HC Deb 23 June 2004 vol 422 cc391-8WH

11 am

Mr. Richard Spring (West Suffolk) (Con)

I am glad to have the opportunity to raise with the Minister a number of concerns that I share with West Suffolk college, my local college of further education, which is primarily based in the constituency of my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley). I am worried about the future of its provision for young people and adults in my constituency.

My constituency contains more manual than non-manual workers and has a relatively small proportion of managerial and technical workers. Some 20 per cent. of the work force is classified as skilled or partly skilled manual workers. The prosperity of the constituency will rest to a substantial degree on raining the aspirations and achievements of young people and adults in the area if, for example, we are to heed the recent warning that the CBI made to the Education and Skills Committee that there will be no unskilled jobs in the next five to seven years.

Within that context, West Suffolk college is the largest and most successful FE college in Suffolk, with more than 21,000 FE students, ranging from 300—400 next year—14 to 16-year-olds attending the college from local schools, to the 7,000 adults it learning centres in each of the market towns in west Suffolk, and still more on other courses in village schools and community centres throughout the area.

The college serves a substantial catchment area of more than 1,400 square miles and is one of the eight most rural colleges in England. with the nearest alternative provider 30 miles away. Quality is high: it is rated by Ofsted as being responsive to widening participation and increasing recruitment, and 71 per cent. of the curriculum was graded good or outstanding in the last adult learning inspectorate Ofsted report. Teaching and learning were graded as good or better in 72 per cent. of the 223 lessons observed. The college is the largest learning provider workplace in the county, with more than 800 learners, and is widely regarded as an exemplar of good practice of work among local employers, providing training for more than 800 of the county's employers. Income from companies represents 4 per cent. of the total budget.

The college is important and essential to the well-being of my constituency, and I am anxious to support it. It offers new options to the young teenager, hope to young people who, for one reason or another, did not enjoy school, support to adults and help to many local employers. Organisations such as the British Chambers of Commerce and the Countryside Alliance have written to me to support the essential elements of what I propose to raise in the debate.

The college has expressed to me some fears about threats to its services that it believe s come from several different directions. I should like to highlight three of those, which apply generally to other parts of the country, in particular to predominantly rural areas. The first concern relates to the 10 per cent. gap that Ministers have accepted exists between schools and college funding. In a debate on the subject, the Under-Secretary of State for Education and Skills, the hon. Member for Enfield, Southgate (Mr. Twigg), summed up by saying: if we compare like with like—if we compare the funding rate for an A-level in a school with that in an FE or sixth form college—we see that for 2002–03, there was about a 10 per cent. gap—£734 for schools, and £663 for FE colleges."—[Official Report, 18 May 2004; Vol. 421, c. 223WH]

Since then, the Government have claimed that in 2003–04 funding for all colleges has increased by 4.5 per cent. and by 3 per cent. for schools. That comparison excludes the funding to compensate the education sector for the extra costs of teacher pensions imposed by Treasury policy.

A different approach was taken for each sector. School sixth forms were given a 2.8 per cent. addition to their funding and colleges had an additional 2 per cent. It ignored the £57 million held back from colleges in 2003–04 when the teachers pay initiative funds were consolidated into core allocations. The headline comparison quoted by the Minister does not take into account the additional funding that schools receive in earmarked grants or in the form of services provided by LEAs, such as transport. The 2004 budget indicated that funding per pupil in schools will continue to rise up to 2008. If that is reflected in yet more funding for the minority—relatively wealthy 16 to 19-year-olds in schools—the gap with college funding will rise above 10 per cent.

Overall, the effect of these factors is likely to ensure that without a determined effort by Government, at best the funding gap will decrease only marginally and at worst it will widen further in the coming years. Will the Minister comment on the size of the gap and say what it means in terms of quality of provision for the two thirds of young people aged 16 to 19 who are educated in colleges? When will the gap be closed, because without such a date, a promise to end the gap is somewhat meaningless?

The submission by the Association of Colleges to the current spending review estimated that equalising funding for all young people would cost £100 million in 2006–07, rising to £202 million by 2007–08. For West Suffolk college, the effect of such an uplift would be an extra £1 million for that age group, which the college would spend on its buildings—the fabric and associated capital projects—extra teaching and support staff and improving the pay of existing staff. The Government's current schools building budget stands at £5 billion, while that of colleges remains at £400 million, added to which, unlike schools, colleges are expected to borrow some 70 per cent. of their funds on the open market, again incurring extra costs. Will the Minister clarify whether colleges serving 14 to 19-year-olds can access "Building Schools for the Future" funds? What hope can he offer to the majority of young people wanting to go on to college that they will be able to continue their studies in well equipped modern buildings like their school counterparts?

