Colleges need guaranteed funding for significant surge in student enrolments, says AoC

Colleges are calling on the government to move to an “in-year funding model” after their membership body projected an extra 90,000 students will be in their classrooms by 2024/25.

The Association of Colleges has today demanded the government provide an automatic guarantee of additional funding for extra 16-to-18-year-olds recruited each year, and said the Treasury should set multi-year revenue and capital budgets.

The Department for Education has also been called upon to annually publish student number projections for that age group, as currently they only provide them for students aged up to 15, three years before the minimum participation age of 18.

The association’s chief executive David Hughes said the lack of official projection data, combined with how government funds college students on a one-year lag “will make it increasingly difficult for colleges to cater for every student.

“The government wants more students to study in colleges but is not providing the funding needed and things will get worse as numbers rise, every year over the next decade.”

Difference between college and university funding ‘not fair to students’

The association has released a report, ‘Forecasting 16-to-18 education growth to 2030’, to explain the calculations, which highlights how universities will be fully funded for every single extra student in the year they are recruited while colleges have no such guarantee because their funding is based on lagged learner numbers.

“That is not fair on those students, nor does it support colleges to plan for and develop the capacity for the growth in numbers,” Hughes writes in the report.

The 90,000 figure is partly based on how the birth rate has risen since 2002, meaning more students will be of age for leaving school and starting college over the next few years.

Based on the association’s calculations, there will be a further 100,000 young people in colleges in the second half of the 2020s.

It is possible apprenticeship delivery could cease in colleges

The recent fall in apprenticeship starts – 28 per cent between 2019/20 and 2020/21 according to figures released this year – is another factor cited by the AoC.

Apprenticeships as a percentage of the college population halved from four to two per cent between 2019 and 2020, so the report warns: “It is possible there will come a point when apprenticeship delivery numbers are so low within colleges that the provision ceases altogether.”

The “profound” changes the coronavirus pandemic has wrought in the economy are another factor, as it has had “a significant negative impact on young people as the number of entry level jobs in hospitality and retail sharply reduced”.

This has resulted in an eight per cent rise in unemployment among the 16 to 24 population, without a guarantee of any “bounce back” in the economy this year.

With fewer jobs on offer, more young people will turn to training, the report predicts.

The government pushing students to study higher technical qualifications between levels 4 and 5 instead of degrees, and the possibility students will favour courses with a set industry placement, like T Levels, could also mean more of them enrol at colleges.

Student projection methodologies cannot account for colleges’ ‘potential variation’

Colleges can apply for in-year growth funding if they see a spike in student numbers, but the AoC has previously pointed out this is based on affordability and not guaranteed.

The AoC warned last November 20,000 “unfunded” extra 16-to-18-year-olds were already studying in colleges, owing to a surge in enrolments due to Covid-19.

The same week, the Institute of Fiscal Studies warned that, owing to FE’s lagged funding system, exceptional rises in student numbers could generate a real-terms fall in funding per student in 2020/21.

As part of its report, the AoC revealed it had asked the DfE a few years ago why student projection numbers stopped at 15, and were told the methodologies used for the projections were “relatively simple”.

So, as there are “many factors which can affect the number of children who choose to a) continue post 16 in a formal education setting and b) do that within a school,” the methodologies could not take into account the “potential variation” when enrolment is “entirely voluntary,” the DfE told the association.

A DfE spokesperson said: “The system of lagged funding, whereby an institution’s funding allocation is based on student numbers from the previous year, is well established and understood because it provides institutions with clear allocations each year, allowing them to make plans with confidence.

“Where institutions see a particularly large increase in student numbers in a year, they typically qualify for exceptional in-year growth funding, in addition to the lagged funding, to help them with the extra costs of these students.”

They highlighted that the department has amended the methodology for calculating growth so institutions with even modest growth were eligible for extra cash.

They also pointed to the £83 million Post-16 Capacity Fund, which was launched to ensure colleges can accommodate an expected demographic increase in 16 to 19-year-olds in 2022/23.

Funding for beyond 2021/22, including anticipated increases in the 16-19 population, will be considered as part of the upcoming spending review, they added.