‘I’ll have a look’ at college VAT issue, says PM

Sir Keir Starmer has pledged to “have a look” at the long-running VAT “anomaly” affecting further education colleges.

The prime minister said today he would speak to the Treasury about the issue, which FE leaders warn is draining hundreds of millions of pounds from college budgets and undermining the government’s skills ambitions.

The intervention follows a recent education select committee report calling on the Department for Education to make the case for FE colleges and standalone sixth form colleges to be exempt from paying VAT on expenditure.

Despite being reclassified as public sector bodies in 2022, colleges teaching 16 to 18 year olds are unable to reclaim VAT on most purchases linked to education and training. Schools and academies educating the same age group, however, can. 

The government last week rejected the recommendation, arguing that FE colleges are classed as “eligible bodies” for VAT. This means they do not charge VAT on education services but also cannot reclaim VAT on their spending, a position the government said is shared by “many public bodies”.

‘No justification’

Raising the issue during the prime minister’s appearance at a liaison committee session this afternoon, education select committee chair Helen Hayes said her inquiry into FE and skills found VAT was a major factor holding the sector back.

She told Starmer that, “unlike other post-16 providers, FE colleges and standalone sixth form colleges are unable to claim VAT back on their expenditure”.

“This is a tax position for which there is no justification,” Hayes said, adding that the committee’s evidence showed the VAT issue was preventing colleges from delivering against the government’s mission.

She asked whether the prime minister would speak to the Treasury about what she described as an “anomaly”.

Starmer replied: “I [will] certainly have a look at it and talk to the Treasury about it.

“I’m very keen to do what we can to further, further education. I think it’s part of the system that needs more work, more resource, more capability and more weight behind it.”

Millions flowing back to Treasury

The Large College Group, an informal partnership of England’s seven largest colleges, reported last month that £379 million in recently pledged college capital funding is expected to flow back to the Treasury through irrecoverable VAT.

The Association of Colleges estimates college VAT bills cost the sector around £200-£250 million each year.

In its response to the select committee, the government said any tax changes must be considered “in the context of the broader public finances”.

Local leaders to hold £283m college capacity purse strings

Metro mayors and local leaders will be allocated £283 million to “boost capacity in colleges” and offer more construction courses next year.

According to a government announcement last night, the funding will help colleges meet “surging demand” for homegrown skilled workers.

Around £100 million has been earmarked to “boost capacity specifically” in construction courses, while local leaders “will be given the power” to choose how to spend the remaining £183 million on college capacity for 16- and 17-year-olds.

Details in the announcement are limited, but the funding appears to be a second batch of post-16 capacity funding initially released to increase college places in Greater Manchester and Leeds.

The Department for Education (DfE) will also release £8.8 million in capital funding for “specialist” T Level teaching equipment and has confirmed the launch of the FE Teacher Industry Exchange pilot in January 2026.

Skills minister Jacqui Smith said: “Learning a trade opens doors to a brilliant career and a secure future, and trade workers are crucial to our mission to turbocharge economic growth.

“We’re making sure every young person who wants to become a builder, engineer or technician can get that opportunity.

“Our plan for national renewal gives young people the skills they need to get on in life while delivering the homes and infrastructure our country desperately needs.”

DfE press materials say the funding is aimed at addressing an expected 67,000 extra 16 and 17-year-olds in education by 2028, with allocations for each area due to be confirmed “in the new year”.

The government appears to be shifting control over how post-16 capacity funding is shared out to mayors and local leaders, rather than direct allocations to colleges.

It follows £20 million in capacity funding released to Andy Burnham’s Greater Manchester Combined Authority and Leeds City Council, which aims to open up an estimated 9,000 extra college places in coming years through a combination of small building refurbishments and the purchase of new properties for conversion into teaching space.

FE Week understands that a total of £375 million has been allocated to post-16 capacity until 2029-30, although details of how it will be distributed are yet to be confirmed.

In the most recent national capacity funding round, the department released about £230 million to colleges between 2021-22 and 2023-24.

Construction capacity crisis

It comes amid increasing doubts over whether the government is likely to achieve its promise of 1.5 million new homes by 2029. 

