1. Policy and funding update
Julian Gravatt, AoC assistant chief executive

2. AoC priorities
Apprenticeships

3. Area reviews Government policy & public spending College finance & funding Final thoughts

4. Area review timetable 18 reports published
Sept Jan May Sept Jan 17
Wave 1
Wave 2
Wave 3
18 reports published
55% of colleges through process
Completion by March 2017
Intervention will continue
Wave 4
Wave 5

5. Area review implementation
Meeting 1,2,3,4 and 5
Merge
Partnership
Standalone
Restructuring Facility
Self-fund
Transaction
Unit
In 1993, there were 488 colleges
23 years later, 324 (1/3rd fewer)

6. Government policy

7. What’s driving government
Everything changed in 2016
Brexit, Brexit, Brexit
New world order
New priorities and policies at home:
- “ordinary working class people” (May, September)
- “schools that work for everyone” (Greening, September)
- “modern industrial strategy” (May, January)

8. Education policies Schools green paper
More places in “good schools” (grammars, faith schools etc)
Justine Greening’s social mobility plan
Tackling geographic disadvantage (“opportunity areas”)
Building capacity (leadership, workforce training)
Ensuring education really prepares young people for work and career success

9. Industrial strategy – the proposals
Six areas of action in the strategy (which is a green paper)
Actions to improve basic skills
Creation of a new technical education system
Addressing STEM shortages (eg Maths free schools)
Addressing sector-specific skills gaps
Higher quality careers information and advice (eg admissions)
Testing new approaches to lifelong learning

10. Some bigger issues Why skills policy has a higher profile
Productivity already low and Brexit will make UK poorer
Unemployment low (5%) yet govt wants to cut migration
Divisions and disaffection evident in society
Full-time higher education implies a £50,000 debt
People will work for longer and are saving less

11. The new overlaps with the old
The reforms that are already underway
School reform (new GCSEs, new curriculum, academies)
High needs (EHCPs, council control of funds)
Apprenticeships (3 million target, new standards, the levy)
Higher education (TEF, OFS, Challengers)
Further education (area reviews, skills devolution)

12. Public spending

13. The Autumn statement A fairly low key document
Official forecast: GDP 2.4% smaller by 2020
All fiscal targets set in 2015 breached. £21 bil deficit by 2020
Key issue is shortfall in forecast tax revenues
Public spending plans
Departmental spending plans unchanged (for now)
2017 efficiency review to find £3.5 bil in savings by
New capital spending (housing, broadband, research etc)

14. AoC’s budget submission
Govt needs a reset on education and skills
Fair funding at 16. KS5 rate = KS4 rate
Technical education package (workforce, equipment etc)
Maintain apprenticeship spending whatever the levy
A citizen’s skills entitlement (including digital)
An English Social Fund
Capital funding
Plus changes to annual budgets, pensions, VAT etc

15. What next on public spending
Timetable of changes between now and 2020
Spring budget (8 March 2017)
EU negotiations (April 2017 to end 2018
Autumn budget (November 2017)
The year of substantial changes could be 2019
Exit date from EU
New technical education routes start
National school funding formula
Run-up to the 2020 election

16. College finances

17. College key funding lines (£ millions)

18. Surplus / deficit

19. Pension contributions rising
Support staff
Teachers
College
TPS
91 LGPS funds
LGPS Employer
Range 10-25%
Average 15.8%
Rising in 2017
TPS Employer
16.48%
Could rise in 2019
Support staff
Income-related
Contributions %
Income-related
Contributions %

20. LGPS valuations are college specific

21. College finances A cocktail of issues
Flat cash funding at a time when costs are rising
Financial weakness in some colleges (15% judged financially inadequate; 5% in distress)
Issues with banks, pensions and insolvency regime
Competing teams (SFA/EFA, FE commissioner, TU)
Austerity to continue until 2022 on current plans
Cashflow is everything

22. College funding

23. Where public money goes
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)

24. 16-18 funding for 2017-18 EFA funding
Same system; some changes to data (eg Band 2)
National base rate protected (£4,000)
Formula adjusts allocations based on student characteristics
Allocations may be reduced where sub-contracting ends
Change to A-levels, GCSEs, Applied General, Technical quals) will bring funding change
A massive English and Maths challenge for colleges

25. English and maths Number of 16-18 GCSE English students
Number of GCSE Maths students

26. 2016/17 Allocations: All institutions
Change in Student Numbers and Change in Funding
2016/17 allocations are provisional
Compared to 2015/16 final published allocations
Funding figures are total funding excl bursary and high needs
**All institutions includes: GFE Colleges, Art and Design colleges,
Agricultural & Horticultural College, Specialist designate colleges, Sixth form colleges, School sixth forms and Academies

27. 19+ funding The decisions made in the 2015 spending review
An apprenticeship levy raising £2.6 bil/year
Student loans for postgrads and 19+ level 3
Protection of adult education budget at £1.5 bil/year
Devolution deals with combined authorities

28. Apprenticeships A new chaotic market
Spending decisions devolved to 20,000 employers
New system, new formula, new rates, new standards
Lots of standards at Level 4+
RATP procurement, hopefully on a rolling basis
ITT for small employers
Allocations for continuing apprentices
Will there be a slow start in summer/autumn 2017?

29. Adult education budget
Significant change in , continuity in
Single adult education budget (AEB) with more course flexibility but more restrictions on who can be covered
Continuing issues with (and controls on) sub-contracting
Underspending in (SFA handing money back)
AEB procurement (contract-funding) for one year
Devolution in 2018? Delays over last six months
“Flat cash” (Year 2 allocation = Year 1 allocation)

30. Higher education / advanced level FE
Higher education reforms
Higher full-time fee cap (£9,250 in 2017) subject to TEF
No cap on recruitment, but declining demand
New OFS in 2018; new rules on quality and student protection
Advanced level FE
College loan facilities were increased by 27% in
Tighter controls on growth (note John Frank Training)

31. Some final thoughts

32. Different college roles
Funding / Finance
Although opportunities exist, financial pressure will increase
Fewer officials = less sophisticated funding models
Continuing push to give power to consumer (levy, loans etc)
Commercial skills will be at a premium
Data / MIS
Integrity of ILR data remains crucial
Knitting systems together (admissions, destinations, CRM)

33. College economics (what’s in the box?)
Class size
Income
Student taught hours
Positive completion
Staff costs per teaching hour
Student / teacher time / effort /love
Student satisfaction
Costs of running the college