Question to the Department for Education:

To ask the Secretary of State for Education, with reference to her Department's policy paper, Further education reclassification: government response, published on 29 November 2022, what plans she has to address concerns in the further education sector over borrowing controls on colleges.

Following the decision by the Office for National Statistics to reclassify colleges to the public sector, colleges are now subject to the requirements of Managing Public Money, which means they may only borrow from private sector sources if the transaction delivers value for money for the Exchequer.

To support and protect colleges the department is providing colleges with additional capital grant allocations totalling £150 million. Individual college allocations were published in December 2022 and will be paid from April 2023. The full list can be found here: https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fassets.publishing.service.gov.uk%2Fgovernment%2Fuploads%2Fsystem%2Fuploads%2Fattachment_data%2Ffile%2F1121488%2FAdditional_FE_capital_funding_allocations_2022_to_2023.ods&wdOrigin=BROWSELINK.

The department is also bringing forward £300 million in payments from the 2023/24 financial year into the 2022/23 financial year to cover the shortfall that providers experience in February and March 2023. This means we will make additional payments to institutions in February and March 2023.

These new measures are designed to help colleges manage the restrictions on commercial borrowing. Where a college believes that commercial borrowing is still required and would deliver value for money, they can submit a consent request for consideration. Departmental officials are working closely with further education colleges through these consent requests.

Departmental officials are also working on other options to support the delivery of capital projects by the sector, including for colleges that were intending to borrow from commercial sources.