An “additional” £300 million will be handed to the further education sector next year, the chancellor has announced in today’s budget.
Details on exactly what this extra cash is earmarked for have however not been released in the Treasury’s budget documents. £300 million was the annual cost of increasing teaching hours for 16- to- 19-year-olds by 40 hours under the previous government.
Chancellor Rachel Reeves revealed the funding boost while also announcing a £1 billion uplift for special educational needs as part of a £2.3 billion increase to the core schools budget to “support” the government’s pledge to hire thousands more teachers.
Budget documents state: “The government is committed to addressing skills challenges, which are holding back growth across the country, alongside supporting people into work. The government has already established Skills England to begin addressing these challenges.
“In the budget, the government is going further by providing an additional £300 million for further education in England, while increasing the core schools budget by £2.3 billion, which increases per pupil funding in real terms.”
The Treasury told FE Week that it will be for the Department for Education to decide what the £300 million can be spent on, including whether it should be used for teacher pay rises. DfE has been approached for comment (see end of article for update).
Schools got £1.2 billion of government cash over the summer to raise teacher pay 5.5 per cent, but colleges received nothing.
The Association of Colleges previously said it would cost the government £250 million to match the school pay award.
University and College Union general secretary Jo Grady said the £300 million announced today for FE “must be used to match the 5.5 per cent pay rise that schoolteachers received and help close the £9,000 pay gap”, adding that if pay doesn’t rise, colleges will “continue to haemorrhage staff and there will be no one left to train the workforce of tomorrow”.
Daniel Kebede, general secretary of the National Education Union, also claimed the additional £300 million will “enable colleges to match the 5.5 per cent pay settlement agreed for school teachers” following this summer’s funding snub.
AoC chief executive David Hughes said his organisation has started “detailed conversations” with the DfE to “understand the implications for colleges and will communicate more when we know more”.
National insurance hike
Employer national insurance contributions will increase by 1.2 per cent in April. The Treasury has told FE Week the Department for Education will get some extra money to reimburse colleges and schools for this rise, but can’t confirm whether costs will be fully funded until the spring.
The AoC estimates that the national insurance rise will hit college budgets by around £50 million. The membership body also calculates that national minimum wage increases will cost a further £50 million.
Independent training providers are unlikely to see any compensation for rising employer national insurance, which is the “biggest area of concern” from today’s budget for Ben Rowland, chief executive of the Association of Employment and Learning Providers (AELP).
Rowland said: “We are currently modelling this so we can work out how different-sized providers will be impacted” but welcomed the £40 million for foundation apprenticeships and £950 million for skills capital.
More £ for capital and apprenticeship reforms
Reeves also announced she was giving the Department for Education £6.7 billion of “capital investment” next year, which she said was a 19 per cent real-terms increase on this year.
Of this, £950 million will be for “skills capital, including £300 million of new funding to support colleges to maintain, improve and ensure suitability of their estate”.
The Treasury’s documents also show the government will invest £40 million to help deliver new foundation and shorter apprenticeships in “key sectors” – initiatives announced at Labour party conference in September – as part of initial steps towards a reformed growth and skills levy, set to replace the apprenticeship levy.
Ministers have also decided to push back the launch date of the lifelong learning entitlement to January 2027.
[UPDATE: A day after the budget the DfE said in a blog that “colleges have freedom to use the [£300 million] funding in the way that best suits their needs, and the government does not set their pay and conditions”. The department later changed this wording to simply say the budget “allocated an additional £300 million to further education”, adding that “we’ll set out in due course how the funds are to be distributed”.
[The last additional cash injection for colleges was controversially funded through the 16 to 19 funding formula.]
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