Department for Education (DfE) ringfencing of school funding has been labelled as “unsustainable” by the Association of Colleges (AoC) as it predicted a departmental budget black hole of £4.6bn.

In a report by the AoC on the DfE’s financial situation, it warned of a budget deficit of £600m in 2015, rising to £4.6bn by 2018/19.

And with the DfE responsible for funding the education of 16 to 18-year-olds, AoC assistant chief executive Julian Gravatt raised concerns about the sustainability of a ringfence which protects schools funding — but leaves the FE sector open to cuts.

He told FE Week: “I think there needs to be a look at what spending levels need to be at each age.

“The ringfencing is only a problem if it protects 80+ per cent of the budget and all savings have to be made elsewhere. The ringfence is unsustainable given the impact it has on the areas of the budget.

“The first thing to do is persuade the DfE to be more open about its own forecasts and work with us. The second thing to say is that budgets haven’t been set for after 2015 and are still open for the next government to put more money in.

“It’s important to remember that this problem only exists if spending doesn’t increase. If pupil numbers go up the main thing is to address that.”

In its report, the AoC explains that the projected deficit is associated with an anticipated increase in the number of people of school age, coupled with increased teacher pay and pension contributions as well as costs associated with new policies.

The report also takes into account a planned 17 per cent real terms spending cut across all departments between 2015 and 2019 and the AoC has said the government is yet to announce whether the school budget, which has been ringfenced since 2010, will continue to be protected.

Mr Gravatt added: “There needs to be a discussion about what choices are available, and people will have views about where savings can be made. We are worried about this assumption that you can continue cutting 16 to 18 budgets without consequences.

“The danger for colleges is, as the main providers of 16 to 18 education which turn lots of people around who failed at 16, that they would be doing that with fewer people and wouldn’t be able to make the improvements people want them to make.

“Pay costs in colleges are about two-thirds of expenditure, whereas in schools they’re about 80 per cent. If this budget issue is not addressed, you’re either going to get fewer people or cuts in pay. Our message to the government, and to all parties, is that there is an election in a year’s time, and they need to be open about this.”

But the report has been dismissed by the DfE, described it as “speculative”.

A spokesperson said: “These speculative figures are based on analysis of a budget that does not even exist yet.

“Our budget after 2015-16 will be a matter for the government’s next Spending Review, which as usual will give full consideration to future cost pressures.

“We have received excellent settlements between 2010 and 2016, enabling us to protect school funding in real terms while the government tackles the deficit.”

Mr Gravatt said the further education and sixth form colleges represented by the AoC educated more than 900,000 14 to 19-year-olds each year and relied on funding from the DfE totalling £3.8bn.

The full report, which includes a more detailed breakdown of the projected costs, is available to download and read online at aoc.co.uk.

 

Colleges seeking funding for learners based outside their usual catchment areas will have to give notice of eight weeks, the government has said.

The Education Funding Agency (EFA) has claimed the guidance simply represents a clarification of existing policy, while the Association of Colleges (AoC) described the move as a “clear signal that the EFA wishes to limit distance sub-contracting”.

The guidance document says: “If the institution believes there is good reason for the EFA to fund sub-contracted provision of a whole programme to be delivered outside their normal recruitment area then the institution must seek EFA’s

agreement in principle in advance of delivery.

“EFA will consider applications made on the distance sub-contracting form available with this document from the website. This must be sent to the EFA territory email address at least eight weeks before the start of any planned delivery.”

An EFA spokesperson said: “We already expected education providers to contact us in advance before sub-contracting out provision of a course outside their normal recruitment area.

“We recently revised the guidelines to clarify our position on this and bring in consistency across the country.”

The move comes as the EFA aims to clamp down on the issue of “double funding” — where a learner is funded twice, through two different lead contractors.

The document said: “Sub-contracted provision (particularly distance provision) has had the highest number of historic ineligible double funding problems and the EFA regards such arrangements as high risk.”

