A spring statement on college finances

12 Mar 2018

The Chancellor of the Exchequer is publishing a Spring Statement on Tuesday 13 March 2018 which will provide an update on the official economic forecast and the UK public finances.

The financial outlook for colleges has deteriorated in the last six months despite the funds made available for education in the Autumn statement and despite the growing understanding that skills matter for our country’s future success. AoC staff have produced a short spring statement summarising the issues;

AoC spring statement on colleges 13 March 2018 (PDF,482.26 KB)

The key issues which contribute to our concerns about the position of colleges in 2018-19 are:

  • DfE funding for 16 to 18 education in colleges will fall by around 2% because the autumn census reported a 2% fall in student numbers . Colleges face increased competition for sixth form age students at a time when there are fewer young people. This means colleges are contracting now but will need to expand again when the current school population reaches the age of 16. 
  • Apprenticeship numbers remain below last year’s levels  with the result that college income from apprenticeships in 2018-19 forecast to be 2% below income in 2016-17  despite the introduction of the levy.
  • Inflation is running above 2% which requires colleges but funding rates remain fixed in cash terms. Retention of teaching staff is a challenge which is why both AoC and SFCA recommended pay rises for 2017-18.
  • Colleges have little control of pension costs. DfE increased Teacher Pension Scheme contributions from 14/1% to 16.48%  in 2015 and may make further increases to take effect from April 2019.
  • Although some financially weak colleges have merged with stronger counterparts, there are still 35 colleges with financial notices to improve. The planned implementation of the college insolvency regime continues to unsettle banks and governors.