Britain would need to make an additional £1.15bn cut in education spending to fill the £30bn black hole in public finances that would be caused by Brexit, the Chancellor has warned.
However, George Osborne’s claim was immediately dismissed as scaremongering by dozens of eurosceptic MPs from his own party.
His warning was echoed by skills minister Nick Boles, who has claimed that leaving the European Union could kill off the apprenticeship levy.
Osborne’s Brexit Budget report spelled out harsh money-saving measures he claims would be needed from 2018-19 if the public votes to leave the EU in the June 23 referendum.
He said: “One plausible scenario shows health spending would be cut by £2.5bn, defence spending by £1.2bn, and education spending by a similar amount.”
It was more specific in a subsequent table which indicated the government would need to cut £1.15bn from education spending.
This provoked an angry reaction from a group of 60 Eurosceptic Tory MPs, who reportedly said it had “destroyed” his credibility.
Mr Boles had previously entered the Brexit debate during an event in Westminster, organised by Policy Exchange, warning: “As skills minister I am responsible for the introduction next April of a new apprenticeship levy on large employers.
“But do you think the chancellor will feel it is prudent to introduce a new payroll tax in the middle of a recession, when business confidence has been shattered by a decision to leave the single market and unemployment is rising?”
Julian Gravatt, assistant chief executive of the Association of Colleges, expressed wider concerns about FE prospects if Britain leaves the EU.
He said: “This could lead to further public spending cuts and if the government cuts or postpones the levy, then the consequences for college funding in 2017 and afterwards could be pretty serious.”
But a spokesperson for the Vote Leave campaign disagreed with these concerns, claiming the government would ultimately have more to spend on the sector if it stood alone.
He said: “We send £350m to the EU each and every week. After we vote to leave we can take back control of this money and spend it on our priorities such as supporting apprenticeships and investing in FE.”
It is believed that there would be a two-year negotiating period after the UK notified the EU of its intention to leave, in the event of Brexit.
This has raised questions, reported on by FE Week in February and still unresolved, over what would happen to European Social Fund (ESF) contracts— with the current round running from 2014 to 2020 worth about €3bn (£2.3bn) across England.
The ESF is cash that the UK receives, as a member state of the EU, to increase job opportunities and help people to improve their skill levels, particularly those who find it difficult to get work.
It is partly administered through the Skills Funding Agency (SFA) and its allocations in 2014/15 showed that 107 different providers, including colleges and independent training organisations, received a combined total of £305,267,633 in ESF cash.