IFS: Colleges face £400m funding shortfall for rising 16-18s

Growing student numbers mean colleges will need £400 million just to maintain per-student funding levels

Growing student numbers mean colleges will need £400 million just to maintain per-student funding levels

19 Jun 2024, 17:00

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The next government will have to find £400 million just to sustain 16 to 18 education funding at current levels, according to the Institute for Fiscal Studies. 

While predicted school pupil numbers are forecast to fall over the next four years, the number of 16- to- 18-year-olds is set to rise by 118,000. 

Yet election manifestos published by the Conservatives and Labour parties last week contained no commitments on post-16 education funding.

Labour, currently in the lead in the polls, pledged a £1 billion education package of measures for schools. Meanwhile the Conservatives committed to protect per-pupil spending in schools.

The Liberal Democrats though did pledge to increase per-student funding rates in colleges “above inflation” every year, alongside extending the pupil premium to 16- to- 18-year-olds, as part of a total education spending package worth £2.2 billion. 

New analysis from the leading think tank forecasts that even if per-student funding is maintained, the 16 to 18 funding rate would still be 9 per cent lower in real terms than in 2010. 

Unlike in schools, where pupil numbers are expected to fall by 400,000 by 2028, the population of sixth-form-age students is expected to rise by 118,000, or 5 per cent, by 2028.

IFS economists modelled three post-16 funding scenarios facing whoever wins the general election on July 4. 

Keeping per-student funding at today’s levels in real terms, so adjusting for inflation, would cost £400 million. The analysis found “this would keep spending per pupil constant in real terms at its current level, which – astonishingly – would be around 9 per cent lower than in 2009-10″.

Another option for the new government would be to freeze the overall 16 to 18 education budget in real terms. Factoring in the growth in student numbers, this would see per-student funding rates drop by 5 per cent over the next parliament. That per-student funding would be 13 per cent lower in real terms than in 2010. 

Alternatively, a cash-strapped government could freeze 16 to 18 education spending completely in cash terms, meaning it would not rise with inflation. Under this scenario, per-student funding would fall by 11 per cent by 2028 and be 19 per cent lower than in 2010.

Institute for Fiscal Studies

These alarming forecasts come as “colleges have faced sharper budget cuts than all other stages of education since 2010,” IFS research economist Imran Tahir said. 

“But while the main political parties have emphasised the importance of further education, particularly for young people, none has set out a clear plan for funding colleges,” he added. 

Funding for 16 to 18 study programmes has been increased by the Conservative government in recent years, but much of that funding has come with conditions, such as the delivery of 40 extra teaching hours. 

Colleges leaders will be hoping for a better per-student settlement than the current funding levels as they struggle to close the £9,000 pay gap between college and school teachers and struggle to meet rising demands for student welfare services.

The Association of Colleges (AoC) estimates £600 million extra per year is needed to fund rising demand and improve teacher pay, alongside capital funding to build extra teaching spaces.

David Hughes, chief executive of the AoC, said funding saved from falling school numbers should be redirected to colleges.

“We know that budgets will be tight going forward, but the next government must commit to investing in the FE workforce and estate to ensure that the education and training needs of 100 per cent of the population can be met,” he said.

“As this report shows, the reduced numbers in schools will reduce costs; the next government needs to recycle those savings into colleges for the growing number of young people, plus reinstate the severe cuts made since 2010 in adult learning.” 

Bill Watkin, chief executive of the Sixth Form Colleges Association, said: “Real terms funding for sixth form colleges is far lower than it was 14 years ago, but the needs of students have increased significantly over the same period.

“We are convinced that raising the rate of funding is the best way to do this, and as London Economics found last year sixth form colleges will require an additional £710 per student in 2025 to keep pace with inflation and provide young people with the level of student support and non-qualification time required to support their studies,” he said.

This is the second warning in two weeks of possible cuts to further education from the IFS.

Last week, IFS director Paul Johnson accused Labour of engaging “in a conspiracy of silence” on where cuts to unprotected budgets would come based on already-agreed so-called “fiscal rules” to reduce the national debt.

Estimates on potential cuts needed to unprotected government budgets, which includes further education, local government, courts and prisons, are £18 to £19 billion over the next parliament. 

Learning and Work Institute chief executive Stephen Evans predicted the adult skills budget’s share of the unprotected spending cuts would be about £380 million, on top of the £1 billion already cut from the sector since 2010.  

The Liberal Democrats were the only party to respond to IFS’ analysis. A Lib Dems spokesperson said: “The Conservative government has let down our young people and underfunded school sixth forms and colleges. 

“It is high time we valued them properly by extending the pupil premium, protecting student choice, and fostering a culture of lifelong learning. This is what our post-16 education budget should be delivering.”

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