Colleges are asking to support Warm Words with funds to raise skills levels in the UK

British business and college leaders have urged the government to back up its “warm words” on raising national skill levels with additional funding or risk hampering the UK’s economic growth prospects.

Chancellor Jeremy Hunt’s Fall Manifesto spoke seriously about the importance of education and the need to provide young people with the training needed to support and build a “modern economy”.

The government has pledged to increase spending on schools by £2.3 billion in each of the next two years – an annual increase of 4 per cent. However, the further education sector has not received any additional funds, prompting colleges to warn of staff cuts, course closures and increased class sizes.

As Rishi Sunak’s administration seeks to reduce the national debt and close the UK’s fiscal gap, which is estimated at around £50 billion, experts said continued failure to invest in training will hamper productivity just as the country enters a recession.

They argued that neglecting the training sector could leave workers lacking the skills needed to meet the UK’s net zero emissions target.

Darren Hankey
Darren Hankey: “We’ve had nice warm words, but when it comes to fair, reasonable, and ongoing investment, it just hasn’t been proven.” © Hartlepool College

“It’s hugely disappointing,” said Darren Hanke, Principal of Hartlepool College in the North East of England, pointing to the lack of new funding for the sector. In the past decade, he has often heard politicians pledge to support more education, but this has rarely translated into the cash the sector needs.

“We got nice warm words, but when it comes to investing that is fair, reasonable and sustainable, it just hasn’t been proven,” Hanke said.

Government investment in further education has declined steadily over the past decade. Between 2010-11 and 2019-20 real spending per student fell by 14 per cent in England’s colleges, according to the Institute for Fiscal Studies think tank. For the sixth of the schools, that percentage was 28 percent.

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The Department for Education said it had made a “significant investment” including an extra £1.6 billion for 16-19-year training in 2024-5 compared to 2021-22. But with inflation soaring more than 11 percent, and student numbers growing, university leaders say their budgets are shrinking more than ever.

As education providers stretch scarce resources, the Association of Colleges, which represents the sector, warned that rising costs would hurt the provision of vocational training.

In September, I projected that the average university energy bill would rise from 2 percent annually to 6-8 percent of annual budgets, as the energy crisis continues, with these extra costs swallowing up potential skills funding.

Many institutions are already feeling the effects. David Hughes, chief executive of the AoC, said one college has switched to a four-day week in order to save money. He expected more to follow.

“There will be some colleges that can’t pay their bills maybe as early as April, and they will have to close more than once,” he said. “Some of it will not be financially viable anymore.”

At Warwickshire College Group, in the Midlands, chief executive Angela Joyce said it had become impossible to manage a budget surplus, making investing in new courses a “real challenge”.

Angela Joyce
Angela Joyce: “You want to do what the economy needs you to do but it’s really hard financially” © Andrew Fox / FT

This year, the staff pay increase recommended by the association was only 2.5 per cent – a figure endorsed by university employers that makes it difficult to retain teachers, which has made it difficult to take certain courses, particularly in subjects most in demand by employers.

The group wants to develop courses in electrification, replacing fossil fuels with cleaner electric technologies – skills bestowed upon employers in the local auto sector. But Joyce worries that budgets are too tight to justify the risk of running new chapters.

“You want to do what the economy wants you to do, but it’s hard financially,” she said.

Paul Johnson, director of the IFS, said more education was “ignored again” in the fall statement.

“that they [colleges] We’ve had a much tougher time than schools since 2010 and this is where we need to do a much better job of supporting young people and the economy,” he tweeted following the chancellor’s announcement.

Meanwhile, companies warn that the lack of technically trained personnel is a major problem. The British Chambers of Commerce, which represents local trade bodies, said the skills shortage had reached a “crisis point” with job vacancies now exceeding 1.2 million.

She said that 76 percent of companies that tried to recruit new employees had problems finding suitable employees.

The Prime Minister has committed to raising technical skills in the UK, an area where many similar economies lag behind.

Bar chart of graduates of intermediate vocational qualifications in 2020 (per 1,000 residents) showing that the UK has a low share of technically qualified people

New education minister Gillian Keegan, a former skills minister, said the government’s policies would “upskill, train and retrain workers” and help fill vacancies.

In the past three years, the government has introduced new technical qualifications on the basis of “T level”, free qualifications equivalent to A level for adults, and opened specialized technical institutes. It also strengthened partnerships between colleges and local employers.

Alex Veitch, director of policy at the BCC, welcomed the government’s focus on upskilling but said the autumn manifesto was a “missed opportunity” to take action on key policies such as getting older workers back to work and incentivizing employers to invest in retraining.

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