Title of the slideSecond line of the slide

Access in a New EraFunding Update

Julian Gravatt, Assistant Chief ExecutiveAssociation of Colleges

23 March 2012

Title of the slideSecond line of the slideAccess funding update

The wider context

Higher education funding and finance

Further education funding and finance

Some concluding thoughts

Title of the slideSecond line of the slideEvents trump plans

2007: The credit crunch (Northern Rock)

2008: The banking collapse (Lehmans, RBS, Lloyds)

2009: Bank rate 0.5%, Quantitative easing, Fiscal Stimulus

2010: Eurozone Crisis starts, Coalition government

2011: The Arab Spring, the summer riots in UK

2012: What’s the most important thing this year?

Title of the slideSecond line of the slideFunding of higher/further ed

Coalition agreement (May 2010) had two priorities- Economic recovery- Reduction in government deficit

Higher education funding left to the Browne review (Oct 2010)

Decisions (autumn 2010) to:- protect spending on research- remove teaching funding/replace with fees & loans- measures to protect access (fee cap, loan changes etc)- reduce spending on FE skills by 25%

Title of the slideSecond line of the slideThe higher education budget

The imperative“The issue is how the higher education

sectormakes its contribution to deficit reduction”

Vince Cable, Parliament, 12 Oct 2010

Total spending rises...Teaching grants cut from £5 bil to < £2 bil)Student loans rise from £3 bil to £7 bil

...but every £1 in loans costs 30 pence ininterest subsidies and write-off

Title of the slideSecond line of the slideQuotas in 2012-13

360,000 full-time entrants a year

est. 65,000 AAB+ places

2012-13 quota = 2011-12 less 9%

20,000 places up for grabs if fees < £7,500

11,000 places to Colleges, 9,000 to Unis

Withdrawal of University places in Colleges

Title of the slideSecond line of the slideUniversities & HE teaching

Universities have diverse income – UK teaching, research, overseas

HE teaching income rising in some Universities

Growing competition between Universities for AAB+ students;

Divergence in University fortunes

Universities control 93% of the student loan quotas in 2012-13

Uncertainty about student demand and the pace of reform

Title of the slideSecond line of the slideColleges & HE teaching

Long tradition of College higher education but evolution depends on

local factors (eg compare Outer vs Inner London, Essex, Suffolk etc)

266 Colleges offer government-funded HE courses25 Colleges >1,000 FTE students30 Colleges have 500-100 FTE students210 Colleges have less than 500 (a long tail)

Colleges account for 7% of HE full-time entrants

Title of the slideSecond line of the slide19+FE and skills funding

Budget cut £4 bil (2011) to £3 bil (2015)

Single Adult Skills Budget

Initial plan to reduce 100% entitlements- inactive benefits, ESOL- second level 2s- level 3s for over 25s

Partial reversal of rule changes in 2011

Title of the slideSecond line of the slideSFA stops and starts

2010 12% cut in adult learning (before election) Single adult skills budget

2011Smaller (2%) cut than expected for 2011-12Many Colleges missed 2010-11 targetsSFA distributed extra funds in autumn 2011

2012Large (12%) cash cuts in provisional allocationsFinal allocations for 2012-13 due shortly

Title of the slideSecond line of the slideSkills funding & policy

Colleges have some freedom with diminishing budgets BUT

• Expectation that apprenticeships and unemployed come first

• Course funding rates have been cut• Some courses have been declared ineligible• System and rules still pretty complicated

Meanwhile

• SFA downsizing and managing multiple initiatives• New growth initiatives every month

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Title of the slideSecond line of the slideFE loans from 2013

A revenue/capital switch (like HE)

Level 3 & 4 courses, over 24s

Similar to 2012 HE fee loans

Big differences between HE & FE admin

Big implementation risks

Briefing paper on www.aoc.co.uk

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Title of the slideSecond line of the slideAccess course viability

Understand HE /19-24 FE/25+ FE funding & fees

Forecast income (SFA rates * student numbers)

What will happen to student demand as things change?

How can things be done differently to sustain your area?- Changes in course hours- Changes to teaching input- Other sources of income- Other cost reductions

Title of the slideSecond line of the slideSome challenges & opportunities

Some big uncertainties - where competition will come from- political direction- student & employer response to higher fees- which courses are worth doing

Income reduction/staffing changes are a permanent fact of life

Would you rather be somewhere other than London?

Has it ever been particularly easy?