Beyond the budget headlines, cuts loom for adult education

The headlines from the budget were undoubtedly the rises in taxes, spending and borrowing.

This was a mix of realism about what’s really needed to even marginally improve public services, plus aiming for growth through investment. There was also some welcome new funding for further education and new trailblazers looking at how to get more young people into work or learning.

But beyond the headlines, battles are looming between big ambitions and limited funding. 

The results of these battles as we head toward a multi-year spending review in spring 2025, along with decisions on how ambitious policy will be, will help shape our path for years to come. 

Here’s five things to look out for.

The end of austerity for adult skills? 

The number of adults improving their skills has halved in England since 2010 as budgets have been cut. Reversing that would be good for opportunity and growth, two things the government says it cares about. 

But the Office for Budget Responsibility says their spending plans involve a 1.1 per cent real terms cut each year in unprotected areas, including adult skills, from 2025-26. That would mean another £180m lost by 2030, leaving spending £1.1 billion lower in real terms than in 2010. We need more investment not less, but the spending review is going to be difficult.

An ambitious growth and skills levy or stealth tax for the Treasury? 

This year the government will take £846 million more from the apprenticeship levy than it spends. We estimate that could rise to £1.2 billion by 2030 if they only raise apprenticeship spending in line with inflation.

While lots of people want the whole of the levy spent on apprenticeships, realistically it’s that extra £319 million that I think could be in play. Can the government be persuaded to spend that on valuable training focused on priority areas and groups that too often miss out, like young people and people with low qualifications?

More devolution on the way? 

The budget commits to a devolution white paper to widen and deepen devolution. That could mean more areas of England getting more learning, skills and employment responsibilities, and greater responsibilities for areas that already have or will soon have them. 

The chancellor namechecked West Midlands and Greater Manchester, confirming they’ll get a more integrated budget, trying to move away from the array of acronyms and ringfences tying funding in knots today. How can we gain the benefits of integrated funding and local tailoring, without increasing admin burdens or complexity?

Where are the people and skills to deliver the big ambitions? 

The chancellor’s mantra was ‘invest, invest, invest’. This includes moving to clean energy, building 1.5 million homes over the next five years, investing in infrastructure, local growth plans and a new industrial strategy and so much more. 

Taken together, the aim is to boost growth across the country. All of these require a skilled workforce. How can we make workforce and skills a golden thread running through these plans, will Skills England be enough?

What about employers? 

There are big tax rises on employers (though most of the national insurance rises will eventually feed through into lower pay rises for employees) but also big expectations.

The government wants them to recruit unemployed people, train their workforce, and invest in the future. But our research shows employers are spending 26 per cent less on training than in 2005. Changing that requires a more fundamental shift than simply putting employers in the ‘driving seat’ of public funding. Will anyone, nationally or locally, grasp that nettle?

As a broader point, I’m hoping that individual departments will recognise the importance of learning. That includes promoting health and wellbeing and so reducing NHS pressures, supporting communities and integration, and helping people back to work to meet the government’s 80 per cent employment rate ambition.

There was lots to welcome in the budget. And longstanding problems of low growth and stretched public services cannot be solved in one go. But reading between the lines, it’s easy to see the clashes ahead. We need ambition to win out. 

Merger partner found for troubled Somerset college

A small Somerset college in severe financial trouble due to a significant government clawback has found a merger partner.

Strode College is hoping to secure its future by partnering with Bridgwater and Taunton College (BTC) in the summer of 2025.

Strode College was put in FE Commissioner intervention last year after a government investigation into subcontracting found young adults on security and rail traineeships were made to work illegal hours by the college’s delivery partners.

A “significant” but undisclosed clawback totalling millions of pounds is now being demanded by the Education and Skills Funding Agency, which has deteriorated the college’s financial health to ‘inadequate’. 

The college, judged as ‘good’ by Ofsted, hasn’t published accounts for the past two years, but it serves around 4,000 learners and had an income of less than £17 million in 2021.

The college, which has launched legal action against the subcontractors involved, cannot repay the traineeship clawback in the short to medium term, the FE Commissioner reported in April, meaning there is a threat to its long-term sustainability.

BTC is also judged as ‘good’ by Ofsted, teaches nearly 25,000 students, has an annual income of £58 million and is around a 30-minute car journey from Strode College.

The proposed merger aims to create a new group structure, allowing both BTC and Strode College to “maintain their individual culture, values, ethos, and identities while benefiting from centralised strategic support”.

