The UK FE Education Sector: A summary of the past 5 years

The evolution of the FE sector over the past five years

The UK FE sector provides an essential public service through quality assured technical and professional education and training for young people, adults and employers. The past 5 years across the FE sector has been underpinned with a mix of volatile policy reforms (e.g. Education Ministers staying in post for an average of two years) and institutional instability (e.g. rushed mergers to future proof colleges) - which has created a challenging environment for the sector. This paper seeks to highlight the key changes across the sector over the last five years.

1. A renewed funding squeeze

The FE sector is the backbone of the vocational and technical training system regarded as essential to meet the UK’s growing skills gap. Despite this, the sector has struggled with limited budgets and squeezed revenues.

Funding reduction statistics

• Between 2010/11 and 2018/19, real terms funding per student in school sixth forms, sixth form colleges, and further education (FE) colleges declined substantially, by 16 per cent, from £5,900 to £4,960.
• Funding in school sixth forms declined by 26 per cent per full time student from 2010/11 to 2018/19. In the further education sector (sixth form colleges and FE colleges), funding declined by 18 per cent per full time student. Within this, funding for sixth form colleges fell faster than in FE colleges.
• 16-19 education has been the biggest real terms loser of any phase of education since 2010/11, but it has also suffered from a long run squeeze in funding: 30 years ago, 16- 19 funding was far higher (almost 1.5 times) than secondary school funding, but is now lower.
• The financial health of 16-19 providers has significantly deteriorated since 2010/11: the proportion of those with in-year deficits has increased across all institutions, with a particularly large rise seen in sixth form colleges: a five-fold increase of 7 to 36 per cent from 2010/2011 to 2016/17.

2. Area Reviews

The fundamental aim of the area review process was to create financially stable FE institutions, which are able to deliver high quality provision to meet the needs of learners and employers, within a locality. The area review process was voluntary for FE colleges and the other key stakeholders. 37 locally led area reviews were conducted across five waves from September 2015 to March 2017. Since the 2015 general election, there has been an increase in the number of college mergers and a new option for sixth form colleges to convert to become 16-19 academies. The government's post 16 area review programme required every college to consider their future and provided official encouragement for mergers.

Area Review statistics

• 52 college-to-college mergers have taken place (1 in 2015, 11 in 2016, 29 in 2017, 12 in 2018)
• 1 university-college merger took effect in August 2018 (though the college was designated as an FE institution under the FE and HE Act 1992)
• 10 college-college mergers have taken place in 2019
• 1 university-college merger took effect in February 2019 (though the college was designated as an FE institution under the FE and HE Act 1992)
• 25 sixth form colleges have converted to become 16-19 academies (17 in 2017, 3 in 2018, 5 in 2019)
• 1 more sixth form college is due to convert in 2020
• 3 college mergers have taken place in 2020 so far, with more planned.

3. Devolution

The government devolved control of the adult education budget to six combined authority areas and the Greater London authority in 2019. This involved the devolution of around £700million (about 50% of the national AEB), an estimated £450 million of which is spent by colleges (about 8% of total FE college income). The seven areas are:

• Greater London Authority

• Greater Manchester Combined Authority

• West Midlands Combined Authority

• Liverpool City Region Combined Authority

• West of England Combined Authority

• Tees Valley Combined Authority

• Cambridgeshire and Peterborough Combined Authority.

Devolution statistics

• Devolution will create a hybrid system for adult education in 2019 in which seven city and combined authorities have responsibility and financial control in their areas and in which the DfE’s education and skills funding agency organises the rest of the country.
• The population of the seven areas is around 18.3 million, which is around 33% of the population of England (54.3million). Around 50% of the budget is being transferred to these areas.
• Each of the seven devolution deals is different but there are some standard words covering 19+ skills which promise the staged transfer of the budget between 2016-17 and 2018-19 at which point the combined authorities are promised full responsibility for funding.
• The government passed legislation in 2017 (clauses within the Technical and Further Education Act) to ensure that combined authorities continue with national data collection arrangements (e.g. the Individual Learner Record) and discussions have continued on the continuation of some national systems.

