Colleges in England look set to lose around £150 million of their income, 2 per cent of turnover, in the last term of this academic year. Most will be able to cope with that after using the government’s job retention scheme and negotiating open-book deals with key suppliers; some will need cashflow support.
Next year, colleges will benefit from their grant-funded 16 to 18 study programmes and adult education budgets being largely protected, reflecting their non-profit, charitable status. That will give them some security on about 60 per cent on average of their turnover, with enormous uncertainty about income from apprenticeships, student fees, commercial training, other commercial income and higher education. There are sectors that will fare much worse, but it’s still very tough; although, I’d imagine many ITPs would prefer that scenario to their own.
This week I wrote to the Secretary of State for Education, Gavin Williamson setting out this financial position. Stating that after ten years of neglect, colleges generally do not have the strong financial position you would want going into this crisis. Not that we are expecting any kind of bailout – the government is already borrowing more than ever before to cope with the unprecedented spending that they have embarked upon.
My letter makes a simple point: that colleges have shown during this crisis just how vital they are to millions of students, the communities in which they operate and the employers they support. Their switch to online learning has been swift and effective, their civic acts have been heart-warming and far-reaching. Crucially their role in supporting nearly 700,000 young people and over a million adults has continued unabated.
But the real message in my letter is this– colleges are vital now, but they are even more important for the recovery we all want to see. We have asked the Secretary of State to continue working with us to secure new investment and flexibilities in how funding can be used to support people in these unprecedented times. I’m confident that we will achieve both because the labour market conditions facing young people and adults will be so tough this autumn that not investing in the people impacted would be an obvious grave mistake.
Commentators from all sides are clear that unemployment will balloon, leaving graduates and experienced adults competing for every job. In that environment we know that young people will suffer because of their lack of experience and apprenticeships will be harder to come by. Whilst adults will be able to quickly re-cycle into new jobs if they get some training and support to use their transferable skills and enhance them as needed.
We’ve asked the government to offer a September Promise for every 16 to 18-year-old. This would ensure that colleges had the capacity and resources to be able to offer a flexible study programme to around 100,000 extra young people who will be unable to find work or an apprenticeship. The funding is important, but so is the flexibility to design a programme which supports them whilst they are seeking work and hopefully work with an employer willing to make the job an apprenticeship.
We are also asking for a new programme aimed at 19 to 24 year olds struggling to find work. To bring together the National Skills Fund, National Retraining Scheme and potentially the new Shared Prosperity Fund with the adult education budget to provide colleges with the resource to support adults needing shorter training courses to quickly get back into work.
All these investments need to be funded at the right rate and with the flexibilities to deliver with agility. Our final ask is for the some of the capital funding announced in March to be brought forward to support colleges to invest in IT hardware and software and to prepare college buildings for opening safely in the autumn.
Colleges want to serve their communities; they have shown that in recent weeks. With the right investment and support from government, they will be central to the recovery we all want to see.