‘A prosperous future for education in our region’

A spokesperson said that both boards of governors have unanimously agreed to pursue this merger, which is subject to due diligence and final approval from the education secretary.

The “collaborative framework” put forward will “provide the resources and capacity to improve student experiences, offer enhanced opportunities for staff, employers, and the wider community, and ensure financial sustainability for both institutions”, according to the colleges.

Staff and students have been told it is “business as usual” at both institutions while due diligence takes place, with no immediate changes to day-to-day operations, roles, or responsibilities.

Strode College principal John Revill said: “We look forward to collaborating with our stakeholders throughout this transformative process and working together to shape a prosperous future for education in our region.” 

Andy Berry, principal of Bridgwater and Taunton College, added: “By bringing together two high-performing colleges, we can strengthen the educational landscape for the communities we serve. Our collective capabilities will enable us to unlock new opportunities for students, employers, and staff alike.”

A welcome budget, but what comes next matters more

The autumn budget has been delivered following months of speculation.

The FE sector may feel as if it has been waiting a long time for the new announcements, however, when it comes to details, it is clear that there are still large gaps to be filled.

What is positive is that within the new Labour government’s focus on repairing the country’s finances, the FE sector has emerged with its coffers a little fuller, or less empty, than many might have expected. 

Given Labour’s focus on education, skills and growth, it was perhaps little surprise that there were some welcome wins for the education sector at large, although they were nowhere near as generous as some may have hoped for.

Regardless, an extra £300 million to strengthen the skills and training is not to be sniffed at. Backed up by a welcome £40 million towards foundation apprenticeships as part of the growth and skills levy, it certainly feels like the sector is getting more recognition compared to previous years. 

However, the budget does still raise questions.

Many people working in FE will be questioning how and where funding can be found to recruit school teachers, when they are already paid more than their FE peers.

Likewise, there was no end to the harsher treatment of colleges compared to schools in terms of pensions and VAT.

Time to simplify

Despite questions like these, the sector should see this budget as one of opportunity.

It is vital that we look forward to what comes next and take every opportunity to confidently work with the government to influence policy, and then implement it. 

However, the sheer amount of rules faced by the sector must be addressed in the near future to prevent FE institutions being overwhelmed by regulation.

With the Education and Skills Funding Agency moving into the Department for Education, and Skills England being given a wider remit, there is a rare opportunity to simplify the regulatory framework for colleges and create an environment that allows them to flourish. 

One way to ease this burden would be to simplify the funding process and have fewer pots of money for which colleges must bid and then be judged against.

An additional £300 million boost to capital funding for colleges is naturally welcome, but it is hoped that this promise of more cash doesn’t require the creation of another mini-industry of bid writing and auditing.

The last thing the sector needs is more red tape and an even higher administrative burden.

If talk of five-year capital budgets is true, then this would give the DfE the perfect opportunity to fund college estates over the medium term.

Doing more with more

The FE sector has received welcome positive attention over recent years in recognition of its efforts and achievements – even more so under the latest government – so it would be understandable if some people looked at this budget and came away feeling disheartened that more hasn’t been done to address some of the inequalities in the way colleges are financed and taxed.

However, it is important to remember that the national conversation is still ongoing and to focus on what the government and the sector can do to be successful with the funding given, whilst continuing to push for change where it is most urgently needed. 

In reality, making the most of what is provided is something that the sector has gained a glowing reputation for, particularly in terms of delivering quality education with significantly smaller budgets than many other areas.

What government wouldn’t want to hear that the sector could do more with (comparatively) less? FE is a sector of doers, and if colleges were more sustainably and strategically funded, they could do even more to help deliver the government’s skills and growth agenda. 

This was not a bad budget for FE. The chancellor gave some welcome nods to the benefits that colleges bring to the UK economy and recognised this through some funding allocations which were by no means a certainty in the run-up to this budget.

Access to funding and the simplification of regulation still need to be addressed, however, if our sector is to reach its full potential.

The budget gave us reasons to be optimistic (and nervous)

Rachel Reeves’ first budget as chancellor of the exchequer sets a cautiously optimistic tone for the FE sector, but the details reveal familiar constraints.

Labour clearly sees investment in skills as integral to economic growth, and the chancellor’s understanding that skills are a critical lever for future prosperity is encouraging. Despite flickers of ambition, this budget lacked the scale of funding needed to fully unleash the potential of colleges and training providers to renew Britain.

