Further Education Funding

Toby Perkins Excerpts

Wednesday 4th November 2020 Westminster Hall

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

As usual, it is a pleasure to serve under your chairmanship, Mr Hosie. As my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss) has said, at a time like this, with so many people losing their jobs, further education and its ability to agilely shift to retraining people are particularly important. It is very concerning that we have seen real financial sustainability issues in FE, a topic that the Public Accounts Committee has raised a number of times. That sector has come into this crisis working from a challenging base, with its funding base for adults in 2020 still at 2013 levels.

As the Minister knows as a former member of the Public Accounts Committee, this sector has been on a difficult trajectory for seven years. She has been involved in some of those discussions, so I do not need to run through the figures with her: I am sure that as a former member of the Public Accounts Committee and with her business background, she is hot on the numbers, and the numbers matter here. That base funding causes a lot of the difficulty and the inability to be as agile as the sector can be, because of the way in which the sector is used to working with adults—of course, it works with young people as well, but I am mainly talking about adults today. Those adults have sometimes come from challenging or different educational backgrounds, and have not followed a traditional trajectory in training: level 2, level 3, and so on.

We on the Public Accounts Committee will be looking again at this topic; that inquiry is coming up, and we will increasingly be looking at sixth-form colleges as well, because that is obviously a concern. However, I particularly want to talk about FE today. There are particular issues with the covid pandemic, so I will talk about funding first, and then some of the practical issues.

[Mr Toby Perkins (Chesterfield) (Lab)]

We are here for a debate about funding for further education, which my hon. Friend is coming to, and many of us are concerned about the overall amount of funding. However, alongside that, we are seeing things such as the Government sending £330 million allocated for skills back to the Treasury because it has not been able to be spent under the apprenticeship levy. There are other examples, which I will come on to, where the issue is not just the overall amount being spent, but the fact that how it is being spent means that it ends up not being used.

[Meg Hillier]

I thank my hon. Friend for his intervention, and I am going to touch on the apprenticeship levy. It was an interesting and bold policy initiative, but as he has rightly highlighted, it has its pitfalls and, indeed, is not always going to the right places. If I have time, I will touch on that as well, but I want to get the immediate funding issues around covid on the record first.

As the Minister will know, the last time that FE colleges were encouraged to come together to save costs—part of the challenge of living on a low funding basis—Hackney College became part of New City College, a consortium of colleges. It has been keen to keep recruiting 16 to 18-year-olds, because in the current climate it wants to make sure that it does not turn students away. It has managed to recruit 200 above its funded target, which is costing it £1.2 million a year: that is a cost to the college directly, money that it is having to take out of its own base costs if it is not funded, and I hope that the Minister will look at that issue. We should not be turning people away from study, and it is great that New City College is not turning people away, but obviously that money has to come from somewhere, so another part of the system is losing out.

The funding tolerance for adults is also a very interesting point. In London—this is a happy circumstance for my constituency—if the colleges meet 90% of their adult rate, meaning that they keep those students in place, they get 100% of the funding. Nationally, the figure is 97%. It is difficult enough to keep in place adults from a different education trajectory who are perhaps juggling families and sometimes jobs as well as study; it is harder than if people are in compulsory education. Add to that the complexities of covid: ill health, and people perhaps dropping out after having to self-isolate because they had covid or have long covid. They can enrol and lose out. That means the figure can very quickly drop below 97%.

Nationally, the Minister needs to look at the tolerance level. As she knows, I am not for wasted money or deadweight money; it is certainly not something I would advocate. There is a very high threshold at the best of times but, with covid, it is particularly challenging. A bit more tolerance would enable colleges to plan and focus. As agile and clever as they are, I am sure they could find ways to fill gaps in those places. I will come to explain how they can be really agile by providing short courses for people.

The costs of covid compliance have to be mentioned, because it is expensive. Fewer people are in the building, and there is less activity in some ways. New City College spent £200,000 from its reserves to support students in the first lockdown. As the Minister knows, many colleges up and down the country have run out of money due to their challenging financial circumstances. There will be a crisis point if those colleges are not supported to survive.

