It is less than 3 months from Friday 29 March 2019 which is the date when the UK is due to leave the European Union (EU), but there is a lot of uncertainty about what will happen at that point.
The impact on colleges is less than in some areas of national life but 40 years in the EU has made a difference to our sector. Brexit could bring some big changes in the 2020s and there are big secondary effects
- If there is economic disruption, changes in export markets for important industries or new trade deals, this will shape the demand for further education and training.
- If there are changes to the rights of EU citizens in the 2020s, this will affect staff and students working in colleges.
- if there is lower migration to the UK in future, this will reinforce the need to tackle weaknesses in UK education and make the country more self-sufficient in skills.
This paper sets out AoC's position on five key Brexit-related issues (access to education, outward mobility, recruiting teachers, regional funds and regulation)
The rest of this website explains the main Brexit issues for colleges:
- Update on the negotiations (updated 18 January 2019)
- No deal contingency planning advice for colleges (updated 18 January 2019)
- Government's no deal notices (updated 18 January 2019)
- Migration and changes to freedom of movement (updated 18 January 2019)
- Retaining and recruiting teachers
- Students of sixth form age, adults and apprentices
- European Social Funds
- Student mobility and Erasmus
- Changing regulations (state aid, procurement)
- VAT after Brexit
The negotiations between the UK government and EU commission started in March 2017 when the UK government started the Article 50 process.
The UK government and EU agreed a Withdrawal Agreement and Political Declaration in November 2018 but, at the time of writing, the UK Parliament has refused to give approval for this so it is unclear when, whether and how Brexit will happen. The Withdrawal Agreement runs to more than 500 pages and covers a number of issues including the status of UK and EU citizens, arrangements at the Irish border, the UK's termination bill as at departure date, the arrangements for the transition period (currently due to run from March 2019 to December 2020) and some aspects of the the future UK/EU relationship including trade, security and a long list of other issues.There are three broad scenarios
- An amended version of the deal is agreed by all sides: If this happens, then the issues are fairly straightforward. The Home Office is about to open its EU Settlement Scheme for applications from any of the 3 million EU nationals. This process continues until 2021 and while it does, there will be no significant change to the immigration system, employment rules or education funding arrangements for EU nationals. The withdrawal agreement includes transitional arrangements for the UK to participate in EU programmes like ESF and Erasmus until December 2020. For all intents and purposes, not much will change for colleges on the date of the UK's departure (29 March 2019).
- No deal: If the UK government pulls out of the deal and there is no deal, there is a long list of issues to address. These include issues relating to people, migration, travel, customs, tax, licensing and other rules. The UK has published more than 100 no deal notices which set out scenarios. Many of these involve unilateral UK recognition of EU rules in the short-term as a way to ensure continuity (for provision of services, imports, normal life etc). The Home Office's no deal notice on EU nationals promises continuity of existing rules in most cases but EU nationals arriving in the UK from April 2019 onwards might not have access to public services (including education funding) on the same terms as those already resident here. The no deal notices on ESF and Erasmus promise continuity of funding from the Treasury. The main issues for colleges to watch out for relate to travel (for example trips to EU countries in early summer 2019), purchases and more complex contracts (eg those relating to bank loans or insurance). There is a lot more information available in the government's no deal Partnership Pack published on 21 December 2018. A sensible immediate action will be to register with HMRC for updates on any customs declaration changes.
- Delay: There may be a delay but it is difficult to know exactly how this would arise. There might be an UK/EU agreement for an extension to allow for a UK general election or referendum but this agreement would need to have unanimous support from all 28 governments. Nevertheless, if it happens, then, as with the current deal, not much changes in the short term but bigger developments in other respects (for example a new government).
The mantra from both sides is that "nothing is agreed until everything is agreed" so there is a small but growing risk that there will a no-deal Brexit come 29 March 2019.
Further education is an area of life that is less affected by Brexit issues than many others but there are some points where it matters. Key points in the agreements so far:
- People: UK and EU countries have agreed to maintain citizen's rights for nationals already living in each other's countries with an agreement on the processes by which governments would register citizens and through which they can exercise their rights. The Home office published detailed information in summer 2018 on the planned EU Settlement Scheme which will open for applications in autumn 2018. A toolkit to help employers has also been developed.
