From education to employment

A Letter to Sunak and Truss: Cut VAT for Colleges!

David Hughes, Chief Executive, Association of Colleges

Dear Mr Sunak and Ms Truss,

I am writing to encourage you to make investment in skills a central plank of your new government, should you become Prime Minister.

Further Education colleges are rooted in local communities, educate over 1.7 million students and are vital in driving social mobility and business success. Colleges help people of all ages and backgrounds to make the most of their talents and ambitions and they support businesses to recruit and develop the people they need to be successful, grow and innovate.

Recent years have seen an increased focus on colleges and post-16 skills, with several policy initiatives making an important agenda for reform. Colleges are working hard to embrace those reforms but have suffered enormous funding cuts over the last decade.

Investment is starting to rise again, but the funding is simply inadequate to meet the ambitions of the government.

One simple consequence of funding pressures is that college pay lags behind industry, particularly in skills shortage areas like construction, engineering, digital and health. The Financial Times recently reported that 85% of colleges surveyed face staff shortages in construction and 40% of colleges being forced to cancel courses due to a lack of staff.

One immediate decision that would make a significant difference is a VAT exemption for colleges to match that for schools and academies, particularly if colleges are reclassified as part of the public sector by the ONS. This would free up funds for colleges to increase pay to attract skilled staff, grow their offer in skills shortage areas and to cope with the rise in energy costs. Further investment will still be needed over the coming years, but this would be a simple, fair and immediate boost for colleges to help people and businesses.

I look forward to working with you and your teams in the next few months to ensure colleges can best support people to succeed, with an economy based on skills, growth and productivity.

Yours sincerely, David Hughes, AoC Chief Executive

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