Further education and skills

Funded by the Nuffield Foundation

First, the number of 16- and 17-year-olds is rising rapidly as a result of a population boom moving through the education system. Second, the impact of the pandemic remains significant, with changes in young people’s education decisions and the effects of lost learning. Third, the government is overhauling the post-16 qualification landscape, which means that many providers are having to change the courses they offer students.

Spending per student over time

Figure 6.1 shows spending per student aged 16–18 in school sixth forms, further education (FE) colleges and sixth-form colleges in each academic year from 2013–14 onwards. In this graph and the remaining analysis in this section, we consider funding allocated per student aged 16–18, as opposed to actual amounts of spending on students, which could be higher or lower depending on how schools and colleges allocate funding for different stages of education.

In each year, spending per student aged 16–18 is noticeably higher in FE colleges. In the academic year 2022–23, FE colleges spent roughly £6,800 per pupil, compared with £5,600 in school sixth forms and £5,300 in sixth-form colleges. This is because students in FE colleges are more likely to study vocational qualifications and are more likely to come from deprived backgrounds, both of which attract higher levels of funding.

Real-terms cuts between 2013–14 and 2019–20 were similar across school sixth forms and sixth-form colleges, at 16–17%. The cuts to FE colleges were smaller, at 8% over the same period. This reflects the fact that FE colleges have gained more from new funding streams aimed at vocational qualifications.

In the 2019 and 2021 spending reviews, the government sought to reverse the decline in further education spending by allocating an additional £2.3 billion in funding by 2024–25 relative to 2019–20 (Farquharson et al., 2021). In the next academic year (2022–23), spending per pupil is set to have risen by 7–8% in FE colleges and sixth-form colleges and by 10% for school sixth forms relative to 2019–20.

Although this represents significant additional funding, spending per pupil will remain well below the levels seen in the early 2010s. This is illustrated by Figure 6.2, which shows how per-pupil funding levels in school sixth forms and colleges have evolved between 1989–90 (from 2002–03 for school sixth forms) and the present day, and how the additional funding will change spending levels up until 2024–25. For data reasons, we combine FE and sixth-form colleges, which we refer to as 16–18 colleges, and track spending by financial instead of academic year.

Since 2010–11, there has been a decline in per-student spending across all types of institutions. Between 2010–11 and 2019–20, spending per student fell by 14% in colleges and 28% in school sixth forms. For colleges, this left spending per student at around the level it was in 2004–05, while spending per student in sixth forms was lower than at any point since at least 2002.

Overall, per-pupil spending in 16–18 education is set to rise by 9% between 2021–22 and 2024–25. Yet even with the additional funding set out in recent spending reviews, college spending per pupil in 2024–25 will still be around 5% below 2010–11 levels, while school sixth-form spending per sixth-form pupil will be 22% below 2010–11 levels. Therefore, the additional funding for sixth forms and colleges will only partially reverse the cuts of the previous decade.

Future challenges

The lack of new spending set out in the Autumn Statement comes at a time when 16–18 education providers are grappling with a range of challenges. In common with the rest of the education sector, colleges and sixth forms are facing rising costs for inputs such as staff and energy. On staffing costs, whilst an exact pay settlement has not yet been agreed, the Association of Colleges has so far only offered a headline salary rise of 2.5% for college staff in 2022–23, plus non-consolidated cost-of-living payments of £500–750 for lower-paid staff.[1]  This offer is clearly well below expected inflation and is less than the 5% offered to teachers. College staff were also already paid less than their counterparts in schools.[2]  Delivering a significantly lower pay award for college staff than that in schools could risk exacerbating recruitment and retention difficulties at a time when the workforce will need to expand to meet the growing student population. However, with no additional funding, colleges would have to find money from their existing budgets to meet the cost of any higher staff pay awards.

School sixth forms will need to pay teachers a salary rise of 5% or more this year. However, school sixth forms might be able to cross-subsidise this with some of the extra funding they received in the Autumn Statement to cover pupils up to age 16.

As well as rising cost pressures, schools and colleges will have to educate a far larger number of students in the next few years. The Office for National Statistics (ONS) projects that the total number of 16- and 17-year-olds in England will grow by a further 6.5% or 90,000 between 2022 and 2024. This would make for a 17% rise between 2019 and 2024 – or an extra 200,000 young people. Given current levels of participation, this would equate to over 170,000 extra students that schools and colleges will have to accommodate. Beyond the current spending review period, a projected 3% rise in the student population between 2024 and 2026 will create additional spending needs. To partly help meet this need, the government announced an extra £1.5 billion in capital investment in the college estate in the 2021 Spending Review (HM Treasury, 2021). Higher student numbers would also imply higher funding for colleges and sixth forms through the 16–19 funding formula. However, the cost will still need to be found within departmental spending plans after 2024, which became a lot tighter in the 2022 Autumn Statement.

An additional challenge faced by the sector comes from an overhaul of the post-16 qualification landscape. There is a major ongoing reform of the Level 3 qualification landscape, with funding being removed from technical qualifications that overlap with T levels.[3] In October 2022, the government published the final list of qualifications that will have their funding withdrawn from August 2024, which amounts to just over 100 qualifications.[4]

The qualifications listed include many common BTEC and City and Guilds qualifications in subject areas that overlap with T levels. To give a sense of the impact of these reforms, in Figure 6.3 we show the share of Level 3 enrolments in the 2019–20 academic year which would no longer be eligible for funding under the 2024–25 funding system.

Around 12% of all enrolments at Level 3 and 40% of non-A-level enrolments at Level 3 will have funding withdrawn for new starters aged 16–19. These reforms are especially likely to affect the post-16 choices of students from poor households (eligible for free school meals), students with education, health and care plans, and students with special educational needs, all groups that are more likely to be taking qualifications that will have funding removed. It is vital that schools and colleges ensure that these students continue to have opportunities to access quality routes through post-16 education.

In summary, colleges and sixth forms are in a particularly difficult position, both now and looking into the future. Although an extra £2.3 billion was provided in recent spending reviews, this will only partially reverse the large cuts that took place up to 2020. Furthermore, unlike schools, colleges and sixth forms did not receive any extra funding in the 2022 Autumn Statement to help them meet rising cost pressures. In the next few years, they also face rising student numbers and a rapidly changing qualifications landscape. But yet again, the scope for additional funding looks unlikely as the government has pencilled in tighter public spending plans after 2024.

Footnotes