The second threat to West Suffolk services concerns adult provision. The Government announced that they have found £130 million for the coming year 2004–05 to avert what the Association of Colleges had warned could be a far greater number of cuts to adult courses than the 70,000 that it predicted in November 2003. The root of the problem is the fact that colleges throughout the country have been successful in recruiting large numbers of 16 to 19-year-olds, leaving insufficient money in the system to fund the promised level of adult courses. There were threats to basic courses such as literacy and numeracy when these were not included on the Learning and Skills Council's approved list and to many level 3 and level 4 courses, from plumbing to access to higher education.

The LSC chose that pattern of cuts to meet the Government's demand that funding be focused on a few basic skills qualifications and level 2, reasoning that employers would pay for higher level courses, a point to which I shall return. The Minister will recall that I mentioned that West Suffolk college has established learning centres in each of the market towns in the area and that it delivers courses in village schools and community centres. These centres especially meet the needs of local people, who would find it difficult to travel up to 30 miles to the main campus in Bury St. Edmunds. Most of the people who will be affected live in my constituency. The impending need to change provision to the Government's national priorities would have required rationalisation in these centres, impacting on learners such as single parents and carers, and threatening the longer term viability of those facilities. While it is hoped that extra funds will mean a reprieve this year, will the Minister comment on the prospects for such provision, which is especially important for rural communities, given the forthcoming announcement of the comprehensive spending review settlement for 2005–08?

Thirdly, the Government are pinning some of their hopes on the prospect of raising more fee income from individuals and employers. Government policy for the past 10 years has pushed colleges to widen participation and to recruit students to free courses. At least 60 per cent. of students currently in the college sector pay no fee at all, either because they are under 19 or because they get a concession. The scope of concessions has widened in recent years, most recently to cover those taking level 2 qualifications for the first time. Many fee-paying students have low incomes or take short courses. Nationally, fewer than one in six pay more than £100. Therefore, the college sector has a small base on which to build more fee income.

In addition, work-based learning in rural areas almost always involves small businesses and microbusinesses. That was clearly pointed out in submissions from the British Chambers of Commerce and the Countryside Alliance. The additional costs of monitoring and the difficulty that businesses have in supporting apprenticeship schemes are not recognised in funding or organisational terms. What plans does the Minister have specifically to help rural microbusinesses become more engaged in training?

Increasing fee income is a reasonable longer term goal, but it is not a solution to current funding needs. Colleges may be able to charge higher fees for some of their courses, but in return they will face extra demands from employers and adult learners. They need time and investment in order to prepare for that change. Will the Minster explain what research he is relying on to support that policy development? Will he comment on colleges' belief that many fees to individuals and employers will have to double or even treble?

Of course, another way to balance the books is to make efficiency gains—anyone in receipt of taxpayers' money must be mindful of that—but I speak on behalf of all rural colleges about the difficult relationship between rural transport, outreach and efficiency improvements. Colleges in rural areas face challenges that are not faced by their urban counterparts. They recruit students from a wide geographical area and have to work hard to reach remote populations—taking learning to the learner. Many run their own bus services to bring students to the college, filling the gaps left by inadequate local authority transport. The Government provide some money through their learner support funds but it is often not enough. Colleges fill the gap from their own budgets, diverting money that would otherwise be available for teaching and learning. Will the Minister comment on the need to ensure that broadband is made available to even the most remote areas at an affordable price to the consumer—I know that the service has expanded considerably—as in rural areas online learning can be a particularly useful medium for some learners and a complement to formal learning for others?

Getting people to courses is only the first challenge that rural colleges face in managing their budgets. The need to provide transport in the morning and late afternoon limits the amount of time that colleges have available for teaching and learning. Typically, classes run between 9 am and 4 pm. That places great pressure on facilities during the day but leaves them underutilised in the evenings. Rural colleges are inventive at making maximum use of their buildings, but the constraints on where they operate make it difficult for them to match the space utilisation levels expected in national standards. That makes it harder for them to meet the demands of the Learning and Skills Council's capital committee and to get capital grants from the Government. All colleges are under pressure to improve their efficiency—that is only right and proper. However, care is needed to make realistic demands on colleges and to take account of their circumstances.

