The chancellor today set out the hard ‘Labour choices’ she was making which will frame the government’s actions for the next four years in the spending review. In doing so, there was some good news for colleges coupled with areas where more information is required for the FE sector. A mixed picture like this is not unusual at fiscal events, but what feels new is the absence of any funding cuts or negatives which the sector has unfortunately been subject to many times over the last 15 years.
On the very positive side, we heard about significant investment in young people, with an increase of £1.2 billion to the 16-18 budget by 2028-29, funding 65,000 more students. And it would seem there are inflation increases in the funding rate. It is pretty close to what we asked for in our submission earlier this year, and builds on the above inflation funding rate increase for 2025-26. We have not had that sort of position in the recent past and it will offer a good deal of stability to many colleges with large cohorts of young people.
With 16-18 budgets making up a little over half the income of the college sector, that announcement is very welcome. The ‘but’ comes now though because we did not see similarly positive announcements on adult funding or apprenticeships to match. We did not hear much either on capital funding, or investment in priority sectors to match the £625m announced for construction in March. Nor how skills support for unemployed young people and adults will be delivered. On all of those we will probably have to wait for publication of the industrial strategy, the infrastructure plan and the post-16 education and skills white Paper. Ministers will want to have their own opportunities to announce funding alongside those strategies and plans.
College leaders will be relieved that there are no more obvious cuts to adult spending after those already announced for next year, and with the adult budget still a pale imitation of what it was when Labour was last in power. For colleges with larger adult funding, there is once again nothing to ease the challenge of increasing costs and a wider fear that there is simply not enough support for learning that does not directly and immediately deliver against the government’s priorities. We will do more work on this over the summer, to set out the positive impact adult education delivers and why it should be a higher priority for government. And how taking a slightly longer term view can show the return on investment in human, community and economic terms.
There will also be some disappointment that the biggest challenge facing colleges – of low pay for their staff – will not be helped by these announcements. College pay lags a long way behind schools and industry, hampering colleges from being able to deliver on the government’s missions. Even the increased investment in 16-18 funding will only plug those gaps, rather than closing them.
So it is a mixed picture, with more announcements to come, one big positive boost to investment and no big funding cuts. Given what colleges have had to endure in the last 15 years, that feels like a win. And with increasing understanding across Whitehall that investment in skills through colleges is central to achieving economic growth and breaking down barriers to opportunity as well as delivering across the government’s missions, I am feeling optimistic and hopeful about the next few years.
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