Ministers’ decision to stump up £50 million to help fund teacher pay in colleges this year has divided leaders – with some describing the deal as an “own goal” that benefits the Treasury.
A lack of new funding for adult education, rising costs and growing industrial unrest have dampened what on the surface is good news for principals.
The Department for Education told the sector last Friday that a chunk of the £300 million announced for FE at the autumn Budget would be released this April as a “one-off grant”.
The remaining £250 million will be made available through 16 to 19 funding rates for the 2025-26 academic year.
Ministers have been under pressure to get additional funding into FE to help fund teacher pay rises since last summer’s snub which saw £1.2 billion injected into schools and academised sixth form colleges to pay for a 5.5 per cent boost.
Standalone sixth form colleges and general FE colleges were given no such subsidy until last week’s deal, which put an end to a judicial review claim that the Sixth Form Colleges Association (SFCA) brought against the government.
Colleges have mostly welcomed the £50 million grant while they wait for their individual allocations as any additional money is good news after 14 years of austerity.
While recognising that colleges are still unlikely to match the school pay award, the SFCA said the move was a “significant step in the right direction” as it increased its pay recommendation from 2 per cent to 4.3 per cent.
But multiple general FE college principals told FE Week they would rather have the full £300 million be put into the 16 to 19 base rate in the next academic year as this would result in a higher consolidated uplift.
A saving for Treasury
One college CEO, who did not wish to be named, said: “We’re far better off getting the £300 million in our rates because it is then embedded in forever, so every year the DfE has got to fund that over and over and over again. A one-off grant is a saving for the Treasury because they only fund it once rather than on a recurrent basis.
“That’s a huge own goal for us.”
They added that the deal had not achieved its desired outcome because sixth form college unions are continuing with strike action.
Another principal agreed, saying that any colleges calling for one-off cash payments to fund pay are on “dodgy ground”.
“From my point of view as an accounting officer, I would not take any confidence in consolidating a pay rise on unconsolidated budgets, because the future affordability of that is so uncertain,” they said.
Association of Colleges chief executive David Hughes said it does look like the £50 million will be a one-off payment that doesn’t then get consolidated into the permanent 16 to 19 rate.
“I think that causes potential problems for colleges, where, if they use their share of the £50 million to improve the pay of staff in this academic year, it’s difficult to know how they pay for that next academic year because it’s not consolidated into the baseline,” he told FE Week.
But Hughes added that any money coming to colleges “is a good thing”, and this year’s grant will be “really helpful” for colleges that have gone to the wire to try and exceed the AoC recommended 2.5 per cent pay award.
Funding cliff edge?
The SFCA countered the argument that the full £300 million would be better off going into the base rate next year as this would also be shared between schools and academies that deliver to sixth formers and not just colleges.
Bill Watkin, the association’s chief executive, said: “One of the great benefits of the £50 million we have secured for 2024-25 is that it is targeted exclusively at 16 to 19 education in colleges.
“Those making the argument that the £50 million should have remained in 2025-26 are effectively making the case to give half of this money to schools and academies. That would be the impact of using it to increase the funding rate next year.”
He added: “In our view, it is far better to share the funding exclusively between 200 colleges than to share it between 2,800 school sixth forms and other institutions.
“It is important that colleges do not face a funding cliff edge next year, and we have been assured that this will be avoided. Next year, the additional funding will be sufficient, we believe, to address the growth in student numbers and to raise the funding rate further.”
The DfE said it will provide a further update on individual allocations by February 13.
Angela Joyce, chief executive of Capital City College, said the issue of pay in colleges is “becoming increasingly complex” in part because the representative bodies are “making different pay award recommendations alongside different associated actions” and because colleges were reclassified to the public sector in 2022.
“FE colleges have been independent corporations for decades meaning that pay decisions have been made locally; reclassification is taking us as corporations closer to central government but seemingly without a desire to challenge the big issues that we face,” she told FE Week.
Mike Hopkins, principal of South and City College Birmingham, pointed out that colleges are currently in a worse position than last year and not only because they were excluded from the schools £1.2 billion pay deal.
“We are also faced with an additional annual cost of £320,000 for the increase in the living wage” he said, adding that funding for £900,000 of national insurance cost rises for his college have still not been confirmed.
“In addition, as almost half our funding is provided through the West Midlands combined authority, any increase in funding made through the 16 to 19 DfE funding is in effect only 50 per cent for this college.”
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