It should not go unnoticed that early on at the despatch box Reeves highlighted that setting up Skills England was one of the government’s key pillars of its growth strategy.

Both the budget and the recent industrial strategy green paper show that skills training and economic growth are two sides of the same coin. Whether it is building new homes, expediting planning, delivering new infrastructure, leveraging the opportunities of artificial intelligence or achieving net zero, ensuring there are skilled workers to do the work required is essential. Without them, Labour cannot achieve its desired growth. 

The additional £300 million in revenue funding is extremely welcome, as is the share of a £950 million skills capital fund to improve college estates. In a budget where the purse strings were tight, to have received this settlement at all is a boon.

However, it is not the transformative package the sector badly needs. FE remains the poor relation of other educational phases. New funding, though helpful, is largely symbolic against the backdrop of dwindling budgets, sustained cost pressures and staff shortages. 

Mixed FEelings

With college staff left out of the public sector pay rises offered by Labour this summer, education unions have rightly called for this new funding to be used to increase salaries.

This could stop the earnings gap between what college staff earn compared to their peers in schools, currently around £9,000, from growing further. But it will not level the playing field. 

There are other reasons to be optimistic.

Flexible apprenticeships could help young people at risk of being NEET enter the labour market, though it’s unclear how many will benefit from the £40 million of funding announced. With 872,000 young people currently NEET, Liz Kendall’s “Get Britain Working” white paper will be pivotal. The local piloting of the Young People’s Guarantee offers FE providers a chance to showcase their strengths in skills support for diverse age groups.

But there are also reasons to be nervous.

With major long-term spending commitments for the NHS and defence, maintaining, let alone extending, FE funding will be challenging as Labour seeks to balance governmental priorities. Looking beyond 2025, the budget forecast from the Office for Budget Responsibility (OBR) suggests that “unprotected” budgets, like further education, could see a small real-terms cut.

Though this is less severe than the cuts predicted by the previous government, it highlights that tough choices are still on the horizon. Sector organisations must, therefore, make strong representations to Treasury ahead of the next spending review window which is expected to open in the new year.

And now, the spending review

Another unknown is how employers will react to being squeezed by this budget, with increased wage bills through increased national insurance contributions and a raising of the minimum wage.

The 2022 Employer Skills Survey showed that investment in workplace skills declined 19 per cent in real terms between 2011 and 2022, so there is a risk that these changes will further curtail employer investment on training their workforces. 

Labour understands that getting the skills system to work is critical for the UK’s growth. The party’s first budget in 14 years was a step in the right direction, particularly when viewed against previous austerity-driven budgets. Any additional funding, however modest, is a promising sign that Labour recognises the sector’s importance to its key mission to grow the economy. 

Next year’s multi-year spending review will be crucial in solidifying the sector’s long-term stability. The ambition is there, but without sustained increases in investment, colleges and training providers will struggle to meet rising expectations and play the vital role Labour envisages. 

The college roadmap to AI maturity – and a reskilled workforce

Building AI maturity in education goes beyond the classroom—it’s about strategic transformation at every level. Colleges must progress through defined stages of AI maturity, adopt robust governance to track ROI, and use AI in both teaching and operations. Code Institute’s guide explores how structured project management and AI-driven pedagogy can position institutions at the forefront of the AI era, transforming learning and operational efficiency for a future-ready education system.

As educational leaders, asking the right questions is essential for driving impactful change.

  1. How prepared is your institution to leverage AI for strategic growth? 
  2. Are your training programmes aligned with the skills needed for an AI-driven workforce?
  3. What steps can you take to ensure your staff are equipped to manage AI projects effectively? 
  4. And, crucially, is your organisation ready to adapt and reskill in response to the rapid advancements of AI technology?

The AI experience in Further & Higher Education

Discover how five pioneering UK colleges of further and higher education are transforming education through AI. 

Anthony Bravo, Principal of Basingstoke College of Technology and the Edufuturists’ College of the Year which the panellists commended for its rapid and imaginative implementation of AI, inspired us with BCoT’s forward-looking AI programme that was accelerated by the collaborative, student-led AI training model that boosts staff-student engagement. 

AI initiatives at South Staffordshire College, driven by its Head of Digital Learning, Steve Wileman, have reclaimed an average of four hours a week per lecturer. The college leverages AI and VR for immersive learning, reclaiming teacher time and enhancing descriptive writing skills. 