- Freedom of movement until 31 December 2020 (unless there is no deal): Anyone who moves from the EU27 to the UK or vice versa from the UK to a EU27 country acquiring rights to become a permanent resident if they stay for 5 years without significant absence. These rights extend to those who come to study and to family members. Those moving here under these rules to education, vocational training and apprenticeships as host country nationals. Rights are cancelled for serious criminals (which is not tightly defined but mainly relates to people who have had custodial sentences of 12 months or more).
- European funds: ESIF funds and rules are now confirmed as continuing until 31 December 2020 including (perhaps ominously) the application of all union laws including “financial corrections” and audit of accounts. The government has promised to continue paying and managing ESIF ad Erasmus fund until the December 2020 date whether there is a deal or not
- European Court of Justice: The government is keen that the UK should leave the jurisdiction of the European Court of Justice (ECJ) as soon as possible. This is a legal example of “taking back control” and only really concerns colleges if there are significant employment law or VAT cases taken to the ECJ.
Colleges could spend - and possibly waste - a lot of time preparing for a variety of scenarios. Our key three points of advice continue to be:
- Understand the impact on staff and students.
- Analyse the college's supply chain to anticipate which (if any) purchases might be affected.
- Conserve cash
Colleges, first and foremost, are organisations of people. They educate and train students and apprentices. They employ and contract with people to do this. The average college employs hundreds of teaching and other staff and buy in the services of other people ranging from examiners to cleaners to do this. So the first and most obvious no-deal issue relates to people. If the UK leaves the EU without a deal, the status of 3 million people living in the UK suddenly becomes uncertain. This sort of uncertainty - a legal vacuum - would be incredibly damaging so it is inconceivable that government would do nothing to address it. The Home Secretary could present some sort of emergency legislation to Parliament providing continuity for UK resident, EU nationals and legal authority for the settlement scheme that is already up and running. The government as a whole, meanwhile, could promise no change to the status of individuals and families pending resolution of other issues. These are big issues with big consequences. What would colleges want to do in the circumstances? The simple things, perhaps. Providing public reassurance to students and staff. Keeping existing rules. Promoting equal opportunities regardless of background - or nationality. Talking to individuals on a 1:1 basis to find out concerns and address them. But, above all, the no-deal mantra for colleges when it comes to people should be no-change.
Supplies and services
The second set of issues relates to contracts and supplies. Colleges have a web of contracts with other organisations to supply everything they need. The range of courses on offer in a typical college makes a wide range of supplies and it is hard to generalise about where the weak points are. Each winter many colleges close for a day or two because of snow disruption. Colleges stayed open in September 2000 when petrol started to run dry but land-based colleges had to shut up shop in April 2001 when foot and mouth closed down large parts of the countryside. More recently, colleges have been affected by riots or terrorist incidents. A no-deal Brexit is different to this because change - and disruption - could last for weeks, months or even longer. There are a range of scenarios for what might happen so it is pretty much impossible to do any serious planning. An obvious first step is to ensure that the college has information on its suppliers and key contracts up to date and available.
Money will be a third concern. The government has underfunded colleges for years while loading new obligations onto the sector. In spring 2019, it plans to implement the new college insolvency regime. Later in the year, the semi-devolved adult education system and the full-fat office for students regime both come into effect. In what will already be a challenging year, a no deal Brexit could be an unhelpful complication. Again, there will be things that colleges can do to manage. For although FE funding systems are absurdly and unnecessarily complicated, the money itself in most cases comes from the UK government. Whether its apprenticeship levy payments authorised by employers, European Social Fund grants or tuition fees covered by student loans, the actual payment comes from the government bank account. This provides some protection in case of disruption because the government will want to keep paying its bills. Ending up without a deal after two years of negotiations will dent confidence in the UK so the Treasury will inevitably want to keep funds flowing in the short term. This should, therefore, provide some certainty for colleges but the loss of confidence could be an issue. It is possible to imagine a series of cancellations: employers cancelling apprenticeship contracts, students cancelling enrolments and any other contracts getting delayed because of uncertainty. In this scenario cashflow will be at a premium so colleges will need to be cautious.
