1. British Council TVET seminar Governance & funding (England) 6.3.19
Julian Gravatt– deputy chief executive

2. Association of Colleges – who we are
National organisation, funded by colleges; acts as an employer organisation, trade association
Represent publicly-funded colleges in England
Independent of government but works with officials to implement education policy e.g. funding, procedures, guidelines
Provide information, advice, events and opportunities for colleges

3. Key Stakeholders in UK Skills System
Schools
Inspectors
Funders & Regulators
Colleges
Government
Students
Apprentices
Qualifications Regulators
Government
Employers
Universities
Private Training Providers
Awarding Bodies
Trade Assic

4. Colleges in England

5. Colleges in England

6. Students – age & equality data

7. College apprenticeships & HE

8. College international activity

9. Governance

10. Colleges in England Law and constitution
Many colleges have a long history
Run by statutory corporations with powers derived from 1992 Further & Higher Education Act
Charities (not-for-profit)
Private sector status in UK national account
Public duties in law
Many governance similarities to UK universities
Regulated and held to account fairly publicly

11. Colleges have a hybrid status
Public service duties
Can be required to admit named students
Partly funded by a grant
Subject to a regularity audit
Have a positive Equality duty
Public procurement applies
Freedom of Information
Use public sector pensions
Private sector status
Set and administer admissions
Decide what courses to run
Employ own staff
Set own budgets
Free to borrow
Can buy companies
Can operate internationally
Surpluses belong to college

12. Governing bodies Key features
Governing body has many responsibilities, eg safety of students, employment of staff, management of finance, quality of courses
Governing body includes principal (CEO), staff, student and majority of non-executive
Governors are unpaid, volunteer trustees
Stakeholder boards with skills/experience
Typically senior people from business, professions, university, local government

13. College accountability
Local government
Assurance
via
Awarding Organisations
External audit of
Financial statements
Banks (via loan covenants)

14. Governance developments
Current issues
Colleges under financial pressure:
- Income not adjusted for inflation
- Funding rules & systems keep changing
- Competitors with deeper pockets
High expectations on quality (from students, Ofsted etc)
More transparency than in the past
DfE runs an extensive oversight and intervention process using student & finance data it collects
Governing bodies need to manage conflicting demands

15. Typical governance activities
What governing bodies do
Approve budget, annual accounts, quality plans etc
Discuss & approve 3-5 year strategies
Review data & dashboards to understand trends
Focus on needs & developments in local area
Discuss the economic community the college serves
Set financial targets to keep the college sustainable
Recruit, select and oversee senior staff
Set college procedures
Assist senior staff in external relationships
Horizon-scanning (especially policy change)

16. Funding

17. Education spending in the UK
Participation
Education compulsory up to 16
Duty on 16 & 17 year olds to participate (c90% do)
Mass higher education (48% enter by age 30)
Education budget
Public spending c38% of GDP
Education spending 4.4% of GDP
School spending c3% of GDP
Student loans used to fund higher education

18. Funding 16 to 18 education Well established national formula
DfE pays a block grant totalling £5.6 billion each year to 258 colleges and 2,100 school sixth forms
1.1 million students taking A-levels, BTECs etc
Annual efficiency gain since 2009
(Number of students) x (an average price)
The characteristics of the student determine the average price per student
Recruit fewer students, funding falls next year
Recruit more students, funding rises

19. The EFA 16-18 funding formula
Programme
Cost Weighting
Dis-advantage
Area
Costs
(up to 20%)
Student Numbers
National Funding Rate per student
Retention Factor ( )
Band
Hours
Total 5
540+
£4,000
4 (*)
450+
£3,300 3
360+
£2,700 2
280+
£2,133 1
< 279
Programme %
Base 0%
Medium
20%
High
30%
Specialist
60%
Land-based
75%
Total Programme Funding
Disadvantage %
1 (GCSE Maths / English)
£480 per GCSE
2 (27% most deprived)
8 to 33% extra

20. 16-19 College Allocations 2018/19

21. Funding education for adults
Adult education (19 years and over)
£1.5 billion budget mainly used for those with lower qualification levels
Devolution of 50% of the budget to 7 combined authority areas in 2019 (London, Manchester etc)
Student loans
The income contingent loans available for higher education also available for courses at Level 3
Relatively low take-up (£0.4 bil a year)

22. Apprenticeship funding
Apprenticeships
£2 billion spending, now all funded by a levy on larger employers (20,000 employers with £3+ mil payrolls)
Levy paying employers get right to spend 110% of what they put in
Unused funds used for training in small companies
New system with lots of change
Demand has been encouraged but total budget is fixed
Giving employers more responsibility and control has created more interest but comes with some risks

24. College income

25. College finances 16-18 £3.1 bil HE £0.5 bil Teachers £2.4 bil
Supples and services
£1.9 bil
FE loans
£0.1 bil
Debt interest
£0.1 bil
High Needs
£0.2 bil
Other staff
£1.8 bil
Fees
£0.3 bil
Depreciation
£0.5 mil
Apprentices
£0.6 bil
Catering etc
£0.5 bil
AEB
£0.8 bil
£6.7 bil Income
83% public (46% 16-18)
63% staff cost ratio
0.1% surplus
Higher EBITDA
Grants (incl ESF)
£0.5 bil

27. College finances – the challenges
Income
Fewer 16-to-18 year olds in the population
Tougher funding rules than in the past
Intense competition for public funds
Relatively low levels of fee-payment
Expenditure
Rising staff costs (staff turnover averages 17%)
Higher pension costs
Compliance costs of regulation

28. How colleges are successful.
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

29. The opportunities

30. Reasons colleges are positive
Several things
The big changes in UK society, economy, politics & international relations are help politicians, policymakers & the public value colleges more
(Some) MPs and officials want to increase funding
The population and need for skills are rising
Colleges have proved their resilience
Colleges have great assets – their history, their buildings, the expertise of their staff, the enthusiasm of their students and the collective love of learning

31. Julian Gravatt AoC deputy chief executive
Any questions?
Julian Gravatt AoC deputy chief executive