We also spoke to Gaz Lewis, a Digital Learning Technologist at Inspire Education Group, which was awarded Google Reference College status this year. Google is supporting Gaz through its Certified Innovator Program to develop a tool that uses gamification to enable teachers to control student use of AI.

Aftab Hussein, ILT and LRC Manager at Bolton College, with his team of two learning technologists and three system developers, developed an intelligent chatbot “Ada,” and a formative assessment feedback tool “First Pass,” to empower students and personalise learning support.

How Code Institute supports AI-enabled digital transformation

We’ve launched a series of upskilling courses to help organisations structure and advance their AI environment.  

AI for Business Leaders focuses on providing leadership teams, including Academic leaders, with the tools to build a well-structured strategic approach that delivers the maximum impact for their learners and college, protected by appropriate governance and oversight. 

AI for Business Operations is all about translating that strategy into action. It equips staff on the ground to be AI champions or product owners who identify and prioritise value-adding AI-augmented opportunities across their roles.

Many colleges currently offer regulated qualifications through the Code Institute learning platform,  including Gateway Qualifications’ Level 5 Diploma for Web Application Development and Level 3 in Software Development. In addition, some FE colleges are taking the leap into AI by delivering Code Institute’s 16-week AI Augmented Software Developer Skills Bootcamp along with the recently introduced 16-week Data Analytics with AI Skills Bootcamp providing future-ready skills in an agile, employability-focused delivery model.

The role of educational institutions in the future of AI 

As AI reshapes the workforce, reskilling is vital, with IBM predicting 40% of employees will need upskilling over the next three years. The UK government’s Occupations in demand index for 2024 highlights 12.6m workers in critical demand occupations with programmers and software development professionals being the largest occupation of 561k workers. Gartner predicts that 80% of the engineering workforce will need to upskill by 2027.

Facing digital anxiety, many young people seek relevant competencies, while colleges serve as essential community mediators. Institutions that partner with Whitehall and the local government to realise reskilling targets will emerge as state-of-the-art hubs of learning. 

As we’ve seen, each institution adopts a tailored approach, balancing innovation with structured oversight to maximise AI’s benefits across both teaching and administration.

Learn the unique strategies, challenges, and successes of these institutions in full—download the whitepaper now to explore actionable steps for building AI maturity and setting a benchmark for AI integration in education.

Read the whitepaper now

Budget 2024: What the chancellor announced for FE and skills

Chancellor Rachel Reeves delivered Labour’s first budget in almost 15 years this afternoon.

Here’s what was announced for FE and skills.

£300m for FE – but for what?

The headline funding announcement was a £300 million additional cash investment for further education.

But Treasury documents fail to say exactly what this funding is to be spent on or whether it will just be colleges that receive a slice of it.

Unions have been quick to say the funding should be used by colleges to match the 5.5 per cent school teacher pay rise for their staff, following this summer’s snub.

The Department for Education said colleges have “freedom to use the funding in the way that best suits their needs, and the government does not set their pay and conditions”.

It hasn’t however said how the £300 million will be distributed. The last additional cash injection for colleges was controversially funded through the 16 to 19 funding formula – meaning colleges with big adult provision missed out.

Colleges to get help with national insurance hike…

Reeves announced that an increase in employers’ national insurance contributions of 1.2 percentage points from April 2025 would raise around £25 billion as part of around £40 billion in tax increases.

Such a rise would likely cost colleges around £50 million a year, according to the Association of Colleges.

The Treasury has told FE Week that the Department for Education will get some extra money to help schools and colleges towards these costs.

However, the amount it will get and whether costs will be fully funded won’t be revealed until the spring.

…But private providers will be hit 

Reeves also reduced the level at which employers start to pay national insurance (NIC) from £9,100 per year to £5,000 per year until 2028. Personal finance expert Martin Lewis estimated this will cost employers who pay it an added £615 per employee per year.

The chancellor also increased the employment allowance to £10,500 and removed the £100,000 employment allowance eligibility threshold for small businesses.

Ben Rowland, CEO of the Association of Employment and Learning Providers (AELP), said the NIC announcements were the biggest area of concern to small employers.

He said his membership body is “currently modelling this so we can work out how different-sized providers will be impacted”.

Minimum wage boosts

The budget announced an 18 per cent apprentice minimum wage rise to £7.55 an hour and national minimum wage increases for 18-20-year-olds by £1.40 to £10 an hour, effective from April 2025.

