Transcript aoc colleges and spending review 16 dec 2015 julian gravattx

The Spending Review
and college funding
Julian Gravatt, Assistant Chief Executive
15 December 2015
One view of college funding…
Why funding matters / what I’ll cover
Why funding matters
• Colleges obtain funding to pay for education and training
• 16-18s, adults on benefits & with low qualifications fully funded
• Government uses funding policy to steer college behaviour
What I’ll cover
• Government policy as set out in the Spending review
• Implications for 16-18 and 19+ funding
• Areas of big reform
The impact of politics
The May 2015 election
• A majority Conservative government
• Thin majority (12 seats), fixed term (5 years)
• Lots of big issues (eg immigration, the EU, Scotland)
• Big focus on implementing the manifesto
What the manifesto said about FE/Skills
• 3 million apprenticeships
• Switch away from low value classroom courses
• Public spending cuts in order to reduce the deficit
Public spending
Departmental spending cash figures
2015-16
£ bil
Change
£ bil
2019-20
£ bil
198
+22
220
Partly protected (Scotland, Wales, NI)
50
+2
52
Post 16, Police, Local Govt, the rest
90
-11
79
338
+13
351
Protected (NHS, Schools, Defence, DFID)
Total RDEL (2015-16)
Notes
• Smaller cuts than implied in July (£20 bil cuts) or in the election
• Apprenticeship levy income has reduced pressure on DfE and BIS
• The spending review covers four years but plans will change
2015 spending review headlines
Further education and skills
• National 16-18 base rate for fixed for four years
• Sixth form college academy conversion option
• Adult education budget fixed in cash terms for four years
• Apprenticeship levy 0.5% on payrolls over £3 mil
• FE loans extended to 19 to 23-year-olds
DfE revenue spending
DfE RDEL (£ bil)
2015-16
2016-17
41.2
?
16-18
7.0
?
All other DfE
5.4
?
53.6
Schools budget
DfE RDEL
2017-18
2018-19
2019-20
54.4
55.5
56.4
57.1
+1.4%
+2.0%
+1.6%
+1.2%
Notes
• 6.5% more cash, 6.4% more primary , 7.7% more secondary pupils
• National school funding formula by 2017-18 (quite disruptive)
• £600 million saving on Education Support Grant (hits schools)
• Savings in 16-18 outside base rate (£160 million out of £6 billion)
16-18 Education – EFA Funding
Funding 2015-16 AY
£ millions
Prog
£ mil
Of
Disad
High
Needs
£ mil
Bursary &
Meals
£ mil
Total
£ mil
FE colleges
2,591
365
105
103
2,800
721
49
10
24
754
1,961
106
49
43
2,053
Free, studio & UTC
75
6
-
2
77
Special schools
18
4
132
2
115
Commercial, charity,
council and HEI
204
40
6
12
222
5,570
569
303
186
6,059
Sixth form colleges
Academies & schools
Total
Protection for the national base rate for 16 to 18-year-olds
c£3.9 billion spent on core full-time 16 and 17-year-olds (£4,000 * 964,000)
(
The EFA 16-18 Funding Formula
Student
Numbers
National
Funding
Rate per
student
Retention
Factor
(less than
1)
Band
Total
Programme
Funding
Programme
Cost
Weighting
Disadvanta
ge Funding
)
Area
Cost
Allowance
(up to 20%)
Hours
Total
5
540+
£4,000
Base
4 (*)
450+
£3,300
Medium
20%
3
360+
£2,700
High
30%
2
280+
£2,133
Specialist
60%
1
< 279
Landbased
75%
Disadvantage
1 (GCSE Maths / English)
2 (27% most deprived)
Programme
%
0%
%
£480 per GCSE
8 to 33% extra
16-18 student numbers drive funding
BIS revenue spending
BIS RDEL (£bil)
2015-16
2016-17
Science
4.6
HE
3.3
Grants go
Core adult skills
1.5
1.5
Other FE/skills
0.5
19+ apprentices
0.8
Other BIS
2.2
BIS RDEL
12.9
2017-18
2018-19
2019-20
5.2
1.5
Devo
Levy
13.4
14.5
13.4
13.2
Notes
• Much smaller cut than expected (“17% in real-terms”)
• £2 billion HE maintenance grant cut. £120 million HEFCE grant cut
• Restructuring of the budget. More student loans. The levy. Devolution
Loans and the levy
