The government's £400 million FE funding announcement (31 August 2019)

31 Aug 2019

The Chancellor of the Exchequer announced a £400 million funding package for further education and 16-to-18 education on the morning of Saturday 31 August. This follows Friday's announcement of an extra £2.6 billion in 2020-1 for schools.  AoC's statement on the Chancellor's announcement is here

These presentation slides summarise the key points

The note below explains some of the details:

  • the announcement for further education and sixth forms is for one year only (2020-1)
  • the Treasury have provided some detail on the composition of the £400 million. The two largest elements are money to increase the 16-to-18 base rate (the first time in 7 years) and money to support higher value courses.
  • the Treasury statement did not confirm the 16-to-18 base rate but, in briefings. officials say there'll be a 4.7% increase which would take the base rate for 16 and 17 year olds to £4,188 and the 18 year old rate to £3,455. DfE does not normally confirm these sort of figures until December (ie after sixth form advice and recruitment has started). 
  • the population of young people is rising. The money allocated by the Treasury in 2020-1 in both announcements (for schools and colleges) is partly needed to deal with extra numbers expected in 2020-1. Once demographic growth and and the Special Education Needs money in the school package are taken into account, we believe the announcements wil result in a higher increase in the 16, 17 and 18 base rates than in those for 11 to 15 year olds. There is the funding drop or more than 20% at 16 so this is a start but there is some way to go. DfE should be looking at the longer-term basis for setting funding rates.
  • the plan to allocate £120 million to support higher value courses will provide funding for STEM courses but officials are working on supporting a wider range of programmes via the Programme Weighting Factor. There will only be a few thousand students taking T-levels in 2020-1 so the size of this budget suggests a plan to add uplifts to a  wider number of courses.
  • there will also be £35 million for targeted interventions to support Level 3 students who secured grades below 4 in GCSE English and maths. DfE recently decided to pay a £750 supplement for T-level students in this position but the size of the budget looks like there is a wider programme in prospect involving those taking academic and applied general qualifications.(ie A levels and BTEC). AoC suggested paying this new premium to all students in this position but the announcement suggests a restriction to those taking Level 3 qualifications. The Social Mobility Commission suggested in August a larger Post 16 Premium should be introduced. While this does not seem to be the plan in 2020-1, the funding arrangements for more disdvantaged young people should be looked at again.
  • the announcement provides details on  funding for T-level development (£25 million), the advanced maths premium  (£10 million) and college workforce programmes (£20 million). Some of the decisions here involve extending one-year budget lines which would otherwise stop in March 2020. Treasury practice is now quite prescriptive on individual budgets but it is positive (in the current climate) that work in these areas will continue.
  • in addition to the extra funds listed above, officials say that DfE will be extending the teacher pension grants introduced this month to protect colleges from this month's contribution increase (from 16.48% to 23.68%). This wil cost the department about £100 million in 2020-1 (here's an explanation of the TPS issue in education).
  • the increase does not take effect until 2020. Colleges are in a different place on budgets and funding to schools. Whereas government took decisions to increase the overall schools budget (up 6.2% between 2017-18 and 2019-20 - see this DfE note) and  school funding per pupil (by 3.6% over the last two years), the college budget has been squeezed hard (see this note) and the one growth area (apprenticeships) is now in doubt. So whereas yesterday's announcement on school funding is effectively an acceleration of existing increases, today's college announcement is like a kick-start to a stalled car. A key issue will be to the keep it moving..
  • the announcement today is only about 16-to-18 year olds. The Chancellor will be making a spending round announcement on Wednesday and may say more on post-18 education. AoC's list of 10 areas explains the spending decisions needed on adult skills, apprenticeship and capital investment in colleges.

The government only has a very small majority in Parliament. Any decisions on tax and spending after April 2020 need to be set out in a Budget and voted by MPs in Parliament. Lots of things could change in the UK even in the next few months but given the agreement across politicial parties about the need to spend more on skills, these spending plans should be considered fairly firm.