Kwasi Kwarteng must support colleges with soaring energy bills

College leaders have called on new Chancellor Kwasi Kwarteng for urgent support to tackle surging energy bills.

A letter, signed by 189 college leaders, and the Association of Colleges chief executive David Hughes, has been sent to the new occupant of 11 Downing Street urging him to use his forthcoming fiscal statement to boost college funding rates, tackle the staffing crisis and exempt colleges from VAT.

Colleges are central to the Government’s skills agenda, are crucial to the delivery of major reforms like T Levels, higher technical qualifications and apprenticeships and each year support 1.7 million students to boost their skills.

The new Chancellor and his officials are being urged to increase funding rates for 16 to 19-year-olds, which were last reviewed in 2021 before inflation spiked, and adult funding rates, which have not increased since 2010.

Colleges are struggling to recruit and retain staff due to teachers being able to earn more in industry, or schools where average pay is £9,000 a year higher. The Treasury is being asked to introduce a new workforce fund to help colleges recruit and retain staff in vital areas like construction, green energy and health.

In recent years, energy has cost the FE sector around £130 million annually. Unlike consumers, educational establishments including colleges are not protected by an energy price cap, meaning some colleges are now facing bills four-times higher than they were used to paying. If replicated nationally this could mean colleges are spending £520 million a year on energy – up from almost 2% of college income to around 8% – an increase nearly £400 million annually.

Colleges in England operate from 4,500 buildings across 800 sites. Although there is five-year Department for Education capital investment plan for further education, the last decade has seen a lack of investment leaving some colleges with old and unfit buildings making some particularly vulnerable to rising energy costs.

The letter – which was signed by eight out of 10 college leaders – also calls for colleges to be exempted from VAT, like schools currently are, if a long-awaited review by the Office for National Statistics later this month redesignates colleges as being in the public sector.

David Hughes, Association of Colleges Chief Executive said:

“As Kwasi Kwarteng is handed the keys to Number 11, he faces a long list of demands from across society and industry to help alleviate inflationary pressures.

“Outside of the cost-of-living crisis, few challenges will be as important as tackling the skills shortages which are holding back businesses and the economy. Supporting colleges must be at the top of his priority list. Cutting VAT on skills and paying college staff better will deliver the economic growth the new PM has promised.”