The further education sector is no stranger to change. Over the past few years, we have seen a spate of reforms that have had significant impacts on colleges of all shapes and sizes. Both land-based colleges and large further education colleges are having to grapple with challenging financial positions and a suite of new reforms. 

Perhaps the biggest challenge for colleges is ensuring financial sustainability. In real terms, colleges have seen their funding cut year on year for over five years. Colleges perform a vital social mission by creating opportunities for the communities that they serve, but to maintain this purpose they need to be supported by sustainable funding. The wider education sector is facing considerable challenges, but the rate of investment in schools and universities has far outpaced the funding of colleges.

The base rate of funding for 16- to 18-year-old students has been frozen at £4,000 per student per year since 2013, so an urgent increase is needed to allow colleges to sustain the vital work they do across the UK. 

Background: FE the ‘big loser’ in education funding

Opinion: ‘Why GCSEs won’t be scrapped - but BTECs could be’

Comment: T levels: the 5 big issues yet to be addressed

College insolvency regime

The introduction of a new insolvency regime compounds this financial uncertainty. We don’t know if, or when, the regime would be used, but the Education and Skills Funding Agency is winding down the college restructuring fund, and the removal of government as the backer of last resort may well dissuade banks from lending credit to colleges on the same basis as they have done in the past.

So colleges are having to think creatively about how they approach their business, and in some cases thinking about how they can embrace more commercial and entrepreneurial activity. The apprenticeship levy presents a clear challenge to many colleges. It is a fundamental shift away from an allocation or grant-style payment system to a competitive, market-based model. Not only have we seen steep reductions in the number of apprenticeships starts since the levy was introduced, but some employers are expressing great difficulty in navigating this new system. This impact is perhaps most pronounced for the smaller non-levy employers who are the bread and butter of college apprenticeship programmes. The chancellor has announced plans cut the SME co-investment rate down from 10 per cent to 5 per cent, but whether this proves to be enough to stimulate demand is an open-ended question.

The shifting qualifications landscape

Then, we also have a qualifications landscape that is shifting rapidly. We have seen a review of qualifications at levels 4-5, we await the Augar review into post-18 education, and the government has recently announced a review into qualifications at levels 3 and below.

What the government is trying to do makes sense. It wants to ensure that we have a world-class technical education system that extends opportunity, promotes social mobility and allows people to progress into good jobs and careers. But, in doing so, there is a lot of change and volatility in the system, and we have reached a point where some in the sector would welcome a period of stability. It is not that what the government is trying to do is wrong but, in the context of their efforts to reform the system, we must balance what is working well presently with improving what is not. The review into level 3 qualifications and below will need to recognise where applied generals are delivering value, and opt to maintain them as viable options where there is enough evidence to do so.

T levels: proceed with caution

There may be an inclination to rush towards T levels as the shiny new programme in this space, but it would be wise to proceed with caution. The number of learners who will undertake T levels is likely to be relatively modest at the outset, so we would not like an approach where options are narrowed for young people. This is especially pertinent for those who may not have developed the analytical competencies to be successful on a T level, but might otherwise be well suited to a BTEC, say, or one of the current City & Guilds technical qualifications.

But even with these challenges and changes, there is still some cause to be optimistic. After all, Ofsted’s most recent report found that there has been an increase in the number of colleges rated as “good” or “outstanding”, a jump from 67 per cent to 76 per cent.

The government has recently announced the formation of new Institutes of Technology where colleges feature heavily as lead providers, and there is still time ahead of the comprehensive spending review in the autumn to make the case to government and the Treasury for why colleges need to be supported by fair funding. Collab Group and Landex are committed to working together to make a case for colleges as indispensable civic institutions that serve the needs of learners, employers and local communities.

Chris Moody is chief executive of Landex, and Ian Pretty is chief executive of the Collab Group