User charges that support post-16 education and training
•
•
•
•
Further extension of student loans (FE, part-time HE, postgrad)
Decisions to make loans a better option for Government
Apprenticeship levy a new tax that supports revenue spending
Employer control of that spending via a digital voucher
2015-16
Student loan outlays
2016-17
2017-18
2018-19
2019-20
13,300
15,400
17,600
19,800
21,500
FE loans
202
260
325
440
480
19+ apprenticeships
740
926
1,076
1,247
1,422
The apprenticeship levy changes the funding route
LARGER
EMPLOYERS
OVERSIGHT (Institute of Apprenticeships)
HMRC COLLECT
LEVY
APPRENTICESHIP
FUNDING
APPRENTICESHIP
DESIGN
Money flow
Information
flow
Cash will pass to
providers on confirmation
of training (likely through
the ILR) and the receipt of
a voucher code from an
employer
INDIVIDUAL
VOUCHER
ACCOUNTS
Payment
made to
providers
EMPLOYERS
Funding claim
and proof of
training
COLLEGES &
PROVIDERS
SFA’s 19+ budget (grant letter)
Finai a£ mil
2015-16
19+ apprenticeships
740
19+ FE (“other ASB”)
1,105 )
Community learning
216
Learner support
173 )
Offender learning
Support budgets
Total
2016-17
2017-18
2018-19
2019-20
926
1,076
1,247
1,423
1,494
1,503
1,511
1,512
130
130
130
130
130
373
390
340
267
239
2,737
2,940
3,049
3,155
3,304
Single Adult Education Budget (AEB)
Less emphasis on qualifications, more on outcomes
Devolution in stages between 2016 and 2018 to local government
Skills devolution
Devolution deals (pre & post election)
*Greater Manchester (October 2014)
Sheffield City Region (Dec 2014, Oct 2015)
*London (Mayor) (February 2015)
*West Yorkshire (March 2015)
Tees Valley (October 2015)
North East (October 2015)
Liverpool City Region (Nov 2015)
West Midlands (November 2015)
Promises
“Further deals with other city regions”
Five year £12 billion Single Local Growth Fund
Education funding landscape
Dedicated School Grant
(centralised)
High Needs
16-18 Education
FE Loans
HE
Teaching
HE Loans
Adult Skills
(devolved)
Apprenticeship
vouchers
(16+)
Fees, Contracts and
International
A quick look at college finances
Income 2009 to 2015 (cash)
Colleges
-10%
Schools
+12% (est)
Universities +27%
4,500
4,000
3,500
3,000
2,500
2,000
DFE
BIS Adult skills
1,500
Other income
Surplus as % income (2014)
Universities +4%
Colleges
-1%
NHS trusts
-4% (2015)
1,000
500
-
Financial weakness
232
FE colleges
12
Exceptional
39
Inadequate
c100
Stretched
Area reviews
National programme of area reviews
Designed to prevent an increase in financially weak colleges
Wave 1
7 reviews, 50 FE & 33 sixth form colleges
Wave 2
6 reviews, 37 FE & 13 sixth form colleges
Waves 3 to 5
21 reviews from April 2016 to March 2017
London
Another 5 or 6 reviews in 2016
Implementation
Unclear if there will be financial support
College self-government in terms of decision-making
Mergers
Mergers in 2015
High stakes
Creditors nervous
Colleges complex
AoC merger tips
document
Timetable for 2016-17
December
• Skills grant letter
• EFA’s 16-18 funding letter
• School and local authority settlements
Spring and beyond
• EFA allocations (based on data, no business cases)
• SFA simplified funding system and allocations for 2016-17
• Information on new EFA, SFA and BIS structure
• Wave 1 area reviews report publicly, Wave 2 reviews start
• Elections (Scotland, London, met boroughs, districts, etc)
Planning for 2016-17
What we know
1. There will be 16-18 cuts. Smaller than expected.
2. 19+ funding will come in future via employers, councils and
loans. There is a degree of stability in 2016
3. The Government’s priority is apprenticeships.
4. There is another shift to user charges (loans, levy)
5. Reforms in every area but not always coherent ones
6. There is a Conservative majority government but policy
might well have changed by 2018