City colleges can make their money go further by adding an extra student to each class and improving average class sizes. Their costs do not increase, but their efficiency does. Rural colleges find that much more difficult because they cater to dispersed populations. Providing services in small communities is a vital service to society and the economy, but there is little scope for flexibility. Rural colleges cannot simply chop and change their courses to maximise numbers in the way that urban colleges can. The Learning and Skills Council has a funding formula that takes account of most eventualities but not those relating to class sizes. Rural colleges are therefore penalised by default and must make do with less than their urban counterparts.

With the extraordinary growth in access to technology, the learning centres in my constituency have been a wonderful innovation and a true asset to the communities that they serve. They have enabled people who, for one reason or another, have been out of employment or are perhaps in early retirement to gain access to the internet, to master technology and to open up new vistas of self confidence. Having witnessed the growth and value of such learning centres in smaller market towns, I do not want to see the core funding pressures to which I have referred become so strong that they threaten their provision. One thing that we need to do—it is already happening, but we must do more—is close the generational gap in understanding the uses of technology, particularly for those who are middle aged and older.

I hope that the Minister will not respond with the standard ministerial assertion that funding for colleges will have increased by 19 per cent. in real terms in the period 2003–06. As he will be aware, once growth and unavoidable costs are taken into account, the increases have been inflation-only for this year and 2.5 per cent. at best for 2004–05 and 2005–06—hence the national funding crisis on which so many colleges lobbied the House on 18 May.

I hope that, with me, he will acknowledge not only the role that FE colleges play but the particular stresses in rural areas. Having brought to his attention a matter of considerable concern in my constituency, I hope that he will apply his mind to the question of rural provision in the same way as other Departments have done in many areas of Government spending policy.

11.18 am
The Minister for Lifelong Learning, Further and Higher Education (Alan Johnson)

I congratulate the hon. Member for West Suffolk (Mr. Spring) on securing this debate. In relation to his final comments, I am pleased to have this opportunity to recognise the enormous value of further education colleges.

I have a great deal of ground to cover, so let me record first that I agree entirely with the hon. Gentleman about West Suffolk college, just outside his constituency. He is right to be proud of it: it is a responsive, good, successful college, with a strong relationship to its community and local employers.

On the general point of further education, the FE sector has a strong and positive record of achievement and quality, which I think it is fair to say has not always been recognised by Governments of all persuasions. We must build on that, because the FE sector is key to meeting our twin aims of social inclusion and economic success. A strong, responsive and high-quality learning and skills sector is fundamental to our education strategy, a sector where teaching and learning are enriching and inspiring and which is demand driven rather than supply led.

The 2002 spending review was unprecedented for further education. I shall not give the standard ministerial response that it was a 19 per cent. increase, but will put it this way: it was an increase of more than £1 billion for the FE sector for the three years up to 2005–06. That investment was essential to help to build the capability and capacity to create a sector able to respond to the needs of the 21st century. Although there will be arguments about specific funding issues, the entire sector appreciates that this was the best financial settlement in the history of FE in this country.

The hon. Gentleman spoke about the funding gap between schools and colleges, and the 2002 spending review allowed us to start addressing that. In 2003–04, the Learning and Skills Council increased core funding rates per qualification by 4.5 per cent. for colleges, whereas the schools increase was 3 per cent. on a comparable basis, and our expenditure plans to 2005–06 should see that trend continue. Given the different ways in which schools and colleges are funded and the much broader remit of colleges, comparisons of the funding of schools and colleges of FE are far from straightforward. However, the hon. Gentleman is right that the 4.5 per cent. increase applied to colleges does not include funding compensation for changes to the teachers' pension scheme. Neither does it include funds linked to the consolidation of previously targeted funds for the teachers' pay initiative and staff training. The additional funding provided for the teachers' pension scheme is linked to the increased costs that each part of the education sector will incur from these changes. That reflects the differing make-up of the work forces in schools and colleges.

