Budget Announcements: Skills

The Chancellor announced his Budget on Wednesday, October 27. Several announcements impact the Further Education and Skills sector. Further clarity on these announcements, not least how much of this is new or additional funding, will emerge over the coming weeks, but the primary announcements include:

The Chancellor announced that “total spending on skills will increase over the parliament’s lifetime (the remaining three years or so) by £3.8 billion by 2024-25. This equates to a cash increase of 42% or 26% increase in real terms once inflation and other considerations are factored in. The Chancellor announced the following as part of that overall increase:

16-19 funding rates will be ‘maintained in real terms’

Annual funding for 16-19-year-old learners is currently £4,188 per student. This is set to increase with an additional £1.6 billion being targeted at this area. Details on what this practically means for annual funding rates for the next three years are awaited and should emerge over the next few weeks

Apprenticeship funding ‘increase’

The Government has announced that it is “increasing apprenticeships funding” to £2.7 billion by 2024-25.

Whilst welcome, it is not clear who is funding this increase. Is it Government from taxation or the Levy? And will it fund an increase in the level of funding per apprentice ie increased standards rates, or simply be seen as a vehicle for funding incentives and increased numbers of starts.

After re-banding standards rates (mainly downwards), the fall in apprenticeship starts during the pandemic, and the increase in out of funding learners, it would be helpful if the Government could plough some additional funding into the apprenticeship programme by raising the level of funding per apprentice.

Apprentice Incentive

It was confirmed that the £3,000 cash incentives for each apprentice an employer hires will end on January 31 2022. It is important that members alert employers to this key change and work with them to maximise the take up of the support whilst it is still available.

One further announcement made in the Budget was the proposal to introduce a Return on Investment (RoI) Toolkit, a form of social value auditing, to allow employers to measure the benefits of Apprenticeships on their business. More detail on this will emerge over the next few weeks but it is hoped that it does not become a requirement or an additional administrative burden for employers that risks becoming a barrier to recruitment and participating in the programme.

Capital Investment

The Government has said it will be providing £2.8 billion in capital investment in skills. This will support improvements to the post-16 estate, purchase of new specialist equipment and facilities to support the ongoing rollout of T Levels, the development of new Institutes of Technology and investment in new growth sector facilities.

It is not clear if the funding will be devolved to the Liverpool City Region or whether Independent Learning Providers will be eligible for support via this fund. GMLPF will be lobbying to ensure that the independent sector is given equitable access to this funding after many years where it was ineligible for support.

Additional Funding for Bootcamp Programmes and Level 3 Offer

The Government announced “a total investment of £554 million by 2024-25 to substantially increase retraining and upskilling opportunities for adults”.

This will form part of the National Skills Fund (details on how this will be rolled out beyond July 22 are still not clear) and will support more adults to access Level 3 courses (higher value skills programmes in growth or high employer demand areas such as engineering and digital skills), boost the volume of Bootcamp programmes (increased participation) and support other training that meets the needs of employers.

UK Shared Prosperity Fund – new Multiply project

The Government wishes to raise the numeracy levels of approximately half a million adults through a £560 m investment in numeracy skills. This funding will form part of, or be ringfenced within, the successor programme to EU funding, the UK Shared Prosperity Fund which will be launched in April 2022.