Financial pressures have drastically reshaped the further
education landscape in England. Since 2010,
thenumber of colleges has dropped from
348 to 218, mainly due to mergers prompted by financial
strains. Even those colleges that remain have been forced to cut
costs, reducing the range of courses offered and scaling back
capital investment.
Total college income has fallen by a third in real terms since
2010, driven in part by cuts to public funding. Between
2010/11 and 2022/23, funding received by colleges for 16–19
education dropped by nearly a quarter, and adult skills funding
was cut by more than half.
With the Autumn Budget approaching, the government faces
a pivotal choice about the future of the college sector.
New skills initiatives, such as the creation of Skills England,
aim to boost growth, but they will fall short if colleges lack
the capacity to deliver. An urgent review of funding is
essential to ensure that colleges can manage rising demand and
tackle the widening pay gap with schools.
A new report by IFS researchers analyses the financial state of
colleges since 2010 and highlights the key future challenges
faced by colleges. The analysis covers all colleges in England,
including further education and sixth form colleges. In
the 2023/24 academic year, these colleges collectively educated
1.6 million learners, including 925,000 adults and 661,000
students aged 16–18.
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The financial health of colleges worsened significantly
in the early 2010s, with the share of institutions in
deficit rising from 16% in 2010/11 to 54% by 2015/16. While
there has been improvement in recent years, 37% of
colleges were still in deficit in 2022/23.
- For many colleges, these deficits have been persistent.
Among colleges reporting a deficit in 2022/23, 44% have
been in this position for at least three consecutive
years, often relying on borrowing and emergency funding
to cover their financial shortfalls.
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Nearly half of college teachers leave the profession
within three years of starting, partly due to the pay
gap between college and school teachers. In 2023/24,
the median salary for school teachers was around £44,000,
compared with £38,000 for full-time college teachers –
a difference of £5,500 or 15%.
-
The pay gap between college and school teachers is set
to widen to nearly £7,000 or 18% in 2024/25 – the largest gap
on record. Unlike schools, colleges have received no
additional funding for salary increases, meaning that any pay
rises will need to come from existing budgets.
- The number of 16- and 17-year-olds in England is projected to
grow by 110,000 (or 8%) between 2023 and 2028. Simply to maintain
current per-pupil funding levels for 16–19 education in real
terms, the government would need to increase total
funding across colleges and school sixth forms by £400 million by
2028.
Imran Tahir, IFS research economist and an author of the
report, said: ‘The government's focus
on economic growth and workforce skills is clear, but for these
plans to work, colleges need the resources to be able to deliver
the high-quality education that the economy needs. For over a
decade, colleges have faced serious financial challenges –
overall income has fallen by over a third in real terms since
2010. With the number of 16- and 17-year-olds growing and college
teacher pay falling further behind school teacher pay, the need
for a funding review is urgent. Colleges have long been
overlooked, but the upcoming Budget will be a critical moment to
decide whether to invest in their future or expect them to
continue making cuts.'