As for funding for capital investment, I can clarify that colleges cannot access the funding from the "Building Schools for the Future" initiative. However, the Government have already set out plans for huge increases in capital funding allocated to the Learning and Skills Council for investment in the post-16 learning and skills sector. Capital funds allocated to the LSC will increase to more than £400 million in 2005–06, an increase of 60 per cent. in real terms when compared with the year before last. That level of support means that for the first time there is a long-term approach to building and redeveloping the FE infrastructure. When comparing the total capital budgets of schools and FE colleges, it is important to remember that there are more than 21,000 schools compared with about 400 colleges. The sum of money spent on schools is bound to be vastly different.

Turning to adult provision, I am acutely aware that public investment and funding pressures have hit the sector in a variety of ways. We have a problem with colleges and providers succeeding in educating more people and achieving better results than they or we had anticipated. Those are problems of success, and have cost implications. As the hon. Gentleman mentioned, we provided an additional £130 million over the 2003–04 to 2005–06 period, and the LSC is working with colleges to determine the best allocation of those resources. The sector must face the need to make hard choices and decide priorities even with the significant public funds that are available.

The skills strategy that we published a year ago set out a vision for transforming our national investment in skills. The Government will continue to make a major investment in adult learning, but Government should not and must not be the only source of such funding. We have examined the situation in other countries, and the contribution that employers and learners currently make towards the cost of learning in the LSC-funded sector is not as high as in other countries. Therefore, we flagged up in the skills strategy—signed by four different Departments and worked out with the CBI, the TUC and the education sector—that there must be a re-examination of the assumptions built into the LSC funding system.

This summer, the LSC will continue its consultations on how we can implement the proposals. Given the need for the LSC to consult and to consider the outcome of consultations, and the fact that decisions have not yet been taken on spending review 2004 allocations, it would not be appropriate for me to speculate on what might happen to specific provision. However, I can say that within the skills strategy we made it extremely clear that adult and community learning programmes, which are perhaps more important in rural areas than urban areas, should be seen as an integral part of the wider learning opportunities for the area. Employers, particularly small employers, often need support and advice to help them to develop their businesses. The Department is working with the Small Business Service to improve the accessibility and quality of support delivered through the Business Link network. Employer training pilots provide a good example of how colleges can take training to the employer, and reach out to employers who might not otherwise have engaged in training. West Suffolk college needs no lessons in that; indeed, it was, in many ways, ahead of the field. It has dedicated teams working with 702 companies throughout the region to provide tailor-made courses and employee training at the workplace. That very much fits in with the employer training pilots strategy.

Rural areas have their own special characteristics and challenges. During the employer training pilots we have been careful to continue to include areas where we can test the approach in a rural context. The national rates advisory group, which advises the LSC, is working to consider the issues of rurality and sparsity in the sector and the implications for funding. In research commissioned by the NRAG in 2002, comparisons were made for all providers over a range of financial and curriculum measures. There was no evidence that the relative costs of delivering provision were greater in rural or sparsely populated areas. The NRAG therefore recommended that there should be no change to funding for providers in those areas in 2003–04. However, to reflect the difference in transport costs in rural and isolated areas, the LSC has incorporated a sparsity factor into the allocation process of learner support funds in 2003–04. There has been a recognition of those issues for colleges such as West Suffolk, and other rural colleges.

On the important subject of broadband availability, I am pleased to say that all FE colleges now have a broadband connection to the academic network—charmingly called JANET—linking them to one another, higher education institutions and the internet. Work is now in progress to provide adult, community learning providers and specialist colleges with an equivalent infrastructure.

I shall make another point about the learning centres in the hon. Gentleman's constituency: such centres are crucial if we are to tackle the inherent problem of so many adults out in the work force or sometimes unemployed, not even having the literacy that we would expect of an 11-years-old. A large proportion of that funding comes separately through the skills for life programme, and that different funding stream has been very successful in achieving our targets of turning around the situation with adults. Many of them have literacy and numeracy problems, but also need training with the third skill for life, which is computer training. I am sure that the hon. Gentleman can be reassured by that.

Finally, returning to funding, I am pleased that the Chancellor was able to announce in broad terms the spending review settlement for the Department for Education and Skills in his Budget. It is a good settlement, given the overall financial position. We are not yet in a position to say what it means for FE, as we are still working though the detail. However, I have listened to the points raised by the hon. Gentleman. He and other hon. Members are right to be concerned and enthusiastic about support for the FE sector, and I shall reflect on those points as we take key decisions. We hope to be able to publish the outcome of our deliberations in July.

11.29 am

Sitting suspended until Two o'clock.

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