No extra cash means no extra students, colleges warn

Students will be turned away this September unless ministers stump up “exceptional” funding increases to cover “unprecedented” rises in student numbers, college leaders have warned.

The Department for Education revealed on Wednesday that colleges will only receive two-thirds of the in-year growth cash they were expecting to accommodate a huge rise in 16 to 19 year olds this year.

It comes as colleges and training providers brace themselves for further cuts to adult education budgets from September.

Data from the Association of Colleges shows 35,000 more 16 to 19-year-old students enrolled in colleges this academic year. They estimate a further 25,000 will come their way in September.

The rises stem from a widely reported demographic bulge in young people leaving school in the next few years.

The DfE described this year’s wave of additional students as “unprecedented” and said a previous plan to fully fund in-year growth was now unaffordable.

Officials use November data returns on student numbers to determine over-delivery against previously agreed allocations for places in 2024-25.

This week a new step was added to the way colleges calculate how much in-year growth they can claim. The so-called “affordability factor” means only two-thirds of eligible growth funding will now be paid.

Nottingham College was funded for just over 7,000 students aged 16 to 19 this year, according to published allocations. The college enrolled an additional 600 students and, based on government guidance published in August, expected £1.5 million in-year growth funding. The college now believes it will get £500,000 less than planned.

Nottingham’s additional students have largely enrolled on lower-level courses, which the college said “reflects the needs of our city” but who need “a great deal of wraparound support”.

Janet Smith, principal and CEO of Nottingham College, said the £500,000 reduction comes at a time of unparalleled demands for investment.

She told FE Week: “We need more space. We need to pay our staff fairly. We need to invest in AI and digital. We need to expand support services. We need to meet spiralling costs and demanding building maintenance. A reduction of £500,000 in in-year growth must be balanced by reduced investment elsewhere.”

Smith added there “is a very real risk” of the college turning away additional students next year.

Institutions will be told their growth payments for this year by the end of March, ahead of payments starting in May.

Rate rise isn’t enough

While colleges have no guarantees on what next year’s in-year growth arrangements will be, they will receive a 3.78 per cent increase to the per-student base rate for the 2025-26 academic year.

Most 16 to 19 year olds at colleges will be funded on study programmes which are arranged by funding bands depending on the student’s age and number of learning hours.

At the top end, for 16 and 17 year olds with 580+ planned hours, the base rate will increase from £4,843 to £5,026. This also applies to high-needs students aged 18 and over. For students aged 18 and over who are not high needs the rate will increase from £4,006 to £4,157.

The rise comes from the remaining £250 million announced by chancellor Rachel Reeves in October.

Sixth Form Colleges Association chief executive Bill Watkin said next year’s rate rise was “good news… particularly at a time when public services are under enormous pressure to find savings”.

NCG has the largest funding allocation for 16 to 19 year olds in the country. It recruited an additional 500 students on top of its allocated 12,886 places for this year.

The mega-college called out the government for using Colleges Week – a week created to highlight colleges’ contribution to the economy – to “once again ask [colleges] to deliver more for less”.

NCG estimates its extra students, and a shift to larger programmes, adds around £5 million in costs to their budget for this year. While the college group had planned to fund some of that from its own coffers, stronger recruitment and lower growth funding than anticipated leaves them “being penalised for our success in attracting and supporting learners”, a spokesperson said.

David Hughes, chief executive of the Association of Colleges, said the increased funding rate for most 16 to 19 year olds next year “will not cover what we expect to be another 25,000 extra young people wanting to start college in September, and I fear that without in-year funding, colleges will have to turn many away”.

Latest figures from the Office for National Statistics show the number of young people not in education, employment or training (NEET) has risen to a decade-high of 987,000.

Hughes added: “With a tight labour market, many 16 year olds will struggle to find work, and a place in college is their best option to set them up for a successful working life.”

Colleges at their limits

Luminate Education Group told FE Week it had to cap additional recruitment of 16 to 19 year olds this year. It could only physically accommodate an extra 637 students after recruiting over 1,000 extra last year.

The Leeds-based group plans to add 500 additional places for September 2025, but that too is limited because of capacity.

Colin Booth, chief executive, said the proportion of NEET 16 to 18 year olds in Leeds, currently at around 10 per cent, will rise further without “significant investment to create more spaces”.

He added: “Growing by 500 and paying for teaching and additional equipment without significant in-year funding will continue to put significant pressure on our short-term cash flow.”

Booth added that colleges’ capacity limits are compounded by public sector spending rules barring colleges from borrowing commercially.

“The problem with lack of physical space and no access to capital grants or loans to help increase space adds to the challenges we face.”

The Association of Employment and Learning has previously made the case for independent training providers to fill capacity shortfalls before the population bulge subsides in order to avoid over-capacity in colleges in the future.

Funding vs rhetoric

There is increasing frustration among FE leaders over funding snubs despite seemingly positive rhetoric around the sector’s importance to the government’s growth missions.

Providers of contracted national adult education provision have also been told by the DfE they will not be paid as much for in-year growth this year as they were expecting due to affordability issues.

And mayoral combined authorities have been told to expect cuts to their adult education budget of between 2 and 3 per cent.

NCG’s spokesperson said: “Alongside the proposed cuts to the adult skills fund, colleges are once again being asked to deliver more for less, despite the government’s stated missions of prioritising skills, education and employment.”

The DfE is yet to confirm its funding approach to non-devolved adult education for 2025-26, but colleges are braced for more cuts.

Hughes said: “The picture for adults is even more stark, with a cut to the adult skills budget suggesting that the government does not recognise how vital investing in skills is for their missions, and in particular for economic growth.”