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Uncertainty in college funding

20 July 2016

This autumn's Treasury statement on the Government's tax and public spending plans could bring bad news for college funding. We don't know when the Autumn Statement will take place or what the Government's plans are but we know enough to be prepared for the worst while hoping for something better. Up until the EU referendum, the Government plan was to bring the budget into surplus before 2020. This was a clear promise in the 2015 Conservative manifesto but was starting to look fairly difficult by the time of the March 2016 budget. The Chancellor at the time, George Osborne, set out plans for extra spending cuts over the next few years without making firm plans about where these would fall. The extra £3.5 billion in cuts would come on top of a package of £11 billion net reductions announced in the 2015 Spending Review. ‎ Following the referendum, the Government's strategy is uncertain. The vote to leave is likely to result in lower investment, lower growth and falling tax revenues. This in turn makes the budget surplus target unachievable. The new Chancellor, Philip Hammond, might schedule in new spending cuts to ensure the deficit keeps falling but another choice is a package of tax cuts and stimulus measures to boost the economy. New ministers may also want to take action to close the divisions exposed in the referendum - inevitably this might involve new spending promises. It is impossible at this stage to predict what will happen but there are some points of clarity. The first is that the starting point for any public spending decisions will be the‎ 2015 review. There is a great deal of inertia in Government decision-making so unless there is a reason to make a change it may not happen. The £4,000 sixth form funding rate, the 0.5% apprenticeship levy, £1.5 billion adult education budget, the £300 million allocated to FE loans, the £1.8 billion local growth fund and nine devolution agreements are all policy until or unless they are changed. The point we need to explain in the coming months is that these are the minimum investment levels needed to provide the education and skills the country needs. Changing course in the Autumn Statement will set the system back just at the point where the referendum and recession confirm the pressing need for more further education and training not less. Julian Gravatt is the Assistant Chief Executive at the Association of Colleges.