4. The Apprenticeship Levy

Apprenticeships became the government’s flagship policy to close current and future skills gaps. As a result, the government set a target of 3 million new apprenticeship starts between 2015 and 2020. Employers now pay 0.5 per cent of any payroll exceeding £3m into an apprenticeship levy to fund training. Since the levy was introduced in April 2017, the government has made changes to the original policy, including an increase to the subsidy to smaller employers, allowing companies to pass a larger proportion of their levy money on to other employers in their supply chain.

Devolution statistics

• The Department for Education (the Department) has failed to make the progress that it predicted when it reformed the apprenticeships programme in spring 2017 – with a £400m Levy underspend. The number of apprenticeship starts fell by 26% after the apprenticeship levy was introduced and, although the level is now recovering, the government will not meet its target of 3 million starts by March 2020.
• The Levy programme is now more heavily weighted towards higher-level apprenticeships e.g. Management training and Professional Development Courses accounted for £551m of total Levy spend.
• Around 20% of the new standards are available at level 2 (often the level at which learners join the programme). In contrast, more than 40% of the old-style frameworks were previously available at this level.
• In response to changes to industrial policy and the Apprenticeship Levy, employers themselves may seek to provide what previously has been delivered by other parts of the FE sector.

5. The introduction and expansion of T Levels

One of the most important changes to the 16-19 education landscape of the next few years. As set out in the 2016 Post-16 Skills Plan, technical qualifications will be divided in 15 routes, of which 11 will be delivered through T levels, which are expected to become the technical equivalents to A levels with clear progression routes to further study or high-skilled occupations. T levels will be funded by an additional £500m a year once they are fully introduced, by September 2023. This funding is expected to cover increased teaching hours for T levels so it is unlikely to substantially change resource pressures on providers. T Levels are new courses coming in September 2020, which will follow GCSEs and will be equivalent to 3 A Levels. These 2-year courses have been developed in collaboration with employers and businesses so that the content meets the needs of industry and prepares students for work.

T Level key information

• T Levels will offer students a mixture of classroom learning and ‘on-the-job’ experience during an industry placement of at least 315 hours (approximately 45 days). They will provide the knowledge and experience needed to open the door into skilled employment, further study or a higher apprenticeship.
• Students will be able to take a T Level in the following subject areas: accountancy; agriculture, land management and production; animal care and management; building services engineering; catering; craft and design; cultural heritage and visitor attractions; design and development; design, surveying and planning; digital business services; digital production, design and development; digital support and services; education; financial; hair, beauty and aesthetics; health; healthcare science; human resources; legal; maintenance, installation and repair; management and administration; manufacturing, processing and control; media, broadcast and production; onsite construction; science.

6. The Augar Review

The Augar Review’s recommendations have the potential to address deep-seated imbalances in post-18 education and put colleges on more equal footing with universities, both in terms of prestige and funding. To improve the quality, capability, and capacity of the FE college network, Augar’s panel has made a number of recommendations for the government and stakeholders.

The key recommendations of the Augar Review

• The FE college ‘network’ should be ‘rationalised’ and given a dedicated capital investment of £1 billion
• All adults should be entitled to their first level 2 and 3 qualifications for free
• The reduction in the core funding rate for 18-year-olds should be reversed
• ESFA funding rules should be simplified and government should commit to providing an indicative adult education budget
• Funding for level 6 apprenticeships and above should be available only for those who have not previously undertaken a publicly-supported degree
• Investment in the FE workforce should be a ‘priority’
• Ofsted should become the lead responsible body for inspecting apprenticeships at all levels
• Government should improve data collection, collation, analysis and publication across FE
• FE colleges should have a protected title like universities.