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Spending Review 2015: Too Soon to Celebrate for FE?


The public sector has become accustomed in recent years to an impending sense of doom ahead of budget or spending review announcements. Following FE budget cuts in real terms of 14% in the last parliament, Education Secretary Nicky Morgan conceded in September that the FE sector was in a "fragile" state. Amid recent ministerial statements that FE would not be protected from cuts, 125 FE College principles wrote to the Government warning that further cuts would tip them "over the precipice".

So did these fears prove to be well founded? The initial opinions emerging are that FE may have escaped the worst case scenario and many of the feared headline cuts did not materialise. AoC Chief Executive, Martin Doel, described it as a "huge relief [..] following five years of stringent budget cuts". Overall the Chancellor announced that the total education and childcare budget is set to rise by £10billion by 2020. With funding for Colleges coming from two different departments (Education for 16-18 and BIS for 19+), assessing what that means for the sector is complex. What are the specific announcements that will affect FE Colleges, Schools, Academies and Sixth Form Colleges?

Adult Skills

Following 'devastating' cuts earlier in the year, rumours ahead of Wednesday's review were that significant further cuts could be expected. Therefore it came as quite a surprise when George Osborne announced that there would be no cuts to "core adult skills funding for FE Colleges". There was further good news when maintenance loans were extended to 19+ and part-time students to increase access to learning. Although this is only beneficial to colleges when students avail of these loans. In addition BIS later announced that £360million in efficiencies and savings in adult skills would need to be found by 2019-20, referencing savings from supporting budgets such as the UK Commission for Employment and Skills and the "restructure of the sector" through the much-publicised local area reviews.

16-19 Funding

Unlike funding for under 16s, funding for 16 to 19s was not protected in advance of the review. However Osbourne stated that the current national base rate of funding will be maintained for the rest of the parliament. While it appears on the surface as good news the details underneath have not been fully published, making it difficult for colleges to assess yet what this means in real terms for them.


£3billion will be raised by an apprenticeship levy of 0.5% on employers which will fund 3 million apprenticeships and create a new funding stream. According to Mark Beatson, Chief Economist for the CIPD, this could be a "double-edged sword in that the new charge [..] may improve the quality of apprenticeships but it could also squeeze out training opportunities for other sections of the workforce".

Schools and Sixth Forms

The big announcement for Sixth Form Colleges is they will be allowed to covert to Academy status. This will enable them to reclaim VAT, something which currently costs around £300k for an average sized Sixth Form College per year. £23billion was promised for investment in school buildings which would create 600,000 extra school places and 500 Free Schools. Changes in funding of the Pupil Premium were also announced with a national rate being set to address disparity in funding levels across different parts of the country. Teachers' Unions warned however that this could mean a loss in real terms for some boroughs. Further to that £600million is to be cut from the Education Services Grant (ESG). In effect this cuts the funding Academies receive to replace the loss of local authority support. The government has indicated that to address this it will support schools to "target over £1billion a year in procurement savings […] through benchmarking, guidance and improved framework contracts".

While it is too soon to assess the full implications of this Spending Review, the initial impressions for Assistant Chief Executive of AoC, Julian Gravatt, was that the "importance of colleges has been recognised".

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