Reeves also confirmed a 6.7 per cent boost to the national living wage from £11.44 to £12.21 an hour. The AoC expects this will be an added £50 million cost to colleges.

Whilst the apprentice wage increase will “ease the burden” on their cost of living, the rise has sparked concern from sector leaders who have warned it might put off small businesses from taking on apprentices.

Apprentify’s director of education Dale Walker said: “Workers deserve to be paid the fair rate for the job but without adequate support for businesses this might make SMEs hesitant to hire apprentices.”

While businesses do not pay NIC on apprentices aged under 25, Stephen Evans, CEO of Learning and Work Institute, told FE Week today’s changes could still impact apprentices starting out in their career after completing education.

“Most apprentices are paid more than the legal minimum wage, though the rises in employer national insurance contributions are likely to lead to lower pay rises for them in future years,” he said.

England’s largest apprenticeship provider Lifetime Training said the changes to employer NIC threshold, the minimum wage rises and the strengthening of employment rights will cause “continuing instability” to employers it works with in the care, retail and hospitality sector.

CEO David Smith said: “We have to be realistic about the impact this is likely to have on recruitment and investment in the skills agenda.

“The pressure will also be felt within the ITP sector, facing the same pressures as our partners and compounded by no increases in course pricing.”

£40m for shorter and foundation apprenticeships

Treasury’s documents also show the government will invest £40 million to help deliver new foundation and shorter apprenticeships in “key sectors” as part of initial steps towards a reformed growth and skills levy, set to replace the apprenticeship levy.

Both initiatives were first announced at Labour party conference in September.

It’s not clear whether the £40 million will come from the current apprenticeships budget or is new funding.

The law currently states that apprenticeships must be a minimum duration of 12 months. The policy was introduced in 2012 but some have complained the requirement is too arbitrary as apprentices can become qualified in a shorter timeframe.

It is not yet clear how much shorter the government plans to make apprenticeship duration.

New foundation apprenticeships are expected to offer training to young people who are not ready to start at level two or three.

Labour teased plans to introduce a scheme similar to traineeships, scrapped by the previous government due to low take up, in June.

FE Week understands that unlike traineeships, foundation apprenticeships will be a paid job. 

No further detail has been released on how the £40 million announced today will be spent.

More capital cash

Reeves also announced she would hand the DfE £6.7 billion in capital funding next year, a “19 per cent real-terms increase” on this year. 

Of this, £950 million will be for “skills capital, including £300 million of new funding to support colleges to maintain, improve and ensure suitability of their estate”.  

UKSPF gets ‘reduced’ lifeline

The UK Shared Prosperity Fund will be budgeted “at a reduced level” of £900 million next year.

UKSPF is a flagship Conservative post-Brexit policy that replaced European Union funding for social projects and employment schemes that was supposed to reach £1.5 billion by 2025-26.

But the Chancellor’s budget today said £900 million for next year will be a “transitional arrangement” to cover existing skills and business support schemes reliant on the fund in advance of “wider funding reforms”.

The government faced increasingly vocal concerns about the budget “cliff edge” schemes faced from March 2025, which threatened to derail many projects that had only recently been set up.

Henry Foulkes, policy and public affairs lead at the Employment Related Services Association said they are “pleased” to see the scheme continue, which will hopefully prevent “job losses and organisations closing down” in the employment sector.

UKSPF was designed to gradually increase in size between its launch in 2022 and 2025.

But complexity, cash delivery delays and rule changes have impacted many of the schemes it funds, according to metro mayors and a government evaluation.

LLE delayed again

The Lifelong Learning Entitlement (LLE) has been delayed again (full story here).

Today’s budget pushed back the student application window and course start dates by 12 months but did not explain why.

Students now won’t be able to apply for an LLE student loan until September 2026 for courses starting in January 2027.

This is the second time the government has delayed its introduction. 

£240m to ‘Get Britain Working‘

The government will soon publish a white paper setting out how it will spend £240 million on getting 2.8 million people back into work, partly by better signposting them to skills programmes.

The ‘Get Britain Working’ white paper will outline ways to tackle long-term sickness, support young people who are ‘not in education, employment, or training’ (NEET), and help people to develop their careers.

£240 million funding will be divvied out to mayoral combined authorities to “streamline” local services and 8 ‘trailblazer’ areas across England and Wales to test out early interventions of ill health.

