EPI urges government to focus on financial concerns of further education sector ahead of Autumn Budget

The Education Policy Institute (EPI) has released new analysis today (15 October) spotlighting the growing financial concerns within the further education (FE) sector, which it said is often overshadowed by the ongoing debates about funding for higher education (HE).

As the sector prepares for Labour’s first budget, EPI’s research calls on the Treasury to give equal attention to both FE and HE funding. 

While the plight of universities dominates discussions, the EPI has emphasised that the financial stability of FE institutions is equally troubling. 

In its analysis, EPI found that a greater percentage of FE providers are operating at a deficit compared to HE providers, despite both sectors facing significant challenges.

EPI said that not only are more FE providers in deficit, but the size of those deficits are larger relative to income, on average, in the FE sector than in the HE sector. 

While both sectors have improved their ability to meet short-term debt obligations, FE institutions exhibit weaker liquidity, with a higher proportion of FE providers reporting a low ratio of assets to liabilities, according to EPI.

Because of these findings, EPI is urging the government to ensure that the forthcoming budget addresses the needs of the FE sector alongside HE, particularly in bolstering funding for Level 4 and 5 qualifications and apprenticeships for young learners.

These initiatives, which EPI said are crucial for social mobility and meeting national skills demands, are not only more affordable but also deliver positive employment outcomes, often even comparable to traditional university degrees.

EPI also stated that further education must be treated as a fundamental part of the UK’s post-18 education system. It said that both the FE and HE sectors must be financially sustainable for the nation to achieve a cohesive and effective post-18 system that can improve outcomes for all students.

The EPI’s analysis compares financial health across both sectors from 2017-2018 to 2022-2023.

A higher proportion of FE providers are running deficits compared to their HE counterparts, and while a slight improvement was seen in 2022-2023 due to additional funding from the 2021 spending review, EPI said that the sector’s financial outlook remains bleak without further support.