Julian Gravatt, assistant chief executive at the AoC, said: “The EFA has introduced a number of new, tighter sub-contracting rules in 2014-15 including a new declaration at the start of the year.

“The school census will include a sub-contracting field in 2015 which will match the data already provided as a matter of routine by colleges via the Individual Learner Record.

“The new eight-week approval timetable should be manageable for colleges but the whole package of controls is a clear signal that the EFA wishes to limit distance sub-contracting.”

 

Official figures showing fewer than two applications for each traineeship vacancy have sparked concern about a “general lack of awareness” of the government’s new flagship youth unemployment scheme.

A freedom of information (FOI) request from FE Week showed just 4,160 online applications were made for 3,480 traineeship vacancies in the eight months since the programme’s launch in August last year.

And with the system only showing the number of applications — rather than applicants — it’s likely the headcount was actually lower because one person could have made more than one application.

A spokesperson for the Association of Employment and Learning Providers said: “A general lack of awareness about traineeships is part of the issue, which is why in tandem with the new statutory guidance for schools on careers advice, it’s important that more local employers and providers can get into schools to explain the benefits of the new programme.”

The traineeship figures are overshadowed by those of apprenticeships, which attracted more than 12 applications per vacancy between August and the end of October last year, according to the most recently figures from the National Apprenticeship Service.

Its report showed 461,530 applications were made online for apprenticeships during this period — which compared to 36,700 vacancies (according to the same FOI response from the Skills Funding Agency).

Teresa Frith, senior skills policy manager for the Association of Colleges, said apprenticeships were bound to attract
more applications as they were more established.

But, she said: “There has been no direct marketing [for traineeships] to potential trainees or their parents or influencers, and it may well be that the expectation of the student is that they go directly onto an apprenticeship rather than a pre-cursor programme.”

The news on applications comes six weeks after FE Week reported that there were just 3,300 traineeship starts in the six months following the scheme’s launch.

However, Skills Minister Matthew Hancock said this month that he hoped 5,000 new traineeships would be created through the employer ownership pilot scheme.

A spokesperson for the Department for Business, Innovation and Skills said: “Many traineeship providers are already using the apprenticeships vacancies service to reach young people.

“However, it is not compulsory for providers or learners to use the system for traineeships, so these figures are only a part of the wider positive picture.

“Some providers will choose other routes to advertise places and some applicants will be referred directly, for example by Job Centres.”

 

The Association of Colleges has called for government proposals for apprenticeship funding reform to be “carefully modelled and trialled” over fears changes could create barriers and reduce quality.

In its response to a technical consultation on the proposals to use PAYE or a credits system to fund apprenticeship, it warned that not enough was known about how either system might function in practice.

The response said: “We recognise that the mechanisms offered are theoretically simple, but we have significant concerns that the approach to be adopted will not be fair and will provide an advantage to larger employers who are already involved in apprenticeships against smaller businesses and those new to the scheme.”

It was also concerned that putting employers in charge of paying for apprenticeship training could lead to a drop in quality.

The association’s response said: “It is difficult to predict precisely how price negotiations will work in practice, but BIS research strongly … suggests that apprenticeships will be price sensitive.

“If this proves to be the case there is a real risk that quality provision will be undercut by the cheapest offer.

“Even if such behaviour is short lived, it will impact adversely on apprentices and on some high quality providers who may well choose not to remain involved.”

The association recommended extensive pilots be carried out to explore the potential impact of the reforms on the system.

It said it believed that the reforms could lead to higher quality apprenticeships which met employer needs if they recognised the additional costs of smaller businesses and of working with younger apprentices.

The response said: “We do, however, continue to have serious reservations as to how government intends to implement these changes.

“We feel that the changes need to be carefully modelled and trialled to determine whether they will indeed support the intent.”

It added that the association did not believe the phase one trailblazers on their own would be enough.

“We would expect all pilot and transition activity to be evaluated to check whether it is better than the existing system,” it said.

“Without such an evaluation this will amount to a significant amount of change and expense for very little (if any) gain over the current arrangements.”