Over the next two years, nearly one in seven places in adult education will disappear, according to official estimates. The skills investment statement published last week revealed that the Government expects 462,000 places in funded adult education to be lost by 2013, the year FE loans are introduced.

According to the Department for Business, Innovation and Skills (BIS), the fall is a result of “longer and more comprehensive programmes” such as apprenticeships: because they are more expensive, fewer people can be funded. But apprenticeships are predicted to rise by only 10,000 during this period.

BIS also revealed that only 40 per cent of people taking out FE loans are expected to pay them back (people have to repay the loans only when their income rises above #163;21,000).

That anticipated default rate is twice as high as for higher education loans, and reduces the number of loans that the Government can afford to make - although BIS said the figure was also being revised to take account of new employment and earnings data. Loans will support 87,000 new learners in 201314 at a cost of #163;129 million, and 171,000 new learners in 201415 at #163;398 million.

FE minister John Hayes claimed that the loans system was not to blame for the expected fall in the number of students, however. He argued that the loan system was in its way a status symbol for FE: it meant it was being treated the same as the universities.

“In terms of the status of FE, I have always believed that it should have the same status as HE,” Mr Hayes said. “I don’t think it’s reasonable in that respect to have different loan systems. People will only pay them back once they are earning above the threshold. That’s absolutely fair.

“We know that, with a level 3 qualification, people over their lifetime earn about #163;100,000 more than people without. They are more likely to get jobs and more likely to earn more.”

That predicted default rate of 60 per cent moved David Hughes, chief executive of adult education body Niace, to say: “It’s an incredible statistic.”

He added that the predicted fall in participation had three causes: the shift to more expensive apprenticeships and training for the unemployed; the likely high default rate of loans; and a reduction in the total cash for adult skills. The total funding for adults is due to fall from #163;3.92 billion this year to #163;3.67 billion in 201314 - a drop of more than 6 per cent. Maintaining adult participation in education would require other Government departments, such as health, to recognise the potential savings that could be realised by investing in education, Mr Hughes said.

“We really must get the message across to all the other Government departments about how adult education can help them reduce costs in their areas,” he added.

Mr Hughes said parts of the NHS had already cut the expense of treating mental illness by offering patients adult education, which increased their independence and capacity to cope. Raising employer contributions to adult learning would also be key.

“We have protected investment towards areas that have the most impact, such as for the low-skilled young adults without intermediate and advanced qualifications and the unemployed,” a BIS spokeswoman said.

She defended loans, saying that despite the slim chance of repayment they were still cheaper than the current grant funding arrangements and that there would be no need for upfront fees in future, which many courses require.

“We will seek to maximise levels of repayment by ensuring that potential learners have the best available information on the quality of FE and training courses and progression prospects, so they can choose courses which provide strong returns in the labour market, and that they are fully informed about the financial liability they are taking on,” she said.

But BIS is having some second thoughts: it acknowledged that some people may be put off by the prospect of debt and the loans may not all be taken up, further reducing adult participation in learning. It has promised to carry out research on public attitudes to loans and this will inform a final impact assessment next year.

A VIEW TO A SKILL

Key facts from the skills investment statement:

The number of adults in publicly funded learning is predicted to fall from 3,280,000 this year to 2,818,000 in 201314.

Of those, 645,000 this year are expected to be apprenticeships and 655,000 in 201314.

FE loans will be introduced for over-25s in 2013, with #163;129 million available to support them in the first year.

Total funding for adult skills will fall from #163;3.92 billion this year to #163;3.67 billion in 201314.