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In what appears to be a pre-budget pitch to the chancellor, a new report states that there is “nothing to suggest that any financial challenges that our providers may be experiencing are due to poor planning, budgeting and/or monitoring of their provision”.

The study, conducted by acl consulting, looked at the costs and cost drivers in the FE sector. It found that at a time when the base unit of funding has been fixed for a number of years, increasingly providers have had to “go to considerable lengths in order to make the income they receive cover the costs they incur”.

Courses and apprenticeships continue to be “reduced” and “lost”, group sizing and workload is increasing, job cuts have had to be imposed and pay rises are made “infrequently”.

These factors make recruitment and retention of all staff, academic and non-academic, “more difficult” as more “attractive” employment opportunities exist outside the sector.

And when it comes to financial viability, “our project suggests that general FE colleges and sixth form colleges are currently facing significant cost pressures which, without an immediate (and significant) increase in income, many providers will have difficulties in meeting: this will have significant impacts on the sector”.

“Overall, our work suggests that, if the FE sector to survive ‘as is’, consideration needs to be given to relaxing the financial pressure it is currently operating under,” the report adds.

It goes on to list more “extremely serious” financial challenges facing colleges, including the impact of unfunded increases in pensions and “other pay-related costs over which providers have no control”.

The resourcing of English and Maths provision for those without a GCSE at grade 4 or above also poses “considerable – and increasing – challenges”.

The availability of professional support for mental health-related issues is a “particular cause for concern”, as is the capacity to carry extra costs for high needs learners.

And there are no “sufficient funds” for necessary capital expenditure, the report notes: IT is now “sufficiently obsolete for efficient delivery and the credibility of the curriculum to be increasingly at risk”, and delivery of the curriculum offer is “being compromised by the lack of necessary equipment”.

For general FE colleges in particular, transport costs are having an impact on “learners’ ability to get to college and therefore on recruitment”.

The report said its quantitative data presents a picture of providers who are “providing good quality FE whilst largely balancing their budgets” and the qualitative findings “show a sector under considerable pressure and with serious concerns about its future”.

The cost pressures facing FE providers “will go beyond further reductions in relatively ‘easier’-to-cut costs and further rounds of the incremental changes already seen (group sizes further increased; options within programme areas further reduced; self-directed learning used more widely etc.)”.

“The risk is that whole curriculum areas will be lost and that colleges – including some of the good/excellent ones we have seen – will disappear,” the report states. It also warns that the position of sixth form colleges appears to be “particularly acute”.

On a relatively more cheerful note, the report said that based on the more limited information available, “we have fewer concerns for independent learning providers.”

In the Conservative’s 2019 manifesto, the party promised £1.8 billion for new college capital projects and a £600 million a year “new National Skills Fund”.

The next budget is scheduled to take place on 11 March.