Cut university budgets to fund FE, suggests thinktank

Government funding should be diverted from universities to support the further education sector, according to an unlikely alliance of influential policy experts.

Under the coalition government, FE bore the brunt of budget cuts within the Department for Business, Innovation and Skills (BIS). Public grant funding for FE colleges has been cut by 16 per cent since 2010, and although grant funding for higher education has been reduced by 46 per cent, universities have many other sources of income to offset the loss, including tuition fees. Indeed, the higher education sector’s total income in 2013-14 came to £30.7 billion, up 5.7 per cent on the previous year.

But financial pressures are set to worsen for FE: on top of the 11 per cent reduction in the adult skills budget for 2015-16 ­announced in February, the sector was hit with an additional 3.9 per cent cut last month.

BIS has also been asked by the Treasury to plan for up to 40 per cent of its budget being slashed by 2020. Pressure is now growing on the government to protect FE provision from further cuts, and trim the higher education budget instead.

A report by the influential Policy Exchange thinktank, due to be published next month, argues for funding to be redistributed from university to FE provision.

TES understands that representatives from the right-leaning thinktank briefed policymakers at 10 Downing Street last month on the importance of FE, skills and adult education.

And Nick Hillman, director of the Higher Education Policy Institute, has cautioned universities against being “at war” with colleges to attract students, arguing that supporting a “healthy FE sector” would benefit universities.

The Policy Exchange report is expected to argue that FE colleges would be better placed to meet the growing demand for higher-level technical qualifications than universities, so government funding should be allocated accordingly.

Jonathan Simons, the thinktank’s head of education, told TES: “We need the FE and HE sectors to be working together, but they both receive their funding from BIS and, in a tight spending review, it’s essentially a zero-sum game.

“The FE sector has faced some significant cuts, and made far more efficiency savings than HE. Despite this, it’s a vitally important area for the government, not least because of ministers’ focus on the apprenticeship programme.

“If you want to safeguard the viability of FE, you need to find extra funding for the sector. Within the BIS budget, HE is the obvious – and probably only – place to take it from.”

A report published in June by Baroness Wolf, Sir Roy Griffiths professor of public sector management at King’s College London, argues that average funding for a 19-year-old full-time student in FE amounts to about £2,150, compared with around £8,400 for a higher education student of the same age.

Universities will also benefit from the removal of the enrolment cap, which will allow them to recruit as many students as they like, and chancellor George Osborne has announced that they will be allowed to increase tuition fees in line with inflation. The system, Professor Wolf argues, is “financially unsustainable” and “deeply inegalitarian in its allocation of resources”.

Vocational education charity the Edge Foundation has also joined the debate.

Writing on the TES website today, acting chief executive David Harbourne argues that higher education is the “last part of the education system that should have been assured further funding”.

Research by the foundation on the accounts of 20 higher education institutions shows that the average rise in income between 2012-13 and 2013-14 was 6 per cent, with some universities, such as Manchester and Sussex, gaining as much as 8 per cent.

According to data published by the Higher Education Careers Services Unit, only one in four of last year’s law graduates had jobs as legal, social and welfare professionals six months after graduation. More than one in three graduates of sociology, English, media studies and psychology were working in shops, bars, restaurants or clerical jobs.  

Yet despite the oversupply of graduates, a recent survey by the Association of Graduate Recruiters found that two-thirds of companies had unfilled graduate roles, with a third claiming that graduates lacked the required skills.

“Considering the diminishing returns that HE is offering to the economy, the imbalance between its funding and that given to FE is astounding,” Mr Harbourne says.

But Mr Hillman, who served as special adviser to former universities minister David Willetts from 2010 to 2013, told TES the two sectors in England could no longer afford to compete. “They should have very deep, intimate links with each other,” he said.

Gill Clipson, deputy chief executive of the Association of Colleges, said the relationship between the two sectors could be defined by the upcoming area reviews.

“The government wants local economies to be supported and well served by their education institutions, whether that is a college, university or combination of both,” she added.