Saved from the abyss...but times will be tough

18th December 2015 at 00:00

Some of the dust on the spending review is settling. George Osborne walked us to the edge of the abyss and back again. By my reckoning, his plans for spending cuts and deficit reduction have now changed four times in under 12 months.

The 2014 autumn statement looked apocalyptic, planning the lowest proportions of public spending since the 1930s. Since then, the chancellor’s view of the state has changed rather dramatically. In the budgets either side of the general election, he reduced the scale and rate of these planned cuts. Politically, this is very much “One Nation” centre ground.

He was helped, of course, by the Office for Budget Responsibility finding £27 billion down the back of the Treasury sofa. But Osborne chose to use it not on deficit reduction or tax giveaways, but on lessening the threatened 25-40 per cent cuts that he’d promised earlier in the year.

In September, Osborne described himself as a chancellor who combined the approaches of Nigel Lawson and Michael Heseltine. So he is fiscally Conservative and he wants to bring spending and the deficit down, but he has also become a chancellor who wants to intervene in sectors and places too.

Further education is a surprise beneficiary. But those breathing a sigh of relief on the assumption they will make it through the next few years largely intact are likely to be mistaken. It’s still going to be tough – £300 million or so from the Department for Education and the Department for Business, Innovation and Skills (BIS) will redraw the landscape.

College budgets will come under day-to-day and year-to-year departmental pressure as ministers also find their “inner Heseltines”, and new ideas with accompanying priorities and spending commitments.

But the existential questions remain and there is no shortage of people who wish to answer them.

Area reviews might feel like a process without a purpose (other than saving money), but political vacuums rarely continue for very long. City regions and local authorities will continue to ask for more powers over FE as devolution deals consolidate and evolve. From 2017, powerful new elected city mayors will be keen to make an impact. FE and skills is at or near the top of their shopping lists.

Large employers will continue to lobby hard against the new apprenticeship levy, and criticism of FE, skills and apprenticeships will be a central and familiar argument. They will also find ways of “spending” their levy contributions.

Ministers in the DfE, BIS and the Treasury will have their own reform ideas, too. Apprenticeships remain both a problem and an opportunity. Too few colleges offer them, and of those that do, too many subcontract their provision. This is untenable on grounds of both philosophy and financial pragmatism. Even if colleges don’t believe it is their job or don’t want it to be, it’s where the money is.

So there is still a job to do. The funding landscape may not be as bad as we feared but there will be no shortage of ideas about how the money available is to be spent. Few, outside of the sector at least, will be lobbying for a slightly smaller version of the status quo. The key words will continue to be “productivity”, “radical”, “transformation” and “devolution”. FE will have to find new or better ways to embody them. The spending review’s financial story, together with Osborne’s political conversion to the centre ground, just provides a little more time and flexibility to make it happen.

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