Impact of further education funding cuts is ‘not yet clear’
Further education colleges are “coping” with £22m worth of Welsh Government cuts, but quality of provision and outcomes for students is not yet clear, a report from the Auditor General for Wales warns.
Speaking as his report was published, Huw Vaughan Thomas said: “While further education colleges have managed to cope with the cuts to their funding over recent years, it is clear that their finances are coming under increasing strain and that they may struggle to maintain the amount and quality of provision at current levels.
“The sector needs some clear direction about its place within the wider policy context for post-16 education. There is also a need for funding arrangements to better reflect local changes in need.”
His report, Welsh Government Oversight of FE Colleges’ Finances and Delivery, highlights a cut in grant funding for the sector of £22m between 2012-13 and 2016-17, a reduction of 13% in real terms.
It adds: “Core funding for full-time provision has risen by 3% in real terms, while funding for part-time courses has dropped by 71%, reflecting the Welsh Government’s decision to prioritise its statutory duty to make reasonably sufficient provision for 16 to 19-year-olds.”
In response to this pressure on funding, the report points to the Welsh Government’s aim that employers should have a greater influence over skills provision and take a greater share of costs, but warns that the UK Government’s new Apprenticeship Levy has implications for this “co-investment” policy.
“While financial management in colleges is generally sound and colleges are financially stable in the short term, their financial health varies and medium-term financial planning is not well developed,” it adds.
“In addition, a revaluation of colleges’ pension scheme in 2015-16 has had a significant impact on their overall financial position, and colleges now face a potentially significant increase in their future pension contributions.
“Colleges have responded to smaller funding settlements by cutting costs, including through large reductions in the workforce. Recent mergers also appear to have improved financial resilience across the sector.
“However, some colleges are better placed than others to grow other sources of income and colleges believe they will be unable to continue to protect 16 to 19-year-olds if further cuts are made. Colleges also see capital investment as a key business risk.”
The report finds that while the Welsh Government’s arrangements for funding allocation and oversight of the sector’s finance and performance are generally sound, “they would benefit from a more integrated and long-term approach”.
Among recommendations it suggests the Welsh Government:
Require colleges to prepare medium-term financial plans, including longer-term financial forecasts.
Develop a mechanism to link funding more closely to likely demand for further education in each area.
Evaluate the impact of funding reductions on learners to inform future decision-making in both policy and funding.
A Welsh Government spokesman said: “We welcome this report, which shows that overall the FE sector in Wales has responded well to the financial challenges of recent years. The report makes a number of recommendations and we will be responding to these in due course.
“Despite funding cuts imposed by the UK Government, we have protected provision for 16 to 19-yearolds, and we will continue to support and work with the sector.
“We recently announced plans to consult on establishing a single strategic authority, responsible for overseeing post-compulsory education and training in Wales. This offers opportunities for a more joined-up approach to the financial monitoring of the FE and HE sectors.”