposed to a shift in training budgets). If we want to stimulate additional investment by employers, we need to understand better why some employers choose not to employ apprentices (or indeed choose not to invest in much formal training at all) — and why others do.

For example, large employers might be very confident that they will re-coup training costs because of high staff retention post-training. They might also have the facilities for high-level on-site mentoring.

The obstacles might be greater for small employers or those in highly competitive labour markets (where poaching of trained staff is a real issue). Thus, the nature and level of government support might need to differ across types of employers.

The success of the policy will depend on getting the detail right. It should be judged by its effect on workers and productivity — and not by whether or not a numerical target is achieved.