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Autumn Statement

Autumn Statement 2015 comment: Further education and higher education

Cuts to education less harsh than expected but funding sustainability issues still need to be addressed

Richard Shaw, Director, Grant Thornton UK LLP

Higher education

"The 17% cut announced by the Chancellor to the Department of Business, Innovation and Skills was less than expected. The preannounced switch of maintenance grants to loans contributed to a significant proportion of the cuts. The introduction of loans to all post graduate students up to the age of 60 from 2016-17 came as a very welcome announcement as the falling number of UK post graduate students remains a concern for skills transfer to the UK economy. The new maintenance grant allowance for part time students in 2018-19 will help support their cost of living whilst studying and may tackle the sharp decline in part-time students numbers that we have faced since 2008.

"The reforms for health students in replacing grants with loans from 2016-17 may free up an additional 10,000 university places for nursing, midwifery and allied health subjects, but could also have the undesired effect of deterring those students who are unwilling to take on the additional debt. Internationally, our global universities can continue to increase income from overseas student, but the visa regime needs to support rather than hinder the UK's global competitive advantage in this area.

"Support was pledged for a new University in Hereford and for the Battersea campus of the Royal College of Art, however other higher education institutions have important capital plans which would also benefit from similar support."

Further education (FE)

"It will be interesting to see whether the move to allow sixth form colleges to become academies or part of multi-academy trusts in order for them to recover their non-business VAT costs will be sufficient enough to make those sixth form colleges considering potential mergers review their position in order to retain their independence. The adult FE budget will be protected in cash terms, not real terms, for the next four years but this may not be sufficient to sustain those colleges in financial difficulty. We know that FE colleges are facing significant financial pressures and many are looking at budget deficits. The lower than expected cuts to budgets will minimise additional pressures but clearly there is a continued need for radical reform and reshaping of the sector, building on regional reviews currently underway.

"The sector will also need to consider how it maximises the opportunity of additional apprenticeship funding from 2017; the increased funding from the apprenticeship levy will be given to business to spend on providers of choice rather than funnelled direct to colleges; this will incentivise greater competitive offers and sharpen a focus on meeting employer needs."