Financial pressures on colleges see cuts in mental health and careers support for students, NAO warns

Financial constraints have reduced mental health and careers support for college students and narrowed the curriculum, the spending watchdog has warned.

A National Audit Office (NAO) report says core funding for the college sector has fallen and its financial health “remains fragile” – with more colleges expected to face financial difficulties following the Covid-19 pandemic.

The watchdog found that, at February 2020, the Government was intervening in nearly half (48%) of colleges – 115 in total – with the aim of preventing or addressing financial difficulty.

The NAO is calling on the Government to assess the extent to which colleges have dealt with financial pressures by narrowing their provision and reducing support services – as the watchdog says cuts are “likely to have detrimental effects on students and skills development”.

Colleges have dropped modern languages courses and some science, technology, engineering and maths subjects, while others have significantly decreased employability activities, the NAO report says.

It notes that the Government has spent significant amounts of money aimed at helping individual colleges in financial difficulty.

Between April 2019 and May 2020, the Education and Skills Funding Agency (ESFA) spent £41.8 million dealing with colleges in, or close to, administration.

It spent the majority of this sum (£26.6 million) on two insolvency cases – Hadlow College and West Kent and Ashford College – during the same period.

But overall funding per student aged 16 to 19 fell by 7% in real terms between 2013-14 and 2018-19, the report highlights.

The Government has put in place measures to support colleges following Covid-19, but the impact is “likely to be significant” and the ESFA expects more colleges will face financial difficulties, the NAO says.

Gareth Davies, the head of the NAO, said: “Colleges play a crucial role in many people’s lives and are vital in the development of the skills and knowledge the country needs.

“While there has been some progress in improving financial security in the sector, this has cost a lot of money, and systemic long-term weaknesses remain unresolved.”

Meg Hillier, chair of the Public Accounts Committee (PAC) said: “Funding has been cut while costs keep rising – and too many students are getting a hollowed out, pared back education.

“The Government has propped up some colleges at great expense, but this has only papered over the cracks in the system.

“Covid-19 is hammering the whole sector right now. It needs simpler, clearer funding arrangements to put it in pole position to support the recovery.”

Ofsted inspection ratings suggest colleges are generally maintaining educational quality, but financial constraints are affecting the breadth of the curriculum and levels of student support, the NAO says.

David Hughes, chief executive of the Association of Colleges (AoC), said: “The cuts have hit colleges hard but even more importantly they have resulted in the most disadvantaged students in our society bearing the brunt of austerity.

“Drops in pastoral support, enrichment opportunities and teaching hours have meant colleges have had to do their best with ever-shrinking resources.

“The improvements in college finances in the last few years were positive steps but the pandemic, lockdown and the aftershocks will mean colleges find themselves in a much more precarious situation now and for the next few years.”

A Department for Education (DfE) spokeswoman said: “As this report notes, standards in the further education sector are high – but we recognise the issues facing colleges and other providers.

“We’ve already acted to stabilise the sector, and to support colleges by guaranteeing grant payments, introducing greater flexibilities so students can continue studying, and provided extra investment through our 16-19 Bursary Fund.”

She added: “Colleges will also benefit from a £400 million boost in 2020/21 – the biggest injection of new money in a single year since 2010.

“Our forthcoming White Paper will strengthen our colleges further, and ensure they continue to meet the needs of employers and their local communities.”

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