We recognise the great diversity of experience that our EU colleagues and students bring to the sector and that a significant number of members benefit from EU funding. We will continue to support you in this area but, if you have any particular concerns, please contact us.
This page provides updates and advice for colleges following the referendum result to leave the EU. There is limited information available at present, but this page will be continually updated with the latest news and information as and when available.
The Prime Minister, Foreign Secretary and the Secretary of State for Exiting the EU have stated the Government's intention to start negotiations by March 2017 (under Article 50 of the Lisbon treaty) to ensure that the UK has left the EU by 2019. The terms under which the UK will leave are uncertain and depend on the negotiations. Until these are clearer, it is difficult to be precise about the issues for colleges, their staff and students. The main areas of interest are nevertheless clear:
- staff issues - relating to the ability of nationals from other EU countries ("EU27 nationals") to work in colleges
- student issues - the terms on which EU27 students can study and train in colleges
- social funding - the future of the college courses currently supported via the European Social Fund
- regulation - changes in legislation and regulations following exit
- VAT - the option that the UK government may have following exit to amend unjust VAT laws relating to 16-18 education
This area of the website summarises issues in more detail.
The economic effect of Brexit have been widely discussed and are a topic of some controversy. The official forecast from the Office of Budget Responsibility published in November 2016 explains that there is a great deal of uncertainty about the long term but identifies several short term effects in 2017 and 2018:
- inward migration is less likely to increase between now and 2019 in the way that it might have done given the better performance of the UK economy compared to many EU countries
- business investment may slow down as a result of uncertainty
- inflation may be higher as a result of the pound being weaker against other currencies
- interest rates may stay lower for longer than they would otherwise be
- it will take longer for the Government to reduce the budget deficit
AoC documents relating to these issues are available below:
- Correspondence to Cabinet Office from AoC listing the issues of concern to colleges in light of exit from EU
- AoC slide on Brexit economic issues for colleges
- AoC response to EU referendum result - our media statement
- Brexit and skills leaflet
The biggest issue for colleges are those connected to staff though the size of the issue is probably not as big as in other sectors (eg universities).
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%. HE may be an outlier because universities have strong international links, many joint research projects and employ their own graduates originally from the EU. The same ONS statistics report higher levels of EU staff in certain roles and sectors (eg doctors or in catering) and also a significant growth in the last ten years. 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 are about to collect some estimates from college HR teams but in the meantime estimate that the proportion of EU national staff is around 2-4%. We suspect that this is below the average for the economy as a whole because of government spending cuts which have resulted in overall employment contraction. Employment in colleges is geographically dispersed with substantial numbers in relatively small towns whereas UK's EU27 population is weighted towards bigger cities. Colleges could nevertheless face considerable issues in this area because:
- staff turnover levels are increasing, partly because of relative pay levels and workload pressures
- it is hard to recruit in certain important areas (maths, construction, engineering)
- there are hundreds of long serving college staff who are EU27 citizens whose contribution to the success of their students and institutions would not be easily replace if they leave or retire
- headline pay levels in colleges are lower than the value of the total package (which includes holidays and pensions) which may be a problem if the Home Office ends up applying a simple salary test. Average lecturer pay in colleges is about £30,000 to £35,000
The immediate issue is ensuring continuity for those who are currently working here but for the long term if there are future restrictions on EU27 migration, then it would be better to design a customised regime than simply transfer across the Home Office rules.
AoC briefing on the impact of Brexit on employment law
Eversheds recording on Brexit and UK employment law
Eversheds PowerPoint presentation on Brexit and UK employment law (PDF,208.19 KB)
The second issue for colleges relates to students, though Ministers have offered some protections for students starting in 2017 and taking on student loans. 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:
- Since the early 1990s, EU member states have offered access to education on the same terms to nationals of other member states as citizens of their own state. This principle is enshrined in EU law.
- 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.
- The situation for publicly funded education and training outside schools is similar but 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 European Economic Area (ie the EU plus Norway, Iceland and Liechtenstein).
- Any data on nationality needs to be treated with care. This 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 minimum standards.
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.
- Statement on the status of EU nationals in the UK - information from gov.uk
- EU Nationals and Student Finance in England - information from Student Loans Company
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.
European Social Funds
Colleges have used the European Social Fund 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 available national figures (from 2014-15) show that colleges received £100 million in European Social Fund (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 some of whom are currently quite financially weak.
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.”
Our suggestion is that an English Social Fund should provide a degree of continuity by maintaining funding levels but perhaps with less bureaucracy. Areas with low GDP per head voted to leave but ESF-style targetting needed to narrow gaps and make the country work for everyone.
Ministers have promised a certain amount of continuity with respect to European funding. They have promised that the UK Government will continue to pay any multi-year EU funded contract signed by a Government department before the Autumn Statement where the project continues after the exit date. They have also promised to pick up responsibility for EU managed schemes after the exit date on the same conditions. The letter from the Chancellor summarises the plan. The most immediate beneficiaries are universities and farmers but then they both have bigger stakes in EU policies. The European Social Fund contracts that colleges are currently bidding for run until 2018 so this promise may not be directly relevant. It is, however, a helpful statement of intent. A letter to local enterprise partnerships (LEP) promises a review of projects signed after the Autumn Statement date to ensure valuable ones continue and also an informal review in the next few months about what might work in future.
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 commitments and which the UK Government has pushed for decades as part of a drive to open up foreign budgets to UK professionals (eg helping lawyers, architects and the like sell overseas).
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.
One small possible area of freedom would be VAT and the way it affects education. 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.
If you have any queries about the information on this page, please contact Julian Gravatt in the first instance.