According to an Association of Colleges post-enrolment survey carried out in October, 60 per cent of colleges reported limited or closed 16 to 18 enrolments for construction, higher than any other subject area.

Electrical (56 per cent), engineering (37 per cent) and education (28 per cent) also faced reported capacity issues.

Overall, 77 per cent of the 105 colleges, sixth forms and specialist colleges that responded reported a “significant increase” in demand from students.

The survey report said: “There have been persistent capacity constraints in high-demand sectors like construction and engineering where colleges face acute staffing and space shortages which have limited enrolment growth despite strong demand.

“Capacity issues are also affecting apprenticeship provision, especially in technical areas.”

Demographic change was the most frequently reported reason for increased enrolments, alongside GCSE grades, local job market health and availability of work-based training.

Bids open for 19 more technical excellence colleges

Sixth form colleges and designated institutions will be able to apply to become one of 19 new ‘technical excellence colleges’ next year, under plans for wave two of the TEC programme.

The government confirmed today it will hand out a share of £175 million to 19 TECs over four years from April 2026 to boost training high-demand sectors such as defence, digital, clean energy and advanced manufacturing.

The second wave of the Department for Education’s (DfE) programme will also dole out £283 million to mayors and local leaders to boost construction course numbers and expand college capacity in their areas.

Wave two will add to the ten FE colleges that became construction TECs back in August in a bid to train 40,000 construction workers by 2029.

After sector feedback, DfE expanded eligibility to sixth form colleges and designated institutions after acknowledging that some large sixth forms have comparable provision to general FE colleges.

Colleges will also be able to hold more than one TEC status under “dual designation” but this would be a rare occurrence and not standard practice, officials confirmed.

Applications are now open to create five defence TECs, five digital and technologies TECs, five clean energy industries TECs and four advanced manufacturing TECs.

Under new guidance for wave two of the programme, TECs will act as a “hub of excellence” in one of the four in-demand sectors and share and scale up their “model of innovative teaching and curricula excellence” across the sector.

Through a “hub and spoke” model, TECs will be expected to support other FE “spoke” providers such as FE colleges, independent training providers and university technical colleges by sharing resources and expertise.

DfE also will expect TECs to establish networks with other providers across the country in subsector areas where there are similar sector needs. For example, an advanced manufacturing TEC should work with the automotive subsector and a defence TEC should collaborate with the maritime capabilities’ subsector.

“Colleges appointed as TECs will support other providers that deliver provision in their sector, so that the opportunities and benefits that TECs create are spread across regions and learners,” DfE stated.

Skills minister Jacqui Smith said: “Learning a trade opens doors to a brilliant career and a secure future, and trade workers are crucial to our mission to turbocharge economic growth.

“We’re making sure every young person who wants to become a builder, engineer or technician can get that opportunity.

“Our plan for national renewal gives young people the skills they need to get on in life while delivering the homes and infrastructure our country desperately needs.”

Funding

The 19 successful TECs will receive an average of £9 million over four years, delivered through capital and revenue funding.

£175 million has been committed over a four-year period, broken down into £137 million capital and £38 million revenue funding and delivered jointly by DfE, Ministry of Defence, and the Department for Business and Trade.

After the TECs have been selected, they will be asked to submit “high-quality costed delivery plans” in summer 2026 along with capital and revenue costs.

They will also have to show support from employers, industry bodies, and strategic authorities relevant to the proposals set out in their delivery plans.

“TECs should also seek match funding or other commitments from employers,” the guidance added.

Around £2 million of revenue cash will be distributed equally per TEC over three years and will go towards TEC hubs developing, scaling and sharing specialist curricula and training with other partner providers.

Meanwhile, capital funding will be awarded for TECs to procure specialist equipment and upgrade their facilities.

Criteria

Budding TECs in wave two are required to meet a swathe of similar essential eligibility criteria as the construction TECs in wave one such as be a further education college part of the statutory FE sector in England.

But DfE has opened up applications to sixth form colleges and designated institutions for the first time after hearing feedback that some large sixth forms have comparable provision to general FE colleges.

