Further education colleges will be covered by the prime minister’s pledge for a sixth-month energy “guarantee” for the public sector, government officials have claimed.
But, an industry body has said college leaders cannot be left in the dark on whether longer term support beyond April is coming.
In an address to Parliament on Thursday, Liz Truss said typical homes will not pay any more than £2,500 per year for energy for the next two years, while the government will “also support all businesses, charities and public sector organisations with their energy costs this winter, offering the equivalent guarantee for six months”.
Further education colleges are not currently considered to be in the public sector, but the Office for National Statistics is currently reviewing that designation. The ONS is due to conclude its review this month.
However, the Department for Business, Energy and Industrial Strategy told FE Week that FE colleges will be covered by that guarantee, while the Department for Education, in a message to the sector, said: “Providers in all DfE sectors will be eligible.”
Julian Gravatt, Association of Colleges (AoC) deputy chief executive, said he welcomed the news that colleges will be covered, but said there was “little detail” so far.
He added: “If these plans only last for six months, then colleges will be wondering what happens in April and will be anxious about future bills. This uncertainty is a struggle for financial planning purposes, and we hope a long-term plan is announced swiftly.”
It comes after 189 college leaders – eight in 10 across England – came together with the AoC to pen a joint letter demanding urgent action from the new chancellor Kwasi Kwarteng and warning of a “serious risk to solvency”.
It said that as colleges were not covered by a price cap in the same way as homes, some were facing bills four times higher than they had been paying previously, which meant the combined £130 million annual energy bill for colleges could skyrocket to £520 million nationally, up from two per cent of college income to eight per cent.
Hari Khurmi, chief financial officer at Loughborough College, said prior to Liz Truss’ announcement that his college was facing a “big hit” – an estimated 100 per cent bill rise.
The college is planning to put together a working group to come up with ways of reducing energy use, and was implementing dashboards to see the areas of biggest use.
In addition, it was consolidating its evening and weekend activities into one or two buildings at most to reduce power and looking carefully at the times it heated buildings.
Luke Rake, principal, and chief executive of Kingston Maurward College, said his college had been facing another £400,000 on top of its existing £338,000 bill, that was despite it installing a ground source heat pump designed to save £100,000.
“We are already looking at budget reductions – not redundancies but discretionary spend on other things,” he added.
Nikos Savvas, chief executive of the Eastern Colleges Group said colleges were being put in an “unworkable position”. He said: “At West Suffolk College alone, our electricity costs are going to move from £400,000 a year to £1.2 million.”
Alison Andreas at Colchester Institute said her 2022/23 budget had a 66 per cent energy cost increase, with its fixed rate contract expiring at the end of the month.
Andreas said the leadership team had developed a 50-point plan that included reducing evening opening, while “a four-day week is not off the table, but something we are trying to avoid if at all possible”.
Suffolk New College was preparing for a 34 per cent utilities bill increase. Principal Viv Gillespie said: “We signed the AoC’s letter to bring these issues to the attention of the new chancellor, and to raise the profile of the FE sector in the context of the government stance on the importance of skills in order to fuel the economy.”
The AoC letter made a call for three immediate actions: an increase in funding rates for 16-to-19 students, boosting efforts to recruit and retain teachers, and exempting colleges from VAT.