Last week in Liverpool, Andy Burnham told his party that it is time for Britain to have hope again. As Greater Manchester’s mayor for years, he saw what its young people could achieve and how often opportunity depended on their postcode.
Now, as prime minister, he has a chance to take the handbrake off the colleges that have the ability to change that.
LTE Group works in the communities he knows, and we share his determination to end what he calls the academic bias in our education system and make technical education a respected route into good work.
One change to the VAT rules would let us do much more with the money the government has already committed – and drive down youth unemployment.
Picture a teenager from the Harpurhey suburb of our city arriving at The Manchester College’s campus there, curious about science but unsure where it might take them. We have just opened a new science laboratory at this campus. With the right teaching and equipment, that interest could lead to a qualification, the confidence to pursue further study, or a route into employment in the healthcare sector.
That is what a technical education should offer: somewhere to start and somewhere to go next. There are thousands of young people like that across Greater Manchester, ready for a chance to seize opportunities.
Alan Milburn’s interim review shows why this matters, and the Chancellor also gets it. John Healey has told his party of a moral duty to get a generation of young people into work. Almost a million young people are outside education, employment, or training. Yet 84 per cent of those surveyed said they wanted a job, education, or training.
Milburn identifies FE as the main route into vocational education for young people from a wide range of backgrounds. When the first rung of the ladder into work is getting harder to reach, a college place matters more than ever.
Burnham took barely ten days in office to set out his ambition: technical pathways from 14 with the same prestige as the academic route, shaped by mayors, employers, and local leaders. I welcome that, and Greater Manchester is ready to go first. Here we know the jobs and skills our communities need. But the first of those pathways are due in 2028, and they need workshops, laboratories, specialist teachers, and enough places for the young people who want to take them. That means building now, and every pound counts.
At present, a school or academy can recover VAT on relevant publicly funded spending. An FE college generally cannot.
Education itself is VAT exempt, but we still pay VAT on much of what we buy to deliver it. A workshop can cost a college up to a fifth more than an equivalent facility at an academy school. That is a practical limit on how many learners we can serve, and an obvious anomaly that a government that wants technical and academic routes treated as equals would fix.
The mismatch became harder to explain when colleges were reclassified into the public sector in 2022. We took on tighter borrowing and spending controls, but the VAT treatment schools and academies enjoy did not follow. Public money for skills loses some of its value before it reaches the learner.
LSE Consulting estimates that irrecoverable VAT costs colleges around £200 million a year. LTE Group’s annual VAT bill is about £5 million. We estimate that, if we could recover it, we could offer around 400 additional places for 16-18-year-olds in Greater Manchester. Imagine what those places could mean for young people in Harpurhey, Openshaw or Wythenshawe, and for the employers looking for their skills.
The Treasury will rightly want to know what a change would cost, and this is a Budget with little room to spare. But this is not a request for new money. It is a request to let money already committed to skills do its job.
Colleges should show exactly what every pound recovered buys: more places, better equipment, skilled staff.
As more decisions on skills pass to mayors and strategic authorities, it makes little sense for devolved money to buy less when it is spent through a college.
Alongside Activate Learning, Capital City College, Luminate Education Group, and New City College, I am asking for a targeted VAT refund arrangement for eligible FE colleges, on the same footing as the one academies already have.
On 28 October, in the first Budget of the Burnham era, the Chancellor can commit to reform, or set a clear Treasury timetable to deliver it by Budget 2027.
The Prime Minister says he wants to draw a line under a decade of drift and division. He knows the streets these learners come from, and what good technical education could mean for them. If hope is to mean something in Harpurhey, it starts with a college place. Let’s take the handbrake off our colleges and let every pound reach the learner.