Schools, academies and independent training providers are still not eligible to apply to become a TEC, but DfE are encouraging close collaboration with TECs to share expertise.

Depending on which of the four wave two sectors a college applies for, providers will have to meet sector-specific criteria.

These are:

  • Demonstrating employer partnerships
  • Alignment with sector priority occupations
  • Alignment with one or more of the Industrial Strategy priority city regions and clusters and associated subsectors
  • Level 4 + plus provision and Office for Students registration

Like wave one, applicants will be expected to have a finalised financial health grade of ‘good’ or ‘outstanding’ for the year 2023-24 as assessed by DfE.

Wave two criteria added that once new grades for 2024-25 are finalised in April 2026, DfE will need to confirm that a TECs grade has remained ‘good’ or ‘outstanding’.

“Any college who receives a ‘requires improvement’ or ‘inadequate’ financial health grade for the year 2024 to 2025 will subsequently be deemed ineligible to become a TEC prior to appointment,” the criteria added.

Julian Gravatt, deputy chief executive of the Association of Colleges, said described the eligibility rules as “complicated” and warned they “may exclude some otherwise strong bids”. 

TECs are also expected to be Ofsted rated ‘good’ or ‘outstanding’ in overall effectiveness. Colleges who have an Ofsted rating of ‘requires improvement’ may apply if they can “demonstrate through a recent monitoring visit report that they have made significant progress against all areas requiring improvement”.

The new criteria added that under Ofsted’s new framework, which has removed single word judgments with report cards, DfE understood that only a small number of colleges will be inspected under the new framework during the bidding process.

For those colleges, it will not apply a single word judgment and will instead consider the new report cards on a case-by-case basis as part of the assessment process.

Colleges also must have an achievement rate above 84 per cent based on 2023-24 figures or an apprenticeship achievement rate above 61 per cent according to the latest data.

Any exemptions from the eligibility criteria will be “rare” and will be considered typically where a single criterion cannot be met due to a “known” issue outside the applicant’s control.

DfE will also consider “dual designation” in exceptional circumstances. Colleges who already hold a TEC status or wish to apply to multiple TECs will have to complete two applications and indicate they wish to hold dual designation.

“Colleges seeking to be considered for more than one sector must provide compelling evidence of their capacity, infrastructure, and expertise to deliver at scale across each area, without compromising quality or impact,” DfE said.

Applications are open until February 16, 2026.

I was NEET for 2 years. Developing soft skills saved my future

For two years after completing my A Levels at 18, I was not in education, employment or training (NEET).I became a member of a growing number of young people, now almost totalling one million. 

The state of the job market wasn’t inspiring any confidence and the fact that employers required experience for entry-level minimum wage jobs only added to my anxiety. 

I applied to all sort of jobs in the beginning. Mostly, I heard nothing back. When I did hear something back it was automated rejections. The lack of feedback combined with the fact that I wasn’t sure what a good CV looked like, much less how to write one, meant that I got discouraged. 

Soft skills like confidence, communication and teamwork took a hit post-covid and dwindled further during those two years post-college. I began to doubt my ability to even do the thing that I was desperate to do – work. 

The King’s Trust TK Maxx Youth Index 2025 found that young people who were NEET for longer than six months had worse overall wellbeing than those NEET for less than six months. Half of young NEETs do not feel in control of their future, compared to 39 per cent of their peers in education or employment; all of which I could relate to. 

I knew that I was stuck and needed support, but I didn’t really know where to look. My turning-point arrived in October 2024 via an Instagram advert for The King’s Trust 12-week self-development programme – Team, delivered by Warwickshire College group in my home city of Birmingham. 

I learnt on this programme that I’m capable of showing up every day, making connections with people and challenging myself. The programme offered me something to structure my days around and a reason to get out of the house regularly. 

I was pushed outside my comfort zone by doing leadership activities and work experience. I took part in community projects and attended a residential where we did things like archery and orienteering. I received support to write my CV, interview skills training and even qualifications. Through doing all of this, my soft and social skills reignited. 

