Major cuts to further education funding in the government's spending review are expected to treble the number of colleges in severe financial difficulty, TES has learned.
A wave of area reviews of post-16 provision are being instigated across the country, with the aim of resulting in “fewer, larger, more resilient and efficient providers.”
At a meeting yesterday to discuss the Sheffield area review, TES understands that FE commissioner David Collins warned the city's principals that cuts amounting to between 25 and 40 per cent of the Department of Business, Innovation and Skills' (Bis) budget were estimated to result in around 200 colleges facing financial difficulty by the end of the academic year.
Earlier in the summer, a report by the National Audit Office revealed that the number of colleges rated “financially inadequate” had risen to 29 in 2013-14, and was likely to hit 70 by 2015-2016. But the latest projections suggest that further cuts could make the situation far worse than previously expected.
A source told TES that Dr Collins had suggested to the meeting that colleges would be expected to increase class sizes and staff teaching hours in order to balance the books.
The source said: “There are major challenges regarding the scale and complexity of the reviews, as well as the lack of resources available. Given the haste in which [government officials] are pressing ahead with the area reviews, there’s going to be a reaction.”
Dr Collins' presentation stressed the need for any proposals resulting from the area reviews to focus on “government priorities such as apprenticeships and high-quality technical routes”. Institutions should show a “willingness to change for the greater good, irrespective of vested interests and personal preferences” and “seek best value in the use of resources, especially those arising from public funding, for the benefit of learners and employers,” it added.
Martin Doel, chief executive of the Association of Colleges, said: “Funding from Bis and for 16- to 19-year-olds is not protected and so AoC is working extremely hard to ensure that colleges get a fair deal in the spending review. In our spending review submission, we have recommended that the government introduces a system of three-year funding allocations to ensure colleges can plan effectively as well as asking that their 16 to 18-year-old students are funded on the same basis as 14 to 16-year-olds in schools.
“AoC is not in a position to speculate on how many colleges might be in financial difficulty in the future, especially with the outcome of the spending review as yet unknown and action being in hand in colleges to adjust to the cuts already made.”