Government departments have published more than 75 notices to help people and organisations prepare for a no deal scenario. The collection of papers is available here
Points of interest for colleges:
- People: the notes published so far do not yet cover the position of EU27 nationals living in the UK but this should not be a cause for concern. The Home Office has set up the rules and systems to manage an EU Settlement scheme. The Prime Minister, Theresa May, made the following statement on 21 September 2018 "there are over 3 million EU citizens living in the UK who will be understandably worried about what the outcome of yesterday’s summit means for their future. I want to be clear with you that even in the event of no deal your rights will be protected. You are our friends, our neighbours, our colleagues. We want you to stay." As responsible employers, colleges should offer reassurance to those staff and students who are affected.
- Erasmus: DfE's note on Erasmus+ says that the government would continue to fund projects approved before March 2019 if there is no deal. There are similar (through different) commitments on research funding. The note on EU funded programmes does not specifically name ESF funds but provides a broader promise that the government would guarantee "the full 2014-20 Multiannual Financial Framework allocation for structural and investment funds" in a no-deal scenario.
- European Social Funds: the paper on the European Social Fund summarises the guarantees given by HM Treasury. The paper explains that the UK government hopes to reach a deal in which the UK continues to pay into the EU budget until December 2020 and to participate in programmes until then. If so, this will mean that ESF will effectively continue until 2023. If, however, there is no deal, the paper says that HM Treasury will guarantee the same level of funding until December 2020 and that the Department of Work and Pensions will continue to sign contracts after that date.
- Public procurement: the paper on public procurement says that the UK government will create its own equivalent of OJEU notices for large tenders if it needs to
- Data protection: the paper on data protection says that the UK has adopted the EU's General Data Protection Regulations (GDPR) via the 2018 Data Protection Act and that UK-based organisations should continue on that basis whether there is a deal or not. The paper notes that there will be no automatic basis for data transfer out of the EU27 into the UK until the EU clarifies its rules (in this scenario).
- Travel: the paper on travel says that anyone planning to travel to the EU after March 2019 should check their passport now in case it just has six months to run.
- Food, Pharmaceuticals etc: several papers cover the arrangements for sensitive items like food and pharmaceuticals. The overall message of the notes is that the UK Government has or will adopt EU law into UK law so will continue to maintain the same standards but also that (if there is no deal) there will be new custom bureaucracy for UK-EU27 trade because the UK will extend the current non-EU arrangements to this area of trade. This may be avoided if the current plans for a deal reach a successful conclusion.
The UK government's publication of plans is part of its negotiating strategy which is complicated because the aim is not just to get an agreement in Brussels but also to secure a deal that will pass through Parliament.
Migration from EU countries to the UK increased significantly in the 2000s as a result of:
- the removal of barriers to freedom of movement within the UK
- the availability of low cost travel
- the willingness of employers to look at individual skills rather than their nationality
- high employment levels in the UK compared to Southern and Eastern Europe.
The Government has had a target to reduce net migration since 2010 which has resulted in tighter controls on the ability of non-EU nationals to work, study and join families in the UK. Immigration was a big issue in the 2016 EU referendum campaign and the current plan, set out in an Immigration white paper, is to adapt the controls in place for non-EU nationals to cover those from EU27. This is politically and technically difficult so the changes would not take effect until 2021 at the earliest.
The Home Office's Immigration white paper on 18 December 2018. There was some delay in getting this out because of disagreements between ministers but the Prime Minister, Theresa May, sees the white paper plans as a key way in which the government will implement Brexit - by taking the UK out of the EU free movement rules. The policies in the white paper may change in the next months and years but future immigration policy raises some issues for colleges. Here's why:
- there is still an opportunity to change policy. The Home office plans a 12 month programme of engagement after which it will prepare detailed legislation and rules for the system to take effect in 2021 and beyond. The paper had a white cover but the content is pretty green. The UK/EU withdrawal agreement (the Prime Minister's deal) extends the current freedom of movement rules until December 2020. The Home Office's EU settlement scheme will be open until June 2021. Any changes to immigration rules will take place after that (ie more than two year's away).
