Spending review: FE budget fears as departments asked to find ‘at least’ 5% savings

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The Department for Education has been asked to find savings of “at least” 5 per cent, leaving it facing cuts that could amount to £4.5 billion and prompting fears of an impact on FE budgets.

The Treasury announced this week that the spending review, a plan for public spending over the next three years, will accompany the autumn budget on October 27 this year.

Ministers have announced plans to increase funding for health and social care in the wake of the pandemic by raising national insurance contributions, but are looking to find savings elsewhere.

Given the impact of Covid-19, the Treasury said spending plans would be “underpinned by a focus on ensuring every pound of taxpayer funding is well-spent, so that we can continue to deliver the highest-quality services to the public at the best value”.

Departments have “therefore been asked to identify at least 5 per cent savings and efficiencies from their day-to-day budgets as part of these plans, which will be reinvested in our priorities”.

The instruction, which is similar to one given in early 2020 before the pandemic began, has prompted unease in the FE community.

Spending on FE represents just 6 per cent of the Department for Education’s £89.6 billion resource budget, and a 5 per cent cut overall based on 2021-22 spending would leave the department having to find almost £4.5 billion.

 

‘Colleges have already made hundreds of millions of pounds of efficiencies’

Julian Gravatt, the deputy chief executive of the Association of Colleges, warned that colleges have already made “hundreds of millions of pounds of efficiencies” in recent years as a result of government decisions to fix funding levels in cash terms “regardless of cost” – at annual efficiency gain of 2 per cent a year for the past decade.

“We have said to DfE and Treasury for years that there are areas where the education system could be more efficient but government needs to be careful about using a fixed percentage target for these exercises,” he said.

Areas that the AoC highlights for savings include “administration, assessment and the duplication of A level provision”.

Sue Pember, a former director of FE funding in the DfE who is now the policy director of adult education network HOLEX, said the DfE will be considering what system they are going to use to make the savings.

They could, for example, “salami slice” – taking 5 per cent of everybody’s budget – or enforce targeted cuts such as removing “dead weight activity and letting others pick up the tab”.

“They will look at the non-statutory budgets, such as early years, the adult education and HE support, and trawl the work of their agencies and look at development funds like the £600 million qualification reform.”

However, Pember added, these budgets are “not big enough to give this level of saving so they will need to look at more radical solutions such as reducing the graduate repayment level or adding 1 per cent to the apprenticeship levy”.

 

‘We will see a lot of window-dressing in the spending review’

Tom Bewick, the chief executive of the Federation of Awarding Bodies, said the government’s decision to plan future tax rises on supporting health and social care does not “bode well for those of us who have consistently been calling for more investment in further education”.

He predicts the spending review will see a lot of “window-dressing, as we’ve seen already with the investments made in T Levels, bootcamps and the lifetime skills guarantee”.

While he had “no real idea” where the DfE might go for the efficiency savings, there is “no doubt in my mind that in recent years the quango state in skills has become rather bloated with over-the-top senior salaries and far too many non-jobs being created in areas like inclusion and strategy officers”.

Bewick suggests the department should “pair back the ambitions of the Institute for Apprenticeships and Technical Education which is planning to spend millions of pounds on a needless dual regulatory system of approving and managing vocational qualifications”.

He added: “You can also create a single funding council in England for all forms of post-18 tertiary education, replacing ESFA, Student Finance England and the Student Loans Company into a consolidated organisation.

“Given the dissatisfaction of many MPs and parts of the FE sector of the poor performance of the Careers Enterprise Company, I can’t really see that lasting out any major cull.”

Association of Employment and Learning Providers chief executive Jane Hickie said the “reported large skills shortages in certain key sectors mean that the DfE needs to have a sharper focus on how it spends its current budgets which includes adult education becoming more effective in retraining adult workers”.

She added that AELP would “strongly resist any opportunistic calls to divert the current apprenticeship levy underspend to other programmes because the underspend is simply a result of the lockdowns and workplaces being closed”.



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