The importance of such skills were also echoed in the Youth Index research; developing confidence (32 per cent), work experience opportunities (30 per cent), help with CV writing and interview skills (29 per cent) and training opportunities with employers which could lead to a job (28 per cent), were the most popular answers among NEET young people to help them move into work.  

As my confidence regrew during my twelve weeks on Team, I began exploring my interests. I’d always had a love for theatre, music and film and a fascination with costumes and fashion. I started researching the skills and work experience I’d need to secure a role in the arts.

A couple of months after I finished, I joined a costume team at Crescent Theatre near where I live in Birmingham, helping with costumes and working on two productions. I also got onto a programme with Birmingham Rep (Young Rep Backstage) getting masterclasses and workshops about backstage careers.

My soft skills were more than just a boon, they were absolutely instrumental in me being offered these opportunities. The confidence that came from knowing I could make a good impression, work well in a team and communicate effectively were my biggest advantages in every environment I entered afterwards. I felt capable, connected to the wider community and more than anything, ready to act and continue taking action to secure employment in the arts.

I think too often, the challenges young people face, especially those who are NEET, are misunderstood. By and large, young people want to have secure, happy lives that offer independence through employment. This is echoed by The Youth Index, which states that two thirds of NEET young people say being in work would give them stability in life. 

Almost a year on from completing Team, I’ve started a two-year running wardrobe apprenticeship with the Royal Shakespeare Company. 

I urge educational organisations, politicians, philanthropists and business leaders to prioritise their support for initiatives that offer young people the opportunity to boost their soft skills. They are essential tools that will be transformational for many. 

Fewer share prosperity when UKSPF ends in March

Only the UK’s most deprived areas will benefit from a post-Brexit fund for local skills, business and community projects – cutting hundreds of councils off from money to help marginalised people.

The UK Shared Prosperity Fund (UKSPF), which ends on March 31, was launched by the Conservative government in 2022 to compensate for the loss of £1.5 billion per year in EU regional social and development funding.

But details published alongside last month’s budget revealed the extent of Labour’s “new approach” to regional investment, splitting funding into two programmes and sidelining the UKSPF’s “people and skills” priority.

It follows the end of the Multiply numeracy programme for adults in March, which was estimated to have cost about £250 million since 2022-23.

Councillor Tom Hunt, chair of the Local Government Association’s inclusive growth committee, said the end of UKSPF would impact councils’ ability to deliver skills and employment support.

He urged ministers to provide programmes that “combine support for local employability, skills, and health initiatives to replace relevant parts of UKSPF before it comes to an end.”

Although Labour’s new approach to regional investment was confirmed in broad terms in June with the 2025 spending review, details of how funding would be distributed were only fully revealed in recent weeks.

Local Growth Fund

The largest programme, the Local Growth Fund (LGF), accounts for an average of about £225 million per year until 2029-30, shared out between 11 mayoral strategic authorities in England’s north and midlands.

From March, the LGF will follow the same principles as UKSPF, with mayors asked to spend the funding on people and skills initiatives, local infrastructure or business support.

However, the fund’s overall budget is 75 per cent less than the £915 million available via UKSPF in England in 2024-25, and its focus on 11 strategic authorities will mean more than 150 local authorities are cut off from annual allocations of £327,000 to £61 million, depending on their size and deprivation levels.

The government has also dictated that from 2026-27 to 2028-29 the share of LGF cash that can be spent on revenue will fall from 75 to 42 per cent.

The Industrial Communities Alliance, a group representing local authorities in industrial areas of the UK, said the change “runs contrary” to the government’s objectives of promoting jobs and will have “knock-on consequences” for the estimated 4,000 jobs the UKSPF supports in England.

The geographical spread of LGF has also disappointed politicians outside the north and midlands, including mayor of Cambridgeshire and Peterborough Paul Bristow, who criticised the government’s “spreadsheet-driven approach”.

He said leaving his region out of the LGF was a “mistake” that denied investment which would help drive local growth.

Bristow added: “The funding criteria includes being under the UK average for GDP per capita, which sees Cambridgeshire and Peterborough just miss out.