- the government's central plan is for a single set of immigration rules covering EU and non EU nationals. The baseline plan involves extending the current Tier 1,2, 4 and 5 rules to EU nationals but (a) the UK anticipates negotiating more favourable arrangements for EU nationals with the EU (b) there is a promise to make the new arrangements more flexible, digital and customer friendly than the current system.
- there is a proposal for a single £30,000 salary threshold for Tier 2 visas, along with a minimum Level 3 qualification threshold. The salary threshold has attracted widespread criticism from employer groups because it would eliminate more than 80% of current EU migration. The white paper includes some research on the labour market impact of these proposals but the wider context is the policy to reduce migration into lower paid, lower skilled roles. The white paper sets out several ways in which the Tier 2 system would be improved with the removal of the need to prove that jobs cannot be filled locally and a promise that visas will be issued within 3 weeks. We have already pointed out to the Home Office that the £30,000 threshold is unhelpfully high for recruiting teaching staff.
- there is a proposal for short-term visas of up to 12 months which could be used to fill lower paid roles and which would only be available to nationals from certain countries. This does not go very far in addressing employer concerns and implies some major changes in the labour market.
- there is a proposal for six month post study visas for those attending institutions with degree awarding powers. This partly addresses the case made by universities but not colleges, though we are on the case.
AoC is represented on the Home Office's employer group and education group so we have a route to raise issues though the big decisions in this area are tied up with Brexit and the future of the government. If they go ahead, the government's plans imply a major change in immigration policy and associated with this, a major change of approach by government and employers to education and training.
What happens precisely depends on the events in national politics, including whether there is a deal or not:
- the final decisions on UK/EU movement will depend on the post-Brexit transition period trade negotiations. The Chequers white paper says the UK wants to facilitate business travel and youth mobility
- adjustments may also be required if the UK concedes migration changes in future Free Trade Agreement negotiations.
- for many employers, the removal of freedom of movement means the removal of the freedom to recruit low skilled workers. The sectors that are most affected (food, hospitality, retail) are pushing back against this but have differing positions. An expanded youth mobility scheme (which allows short-term work) may meet the needs of a high turnover sector like hospitality which has seasonal variations in demand but be less helpful for retail or construction.
- faced with government insistence on ending free movement, some sectors are clearly placing hope on using up youth mobility scheme to the maximum. There is a risk that this could create the sort of migration was often most unpopular in communities (ie transient young adults). One interesting observation from the MAC report is that the supply of young people from Eastern Europe was high in the 2000s but will fall because of demography and as their home economies improve vis-a-vis UK. From the point of view of avoiding a point when migration might affect voting, the 2016 referendum couldn't have been worse timed.
- the targets for the Home office are to regain control of migration and to change the balance so that more of it is high skilled. The policy is definitely to reduce low skilled migration with the hope that the existing pool of EU workers and British citizens will fill available jobs.
There are significant teacher shortages in colleges in construction, engineering, maths and other areas. Staff turnover levels are increasing, partly because of relative pay levels and workload pressures. There are also shortages in schools. There's a risk that a new migration regime for EU workers might make this worse because:
- teachers leave for jobs in industry
- people from other EU27 countries who might have come to the UK in the past will stop doing so in future
- Home Office might apply a blanket salary threshold (eg extend the £30k used for non-EU workers) which excludes lower paid staff in education. We want people in our sector who work for love as well as money.
There is no firm data on the proportion of EU nationals in colleges because it has not been necessary up to now to collect this. We have collected estimates from colleges via our 2017 workforce survey which suggests that colleges employ an average of 23 EU nationals. This adds up to a total of 7,000 people or 4% of the college workforce. 12% of colleges surveyed reported no known EEA employee whereas 5% reported more than 20. Colleges employ an estimated 189,000 people, of whom 76,000 are teachers.
