Fears growing number of 16-19s will stretch budgets this year

Fears are growing that the government’s FE funding boost for this year will not be sufficient to cover an anticipated surge in 16 to 19 year old college places.

The government is pumping an additional £400 million into further education in 2020-21, which includes raising the 16 to 19 learner base rate to £4,188 and could, the Institute for Fiscal Studies says, represent the first real-terms increase in spending per student for about a decade.

However, the organisation’s annual report on education spending, published today, warns that because of the way the FE funding system works, exceptional rises in student numbers could still generate a real-terms fall in funding per student.

It explains how student numbers in FE colleges and sixth forms are likely to increase this year due to rising numbers of young people combined with “unusually high” GCSE results and “significant” reductions in training and employment opportunities.

The report chimes with an FE Week investigation in September that found recruitment for traditional level 3 further education courses was booming, and even university technical colleges learner numbers were on the rise despite the pandemic.

The IFS says that responding to these changes in participation will be “challenging” given that providers’ funding is set by the Education and Skills Funding Agency based on lagged student numbers.

The IFS does recognise that the 16 to 19 funding system does have mechanisms to allow colleges to apply for in-year growth if they have a spike in student numbers. However, they say that this is “subject to affordability” and it is “not designed to address significant sector wide growth”.

Imran Tahir, research economist at the IFS and a co-author of the report, said: “Student numbers could have risen dramatically more than expected due to a reduction in training, apprenticeship and employment opportunities, on top of population growth.

“If there is no additional funding forthcoming, planned real-terms increases in spending per student could be mostly – if not entirely – eroded.”

James Kewin, deputy chief executive at the Sixth Form Colleges Association, shared the IFS concern that, because in-year growth is subject to affordability, not all colleges that need the funding will be able to access it.

He told FE Week that his organisation has been “making the case for some time” that the threshold for in-year growth funding needs to be lowered.

Responding to the IFS’ report, Kewin said: “A combination of demographic trends, this year’s exam results and the lack of work-based opportunities means that more young people than ever could participate in 16 to 19 education.

“However, the lagged funding model means that this will put pressure on the cashflow and finances of some colleges and schools at a time when they are already under strain dealing with the additional costs of Covid.

“This, and of course an increases in the core rate of funding itself, should therefore be a priority area for investment.”

David Hughes, chief executive of the Association of Colleges, said his organisation has “raised the issue of in-year 16 to 19 growth several times now with ESFA”.

He told FE Week: “Overall we believe that numbers will be higher, just as the IFS supposes. The commitment to support exceptional growth is always subject to affordability, which is unlike in HE where it looks as though increased student numbers will attract full funding immediately. That does not feel fair and we hope that ESFA recognises that too.”

A government spokesperson said: “We understand this has been a challenging time for the education sector which is why we introduced a range of support to help colleges and universities manage their finances and safeguard students.

“We have protected grant funding for further education, worth over £3 billion for a full year, and increased education and training investment this year for 16-19 year-olds by an additional £400 million.”