Key challenges facing the FE sector

1. Defining the FE Sector

There are currently 266 institutions within the FE sector. Table 1 below highlights the current composition of these institutions. The sector delivers a mix of academic and vocational qualifications such as apprenticeships, BTECs, A-levels, basic skill courses and higher education courses aimed at both young (16-18) and adult (19+) students. In England, providers receive public funding of around £7bn to educate and train four million learners, more than half of whom are taught through FE colleges, whilst 700 charitable and commercial providers teach the remaining students.

Table 1

• General FE colleges (GFEs)
• Specialist colleges (for example land based or residential special educational needs);
• Independent Training Providers (ITPs) some of whom are part of the charitable or “Third” sector;
• Work Based Learning (WBL);
• Adult and Community Learning (ACL); and
• Education and training in the justice sector [prisons and Young Offender Institutes] for offenders and young offenders.

2. Material challenges facing the FE sector

Since 2010, the adult skills budget has fallen in cash terms. Against this tight funding backdrop,

there have also been significant policy changes. Collectively this has and will continue to create a series of challenges for the FE sector. These are described in table 2 below.

Key challenge	Description
Leadership	As larger FE organisations have emerged following the area review process, there is an increasing trend to clearly define the leadership structure and capabilities of the Principal or CEO. Some within FE are clearly are opting for an ‘either or model’, whilst some are investing in separate roles e.g. the CEO has responsibility for corporate matters and governance, whilst the principal provides assurance ad oversight for all curriculum quality and improvement. A key issue faced by the sector is that the leadership role of an FE institution now goes beyond academic oversight and is starting to mirror that of a corporate CEO e.g. identifying non-traditional revenue streams, dealing with lenders during turbulent income generation, leading transformation programmes on the back of Area Reviews and to ensure a balanced book approach.
Financial pressures	The current financial model for the current 266 institutions is not sustainable. This is driven by: Falling income from 16-to-18-year-olds Education of 16 to 18-year-olds account for 41% of FE college income and 77% of sixth form college income. Apprenticeship volumes haven’t materialised – FE Colleges expect apprenticeship income to fall in 2018-19 Staff costs account over 65% of FE College costs and there’s very little to be done about this without impacting teaching quality Lending is becoming much harder for FE Colleges e.g. the insolvency regime for the FE sector came into force on 31 January 2019, with a special objective to protect existing students at an insolvent institution. This might mean the UK witnesses the first FE College insolvency case. DfE plan to remove exceptional financial support where colleges run out of cash.
Income diversification is critical – but it is not going to be easy	The FE sector urgently needs to identify non-traditional funding routes because it is now operating within a ‘learning marketplace’ beyond the traditional ‘chalk and talk academia model’ e.g. there is increased competition from UTC’s, employers and independent training providers for AEB, ESF and Apprenticeship income in a locality. The FE sector has a diverse range of funding sources and funders, and is subject to frequent government policy evolution. This makes it difficult for the sector to proactively prioritise and invest in opportunities e.g. £600m devolved employability and skills commissioning across Manchester, London, Liverpool, North Tyneside, West Midlands; T Levels from 2020 will provide an additional £500m every year once they are fully rolled out; additional funding to support institutions to grow participation in level 3 maths; £470m of Restructuring Facility Funding for colleges; £1.5bn AEB; Apprenticeships; Flexible Learning Funds.
Teaching quality	The quality of teaching and training is the single most influential factor in determining positive outcomes for learners. However the sector faces fundamental challenges to ensuring a sustainable supply of teachers for the future e.g. Unlike other professions, further education teaching does not have a high-profile and well- resourced national graduate recruitment scheme English and maths provision remains an area of weakness in FE due to a shortage of specialist English and maths teachers on the one hand, and a lack of English and maths expertise among vocational
A new Education Inspection Framework	A new FE and Skills Inspection Handbook has been created as a result, which includes a number of changes to the way inspections are carried out in the sector. Inspectors will be spending less time looking at performance data, and more time considering how providers are making sure their learners are developing the knowledge, skills and behaviours required to allow them to successfully progress and achieve This will require the sector to invest in and adjust to a new audit regime e.g. Evidencing the quality of education not just data A four point grading system with new timescales for re-inspecting grade 3 A newly merged college will receive a full inspection within three years of the merger, and will be treated as a “new” college – meaning it will not carry forward any inspection grades from predecessor colleges
Increased competition	Due to a combination of Brexit, and fewer EU students, the FE sector may face increased competition from the university sector as it seeks to engage learners. Funding shortages may drive schools to attract 16-18 students Employers themselves may seek to provide what previously has been delivered by other parts of the FE and skills sector