Adult and Further Education

Debate between Jane Hunt and Robin Walker

Wednesday 5th July 2023 Commons Chamber

[Jane Hunt (Loughborough) (Con)]

I thank the Chair of the Education Committee, my hon. Friend the Member for Worcester (Mr Walker), and the hon. Member for Wirral West (Margaret Greenwood) for initiating this useful debate.

Further education colleges have a wealth of experience in delivering learning, training and qualifications in their local communities, and that includes the fantastic Loughborough College in my constituency. They have a unique understanding of the skills gap through their relationship with businesses, industry and other local stakeholders, which enables them to adapt the courses they offer to help to skill young people, as well as upskilling and reskilling workers to meet the needs of the local economy in real time and prepare for the challenges of tomorrow. That makes them essential to our local communities and crucial to economic growth.

The country should make much more of, in particular, the flexibility of FE colleges to tailor the skills and training made available to meet local need, although we have already done that to some extent through the Skills and Post-16 Education Act 2022. Let me give an example involving Loughborough College. Not long ago, a business was thinking of coming to the area, but needed a workforce that was skilled in a certain way. I contacted the principal of Loughborough College by email, and she came back to me within about 10 minutes, having already contacted the business and reached an agreement on what they would do. Such flexibility and deliverability of that kind are available to the whole town of Loughborough and the local area because of what the FE college can deliver.

As the co-chair of the all-party parliamentary group on T-levels, I am also immensely proud of the fact that at the heart of Loughborough College is one of the first T-level centres built with town deal funding. The college will have an institute of technology, which it will be building along with Loughborough University, the Derby College Group and Derby University. The Minister, very kindly, officially opened the centre, and broke ground at the IOT not long ago. All those developments have been brought together by a phenomenal staffing team, and an equally phenomenal principal and chief executive, Jo Maher. I have named her because I want to thank her very much: she has done an enormous amount for people in Loughborough, and has achieved a huge amount in a very short space of time. She is moving on, but thankfully she is staying in Loughborough to become the university’s pro vice-chancellor for sport—and it doesn’t get much better than being in charge of sport at Loughborough University, let’s put it that way. She has achieved an amazing thing, along with all her staff, the governors and others. It is an amazingly proud moment for the town. The college has everything from T-level engineering to courses on health and social care and training for electricians and nursery staff. There are people who are going to make fantastic emergency service workers, prison officers and so on. It is a wonderful draw for the whole region to get those skills into the area.

For FE colleges to continue to deliver much-needed skills education, we must ensure that they are placed on a sustainable footing by addressing their historic levels of underfunding. Despite recent uplifts, FE college funding compares unfavourably with funding for universities and schools. As colleges spend 67% of their income on staff, current budgets are having a detrimental effect on recruitment.

Many colleges are being constrained in their ability to provide training at the level necessary to address skills shortages, because they cannot offer salaries competitive enough to attract the right people, who can earn far more in industry and even in schools. To reinforce that point, the Association of Colleges has informed me that, on average, teachers in schools are paid over £8,000 more than college lecturers, despite many college lecturers being more specialised and bringing real-life industry experience to their roles. That concern has also been raised with me locally. Salaries in the private sector are used to attract people with skills and knowledge; the same should be true in FE colleges.

Alongside the issue of additional funding in these areas, Loughborough College has highlighted to me that despite now being considered essentially to be public bodies by HM Treasury, colleges are not able to reclaim VAT as the vast majority of public bodies do. I have been told that this tax currently uses up 3% of a college’s income. The money voted for by Parliament for 16 to 19 education in a wide variety of key sectors is being taxed, which is disproportionately affecting those from disadvantaged backgrounds, who make up the majority of those attending college. It is compounded by the fact that, following ONS reclassification, an immediate block on commercial borrowing was placed on colleges.

That has left colleges stuck between a rock and a hard place: unable to receive private funding, as they are considered to be a public body, but having to pay VAT as if they were a private entity. It is therefore important that due consideration is given to including colleges in the VAT refund scheme. That simple change would go a long way towards helping colleges to provide the high-quality skills training that our economy needs.

[Mr Robin Walker]

In these debates, we have heard a lot about parity. Does my hon. Friend agree that now that there is greater flexibility, the Government should look across the education sector and ensure that early years settings, colleges and others are given parity with schools in their treatment for VAT purposes?

[Jane Hunt]

I absolutely agree. I thank my hon. Friend for his intervention.

FE colleges such as Loughborough College are our greatest asset in local communities and the best conduit for social mobility. Let us reform the sector for the future, so that they have the tools and resources in place to make the difference to the lives of their students and to the businesses where they will go on to work. I want to put it in a positive rather than a negative way: yes, we need to look at the money and look at the VAT, but there is such fantastic resource within FE colleges. It is all there to be had. Let us do that, and let us help them.