We do not ever want to see a college go bust. Colleges are the main education providers in small towns, but they might be hampered by previous loans from Government, some of which we know have been converted to grants. Even then, however, such colleges are in great difficulties financially. If they go bust, where will the adults in that area go? The Government have an agenda of levelling up areas of the country that have traditionally not recovered from some of the post-industrial job losses in previous decades. If they lose their FE colleges, where will the training come from for the people who are now losing jobs in some of the sectors that are particularly suffering because of covid?

I want to touch on capital funding. It is good that the Government have said they will match-fund capital expenditure to ensure that colleges can patch themselves up, but the constraint of having to spend the funding in the current financial year is challenging. We are already in November. Although the announcement on funding was made a while ago, some of the projects that could be delivered are a bit longer range or are very disruptive to the working of a college. Add in the covid measures and it becomes even more challenging. We all know that a lot of work goes on in schools and colleges during the long summer recess or the breaks, but the summer recess comes after the end of the financial year. Although I recognise that it is difficult in some ways, it is not beyond the wit of Government to look at extending the deadline and perhaps making it a two-year capital funding programme, so that colleges can plan.

The Minister knows as well as I do that if things are done in a rush because the money has to be spent by a certain point, they are not necessarily done well, or the right things are not necessarily done. We should allow colleges to spend that capital money as effectively as possible. It could be spent on better covid measures to enable people to work more easily in those circumstances, or on enhancing facilities for the sort of job creation that we will need and that they will need to train for. I will touch on that in a moment.

It would be good if we could have more flexibility. An example of why this is needed comes from Hackney College, where there is an atrium with a leaking roof. It is a £500,000 job. The matched funding is very welcome, but it is a big job and will really disrupt things. If that has to be done before the end of the financial year, it will be challenging—if it even gets done.

I will move on to how we train people for the jobs that will still exist after covid, and for the ones that will emerge. I hope the Minister will tell us what shared intelligence there is of the local and regional skills that will be needed. Having a strong London authority means that there is some understanding of the jobs that are available in London but, given the nature of their work, a lot of London workers now do not have to live in London. There will be an interesting and challenging job for everybody in working out where people will be and where the jobs will be available. If somebody is working in care or certain other jobs, they clearly have to be physically present, but that is not the case for lots of jobs.

There really needs to be some analysis. I hope the Minister can shed some light on what analysis is being carried out not just in her Department, but across Government, about what jobs and skills might be needed. It might seem early to start thinking about that, but it is never too early to start planning. Things might shift and they might change, but if we do not start thinking about it now, there will be far more people without jobs in the right places. Imagine retraining for a job that does not exist in a year’s time because we have not got it right. We need to be thinking about that and sharing intelligence as much as we can. I am not saying the Government have all the answers, but they have a very strong role in co-ordinating this effort.

We need to move quickly. Existing mechanisms for funding new courses are very slow. Let us consider some of the jobs for which need might be rising. With Brexit looming, the health and social care sectors face a real struggle. I know from looking at the issue with the Public Accounts Committee that getting people to work in social care in the Minister’s own constituency is very challenging because of the costs. If the Government are serious about levelling up and investing in infrastructure projects, construction will be vital. Digital enablement of all sorts of careers will also be important. I happily represent Hackney South and Shoreditch, where understanding how to work digitally and adapting quickly has been a hallmark of people’s success in surviving and coming through the pandemic so far, so it is definitely something in which we need to train people.

Those examples are the reason for my hunch about what might be necessary. Putting people on six-month intensive courses—my local college reckons that that could be done for between £3,000 and £3,500 per person— could quickly get them out of unemployment, off benefits and into work. Alternatively, as they may still be on furlough with their job winding down, facing redundancy even if their sector survives, it might be better to train them before they have to claim support from the state.

There is a constraint, however, about which I hope the Minister will give us some reassurance, even though it is not her remit alone. Those six-month intensive courses, for which I just gave the costs, would entail only 15 hours per adult per week, because under the current rules the college cannot start planning a longer course. If anyone studies for 16 hours or more, they are no longer eligible for benefits. That trap will be devastating as we come out of covid. People will be trapped on benefits because they have lost their jobs, but they will not be able to train for other jobs because they would no longer be able to claim benefits. We would find ourselves in a Kafkaesque circle of doom.

