Question

To ask the Secretary of State for Business, Innovation and Skills, what assessment he has made of the effect of changes to the adult skills budget on the long-term financial stability of the further education sector.

The financial health of further education colleges is under constant review by the Skills Funding Agency based on self-assessment information from colleges and the publication of college accounts. Colleges with inadequate financial health are subject to intervention led by the FE Commissioner.

Across all our grant, loan and capital support for adult FE, we are making available over £3bn in 2015-16 and our funding mechanism is designed to allow providers the freedoms and flexibilities to decide how best to use their allocation to respond to local learner and employer demand. As autonomous organisations it is up to colleges to manage their own budgets.

Apprenticeships are our priority for skills and colleges have been encouraged to expand their apprenticeship offer. As government funding has reduced, many colleges have responded well by looking at generating other income streams and creating sustainable business models for the future. This entrepreneurial approach will help ensure sustainable future business models with less reliance on government funding.

In order to address the significant financial pressures on institutions, a declining 16-19 population and the need to maintain very tight fiscal discipline in order to tackle the deficit, a major reform of post-16 education and training institutions is necessary. On 20 July the Departments for Education and Business, Innovation and Skills announced a programme of area-based reviews to review 16+ provision in every area. These reviews will provide an opportunity for institutions and localities to restructure their provision to ensure it is tailored to the changing context and designed to achieve maximum impact.