Colleges will receive £100 million to help pay for increases in pension costs in 2020-21, it has been confirmed.
The Department for Education had previously confirmed it would foot the bill during 2019-20, but it has now been confirmed that this arrangement will remain in place for at least an extra 12 months.
Education secretary Gavin Williamson wrote on Twitter: “I said I’d deliver for FE as education secretary and skills minister, and I meant it.
"Alongside a record [increase in funding] for schools, we’re also giving FE the largest boost for a decade: £400million as well as an extra £100m for FE pensions so all extra [funding] gets to the frontline.”
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And the education secretary's special adviser, Richard Holden, added that there had been a “lot of work between the Department for Education, Number 10 and the Treasury" on the funding package, including for pensions cash “which FE had had to find from own cash previously”.
This comes after it was announced on Saturday that colleges are to benefit from a £400 million funding package, and the first increase in the 16-18 funding rate since 2013 after it was frozen at £4,000 per student for 16- and 17-year-olds for seven years.
The Treasury announced that the rate will finally go up in 2020-21 in what it describes as the “single biggest annual increase for the sector since 2010", ahead of next Wednesday's spending round.
Last autumn, a technical notice issued by the Treasury revealed that colleges could face having to stump up an extra £100 million to cover a shortfall in public sector pensions created by the increase in employer contributions to the Teachers' Pension Scheme.
In April, the DfE confirmed it would fully fund the increased pensions bill for “state-funded schools and colleges, as well as other publicly-funded training providers” for 2019-20, at a cost of £940 million. But news of the additional funding for 2020-21 had not been confirmed until this week.
Julian Gravatt, deputy chief executive of the Association of Colleges, said it was helpful to have official confirmation that the extra funding for FE given by the Treasury “won’t be partly taken back in a big top-slice”. “The DfE issued a consultation on the [Teachers' Pension Scheme] grant in spring 2019, which resulted in a decision to provide this grant to colleges. It would have been odd – and very damaging – to take this money away in 2020 but it’s good that this issue is settled for another year,” he added.
