Transcript AoC Clerks 30 Sept 2014 update

Autumn Clerk’s Conference
Funding and finance update
30 September 2014
Julian Gravatt, Assistant Chief Executive, AoC
[email protected]
@JulianGravatt
http://www.aoc.co.uk/term/funding-finance
Twenty years of funding, what we’ve learnt
Lots of activity - agencies, initiatives, acronyms etc
Periodic changes to the funding formula – 2003, 2008, 2013
Incessant fiddling with qualifications, prices and programmes
Funding used to nudge and control
Budgets that change every year despite multi year spending reviews
Desire to squeeze every ounce of value out of every pound spent
College accounts 2013-14
Education (16-18)
High needs
Apprentices (16-18)
Apprentices (19+)
Adult Skills (19+)
Fees (24+L3+) Loans
HE Fees & Grants
Fees Contracts Other
Total
0
1000
2000
3000
0
1000
2000
3000
4000
5000
6000
7000
Pay
Supplies Services
Depreciation
Interest
Total expenditure
Surplus
4000
5000
6000
7000
The bigger spending picture
800
Government plans
Deficit reduction
Spending cuts 2009-18
Spending review in 2015
700
600
500
Unprotected departments
9.1% of GDP (2013-14)
7.8% of GDP (2015-16)
5.4% of GDP (2018-19)
Spending cuts c40% to come
Loans may be a safe haven
Taxes
400
PSCE
RAME
300
RDEL
Deficit
200
100
0
-100
The DFE budget after 2015
DFE’s cash crunch: too many academies, sixth forms, pupils & promises
2015 to 2020: 10% growth in 11-16 pupils, 8% fall in 16-18s population
Education is staff-intensive (80% of school income)
Pensions + NI on-costs = 5% increase in cost of employing a teacher
EFA 16-18 funding
2015-16
Decisions on 16-18 later than on schools
EFA needs to fund costs of study programmes (more FT students)
New A-levels, new Tech Levels, New traineeships
If cuts are necessary, EFA will cut rates, weightings or eligibility
EFA will confirm allocations by March 2015
2016-17
Lagged funding introduced in 2010. Are there alternatives?
Do councils get control of the 16-18 budget?
Formula Protection Grant ends; Maths/English condition starts
Nothing will be clear until the post-election 2015 spending review
SFA Funding from 2016 onwards
BIS budget
Some big cuts likely in BIS spending
HEFCE + Student Grants + Science £8 bil out of £13 bil
19+ FE/Skills budget might be quicker to cut
LEPs/Councils will continue to push for DWP & BIS budgets
Expansion of FE loans could take place in 2016
Apprenticeships
Cross-party support for apprenticeships (advanced & higher apps)
Employer routed funding for apprenticeships by 2017 ?
Government spends £1.5 bil. Will employers pay for training?
Unemployment
Areas of high unemployment despite the economic recovery
All three parties have talked about under 25 benefit cuts (earn or learn)
Longer-term funding trends
Politics
Current shift towards devolution
The 2015 vote and Coalition negotiations determine next steps
Events determine post-16 policy as much as ideology
Political views of ministers determine planning/market mix
Public spending
Post-election 2015 spending review
Three things working against 16+ education
Demography (more children now, more older people)
Economics (deficit reduction continues to be a priority)
Politics (UK, devolution, EU issues)
No appetite to rebuild the size of government
Spending likely to dip around 2018
Financial health
College finances
Deficits in 2012-13 (48% operating deficits, 10% cash based deficit
Ofsted-related spending + capital projects = short-term deterioration
Staff costs 60-65% of income
Public spending cuts -> 4% fall in EFA+SFA in 2014
Rising costs and falling income
How Colleges need to respond
Understand their position, their environment and their risks
Relationships with SFA, EFA, Council, MP and their bank
Actively manage their finances
Think about opportunities and what comes next
On a more positive note...
Opportunities
Colleges have friends and allies
Education and skills matter both to the recovery & to society
Government will still be spending £70+ billion on education in 2020
Income generation opportunities exist
Quality counts
Productivity improvements from IT only partly realised in education
There are some relatively simple things that can still be done
Known events
Autumn
Scotland referendum, 18 September 2014
Party conferences, 21 September to 8 October 2014
AoC annual conference, 18 - 20 November 2014
Autumn statement, 4 December 2014
Spring
Budget, mid March 2015
Easter, 7 April 2015
General election, 7 May 2015