Colleges call for aid as four-fold energy price hikes threaten solvency

Scores of colleges have outlined solvency fears unless soaring energy costs are tackled

Scores of colleges have outlined solvency fears unless soaring energy costs are tackled

College heads across England have demanded urgent action by new chancellor Kwasi Kwarteng in tackling the soaring cost of energy bills, warning of a “serious risk to solvency”.

A joint letter penned by the Association of Colleges chief David Hughes and signed by 189 college leaders – eight out of 10 in England – said that as colleges are not protected by an energy price cap in the same way as consumers, some are now facing bills four times higher than they were paying previously.

The letter warned that there are “very serious risks to solvency and in turn UK skills development if nothing is done”.

It said that in recent years the college sector’s energy bill has been a combined £130 million annually, with rising prices meaning that could rocket up to £520 million a year on energy alone if replicated nationally – up from 2 per cent of college income to 8 per cent.

The letter pointed out that a lack of investment in the last decade to buildings has left some more vulnerable to rising energy costs. Colleges in England run an estimated 4,500 buildings across 800 sites, according to the AoC.

The letter, issued ahead of an expected announcement this week by the new government on its plans to tackle skyrocketing energy bills – has called on the new chancellor to increase funding rates for 16 to 19 students, boost efforts to recruit and retain teachers and exempt colleges from VAT.

AoC chief executive David Hughes said: “Outside of the cost-of-living crisis, few challenges will be as important as tackling the skills shortages which are holding back businesses and the economy.

“Supporting colleges must be at the top of his priority list. Cutting VAT on skills and paying college staff better will deliver the economic growth the new PM has promised.”

The AoC said the funding rates for 16- to 19-year-olds was last reviewed in 2021 while adult funding rates last increased in 2010 – both before the spike in inflation, most recently at 10 per cent.

On teacher recruitment, the letter pointed out that teachers can earn more money in industry or in schools, where pay is up to £9,000 a year higher.

The letter said the energy costs “cut the resources we have for staff at a time when colleges are already struggling in the face of the widening gap between college pay and what skilled teachers can earn in industry and in schools,” and was “already hampering the expansion of technical education”.

It has called for a new workforce fund to be established to help recruitment, particularly in key sectors like health, construction and green energy.

The letter also asks for colleges to be VAT exempt in the same way schools are, if the Office for National Statistics review re-designates colleges as being public sector.

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