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. 

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.

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.