The government will make £155 million available for post-16 schools, academies and colleges to help cover the incoming rise in employer national insurance contributions.
Employers’ national insurance contributions will increase this April from 13.8 per cent to 15 per cent.
To compensate for the rise, colleges, sixth forms, councils and 16 to 19 schools and academies will be allocated a share of a national insurance contributions (NICs) grant based on their 16 to 19 funding or financial income.
Eligible providers will be told of their allocations this May and paid this September, which FE leaders say is “very late in the day”.
James Kewin, deputy chief executive of the Sixth Form Colleges Association, said he welcomed the support but called for the grant to be “mainstreamed” into the 16 to 19 funding rate and multi-year funding allocations.
“16 to 19 funding is uncertain at the best of times, but this year colleges are also waiting for their post-16 budget grant allocations (scheduled for May) and a decision on the 10 per cent T Level uplift,” he added.
“This is all very late in the day and is why we’d like to see grants mainstream into the 16 to 19 funding rate wherever possible and serious consideration given to multi-year funding allocations – two steps that would help to bring some much-needed certainty to the sector.”
According to Department for Education guidance published today, the methodology of the grant should be expected next month and conditions of the grant will be published in May.
DfE will calculate the grant amount depending on whether providers have 16- to- 19-year-olds enrolled, adults and apprentices, or local authority centrally employed teachers (CETs) and centrally employed support staff.
Those with 16 to 19 delivery will receive a share of the grant based on total 16 to 19 allocations from 2024-25.
Colleges delivering adult education and apprenticeships will be funded according to incomes recorded in their 2023-24 financial statements.
The guidance added that the DfE is continuing to “finalise” how it will fund councils employing centrally-employed teachers through the grant.
It is unlear how much of next month’s national insurance rise will be covered by the £155 million grant.
The Association of Colleges estimated in November the NI hikes would cost FE and sixth form colleges alone £100 million a year.
Independent training providers and specialist colleges were left out of the eligible provider list.
Natspec, who represent specialist SEND colleges, said following the autumn budget that the NI hikes could create a “significant financial burden” on the sector after estimating employer costs could shoot up by up to £900 per employee per year, given the high staff to student ratios.
Though ITPs were unlikely to be compensated for the rises, Simon Ashworth, Association of Employment and Learning Providers deputy CEO and director of policy, said it was “as disappointing as it was when it was initially announced last autumn”.
“This funding should be available to support the delivery of high-quality provision in all post-16 education providers,” he said. “Too often, ITPs at best are treated as an afterthought rather than being central to the government’s key growth and opportunity missions.”
Today’s announcement revealed schools will receive £1 billion for their national insurance bill and schools with early years provision will be compensated £25 million.
The Department for Education was contacted for comment.
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