1. Hampshire principals, 23 June 2017 Policy update and discussion
Julian Gravatt, AoC deputy chief executive

2. 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

3. 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)
Confidence and supply deal in negotiation with the DUP
Queen’s speech for next 2 years with fewer bills
Brexit negotiations overshadow policy agenda

4. The 2017 general election A minority government
PM required to consult cabinet, 1992 committee & MPs
Legislation depends on party deals and discipline
The budget process becomes more important
Grammar schools dropped but school reform continues
School funding reforms paused
Industrial strategy & tech ed reforms go ahead

5. 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, retention, apprenticeship allocations, IoTs
Individual MPs may be important in helping colleges

6. AoC Policy Groups
Apprenticeships

7. Public spending and funding

8. The pre-election public spending planFY
Spending 39.3%
Receipts 36.7%
Net borrowing 2.7%
Figures as % of GDP
Sources, assumptions and issues
Figures from the budget in March 2017
£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 FY
GDP 10% up
Spending 38.0%
Receipts 37.3%
Net borrowing 0.7%

9. 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

10. 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)

11. 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%

12. 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 down 10% since 2010 and still falling
Fall in student numbers in : FE -3.2%, Schools -3.6%
Some short-term issues (English/Maths, retention factor)
Longer-term reform (£500 million/year for T-levels by

13. 2017/18 Allocations: All institutions Change in Student Numbers and Change in Funding

14. 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 and worse in
Skills devolution due in but may now be delayed
Industrial strategy in autumn 2018 may clarify devolution plan

15. 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

16. Apprenticeships Of the total £1.6 bil budget 30% FE
£500 mil
Of the total £1.6 bil budget
30% FE
70% private providers
Major reform underway in 2017
£2.6 bil levy supporting £2.0 bil English spending in
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

17. Apprenticeships Everything is changing The levy
Spending decisions devolved to 20,000 employers
New system, new formula, new rates, new standards
New register, temporary (8 month) SME allocation

18. Higher education fee loans
HE & FE loans
£400 mil
£12.4 bil student outlays in
£400 mil HE fees to FE (c4%)
Well established student loan with changing regulation
HE full-time fee cap £9,000 ( ), rises to £9,250 ( )
HE entry rate age 18/19 at record high (but still less than 45%)
Reduction in part-time HE numbers (including in colleges)
Changing set of rules (TEF, OFS etc)
Institutions have to plan months in advance

19. 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%

20. Competition for students
318 colleges operate in a world with
3,600 EFA funded institutions, 1 million year olds
200 new sixth forms, free schools, UTCs since 2010
1,000+ training providers
131 Universities

21. Area reviews

22. Area reviews What happened?
37 reviews, 332 colleges visited, 182 steering group meetings, 365 recommendations so far
With what result?
19 mergers since start of 2016; 29 scheduled
21 SFC academy conversions; some GFE/SFC mergers
Lots of standalones; some large college groups
No action on school sixth forms

23. Intervention now area reviews are over
The work continues
1 FE commissioner, team of 18 deputies and advisors
31 current interventions
Fewer Ofsted inadequate colleges (14 FE, 2 SFC right now)
Several college financial failures (where cash runs out)
Continuing referrals from ESFA to commissioner
8 commissioner-led structure/prospect appraisals leading to fresh start or merger

24. 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

25. Quality and accountability

26. Post-16 Performance Tables

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

28. Introduction

29. GCSE English and Maths A*- C Achievement

30. Headline Summary - Ofsted

31. A system of multiple regulators
Special
Administrator
(2018) FE
Commissioner
ESFA
Office for Students
(2018)
College
Ofsted
LGPS Fund
External auditor
The College’s bank

32. College strategies

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

34. What other colleges are doing
Variety of responses
Merger (30% 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
Cutbacks continue in significant number of colleges
Agree your plan, deliver it, be flexible as things change

35. Running a successful college
Class size
Income and
cashflow
Student taught hours
Positive completion
Staff costs per teaching hour
Staff and student engagement
Student satisfaction
Costs of running the college