Spending review 2021: What the chancellor announced for FE and skills

Treasury documents set out spending plans for next three years

Treasury documents set out spending plans for next three years

27 Oct 2021, 15:55

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Chancellor Rishi Sunak delivered his spending review and autumn budget today and confirmed a number of investments for the FE and skills sector.

He promised that “total spending on skills will increase over the parliament by £3.8 billion by 2024-25, equivalent to a cash increase of 42 per cent (26 per cent in real terms) compared to 2019-20”.

However, the accompanying red book fails to provide clarity about how much of this funding is brand new money. Much of it appears to be a rehash of funding that was already allocated.

FE Week is seeking clarity from the Treasury. In the meantime, here is what the spending review documents commit for FE and skills:

16-19 funding rates to be ‘maintained in real terms’

The current base rate for 16- to 19-year-olds sits at £4,188 per student.

Today’s red book states that an “additional” £1.6 billion will be invested by 2024-25 to “maintain funding rates in real terms per student, and provide a 28 per cent real terms increase in 16 to 19 funding from 2019-20”.

FE Week has asked the Treasury to confirm whether this means the £4,188 rate will increase annually in line inflation.

The red book goes on to say the £1.6 billion provides “additional hours in the classroom for up to 100,000 T Levels students by 2024-25” and also funds “40 additional hours learning per student per year for 16- to 19-year-olds”.

Apprenticeship funding ‘increase’

The red book says the government is “increasing apprenticeships funding to £2.7 billion by 2024-25 – the first increase since 2019-20”.

It goes on to show this is a £200 million increase on what was predicted in March 2021.

However, it is not clear whether this is natural growth in the apprenticeship levy on large employers’ payrolls as employment and earnings rise. FE Week is seeking clarity.

The red book says the government is continuing to meet 95 per cent of the apprenticeship training cost for employers who do not pay the apprenticeship levy and “delivering apprenticeship system improvements for all employers”.

Improvements include an “enhanced recruitment service” by May 2022 for small and medium-sized enterprises (SMEs), helping them hire new apprentices.

By April 2022, the government promises to also “consider” changes to the “provider payment profiles aimed at giving employers more choice over how the apprenticeship training is delivered, and explore the streamlining of existing additional employer support payments so that they go directly to employers”.

Government also plans to introduce a “return on investment tool” in October 2022 to ensure employers can “see the benefits apprentices create in their business”.

The red book confirms that £3,000 cash incentives for each apprentice an employer hires will end on 31 January 2022.

£2.8bn skills capital investment

The red book states that government will be “providing £2.8 billion in capital investment in skills”.

This funding will include: “Improvements to the condition of post-16 estate, new places in post-16 education; more specialist equipment and facilities for T Levels; and delivery of the commitment to 20 Institutes of Technology across England. It will also help to provide the skills that local areas need in key sectors like biosciences, through industry-standard equipment and facilities.”

It is not clear how much for the £2.8 billion, if any, is new.

Capital funding for T Level equipment and facilities, £1.5 billion for college estate projects and almost £300 million for Institutes of Technology has already been announced.

£554m from the national skills fund to boost bootcamps and the level 3 offer

The government already committed to a £2.5 billion national skills fund in the 2019 Conservative party manifesto and subsequent budgets.

Today’s spending review document states that the government will provide “a total investment of £554 million by 2024-25 to substantially increase retraining and upskilling opportunities for adults”.

It continues: “This provides a 29 per cent real terms uplift in adult skills funding compared to 2019-20 and meets the government’s commitment to a national skills fund. This includes giving more adults access to courses at level 3 in in-demand areas such as engineering and digital skills, scales up skills bootcamps, supports reforms to the adult skills funding system, and invests in the skills local employers need.”

£1.8bn more for education recovery

Also included in the spending review is an additional £1.8 billion for education recovery. This is on top of the £3.1 billion already announced.

The new commitment includes a £1 billion “recovery premium” for the next two academic years “to help schools to deliver evidence-based approaches to support the most disadvantaged pupils”. It seems to be an extension of the current school-led tutoring fund.

Also coming out of the £1.8 billion is £324 million in 2024-25 for “additional learning hours” for 16- to 19-year-olds.

But that leaves over £400 million of the funding unaccounted for, and it’s not clear from the documents what this will be spent on.

The Department for Education later confirmed that £800 million will be allocated for 16 to 19 catch-up in total.

A spokesperson said: “Students in 16 to 19 settings who have the least time left to recover learning lost will benefit from an additional 40 hours of education across the academic year, equivalent to an additional hour per week.

“This time will be used for extra teaching and learning – including in English, maths and other subjects – depending on students’ individual needs. This, alongside the 16 to 19 tuition fund, will help to prepare these students for their future.”

UK Shared Prosperity Fund to pay for £560m Multiply project

The government has announced a £560 million Multiply scheme, aimed at improving half a million adults’ numeracy (click here for full story).

Documents show the shared prosperity fund, which is set to launch in April and succeeds EU structural funds, will be used for this scheme. The prosperity fund will be worth £2.6 billion in total over the next three years.

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