College leaders unite to call for urgent investment

Jason Lancaster is one of 172 college leaders to have signed the letter, which draws attention to the stark staffing challenge in FE, the rapid growth in the numbers of 16 to 18-year-olds and the injustice of colleges having to pay VAT.

Four weeks before the autumn budget, leaders voiced their dismay at the lack of a funded pay rise for FE teachers to start to close the £9,000 pay gap between school and college teachers. That gap is making it increasingly difficult to recruit and retain lecturers in key sectors such as construction, engineering and health and social care, stifling economic growth and opportunity.

The Association of Colleges estimates that it would cost the government £250 million to match the school pay award.

Mr Lancaster said: “The decision to award school teaching staff a 5.5 per cent pay award for 2024/25 and not make funding available for colleges to be able to do the same will sadly see this challenge only deepen, unless action is taken.

“Across the sector we are finding it harder to fill vacancies in teaching roles. Unless funding for FE is increased, the country will stall in its bid for growth, as there will be too few staff to deliver the skills training that our economy so desperately needs. Without lecturers, skills shortages will deepen, and our young people, adults and apprenticeships will suffer. It really is that simple.”

Signatories of the letter represent 1.6 million learners across the country. College leaders warned that future skills shortages would hit the government’s ability to deliver manifesto commitments including 1.5 million new homes, the transition to net zero, a reformed NHS and productivity gains.

The letter highlighted the need to fully fund the growing numbers of students enrolling in FE while there are falling numbers of pupils in primary school. In the 2023/24 academic year, for example, around 39 per cent of college leaders told the Association of Colleges they had seen a growth of 10 per cent or more in young people coming to their college. And while enrolment is still underway for 2024/25, leaders are reporting larger numbers than ever.

No college wants to turn prospective students away, and therefore leaders have asked for a basic funding commitment from the Treasury: funding in-year growth, as well as capital investment to deliver the extra space and equipment needed.

The letter also called on Rachel Reeves to end the injustice of VAT payments. Unlike schools and academies, colleges are not covered by the VAT refund scheme, despite being classed as public sector organisations with strong social inclusion and public service roles.

David Hughes, chief executive of the Association of Colleges, said: “It’s clear that the government recognises the vital role the further education sector must play in reducing skills gaps, increasing productivity and driving forward economic growth.

“You could step into any number of colleges across the country and see exceptional provision fulfilling this role. Colleges have huge potential to do even more to support the government to meet all five of its missions, but crucially they cannot fully deliver without better investment.

“We recognise the tight fiscal environment the government is operating in. However, in the upcoming autumn budget, the Chancellor has a very real opportunity to inject £210m directly into colleges through changes to VAT rules and show commitment to the FE sector and the government’s own missions. Imposing VAT on independent schools will bring in £1.5 billion, so the time to right this wrong is now.”

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