ASCL’s Dr Anne Murdoch says colleges have been starved of funding for far too long and the government must use the upcoming Spending Review to end this injustice.

Stop the FE funding drought

Colleges have been starved of the funding they need for more than a decade. The Institute for Fiscal Studies (IFS) reports that from 2010/11 to 2022/23, total funding for all 16–19 education fell by almost a quarter; and that the financial health of colleges deteriorated sharply in the 2010s, with more than a third (37%) of colleges operating in deficit in 2022/23 (tinyurl.com/25rkrrjc). The report also highlights that colleges have consistently been in a worse financial position than universities.

In addition, the IFS reports that almost half of college teachers leave the profession within three years of starting, partly due to the widening pay gap between school teachers and those teaching in colleges. In 2023/24, the median salary for schoolteachers was approximately 15% more than FE teachers. This gap is set to increase to 18% in 2024/25 due to the 5.5% pay increase school teachers have received.

There has been a partial breakthrough over the government’s failure to provide funding for colleges that matches the allocation for schools for pay awards. The government has now said that £50 million of the £300 million allocated to further education in the Autumn Budget for 2025/26 can be used for the period April to July 2025 as a “one-off grant” to enable colleges “to respond to current priorities and challenges, including workforce recruitment and retention”. However, while this is welcome news, it will not enable colleges to match the pay award in schools and ASCL will continue to press the government over this issue.

And even though Baroness Jacqui Smith, Minister for Skills, expressed “regret” that FE staff did not receive the same pay rise as school teachers in 2024/25, acknowledging that FE staff "felt rightly very disappointed" given the need for recognition of their crucial role, no clear action has been proposed to address the inconsistencies in funding, making it extremely difficult for colleges to deliver the range of skills-based training essential to the government’s skills mission.

Major short fall

ASCL welcomes the allocation of the £300 million to further education announced in the Autumn Budget, but it will be insufficient to address the rising cost of delivery as well as the rising number of 16–18 year-olds. IFS analysis (tinyurl.com/35rbzbh6) suggests that £400 million will be needed by 2028 simply to maintain current per-student funding levels as the population of 16 and 17 year-olds in England grows, and nearly £200 million extra will be needed when accounting for inflation.

ASCL’s concern is that the additional money announced will not be sufficient to improve funding rates and we are no closer to the investment required by the 16–19 sector to ensure colleges can recruit and retain sufficiently skilled staff. The challenge is significant: as well as increased number of FE students, Office for National Statistics (ONS) figures show that nearly a million young people aged 16 to 24 in the UK are not in education, employment or training (NEET) (tinyurl.com/559cdtwp), and the IFS found the number of people in the UK with Level 4 or 5 technical qualifications is lower than in most other developed countries (tinyurl.com/49z24h7t).

In the annual remit letter sent to the School Teachers' Review Body (STRB) in September 2024 (tinyurl.com/5n8mcbay), Education Secretary Bridget Phillipson told the STRB, for the first time, to consider the impact that its pay recommendations for 2025/26 will have on the further education workforce, but she gave no indication of improved funding.

College leaders and their staff are committed to improving outcomes for young people and adults, helping them to gain the skills that they and the country need, but they cannot do this in a funding vacuum. The government must sufficiently support them to ensure that they are able to recruit, retain and develop their staff, and provide excellent training facilities for their students. If the government wants the shortage subjects taught (construction, engineering, healthcare, and English and maths), the Spending Review concluding in spring must significantly improve funding so colleges can adequately pay those who teach these subjects. This must be a key commitment by the government if it is to obtain its own mission for economic growth; the continuous underfunding of the further education sector must stop right now.

Dr Anne Murdoch OBE
ASCL Senior Advisor,College Leadership

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