Colleges are facing significant funding shortfalls and heightened uncertainty as a result of Covid-19 challenges, research published today finds. 

The Institute for Fiscal Studies' Annual Report on Education Spending in England finds that despite the £400 million extra in funding this year, exceptional rises in student numbers could still generate a real-terms fall in funding per student for college. 

The research found that student numbers in further education colleges and sixth forms are likely to increase this year owing to rising numbers of young people combined with unusually high GCSE results and significant reductions in training and employment opportunities.

Imran Tahir, research economist at IFS and a co-author of the report, said that if there is no additional funding for colleges, “planned real-terms increases in spending per student could be mostly – if not entirely – eroded”.

The report says that FE colleges and sixth forms have seen the largest falls in funding of any sector of the education system since 2010–11, and that funding per student in FE and sixth-form colleges fell by 12 per cent in real terms between 2010–11 and 2019–20.

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'Continued challenges'

David Hughes, chief executive of the Association of Colleges, said that the report was "a stark reminder of the continued challenges that exist in our further education and skills system."

He said: "Post-16 and adult education experienced significant real-terms spending cuts in the last decade. The Treasury started to address this with an added £400 million to the 16-18 budget in 2020-1, but as IFS notes this is for one year only and will be largely absorbed by the substantial rise in student numbers because of the population increase and lack of alternatives for young people. 

"Unlike in HE, increases in student numbers are not funded in-year. That works well in a stable environment, but this year many colleges have had big increases in student numbers that they cannot afford without additional funding. At the same time, FE colleges have also lost income from fees, employers and international activities and have to use what’s left on measures to keep students and staff safe during the pandemic."

A decade of neglect

Bill Watkin, chief executive of the Sixth Form Colleges Association, said that the report highlights the scale of underinvestment in sixth form education over the past decade. 

He said: “The sharp reduction in funding identified by the IFS has led to courses being cut, support services reduced and extra-curricular activities removed for 16- to 18-year-olds across the country. The £400 million investment announced in the 2019 spending round was a welcome step in the right direction but was only a one-year deal following a decade of neglect. 

"We are asking the government to do two things in the forthcoming spending review: raise the rate of funding for 16- to 18-year-olds to at least £4,760 per student and create a dedicated capital expansion fund for sixth-form providers to cater for the rising number of students identified in today’s report.”

A Department for Education spokesperson said: “We understand this has been a challenging time for the education sector which is why we introduced a range of support to help colleges and universities manage their finances and safeguard students.

“We have protected grant funding for further education, worth over £3 billion for a full year, and increased education and training investment this year for 16-to 19-year-olds by an additional £400 million.

“We also brought forward over £2bn worth of tuition fee payments for universities, and announced a major package of £280m to stabilise research funding.”