Extra cash will be also given to existing programmes to create eight youth guarantee trailblazer areas which aim to support young people at risk of becoming NEET.

Devolution

From March next year, two ‘trailblazer’ combined authorities, West Midlands (WMCA) and Greater Manchester (GMCA), will be given a consolidated “single flexible pot” of funding to spend on their local priorities.

Devolved mayors say this will unlock more funding and extra flexibilities for their local skills provision.

In line with a ‘deeper devolution deal’ agreed with the government in 2023, WMCA and GMCA will have the first “integrated settlements” in 2025-26.

But due to its “unique devolution arrangement”, the Greater London Authority will fall behind the two trailblazers and only has a government commitment to “explore” how the capital could follow with equal flexibility in 2026-27.

Despite this, London Mayor Sadiq Khan called the budget “historic” and praised the government for “working with us here in the capital, not against us”.

Several other combined authorities are also set to follow the trailblazers with their own single settlement from 2026-27: Liverpool City Region, North East, West Yorkshire and South Yorkshire.

The West Midlands believes the deeper devolution deal will equal “hundreds of millions of pounds” more for the region.

The mayoral combined authority will have to agree a “streamlined, overarching, single” accountability framework with the government that includes specific targets for five “pillars” including skills and net zero, and local growth and place.

This will mean the government should treat it as a “single government department” with certainty over funding agreed at each spending review.

Budget 2024: Lifelong learning entitlement delayed again

The lifelong learning entitlement has been delayed again. 

Windows for student applications and course start dates for the flagship higher education scheme have been pushed back by a year in today’s Budget.

Applications were initially due to open in February 2025 for courses starting in September 2025. 

In April, the previous government delayed opening the application window to September 2025 and course start dates to January 2026. 

However students can now not apply for LLE funding until September 2026 for courses starting in January 2027. 

Treasury documents published today do not explain the reasons for the delay.

“The government will deliver the lifelong learning entitlement, but will postpone its launch by one year. The LLE will launch in September 2026 for learners studying courses starting on or after January 1, 2027,” the Treasury said.

The scheme will, when launched, give students access to student loans to cover tuition and maintenance for higher education courses and higher technical qualifications between levels 4 and 6. 

Its main selling point is the ability to access loan funding for shorter courses and modules worth up to £37,000. 

The scheme was delayed in April to give the Student Loans Company more time to develop and test its systems.  

This further delay will give the Department for Education more time to work out what courses can be delivered by higher education providers and how much they can charge.

It will also give independent training providers more time to register and gain approval from the higher education regulator, the Office for Students.

Today’s budget provides £10 million for the LLE in financial years 2027-28, 2028-29 and 2029-30.

Maintenance loans are another stand-out feature of the LLE, but no detail has emerged on what students will have access to, despite being announced in 2023. 

Budget 2024: Extra £300m for FE

An “additional” £300 million will be handed to the further education sector next year, the chancellor has announced in today’s budget.

Details on exactly what this extra cash is earmarked for have however not been released in the Treasury’s budget documents. £300 million was the annual cost of increasing teaching hours for 16- to- 19-year-olds by 40 hours under the previous government.

Chancellor Rachel Reeves revealed the funding boost while also announcing a £1 billion uplift for special educational needs as part of a £2.3 billion increase to the core schools budget to “support” the government’s pledge to hire thousands more teachers.

Budget documents state: “The government is committed to addressing skills challenges, which are holding back growth across the country, alongside supporting people into work. The government has already established Skills England to begin addressing these challenges.

“In the budget, the government is going further by providing an additional £300 million for further education in England, while increasing the core schools budget by £2.3 billion, which increases per pupil funding in real terms.”

The Treasury told FE Week that it will be for the Department for Education to decide what the £300 million can be spent on, including whether it should be used for teacher pay rises. DfE has been approached for comment (see end of article for update).

Schools got £1.2 billion of government cash over the summer to raise teacher pay 5.5 per cent, but colleges received nothing.

The Association of Colleges previously said it would cost the government £250 million to match the school pay award.

University and College Union general secretary Jo Grady said the £300 million announced today for FE “must be used to match the 5.5 per cent pay rise that schoolteachers received and help close the £9,000 pay gap”, adding that if pay doesn’t rise, colleges will “continue to haemorrhage staff and there will be no one left to train the workforce of tomorrow”.

Daniel Kebede, general secretary of the National Education Union, also claimed the additional £300 million will “enable colleges to match the 5.5 per cent pay settlement agreed for school teachers” following this summer’s funding snub.

