1. AoC London, 29 June 2017 National policy, funding etc
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 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

4. 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

5. 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

6. The £1 billion….

7. 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

8. 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 with full 15 routes by 2021
Big emphasis on work placements
Colleges (and UTCs) seen as having a big T-level role

9. 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

10. Public spending and funding

11. The pre-election public spending planFY
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 FY
GDP 10% up
Spending 38.0%
Receipts 37.3%
Net borrowing 0.7%

12. 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

13. 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)

14. 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%

15. 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

16. 2017/18 Allocations: All institutions Change in Student Numbers and Change in Funding

17. 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 starts in but there’s a risk of delay
Industrial strategy in autumn 2018 may clarify devolution plans

18. 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

19. 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
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

20. 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

21. 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%

22. Judging college performance

23. 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

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

25. Introduction

26. GCSE English and Maths A*- C Achievement

27. Headline Summary - Ofsted

28. College strategies

29. 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

30. 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

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