I hope the Minister will try seriously to tackle that. If that time threshold were raised, colleges could be so much quicker and more efficient in targeting and supporting adults back into work. Funding for that sort of short-term, swift reskilling would usually come from the approved national skills fund, which is, again, something over which the Minister can have some very direct influence, I hope.

That fund is normally released in the summer. We are now in November and already in our second lockdown, meaning that people will lose their jobs. The Minister knows that one of my bugbears about all Governments is what I call cost shunting, which is something that the Public Accounts Committee highlights all the time. If we do not get that money to train people now, many of them will start claiming benefits and there will be all sorts of ramifications for their lives, homes, livelihoods and so on. That will cost them, the state and the taxpayer a lot more in the long run.

My hon. Friend the Member for Sheffield, Brightside and Hillsborough mentioned the apprenticeship levy. The Public Accounts Committee has looked at this and we were concerned that, in order to get the money out of the door, it is quite easy for companies to put money into MAs and other higher-level apprenticeship programmes. I think we would all acknowledge that the levy was really intended to train people in much lower-level careers, so that they could either reach higher levels or change career.

I do not have all the answers, but the Government need to look at how the levy works. As the shadow Minister, my hon. Friend the Member for Chesterfield (Mr Perkins), has said, it is criminal for that money to be levied, only to then go back into Treasury coffers. I am sure that we would all back the Minister if she took on the Treasury and demanded that that money be syphoned back into education. We might find a harmonious point of cross-party agreement in these challenging times. I launch that campaign here and now, and tempt the Minister to agree with it when she responds.

I am sure that the Minister has our support to act fast. We need safeguards in place, but I have no desire to see more of my constituents lose everything just because we have a bureaucratic deadline of next summer rather than November and the 16-hour rule that prevents those who are studying from claiming benefits. We need to unjam the system so that people who want to work and retrain are encouraged to do so with every tool in the box. Colleges stand ready and waiting. I pay tribute to East London Advanced Technology Training, which trains people in my constituency but is already losing students because of the loan scheme.

Will the Minister also look at the loan scheme for level 3? Many people will not take on the debt now, but they need support to ensure that they are retrained and can work and support themselves. My constituency is poor, but there is no poverty of ambition. I now have the new poor: people who had good jobs and want to work again. They just need a little leg up. They do not want a handout—they want a hand up. I hope that the Minister has heard me and will answer my questions.

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[Mr Toby Perkins (Chesterfield) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Hosie. I thank my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss) for securing this timely debate and for the passion and determination with which she continues to speak up for the further education sector. It is hugely welcome that for the second time in two weeks we are here to debate the sector. I know how important it is to many Members.

Our colleges are incredibly important. They are at the heart of all our communities. They are an education and skills hub relied on by employers and learners. They are crucial providers of skills and play an incredibly important role in bringing employers and learners together. They are the institutes of second chance for many people who have had their lives turned around by the further education sector—even in my own family. My son went to an FE college and subsequently went to university, which would not have been predicted when he left school. I know that his experience is commonplace.

People who go to our colleges can study vocational or academic subjects, and foundation and life skills. Colleges are incredibly important for adult education. People who go to colleges are more likely to be younger, and more likely to be black or from an ethnic minority, than the average population. Colleges are an incredibly important cog in a functioning education system. I think that the passion for that has come across today.

I was particularly struck by what my hon. Friend the Member for Sheffield, Brightside and Hillsborough said about the extent to which the skills and productivity crisis that we face existed prior to coronavirus. It has been much exacerbated by the virus, but many of the issues existed long before, and it is important for us to focus on that. As we think about the value of adult education, and learning at all stages of our lives, I am sure I am not the only one who has today learned, in far more detail than they knew it before, the geography of Wisconsin and what the obscure states around America are all about. It just shows that every day is a school day.

It is important to make the point that we already had a skills and productivity crisis before coronavirus. We already had an apprenticeship levy where there was a huge reduction in apprenticeships at small and medium-sized enterprises and in the number of 16 to 19-year-olds obtaining access to one of them. We already had an underfunded further education college sector. We already had a huge flight of experienced college lecturers, after years of real-terms pay cuts. They left the profession and left colleges less able to provide the support that is needed. We already had a Government who were making further education the enemy of higher education, rather than seeing them as complementary providers whose success depends, in part, on each other.