“This spreadsheet-driven approach fails to recognise the reality on the ground where the relative affluence of Greater Cambridge skews regional averages.

“We have areas in Cambridgeshire and Peterborough which come well under national average metrics for health and wealth and need investment to change the story.”

A spokesperson for the Greater London Authority (GLA), which will lose out on about £63 million a year, told FE Week that the mayor’s team is developing options to continue supporting businesses.

Pride in Place

The second programme, Pride in Place, will invest £5 billion over the next 10 years in 350 of the “most deprived” neighbourhoods, doling out about £400 million per year in England once it is up and running.

Pride in Place claims to be a “new way” for government to work with neighbourhood boards in “left behind” communities, promising to spend £20 million in each area over a decade, with the core objectives of building stronger communities, creating “thriving places”, and empowering people to “take back control”.

While this programme could fund skills and employment-focused initiatives, its other priorities threaten to “squeeze out these vital activities,” the Industrial Communities Alliance warned.

The association criticised Pride in Place for its “top-down” approach to distributing funding that focuses on statistical boundaries that “don’t match neighbourhoods on the ground” and were decided without consulting local authorities.

The Treasury and Ministry of Housing, Communities and Local Government did not respond to repeated requests for comment.

‘At odds’ with government priorities

Sam Avanzo Windett, deputy director of the Learning and Work Institute, said the new programmes had put “vital” support for marginalised people outside mainstream services “in question”.

She added: “With the move from the [European Social Fund], combined into UKSPF, and now rolled into plans for a Local Growth Fund only in specified areas, the future of these services is uncertain.

“With a patchwork of initiatives in place, some organisations will be facing a cliff edge and vital frontline expertise will be disappearing.

“At a time when economic inactivity is a pressing concern, any decision to reduce funding to help groups with more complex barriers into employment seems at odds with the government’s aim to reach an 80 per cent employment rate.”

There’s widening participation, but narrowing mental health support

Student mental health has become one of the defining challenges across both further and higher education. Colleges and universities are seeing more learners who are facing anxiety, depression and stress-related issues than ever before. Yet the ability of institutions to respond has not kept pace, resulting in a wider gap between what students need and what academic institutions can provide.

Rising demand, limited capacity

Research by the Association of Colleges  found that 95 per cent of colleges had seen an increase in disclosed mental health difficulties among their 16–18-year-old learners. Similarly in higher education, an Office for National Statistics survey found that around four in ten first-year university students showed symptoms of depression or anxiety.

Waiting lists for counselling and wellbeing services often stretch into weeks, during which time the mental health of these students can worsen.

While both the FE and HE sectors are committed to widening participation, this success brings with it additional complexity. Learners from disadvantaged backgrounds are entering in greater numbers into FE and HE, but they are also more likely to experience mental health challenges (Sutton Trust, 2019). With resources being stretched, often the students who need support the most are struggling to access it.

FE and HE: different contexts, shared challenges

There are some differences between FE and HE. Colleges are catering to a younger audience, many of whom are still trying to navigate through adolescence. They often lack the resilience to deal with major life transitions. Universities, however, are supporting large numbers of international students and mature learners who are balancing multiple pressures.

Despite these differences, the challenge each sector is facing is similar: growing demand with limited resources. Too often, institutions are relying on overstrained counselling services as the first and only line of support, instead of embedding wellbeing across the teaching and learning environment.

The case for early intervention

Evidence has clearly shown that early intervention can make a big difference. In FE, this can mean having regular wellbeing check-ins at enrolment or using pastoral systems to highlight any concerns before they become major problems. In HE, it may involve giving staff adequate training to recognise signs of distress and signpost appropriately.

Having strategies such as flexible deadlines, mentoring schemes and transparent communication around what is expected can decrease stress before it turns into a major crisis. These methods are not resource-intensive, but they require a cultural shift so that responsibility for mental health is seen as shared across the institution, not just left to specialist teams alone to deal with these issues.

Building capacity and partnerships

No institution can solve the mental health crisis on its own. Colleges and universities need to collaborate to build stronger partnerships with local health services, charities and community organisations. Having a joint approach can expand capacity and provide learners with a broader network of support.