The Office of National Statistics estimates that education as a whole has an estimated 4% of non-UK EU staff whereas higher education has 15%. Higher education may be an outlier because universities have a strong tradition of international partnership, income from multinational research projects and a tendency to employ their own graduates, an increasing number of whom come from the EU. The university workforce has expanded in the last 10 years (at a time of higher EEA immigration to the UK) while the college workforce has contracted by a few percentage points. It may also be relevant that college employment is geographically dispersed with substantial numbers in relatively small towns whereas UK's EU27 population is weighted towards bigger cities.
There are complicated issues for students of sixth form age, adults and apprentices. Ministers have offered some protections for students starting courses in 2017 and 2018 that they will be able to complete their course on existing terms but have not yet confirmed the situation for those starting in 2019. A guarantee of continued funding was made to those starting higher education courses but not those starting further education courses.
There is no official data on the number of EU27 nationals in colleges. The sector used to collect nationality data via the Individual Learner Record (ILR) but it was unreliable and the collection has been discontinued. We estimate that the numbers might be around 40,000 (2%) but this is very much a guess. There are some points to note:
- The transition agreement reached between the UK government and EU in March 2018 effectively extends existing arrangements and rules until 31 December 2020, though with some tweaks in the details.
- There are some wider issues relating to access to the UK education system which go beyond the EU. In terms of school admission, DfE guidance is that “children arriving from overseas have the right to attend state funded schools in England” except for children from non-European Economic Area (EEA) countries who are short-term visitors or whose permission to study was given on the basis that they attend an independent fee paying school. DfE’s School Admissions Code restricts the factors that can be used to decide admission which means that other EU nationals are treated on the same basis as UK nationals.
- Increased mobility within the EU suggests that there are a higher proportion of children of other EU nationals in UK schools but DfE does not collect data on this issue in the school census. However it is worth noting that the national 2011 census reported that the vast majority of the UK residents born overseas were adults rather than children. The current school admission rules do not test nationality or residence (beyond current address) and it would be a massive reform if a decision was taken to do so. The trickiest area of all would be distinguishing between UK and Irish citizens.
- Since the early 1990s, EU member states have offered access to further, higher and adult education on the same terms to nationals of other member states as citizens of their own state. The rule for publicly funded education and training outside schools are slightly more restrictive. EU nationals living and working in the UK have been able to enrol on further education courses or take apprenticeships on the same basis as UK citizens with the key test being three year's ordinary residence in any one of the 28 EU states plus some further countries. Existing education entitlements extend to the EEA (ie the EU plus Norway, Iceland and Liechtenstein).
Any data on nationality needs to be treated with care. A front page Sunday Telegraph story from May 2016 quoted an ONS estimate that 700,000 school children have one or more parent who are citizens of another EU country without explaining that this is a very wide interpretation. There are several senior UK politicians who are married to EU27 citizens and whose children would therefore be categorised as "foreign" under this definition.
The main source of figures on the numbers of HE students from the EU is taken from student loan data, which reports about 125,000 EU students at UK universities and £224 milllion was paid in fee loans to EU students on full-time courses in England (3.7% of the total). Colleges incidentally have almost no students in this funding stream because their higher education student population is non-residential. Around 70% of college HE students live less than 25 miles away from their place of study. There are significant numbers of EU students in universities in major cities. It is no accident that three of the five universities that recruited more than 1,000 EU students are in London.
The English approach to FE funding/fees gives EU27 exactly the same entitlements as UK students (and non EU students). Key rules are:
- The course is in England (with some exceptions for armed forces)
- The student has three year's ordinary residence in the UK
- Because many FE funded courses are also free (16-18s, basic skills, Level 2, first Level 3 up to age 24), this acts as a government subsidy to EU27 citizens but also ensures that those living and working here attain education and skills for daily life and for work.
In recent years governments across the EU have been fairly constrained by European Court of Justice (ECJ) judgements relating to freedom of movement/benefits/HE rules. The Danish Government lost a case in which they tried to restrict HE funding for their residents vis-a-vis commuters from Malmo. There have been other precedents in the benefit/tax credit areas. When it comes to students - the rules bar discrimination between home/other EU countries when it comes to fees/funding while allowing restrictions on maintenance support.