AoC chief executive David Hughes said his organisation has started “detailed conversations” with the DfE to “understand the implications for colleges and will communicate more when we know more”.

National insurance hike

Employer national insurance contributions will increase by 1.2 per cent in April. The Treasury has told FE Week the Department for Education will get some extra money to reimburse colleges and schools for this rise, but can’t confirm whether costs will be fully funded until the spring.

The AoC estimates that the national insurance rise will hit college budgets by around £50 million. The membership body also calculates that national minimum wage increases will cost a further £50 million.

Independent training providers are unlikely to see any compensation for rising employer national insurance, which is the “biggest area of concern” from today’s budget for Ben Rowland, chief executive of the Association of Employment and Learning Providers (AELP).

Rowland said: “We are currently modelling this so we can work out how different-sized providers will be impacted” but welcomed the £40 million for foundation apprenticeships and £950 million for skills capital.

More £ for capital and apprenticeship reforms

Reeves also announced she was giving the Department for Education £6.7 billion of “capital investment” next year, which she said was a 19 per cent real-terms increase on this year.

Of this, £950 million will be for “skills capital, including £300 million of new funding to support colleges to maintain, improve and ensure suitability of their estate”.  

The Treasury’s documents also show the government will invest £40 million to help deliver new foundation and shorter apprenticeships in “key sectors” – initiatives announced at Labour party conference in September – as part of initial steps towards a reformed growth and skills levy, set to replace the apprenticeship levy.

Ministers have also decided to push back the launch date of the lifelong learning entitlement to January 2027.

[UPDATE: A day after the budget the DfE said in a blog that “colleges have freedom to use the [£300 million] funding in the way that best suits their needs, and the government does not set their pay and conditions”. The department later changed this wording to simply say the budget “allocated an additional £300 million to further education”, adding that “we’ll set out in due course how the funds are to be distributed”.

[The last additional cash injection for colleges was controversially funded through the 16 to 19 funding formula.]

Apprentice minimum wage to rise to £7.55

Apprentices will see an 18 per cent bump to the minimum hourly wage next year, the Treasury has announced.

Ahead of the autumn budget tomorrow, chancellor Rachel Reeves said that the apprentice wage will rise from £6.40 to £7.55 an hour from April 2025.

Reeves will also raise the national minimum wage for 18-20-year-olds by £1.40 to £10 – the largest increase in the rate on record.

The move appears to ignore an independent advisory body’s March recommendation that the government should link the apprentice hourly rate to the national minimum wage for over 18s during the first year of their apprenticeship. 

Employers pay at least the apprentice minimum wage for apprentices aged 16-18, and for apprentices aged 19 or over in the first year of their apprenticeship. After their first year, apprentices aged over 19 should receive at least the national minimum wage, or the national living wage, depending on their age.

The Low Pay Commission (LPC) undertook a review into abolishing the apprentice minimum wage last year after hearing “widespread” concern that the “low” rate was discouraging people from taking apprenticeships. It recommended to keep the rate but link it to age to narrow the gap between the national minimum wage for apprentices and non-apprentices.

The Treasury also today confirmed a boost to the national living wage from £11.44 to £12.21 an hour, a 6.7 per cent increase. The rate applies to those aged 21 and over, after the age boundary was lowered last year from 23 to 21-years-old.

Last year, the apprentice minimum wage rose by 21 per cent from £5.28 to £6.40.

The government will deliver the 2024 autumn budget tomorrow afternoon – Labour’s first in almost 15 years. 

Reeves said: “This government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise.”  

Deputy prime minister Angela Rayner said: “Our changes will see a pay boost that will help millions of lower earners to cover the essentials as well as providing the biggest increase for 18–20-year-olds on record.”

A government spokesperson claimed the Department for Business and Trade estimate over 3 million workers will directly benefit from the 2025 national living wage increase, nearly 200,000 workers will benefit from the increase to the national minimum wage for 18 to 20-year-olds, and over 130,000 workers will benefit from the uplifts to the rate for apprentices and those aged under 18. 

Minimum wage rates from April 1, 2025

 Per hour rateAnnual increasePercentage increase
National Living Wage (21 and over)£12.21£0.776.7%
18-20-year-old national minimum wage £10.00£1.4016%
16-17-year-old national minimum wage£7.55£1.1518%
Apprentice rate£7.55£1.1518%