At the same time, staff development is imperative. Tutors and lecturers are the very first point of contact, yet many are not prepared to respond to student disclosures. Constant CPD in safeguarding, mental health awareness and referral pathways need to be a part of professional development across both sectors (Universities UK, 2021).

Towards a culture of care

To tackle the mental health gap is not just about offering more counselling sessions, valuable as these are. It is about creating a culture of care that values wellbeing as much as academic success. That means leadership teams must prioritise mental health within strategies, allocate sustainable funding, and ensure accountability for outcomes.

Colleges and universities face immense pressures. But ignoring the mental health of learners is not an option. If FE and HE are truly to prepare students for work, life and active citizenship, then mental health support must be embedded, accessible and prioritised.

The choice is ours invest in early intervention now, or continue to see learners disengage, drop out, or struggle unnecessarily. The mental health gap is not just a student issue; it is a systemic challenge that goes to the heart of education’s purpose.

The AI governor is in the boardroom

Let’s be blunt: the traditional FE boardroom is broken. We celebrate hours of debate as diligence, add mistake-dense paper packs for depth, and often value anecdote over evidence. This isn’t governance; it’s ritual. While we’ve been busy governing in retrospect, a revolution in decision-making has arrived. Artificial Intelligence is no longer a futuristic concept; it is poised to dismantle and rebuild the very foundations of how our colleges are steered.

The choice before us is not whether to engage with this change, but whether we will be its architects or its casualties. The emergence of the ‘augmented governor’ is inevitable. The question is, what will we become?

From gut feeling to guided insight

The greatest myth is that AI will coldly replace human intuition. The reality is the opposite. By cutting through corporate jargon and presenting data in a stark, simple format, AI doesn’t replace the “gut feel”, it focuses it. Consider a debate on student retention. Instead of wading through conflicting reports, imagine an AI synthesis stating: “The core issue in course Z is not academic ability, but a correlation between late-stage financial challenges and drop-out.” Instantly, the discussion is elevated. The governor’s lived experience validates the insight; strategic proposals target the true cause. The AI provides the ‘what,’ and the human board provides the ‘why’ and ‘how.’ The college’s soul isn’t lost; it’s empowered by clarity.

The clerk’s radical elevation

This evolution spells the end of the clerk as a procedural secretary. The role is being reborn as that of a strategic facilitator. This new clerk curates the AI, interprets its outputs within legislative frameworks, and ensures the board’s wisdom is applied to data-driven insights. This is a radical elevation. Tech-savviness will differentiate the best from the rest, but the core skills are still facilitation, influence, and impact. It demands a seat at the senior management table, with the recognition and remuneration that reflects this critical, strategic function.

A pragmatic path forward

For boards hesitant to begin, the path is pragmatic, not perilous.

  1. Start with the Minutes: Use AI to draft minutes for human review, freeing the clerk for higher-value work.
  2. Summarise Submissions: Introduce AI-generated summaries of board papers, ensuring every governor, regardless of background, grasps the core of every issue.
  3. Automate to anticipate: Allow AI to populate risk registers and suggest agenda topics based on emerging trends.
  4. The live dashboard: Integrate financial, academic, and safety data into a simple dashboard, giving the board continuous oversight without burying executives in report-building.

Satisfying the regulators: No black boxes

The Department for Education and Charity Commission will rightly demand accountability. The answer is transparency, not retreat. A strong AI usage policy is essential. It must delineate how AI is used and, critically, identify the unambiguous human intervention points in every process. The minutes must record that “the board considered the AI’s analysis on X, debated its implications, and made the following decision…” This demonstrates that the technology is a supplement to governance, not a substitute for it.

The augmented board is here

A new model is emerging: The augmented board. It is data-informed but human-centred; efficient yet deeply deliberative. It empowers every governor, supports the executive, and elevates the clerk. This is not a threat to tradition but an upgrade to relevance. By embracing this change with courage and clear frameworks, we can forge FE boards that are not only more compliant and financially sound but also genuinely strategic, fully equipped to secure the future of our students and our communities. The time for speculation is over. The time to build is now.