Coronavirus has only exacerbated those challenges, with a huge reduction in apprenticeship starts. The colleges that focused most on apprenticeships and commercial partnerships are the very ones with the biggest financial challenge. Many apprentices’ college courses were suspended, and they were either furloughed or made redundant, and a generation of workers of all ages who need retraining find that the careers and adult education offers that would help them right now have been obliterated.

On finances, the Ney report exposed the fact that the Government’s destruction of the civil service and its capacity means that the Department for Education has been ill equipped to work with colleges that hit financial trouble. On capital funding, which other Members have referred to, the Minister’s written response to my recent question exposed the unprecedented capital funding cuts we have seen over the last 10 years. This debate is timely, Mr Hosie.

In the last decade the further education sector has seen its funding slashed by a third, but adult education, which is so crucial at this time, has taken an even bigger hit, with a 50% reduction. By the end of this year, an estimated 1 million young people will be neither in employment nor education and training, and will be facing the toughest jobs market in a generation. Even when faced with the urgent need to act this spring, Ministers ignored calls from the Association of Colleges to have that education and training offer in place for September, at the start of this academic year.

On capital funding, £2.61 billion was invested in further education capital expenditure in the final five years of the previous Labour Government. In the five years that followed, the Government reduced that spending in actual terms by a shocking 64%. When we hear the Government now proudly boasting about a £200 million increase in capital funding, we need to place that in the context of the cuts we have already had. Even with the additional money that has been spent, Government are spending less now than they were 10 years ago—purely in cash terms, not even taking into account inflation.

When colleges urgently need funds to make structural changes to cope with the demands of coronavirus, it is staggering inaction on the Government’s part to say that there will be a plan coming along in April. The Association of Colleges has exposed that the average college has spent between £200,000 and £300,000 on covid-related improvements to keep their college safe, as my hon. Friend the Member for Luton South (Rachel Hopkins) reflected.

A powerful point was made by the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), who brought her experience to bear, as well as her passion for the sector. In her contribution she talked about the frustration that we all feel when money that has been allocated by the Treasury and is finally in the skills sector is then subject to systems that mean we cannot use that money, and it is sent back to the Government. It is infuriating.

My hon. Friend the Member for Sheffield, Brightside and Hillsborough spoke powerfully about the digital divide. In this crisis, we have seen the importance of young people being able to access broadband and devices. The case she made about the lack of laptops was powerful.

On the subject of money being sent back, in a debate a couple of weeks ago I asked the Minister about the “Get Help to Retrain” scheme, which was being wound up after its pilot. She said that it had not been scrapped, but was being incorporated into the national retraining scheme. FE Week recently published evidence that the leftover cash from the £100 million, earmarked for the retraining scheme, would not be added to the new skills fund and Ministers have confirmed that the money will be sent back to the Treasury. Once again, we have a situation where money has been allocated and it ends up not being spent on our young people, when it should be. That is becoming something of a pattern.

The tweaking of the apprenticeship levy to enable large employers to pass levy funds down to companies in their supply chains is welcomed. The hon. Member for Totnes (Anthony Mangnall) talked about the importance of his college in Devon. He made a powerful case for the importance of the FE sector, focused on local needs, in small towns and rural communities.

The hon. Member for Bath (Wera Hobhouse) spoke about adult education, as I have, and she referred to the decision to scrap the union learning fund. I see that decision as entirely vindictive. The fund is a tiny proportion of the money being spent on skills, and it is being scrapped at a time when we know that the Government cannot even spend the money that they have. The decision does not seem to be based on any evidence that shows that the programme does not work—it does work—but on the Secretary of State’s antipathy towards the trade union sector.

In a wide-ranging speech, my hon. Friend the Member for York Central (Rachael Maskell) once again demonstrated what a great advocate she is for her local college, and spoke about the state of the college estate. The FE colleges that have been hit hardest by the pandemic are those that took the Government’s advice, developed training in association with large employers locally, focused on apprenticeships and built up commercial partnerships. It is a tragedy that those are the ones most badly affected.

As the Secretary of State focuses his aims in the White Paper on creating a German-style education system, it is important that the Government should have cognisance of the difference between the kind of economy we have and that of Germany. I would love to see more of a skills-based approach, but it will not stand in isolation from a proper industrial strategy.

