Colleges call for emergency government funding to boost staff pay

Ministers are being urged to stump up emergency funding for colleges so that staff pay can be increased in the face of a cost-of-living and recruitment crisis.

The Department for Education is also being asked to review policies to reduce financial risks – including by being lenient when it comes to funding clawbacks, offering an income “guarantee”, and increasing funding rates for adult education courses.

Association of Colleges boss David Hughes laid out the demands in a letter to education secretary Nadhim Zahawi today.

It comes ahead of the association’s annual negotiations on staff pay with education unions later this week. The AoC has repeatedly recommended a 1 per cent pay increase for staff over the past five years much to the protest of unions which have in turn launched numerous strikes.

In an update to members on Friday, Hughes revealed that the unions’ claim this is for a 10 per cent rise this year, with a minimum of £2,000.

He said that given inflation is running at 9 per cent, and the longstanding pay gaps with schoolteachers of £9,000 and with wider industry, that does “not look completely unreasonable”.

But he pointed out after a decade of underfunding, there is not a single college which is able to meet that claim, nor even get very close.

In turning to the government for extra funding, Hughes highlighted there is a risk to the rollout of T Levels and Higher Technical Qualifications, as well as ambitions to boost apprenticeships, because colleges are “struggling to retain and attract top talent to teach the skills needed to fill gaps in shortage sectors across the economy”.

Previous AoC research claimed that colleges are suffering their worst staffing crisis in two decades.

Hughes said: “The government’s skills revolution is in danger of stalling because, ironically, colleges cannot compete in the tightest labour market on record. At the very time colleges need to be training more people for the increasing number of skilled vacancies, they find themselves unable to pay enough to attract and retain talented, experienced and skilled people themselves. 

“Colleges want to deliver but are not being given the funding they need to do it. The gap between what these teachers could earn in industry, or even in schools, compared to working in a college is now at crisis point, limiting capacity just when colleges need to grow numbers.”

He called on Zahawi to make representations to the Treasury for emergency funding. But he stopped short of saying how much is needed specifically.

Last year’s spending review announced that the DfE will be investing an extra £1.6 billion in 16-to-19 education and training by 2024/25, compared with the 2021/22 financial year. This includes an up-front cash boost which will see the rate of funding per student boosted by over 8 per cent in 2022/23.

Hughes said these funding decisions for 2022/23 assume 2 per cent inflation for 16-18 courses and 0 per cent for everything else (adult education, apprenticeships and higher education) which is some way off the current 9 per cent inflation.

Alongside pay pressures, colleges have to deal with increases in national insurance contributions, the national minimum wage, pension contributions, utility bills and other costs, Hughes said.

The AoC also wants DfE to review other policies which could be adjusted to reduce the financial risks for colleges which, in turn, could help them make a better pay settlement.

These include:

– how the business case processes can be designed to allow more leeway for 2021-22 and 2022-23 AEB and 2022-3 T level shortfalls because colleges risk clawback on both;

– more flexibility on the extra 40 funded hours in 2022-23 which are eating into the funding available, and which are also more challenging to deliver given the widespread difficulties in recruiting and retaining teaching staff;

– suspending intervention action on ESFA financial health assessments and the FE commissioner 65 per cent staff cost benchmark because those measures will severely constrain colleges from making better pay offers to staff;

– a cost increase sharing mechanism for approved DfE capital projects (currently 100 per cent of extra costs fall to the college) because of the large inflationary increases in construction materials and labour costs;

– offering an income guarantee for colleges where the grade inflation in last summer’s exams led to more young people staying in school sixth forms. This impacts through the lagged system on income from the autumn, just when we expect those student numbers to bounce back. The lagged system was not designed for such unique circumstances and needs to be amended for next academic year;

– considering a rate increase on AEB, learning from the approach taken in London by the GLA with it’s devolved powers. The AEB funding rates have not increased for over a decade;

– considering a rate premium on priority courses and qualifications, including in skills shortage areas such as construction, engineering, digital and health where colleges have the most difficulties in recruiting skilled staff and for T Levels, HTQs and other courses which the Government wishes to see grow.

The DfE was approached for comment.