Deals end January strike threat at three colleges

Strikes at three colleges have been called off after teachers agreed to pay awards of between 4 and 7 per cent.

Thousands of University and College Union (UCU) members had voted to down tools this January over pay, working conditions and a demand for national pay bargaining.

But lecturers have in recent days settled their disputes at Lakes College, Runshaw College and York College.

It means 30 colleges are left facing strikes on January 14, 15 and 16, when several vocational and technical exams take place.

UCU opened a nationwide ballot in October after the “disappointing” 4 per cent pay rise recommendation from the Association of Colleges earlier this year.

Union members at 33 of the 54 balloted colleges passed the legally required 50 per cent turnout threshold and backed strike action, demanding pay parity with school teachers, a national workload agreement and binding national bargaining.

Twenty-one colleges failed to meet the threshold, and now 20 colleges have settled their disputes with deals worth up to 8.7 per cent.

Staff in the north step back…

The strike at York College was called off shortly after the ballot results were published in late November. Members accepted a 5 per cent pay award, as well as joint negotiations over workload for 2025-26.

An agreement for a 7 per cent pay rise at Runshaw College, in Leyland, Lancashire, shortly followed.

UCU and Unison members, who represent non-teaching FE staff, will see their pay packages rise in line with sixth-form workers in the new year.

Clare Russell, Runshaw College principal, said: “This uplift brings the top of the main teacher pay scale to £51,714, aligning salaries with those in sixth form colleges, first achieved when we introduced our current teaching staff pay scale in 2023.

“This award has been made possible through strong financial management, buoyant student recruitment and efficient curriculum planning. More than 80 per cent of our income comes from 16- to 18- provision, an area that has benefited from increased national investment.

“We recognise that many colleges rely far more heavily on adult funding, which has been constrained for many years, and we fully support the sector’s national campaign for improved investment in adult education.”

The latest agreement, made earlier this week, was a 4 per cent salary increase for teachers at Lakes College, in Workington, Cumbria, backdated to August.

Chris Robinson, UCU northern representative, said staff had voted to strike through “frustration” that no pay offer was on the table before the national ballot.

“Lakes College only put something on the table just as the ballot was about to close and just as we got over the threshold,” he told FE Week.

Mark Fell, principal of Lakes College, told FE Week that discussions on workload agreements were ongoing.

Jo Grady, general secretary of UCU, said: “We have now resolved our dispute at 20 colleges and, to avoid disruption on campus come the New Year, leaders at colleges where we are still in dispute need to make meaningful offers and show they value their staff.”

…but strikes go on in Capital City

College staff at Capital City strike over pay, workload and bargaining

Meanwhile, FE and sixth form staff at Capital City College (CCC) walked out this week as tensions with senior management escalated over pay and “ripped up” legacy sixth form conditions.

UCU and NEU members, who represent around 60 sixth form lecturers at CCC’s Angel campus – formerly known as City and Islington College, conducted a coordinated two-day strike across the group’s 11 sites in London.

NEU members have had 14 days of industrial action since October over CCC’s “intolerable” plans to freeze sixth-form teacher salaries for two to three years to bring them in line with FE lecturers.

“For the last 30-odd years, we’ve had these conditions despite being part of a bigger further education college,” said Nick Lawson, NEU rep at CCC.

“The college has unilaterally ripped those up, and we want to be returned to our national pay and conditions.

“We’re marching separately but striking together.”

Jeremy Corbyn also attended the picket line at the college group’s Finsbury Park campus, which is located in the MP’s Islington North constituency. Corbyn also lent his support to the UCU’s recent Parliamentary lobby efforts to seek a reversal of adult education funding cuts.

Meanwhile, UCU rep Mustafa Turus said the union’s branch had sought additional industrial action before the end of term.

Members rejected a pay offer of 4 per cent, a 4.5 per cent rise for those on a salary of £25,000 or less, and a one-off payment of £200-250 for those earning £34,000 or less.

Leaders also offered to set up a workload committee, which Turus said was not a tangible solution.