Departure from the EU would give the UK Government more control over funding rules relating to students but it is quite plausible equal treatment for EU27 citizens may continue as part of a deal to secure access to research funds or to avoid barriers to trade in services.
There is an interesting issue in apprenticeships which may not be widely understood:
- Companies employing staff in the UK will pay the levy for anyone paid here (just as they pay employers NI for them) but a fair percentage of this payroll in some companies and public services will relate to EU27 national and non-EU staff.
- The apprenticeship funding rules restrict spending to anyone with three year's residence.
In other words, there will be companies paying the levy for members of staff who they cannot claim training funds to support.
Colleges have used the European Social Fund (ESF) over the last two decades to help retrain and improve the skills of hundreds of thousands of people. Exit from the EU requires a fresh look at the priorities but should not result in any reduction in spending because this would widen existing social and economic divisions.
The latest stage of the Brexit negotiations involved agreement on several elements of the implementation (transition) period. This will run from the official leave date on 29 March 2019 to the end of December 2020. The latest iteration of the withdrawal agreement confirms that the UK will continue to make payments to the EU until the end of the 2014-20 budget and that, in return, programmes like ESF will continue with the same set of rules, audits, clawbacks etc. For those who have ESF contracts and who have compliance sorted, this is obviously good news.
In the longer term, the government has promised that a Shared Prosperity Fund will replace ESF though with different objectives. Whether Ministers keep the promise to maintain the same level of funding for social and regional funds remains to be seen. We believe the emphasis should be on providing a degree of continuity by maintaining funding levels but perhaps with less bureaucracy. Funds should be targeted on areas where economic activity is lower and unemployment is higher to narrow gaps in our society and to make the country work for everyone.
The amount of ESF funding received by colleges fluctuates widely because of the stop-start nature of government procurement and the complexity of the funding rules. At its height (in 2014-5) colleges received £100 million in ESF income and £18 million in direct European grants which is high because the previous programme was coming to an end. This represented almost 2% of total income and is less in absolute and relative terms than the £1 billion a year (3% of total income) received by UK universities from EU research funds. Nevertheless, the money is very important to colleges in the more economically disadvantaged parts of the country. The money is concentrated in a small number of colleges..
This is how one college used ESF funding in the 2007 to 2013 period:
“Calderdale College is running the Skills Enhancement Fund project with up to £33 million of ESF funding via the Skills Funding Agency. The project, which ends in 2015, engages with employers to invest in skills development and helps them respond to changes in market needs and the economy. Through contracts with providers and employers, the project has so far supported 43,400 starts on learning and helped people to gain over 14,700 accredited qualifications or units.”
The Work and Pensions Select Commitee published a report in April 2018 which set out the issues
The EU has encouraged student and staff mobility through schemes such as Erasmus+ for over 30 years. Erasmus+ aims to modernise education, training and youth work across Europe whilst encouraging a better understanding of different societies and the sharing of educational practice. The transition agreement reached between the UK government and EU in March 2018 effectively extends existing arrangements and rules until 31 December 2020, though with some tweaks in the details.
Since 2014 (the current Erasmus+ programme cycle), UK colleges have received around €43.5m for vocational projects through Erasmus+, benefiting over 100 colleges. In the same time period, for mobility programmes alone the UK has received around €81m in Erasmus+ funding. €39m of this funding has been awarded to colleges. 200 separate mobility grants have been made to 95 UK colleges, with a 20% increase in funding to UK colleges in 2017 compared to 2016.
Whilst the big focus in the past has often been on university student mobility schemes for a semester or a year abroad, there have already been 34,239 UK vocational mobilities through Erasmus+ in the current funding cycle. College student and staff participants account for half of these. Erasmus+ has been successful as it provides a mechanism for college students to undertake short placements in Europe. Short placements fit better with how college courses are traditionally delivered and the work or family commitments that college students often have. The opportunity for a European placement attracts students to college courses and can improve retention and student outcomes. In some parts of the UK, a lack of local work placements has meant that placements in Europe, in subjects areas such as social care or childcare, have been essential. There is no equivalent UK scheme to Erasmus+, and any future domestic scheme arguably could not guarantee the same work experience, foreign language and cultural benefits that Erasmus+ provides.
