FE sector's financial health is deteriorating, AoC warns

13th March 2018 at 08:50
Colleges are expected to be unable to accumulate the surplus of 3 per cent of income set out as a target for them in the area review process

The financial outlook for colleges has deteriorated in the past six months, according to the Association of Colleges. In its “spring statement”, published this morning, it says that this is despite the funds made available for education in the Autumn Budget and the growing understanding that "skills matter for our country’s future success".

Education and Skills Funding Agency data on the sector for 2016-17 will not be available until the end of the month, but the sector is expected to be "well below" the area review benchmark that colleges should aim for surpluses at 3 per cent of income. In 2015-16, 55 per cent of colleges reported deficits, with the sector as a whole reporting a deficit for the third year in a row.

The AoC briefing adds that overall college income has fallen from £7.8 billion in 2009-10 to less than £7 billion in 2017-18, “mainly because of public spending cuts”. “The promise that colleges would be able to increase apprenticeship income is proving hollow because of the shift in control to levy-paying employers and the low rates at which apprenticeships are funded,” it adds.

'Real-terms decline'

According to the briefing, overall funding from central government is likely to decline in real terms between now and 2020, and “public spending cuts lead directly to course and capacity cuts”. As a result, teaching and support for young people has dropped to around 15 hours a week, compared with more than 25 in many Organisation for Economic Cooperation and Development countries, says the briefing. There has also been “a prolonged squeeze on pay costs”, it adds.

“Data collected by AoC and [the Education and Training Foundation] suggests average lecturer pay in colleges is £30,100, which is significantly less than average school teacher pay (£35,000) and average university academic pay (£43,000). Staff turnover rates in colleges have increased and there are recruitment difficulties in certain areas, particularly maths, engineering and construction.”

AoC chief executive David Hughes said: "We think colleges are the worst-funded part of the education system and have been the hardest hit by austerity. We wanted to keep that high on the government's agenda. The government has been very strong on how important colleges are, and yet the funding is really inadequate. So this is really a reminder of that." 

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