“We cannot wait months and months, if not years, for a workload committee to come to address our urgent concerns,” he said.

CCC declined to comment.

AoC quids in after £9m cash windfall

The Association of Colleges (AoC) has cashed in a £9 million windfall after ditching a pension fund that posed a “significant risk” to its financial stability.

The membership body’s newly published 2025 annual accounts reveal it agreed a settlement with the London Pension Fund Authority after taking the “difficult decision” to remove its employees from the defined-benefit scheme.

The scheme was in deficit for many years, reaching a peak of minus-£21 million in 2021 which meant the college body was technically insolvent.

But following improvements in market conditions, including an increase in interest rates, meant the AoC could exit with a £9.44 million surplus.

Chair Shaid Mahmood (pictured, right) said: “The AoC was technically insolvent for a significant number of years due to the LPFA pension liability.

“Once the LPFA moved to a surplus in 2024, the board discussed the option to withdraw in order to remove the risk and secure AoC’s financial security.

“We had long and detailed discussions across a number of board meetings, giving significant consideration to various options and taking into account the impact on those members of staff who were in the pension.”

The move required the agreement of about half the association’s 148 staff body who were signed up to the scheme.

Hughes enters the £200k club

The 2024-25 accounts also revealed that AoC chief executive David Hughes’ (pictured, left) basic salary grew 5 per cent to £205,905.

This places his salary in the same group as 12 college principals whose basic salary was £200,000 or more per year in the 2023-24 financial year.

Mahmood said: “The remuneration of our chief executive is determined by the remuneration committee which considers performance and impact as well as the market rate for senior, national roles like this one in the same way we set pay at all levels.”

‘Principal risk’

Annual accounts for the college body show its board viewed the pension liability as the only “principal risk” to its financial stability.

The AoC’s fund had suffered a high deficit due to financial reporting standard (FRS) rule 102, which governs how pension liabilities and assets must be accounted for by companies.

This included the association’s lack of security that could be “offset” against the pension deficit, said Mahmood.

The board had chosen to over-pay pension contributions for several years to reduce the liability.

According to its accounts for the year to March 2025, the AoC held £5.4 million in its profit and loss account, a 20 per cent increase on the previous year, and £9.4 million in its pension reserve, a 100 per cent increase.

The London Pension Fund Authority was set up in 1989, has about £8 billion in assets, nearly 100,000 members and 115 contributing employers.

Staff agreed voluntarily

Mahmood said AoC staff were offered two options: either a LPFA defined-benefit pension that required employee contributions based on their salary level, or a defined contribution scheme that did not require contributions.

Defined-benefit pensions offer a guaranteed income for life based on an employee’s salary at or near retirement, and how long they have been in a scheme.

They are generally viewed as more lucrative than defined contribution pensions, which provide an income based on how much the employee and employer invest, and how well those investments perform.

Staff in the LPFA scheme are understood to have “voluntarily” agreed to the change after the AoC offered an “alternative defined-contribution rate” as part of their agreement to exit.

About £1.9 million has been ring-fenced from the £9.4 million to fund this.

Mahmood added: “Our new pension offer for all staff was enhanced and is a good benefit which we are proud to offer.”

Following staff approval, it took LPFA 10 months to undertake the “complex process” to calculate the final settlement.

How will AoC spend the cash?

The AoC has set up a reserves and investment sub-committee to manage its “enhanced reserves” and will share further details “in the new year”.

Mahmood said: “As a board, we are clear the reserves should be utilised carefully to both secure the long-term future of the AoC so that it can continue its work to address current member priorities as well as the position of the sector with government and in wider society.”

The AoC currently represents 191 college members.

A spokesperson for LPFA said: “The LPFA reported a 128 per cent funding level at its last Valuation in 2022 and whilst the 2025 valuation is not yet complete, we expect to report a surplus once again.

“Our latest annual report, published last month, reports consistent year-on-year growth.

“It is not for the LPFA to comment on the benefits the Association of Colleges decides to provide for its employees, but we continue to support employers that provide benefits under the Local Government Pension Scheme.”