Much-feared Budget looks positive for adult skills budget — but what could the new 19-plus FE loans mean?

Further education loans were extended to the 19+ age group in a positive-looking Spending Review that many feared could have spelled the end of adult skills funding — but key details are yet to be revealed and the UK Commission for Employment and Skills looks set for the chop.

Protection of funding for the “core adult skills participation budgets in cash terms, at £1.5bn” may have offered the sector reassurance in Chancellor George Osborne’s Budget today despite £360m of cuts, but passing mentions of an FE loans extension could have serious implications.

The Budget document outlines the announcement, explaining that “government will expand tuition fee loans to 19 to 23-year-olds at levels three and four, and 19+ year-olds at levels five and six”.

The Department for Business, Innovation and Skills has been asked by FE Week whether cash saved in providing loans rather than grant funding was included in the £1.5bn that Mr Osborne said would be protected.

“We will not, as many predicted, cut core adult skills funding for FE colleges – we will instead protect it in cash terms,” he said, adding: “We will maintain the current national base rate of funding for our 16 to 19-year-old students for the whole Parliament.”

Meanwhile, adult skills budget efficiencies and savings of £360m by 2019-20 were also listed, with savings made from “supporting budgets, such as the UK Commission for Employment and Skills,” according to the Budget document.

“The government is also restructuring the sector through locally-led area reviews to provide sustainable and high quality provision in the future” it adds.

The Department for Education and the Treasury have also been asked by FE Week for details of the “targeted savings from 16-19 funding, including from declining demographics and funding outside the national base rate per student” in light of the announcement that “current national base rate per student for 16 to 19-year-olds in England will be protected in cash terms over the Parliament”.

Details of the government’s plan to raise £3bn through the apprenticeship levy also figured in Mr Osborne’s Budget.

He confirmed that from April 2017, employers would have to pay 0.5 per cent of their pay roll costs towards the levy — offset by a £15,000 allowance meaning that most employers will not have to pay.

“To ensure large businesses share the cost of training the workforce, I announced at the Budget that we will introduce a new apprenticeship levy from April 2017,” he told MPs today.

“Today I am setting the rate at 0.5 per cent of an employer’s paybill. Every employer will receive a £15,000 allowance to offset against the levy — which means over 98 per cent of all employers — and all businesses with paybills of less than £3 million, will pay no levy at all.

“Britain’s apprenticeship levy will raise £3bn a year. It will fund 3 million apprenticeships. With those paying it able to get out more than they put in.”

Mr Osborne also increased the government’s commitment to funding the apprenticeship programme, calling it “the flagship of our commitment to skills”.

“In the last Parliament, we more than doubled the number of apprentices to 2m. By 2020, we want to see 3m apprentices,” he said.

“And to make sure they are high quality apprenticeships, we’ll increase the funding per place — and my Right Honourable Friend the Business Secretary will create a new business-led body to set standards.

“As a result, we will be spending twice as much on apprenticeships by 2020 compared to when we came to office.”

Mr Osborne also announced changes to sixth form college rules as part of what he called the “schools revolution”.

“And I can announce that we will let Sixth Form Colleges become Academies too – so they no longer have to pay VAT.”

The Chancellor also said the government was planning to open 500 new free schools and university technical colleges (UTCs).

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  1. The 16-19 funding rate bis protected but let’s see how the technical aspects of the funding formula now get adjusted. Reducing programme uplift or disadvantage funding won’t get headlines, but may deliver the savings they need. Until we see the formula funding in Dec, we can’t rest easy on planning 16/17 budgets.

  2. A.P.Prentice

    What do new 19+ loans mean??? Might they indicate that although the ASB is protected to some extent at the top line level there are still plans for a significant cut to the “Other” ASB element (ie. Non Apprenticeships). Or to put it another way, a further skewing of ASB away from “classroom based” skills and into 19+ Apprenticeships. Introduction of 19+ loans is a way to moderate the impact of this cut. That will become clear when SFA makes its 16/17 ASB allocations.

  3. Lets not forget that the majority of colleges have a payroll cost greater than £m so will have to find 0.5% Apprenticeship Levy as a cost. £4.7b staff costs in sector in 13/14, so approx £23m cost to the sector as a whole. (or have I missed the bit that says Colleges are exempt?)
    The trick will be to use apprenticeships within staff development, and to grow apprenticeship business elesewhere in order to offset this.