Budget 2024: AEB deals for 3 county councils

But nothing else new for FE and skills

But nothing else new for FE and skills

Three more areas of England are to gain control of their adult education budgets in devolution deals announced in the chancellor’s budget – but there was no new investment for FE.

Jeremy Hunt’s budget was heavy on tax cuts – except for VAT for colleges – but light on public spending, with no further revenue funding to help colleges and providers deal with rising pressures.

He also announced a “public sector productivity plan” aimed at making public services including education more efficient, but did not detail how this would affect schools and colleges.

Hunt did however confirm that three county councils Surrey, Warwickshire and Buckinghamshire will gain control of their adult education budgets under level two devolution deals.

Further details were also published about North East Combined Mayoral Authority (NEMCA)’s level four deal, which will join the West Midlands and Greater Manchester as a “trailblazer” devolved authority with an estimated adult education budget of about £60 million per year.

Level two deals are offered to county councils or combined authorities that do not have a directly elected mayor.

Cornwall and Lancashire have already agreed level two deals which are due to go live in 2025.

The deals will offer control over adult education, the UK shared prosperity fund, and require the councils to use “local labour market intelligence” to support local skills improvement plans alongside local employers.

It takes the number of areas with actual devolution or with deals to 22, of which 10 are established and two have mayoral elections in May 2024 – East Midlands and York North Yorkshire.

Association of Colleges deputy chief executive Julian Gravatt said devolution covers 41 per cent of the English population and 62 per cent of the adult skills budget.

‘Own goal’ on VAT college exemption

Aside from the devolution deals there were no new announcements for FE and skills despite the chancellor repeating the government’s pledge to build a “high-skill economy”.

Chief executive of the AoC David Hughes said Hunt “missed another opportunity”. 

He added: “There is a simple reality, that the prime minister’s economic priorities cannot be achieved without a boost in investment in skills.”

Colleges have repeatedly called for the government to scrap “unfair” tax rules requiring colleges to pay VAT. But Hunt chose to ignore the pleas yet again.

Hughes said: “College budgets and staff will benefit a little from the national insurance cut, but in a tax-cutting budget, the chancellor has missed the opportunity to scrap the unfair VAT rules imposed on colleges. That simple and fair move would have injected £210 million into colleges to help meet students’ needs.”

Julie McCulloch, director of policy at the Association of School and College Leaders, said the budget “failed to support” schools, colleges and those they serve.

She added: “The chancellor has instead focused on a desperate attempt to secure short-term political gain by cutting taxes as a pre-election sweetener.”

Public spending plans could lead to £380m adult skills cut

The Office for Budget Responsibility estimates that government spending plans, which include cutting the employee national insurance rate from eight per cent to six per cent from April 2024, are likely to mean 2.3 per cent a year cuts to non-protected budgets.

Stephen Evans, chief executive of the Learning and Work Institute, estimates that the government’s spending plans could therefore mean a “further £380 million cut” to adult skills in England.

He said: “Taxes should always be as low as possible, but high-quality public services are essential for growth too. The government’s public spending plans could mean a further £380 million cut to adult skills in England – already £1 billion lower than in 2010 – and cutting off an engine of growth.”

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