AoC London, 29 June 2017 National policy, funding etc Julian Gravatt, AoC deputy chief executive

The 2017 general election The vote Return to two party politics (Con 42% of vote; Labour 40%) Higher turnout (69% - it was 61% in 2005) Labour revival (vote up from 30% in 2015 to 40% in 2017) A new map (Labour Canterbury; Conservative Mansfield) Con 318, Lab 262, SNP 35, DUP 10, LD 12; Other 6; SF 7 321 votes needed to win if all MPs vote

The 2017 general election The vote Return to two party politics (Con 42% of vote; Labour 40%) Higher turnout (69% - it was 61% in 2005) Labour revival (vote up from 30% in 2015 to 40% in 2017) A new map (Labour Canterbury; Conservative Mansfield) Con 318, Lab 262, SNP 35, DUP 10, LD 12; Other 6; SF 7 321 votes needed to win if all MPs vote

The 2017 general election Government Teresa May still PM Majority of cabinet return to same roles (Greening, Clark and Hammond back). Some junior ministerial changes (Milton replaces Halfon) Brexit negotiations overshadow everything Limited (2 year) queen’s speech with no education bill Conservative/DUP confidence and supply deal

The Conservative / DUP deal What’s in the deal … and what’s not Confidence votes Queen’s speech (2017) Budget (2017, 2018) Brexit Security Pensioner protection Some money for NI Anything after Easter 2019 Legislation (other) Regulations (other) This could affect College insolvency Skills devolution Office for Students framework

The £1 billion….

Minority government A minority government PM required to consult cabinet, 1992 committee & MPs What gets done in Parliament depends on deals The budget process becomes an even bigger vehicle Another election might happen -> affects time horizons DFE ministers will focus on areas they can or need to act eg. school funding, opportunity areas, technical education

Technical education A big domestic priority for the government Part of the industrial strategy Funding from Treasury starts in April 2018 T-level pilots due in AY 2019-20 with full 15 routes by 2021 Big emphasis on work placements Colleges (and UTCs) seen as having a big T-level role

The 2017 general election AoC, colleges and the political process Our manifesto had 6 themes. All still relevant UK needs to be more self sufficient in skills, to improve productivity and to fund post 16 education properly We are encouraging ministers to take forward some promises, for the FE/HE funding review Some immediate issues: English and maths condition of funding, 16-18 retention, apprenticeship allocations, IoTs Individual MPs may be important in helping colleges

Public spending and funding

The pre-election public spending plan 2016-17 FY Spending 39.3% Receipts 36.7% Net borrowing 2.7% Figures as % of GDP Starting assumptions from from the March 2017 budget £3 bil saving by 2019 (“6% of non-protected budgets”) Everything depends on GDP. This depends on world events, Brexit, financial stability, migration, productivity etc 2021-22 FY GDP 10% up Spending 38.0% Receipts 37.3% Net borrowing 0.7%

Public spending overall plan From the queen’s speech statement “We will reflect on the message voters sent at the General Election – while always remembering that we have to balance the books and eliminate the deficit we inherited following the financial crisis. This is to ensure that future generations doe not pay where we fail to live within our means” “We have committed to budget balance – matching what the government spends with what we raise in taxation – by the middle of the next decade” Translation: Room for lower tax or extra spending in next budget

The DFE budget, key components School grants (£32 bil/yr EFA to Academies direct in 2019) 16-18 grants (£6 bil via EFA) High Needs (£5 bil/yr via councils) HE (and FE) Student Loans (£20 bil/yr by 2020) Levy funded And SME co-funded Apprenticeships (£2 bil/yr by 2018) High cost HE (£1 bil via HEFCE) Adult Education (£1.5 bil, via SFA & Mayors)

College income lines and % share 16-18 education £3,200 mil Levy and SME Apprenticeships £500 mil 31% 55% 42% FE 13% SFC HE Fees (Loans) £400 mil 4% High Needs £120 mil 2% FE Fees (Loans) £110 mil 50% Adult Education £900 mil 65% Fees & contracts £300 mil ESF £50 mil 30% Other income £500 mil HE teaching £100 mil 5%

16-18 education funding Of the total £6 bil budget 42% FE 13% SFC £3,300 mil Of the total £6 bil budget 42% FE 13% SFC 40% Schools Well established national student numbers based formula Total 16-18 down 10% since 2010 and still falling Fall in student numbers in 2016-17: FE -3.2%, Schools -3.6% Some short-term issues (English/Maths, retention factor) Longer-term reform (£500 million/year for T-levels by 2021-22

2017/18 Allocations: All institutions Change in Student Numbers and Change in Funding

Adult education Of the total £1.3 bil budget 65% FE £880 mil Of the total £1.3 bil budget 65% FE 20% community learning 15% other (incl Unis, private provider) National historic allocations, formula to price students Budget cut every year for ten years 2005 to 2015, now fixed Restricted eligibility rules because of apprenticeships & loans College underperformance in 2015-16 and worse in 2016-17 Skills devolution starts in 2018-19 but there’s a risk of delay Industrial strategy in autumn 2018 may clarify devolution plans

Skills devolution Devolution of adult education due in 2018 West Midlands, Greater Manchester, Liverpool City Region, West of England Tees Valley, (Greater) Cambridgeshire Devolution of adult education in 2019 London

Apprenticeships Of the total £1.6 bil budget 30% FE £500 mil Of the total £1.6 bil budget 30% FE 70% private providers Everything changes £2.6 bil levy supporting £2.0 bil English spending in 2017-18 Carry-in allocations worth £1.0 bil due to be confirmed in July Levy payers have 24 months to spend 110% of what they pay Squeeze on allocations for non levied apprentices with plan for new procurement covering 15 months from Jan 2018

Apprenticeships for large employers (c19,000) HMRC Levy (0.5% of payroll) Employer directs recipient and price Apprentice Digital Apprenticeship Service Registered Training Organisation Skills Funding Agency Payment on confirmation of training (ILR) and employer authorisation

Flat cash funding No inflation in post -16 education 16 to 18 rates fixed for 4 years (eg £4,000 rate) Adult education budget fixed at £1.5 bil/year Apprenticeship rates based on old rates No uprating for 5+ years With some exceptions RPI indexing on HE fees HEFCE grants up c1%

Judging college performance

A cocktail of financial challenges Rising staff costs College credit crunch Competition for students Flat cash funding Poorly controlled pension system Funding reform and uncertainty

E&T 16-18 Achievement Rates 2015/16 Provider Type

Introduction

GCSE English and Maths A*- C Achievement

Headline Summary - Ofsted

College strategies

College strategies Some starting points Severe rationing of government funding Emphasis on skills (apprenticeships, T-levels) Technology continues to offer hope of change Tough intervention regime (college insolvency from 2018) DFE wants colleges to succeed

What other colleges are doing Variety of responses Merger (30% of colleges). More to come A few are expanding 16-18s but most face declines in 2016 Income diversification (HE, apprentices, international) Relatively few new capital projects Emphasis on maintaining Ofsted rating Agree your plan, deliver it, be flexible as things change

Finally Items for checklist Financial plan Estates fire safety survey and plan Work placements Apprenticeship delivery & bid Adult education budget plan