As much as £2 billion out of £7 billion in college income could be at risk for the next academic year as a result of the coronavirus pandemic, the Association of Colleges warned this morning.

Speaking before the Commons Education Select Committee on the impact that Covid-19 has had on the FE and skills sector, David Hughes, chief executive of the AoC, said that the government “must, must must” do something to support those colleges at risk.

“We think there is about £2 billion of college income at risk for the next academic year, out of £7 billion,” he said. “That is an enormous impact and this is on a sector that has faced a decade of austerity and neglect. It is a very vulnerable sector.

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“It is not just the independent training providers. Colleges all over the country are well-run, well-led, in fantastic relationships with employers. There is one college that has 40 per cent of its income commercial because it is working so effectively with businesses - all of that income is at risk. The government must, must, must do something to support those colleges at risk.”

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A survey from the AoC published exclusively in Tes in May showed that 13 per cent colleges feared their solvency was at risk. 

Mr Hughes told the committee that there were also significant concerns around funding lost due to a drop in apprenticeship starts. He said that 17 colleges providing apprenticeships that were surveyed by the AoC estimated that starts would drop by 50 per cent, equating to a £30 million loss at these institutions alone.

The Department for Education has been urged to provide more funding support to the FE and skills sector after post-16 education was excluded from last week’s £1 billion Covid “catch-up fund” for schools. 

Kirstie Donnelly, chief executive of City and Guilds, told the committee that support could be given to the FE and skills sector through the £3 billion national skills fund, adult education budget and added flexibility around the apprenticeship levy.

She said that the national skills fund should be utilised to provide “short, sharp training interventions”, and suggested rethinking the use of the apprenticeship levy to target specific groups who will need to retrain. 

 “It’s about reimagining the money that is already there and being creative about how we work as a skills ecosystem to use that money,” Ms Donnelly said.

Changes to universal credit 

Mr Hughes said that in order for colleges to meet the demand for upskilling and those “short, sharp training interventions”, changes must be made to the universal credit system.

He said that where adults were made redundant, most of them would need to go on to universal credit for income - but that the conditionality rules meant they had to be actively seeking work and be available for jobs. This, he said, was an “intensive amount of work”. 

He said: “What we are saying is allow two, three, four weeks on an agreed programme to take away that conditionality and allow them on training for a job that is available. The problem is the rules that the DWP [Department for Work and Pensions] set don’t fit with that kind arrangement for colleges and the funding that DfE [the Department for Education] provides doesn’t allow for that short course offer to be made - but it is the right thing to do.”