It is clear that Ministers’ rhetoric about FE funding is a long way from the reality of the policies we have seen over the last decade. This Government are constantly keen to distance themselves from the last 10 years of their own record. However, whether they have really made a damascene conversion to FE remains very much to be seen.

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[Gillian Keegan]

I was going to come to that, but I will address the hon. Lady’s question. Effectively, we have increased a lot of the basic entitlements—obviously with English and maths, and with the digital entitlement. We are trying to streamline the delivery partners, including to the devolved areas, to ensure that it is simpler for people to get easy and broader access. That was the decision, and I have communicated that personally to the general secretary of the TUC.

I recognise the challenges that providers face as a result of covid-19. My hon. Friend the Member for Totnes (Anthony Mangnall) mentioned the response to covid and the world-leading scientists working on vaccines, and so on. However, I also want to mention—as he has given me the opportunity—the many apprentices working on our response to covid, whether they are lab technicians, science and engineering apprentices, or those in nursing, health, social care, everything digital, and many, many more areas. As he also mentioned fishing, I should also tell him that a level 2 fisher apprenticeship is under development, and I am sure there will be many more to come as we develop the sector.

I thank the FE sector for its continued hard work to make sure our learners can continue to access high-quality education and training, which includes the move to remote learning. The hon. Member for Hackney South and Shoreditch (Meg Hillier), who I always seek to remain harmonious with, mentioned that. We have introduced a lot of flexibilities to shift towards online and blended learning and to increase the flex vis-à-vis attendance. Many of the colleges have appreciated the flexibilities that we have introduced, and we have done that all the way along.

In June, I had the pleasure of meeting students and leaders from Barnsley College, who, from the first day of lockdown, successfully moved 100% of their curriculum online. We have heard from many colleges about how covid-19 forced a behavioural and cultural change towards a more flexible approach of blended learning, which might otherwise have taken years. I have been so impressed by the sector. In fact, I know that it has even surprised itself, given how well the whole sector has moved to absolutely excellent interactive online learning.

We are helping to ensure that all young people and adults can access the skills and training they need to get on in life, despite all the economic and other challenges posed by the pandemic. That has included giving people access to digital devices and dongles, which goes to the point that the hon. Member for Sheffield, Brightside and Hillsborough made. Data is vital. We know that, which is why part of what we have broadened access to, for those who need them, includes data, PCs and dongles. We have enabled the discretionary bursary fund to be used for that and have also put in place a very simple business case to enable providers to ask for an uplift if it runs out, because it is being used for different things, and 38 have benefited from that uplift.

Of course, we recognise the impact of lockdown. As part of the £350 million national tutoring programme, we have made available a one-off ring-fenced grant of up to £96 million. Those are important additional funds to help students who, in some cases, may have missed the last six months or the last year of their GCSEs, as the hon. Member for Luton South (Rachel Hopkins) referred to. We know this is always a challenge for colleges, so we have specifically put that funding in place for them to provide small-group tutoring activity, to enable our most disadvantaged students to catch up.

There have been some additional costs, and we have looked at making sure we provide financial support, as the hon. Member for Hackney South and Shoreditch mentioned. The financial health of colleges is absolutely vital and key, so we have put that support in place, and we have a team of people who have been there to support colleges. As those colleges’ funding has changed—their commercial income and sometimes their apprenticeship income—that has impacted their overall income, so that support is in place, as is emergency funding. To date, five colleges have requested that emergency funding and have received it, but we are ready to help others, and keep very close to the sector to make sure that no colleges close. Clearly, we need to keep learners in focus throughout this period.

[Mr Perkins]

The Minister has previously spoken about the five colleges that have had direct financial support, and 40 colleges she has identified that might need that support. Can she update us a bit more on what progress is being made, and how many more she thinks are likely to need further support?

[Gillian Keegan]

I am very happy to, because I asked that question just as I was leaving to come here, and the number of requests for emergency funding has not changed: it is still just those five colleges. However, things clearly will change, and we are now going through other changes as well. Another month’s lockdown could have impacts on other incomes, apprenticeships and so on, so we keep this issue constantly under review, and keep a team in place to help people and make sure we are aware of any stresses and strains on the system.