AoC’s 2017 survey of college international activity showed that EU countries formed the second most important international markets for colleges after China. The survey also highlighted the strong wish of colleges for continued UK participation in Erasmus+ after Brexit. The UK is also one of the largest host countries for Erasmus+ mobilities. Our strong vocational education system, population size and our place as the home of the English language mean the UK has welcomed significant numbers of Erasmus+ participants from EU27 countries. There is therefore considerable concern at European Commission level about the withdrawal of the UK from Erasmus+ after Brexit. At the present time there is no commitment from the UK Government to remain in Erasmus+ beyond the current programme cycle. However, there is clear acknowledgement of the soft power of Erasmus+ and of the benefits to students. There may be options for the UK to continue participation after exit from the EU as a non-EU programme country such as Norway or Iceland. AoC will continue to push for the UK to remain in Erasmus+.
There are quite a few rules which constrain ESFA, colleges and others in the education system designed on the basis that we provide services that trade across the EU and where the objective is to promote competition.
UK membership of the EU means that a large body of legislation has been shaped by EU directives including employment, public procurement, consumer protection, competition, energy, intellectual property and social security law. It is a matter of conjecture what EU exit would mean for these various laws because this would be a decision for the Government in future, would be tied up in the UK/EU exit negotiations and would be affected by the UK’s wider international commitments. Some of the laws that vex colleges most (for example public procurement laws or state aid) are part of World Trade Organisation (WTO) commitments. Exit from the EU might allow some flexibility because their main focus is to improve competition for services where there is cross-border trade. There is very little of this in further education and training. However the UK Government has pressed for decades for governments to open their markers and economies so it is not that likely that it will choose to close them off in our sector. AoC nevertheless continues to push for a more intelligent approach to developing education and training capacity.
Colleges would love less regulation but it is not clear that Brexit would deliver it for them. The Ofsted system was designed to meet English priorities and issues. The system of qualifications and awarding bodies has adapted to fit EU classifications and requirements on mutual recognition but is recognisibly and distinctly English. The UK has four different national education systems which allows different approaches in different places regardless of what might happen at EU level. Other sources of regulation in English colleges include a very English approach to funding (described by Professor Alison Wolf as being unique in the world). Child protection rules, health and safety laws, freedom of information and other causes of additional work for colleges are all very heavily influenced by the government in Westminster. The Foreign and Commonwealth Office's balance of competence review of education from 2013 concluded that EU policy making had some impact on UK policy but not that much and arguably EU less influential than OECD.
The UK introduced Value Added Tax (VAT) on the day that it joined the EU. VAT rules in EU members states are partly controlled by the EU treaties because a slice of VAT revenues is used to calculate contributions to the total budget. This means that college students are disadvantaged by the current unjust VAT regime which reduces the resources available to them by about 3% compared to school sixth form students. Government funding levels fix the full-time funding rate for 16 to 18-year-olds at £4,000 until 2019 which is 20-25% less than paid to pre-16, half that available for HE students and insufficient to build a better technical education system.
There are two sets of VAT rules that could be reviewed once the UK Government has more control over the legislation:
- the rules that limits public service VAT refunds to councils, academies and national museums but leave colleges outside the fence.
- the rules that exempt education (schools, private schools, colleges, universities) from VAT but leave private training providers and private universities outside the fence.
Colleges lose out from the first set of rules but benefit from the second. AoC has argued for years that the government should extend the VAT refund scheme to all sixth form education. There is risk in seeking changes in VAT rules is that UK Government might use its new found flexibility to "do a New Zealand" and extend VAT ("Goods and Services Tax") to just about everything. This is not beyond the realms of possibility. Labour's 2017 manifesto proposed VAT on private school fees. Given the importance of education and training to future economic success, any changes to VAT rules should be introduced with care. The VAT paid by colleges for 16 to 18-year-olds acts as a form of learning tax which reduces the resources available to the most efficient and effective sixth form providers.
If you have any queries about the information on this page, please contact Julian Gravatt in the first instance.