Some relief for education and skills in the Spending Review

George Osborne’s Spending Review and Autumn Statement on 25 November included a number of education, skills and related employment announcements covering 2016-17 to 2019-20 inclusive. Here are the key points.


The Dedicated Schools Grant (DSG), Universal Infant Free School Meals and the Pupil Premium are all protected in real terms.

Consultations will begin early in 2016 on a more transparent National Funding Formula for schools, to be phased in from 2017. The aim is to end the system where a child from disadvantaged background in one school attracts half as much funding as a child in identical circumstances in another school, simply because of where they live.

The Education Services Grant will be cut by £600m. ESG is a discretionary fund used for services such as school improvement, education welfare and central support services (for which some LAs charge).

George Osborne wants local authority involvement in running schools to become “a thing of the past”, and for all schools to become academies. A consultation on reducing the local authority role and statutory duties will be carried out in 2016.

Further Education

6th form colleges are to be allowed to convert to academy status, which will enable them to avoid paying VAT – a major funding issue. They will be able to joint Multi-Academy Trusts, enabling more collaboration with schools.

The 16-19 funding rate has been protected in cash terms.

24+ further education loans will be extended – as predicted - to include those aged 19-23 studying for a Level 3 or 4 qualification, and for those aged 19 and over studying for a Level 5 or 6 qualification.


The apprenticeship levy will be introduced in April 2017 at a rate of 0.5% of employers’ paybills; it will be paid by less than 2% of employers, as a £15,000 offsetting allowance will mean that it will only effectively apply to a paybill in excess of £3m. Employers who don’t pay the levy will still be able to access government support for apprenticeships. The levy is expected to raise £3bn across the UK by 2019-20.

The government will establish a new independent employer-led body – the Institute for Apprenticeships - to set apprenticeship standards and ensure quality; it will also advise on the level of levy funding each apprenticeship standard should receive.


Funding for the core adult skills participation budgets (£1.5bn) will be protected in cash terms, however there will be £360m of adults skills “efficiencies and savings” by 2019-20.

In order to prioritise funding for participation, savings will be made from the supporting budgets, such as the UK Commission for Employment & Skills (UKCES). A Treasury spokesperson told FE Week she believed the UKCES would cease from 2016-17, although a BIS spokesperson was unable to confirm that.

Higher Education

The government will consult on a new system of maintenance support for higher education students wishing to study part time by 2018-19.

It will lift the age cap for new postgraduate loans, so they are available to all those under 60, and reduce the repayment rate from 9% to 6% of income over £21,000.

The restriction on accessing tuition fee loans for a second degree in science, technology, engineering and maths (STEM) will be removed from 2017/18, allowing more people to retrain in the subjects.


DWP will introduce a new Work & Health Programme to replace the Work Programme and Work Choice and provide specialist support for the long-term unemployed and claimants with health conditions and disabilities.


£25m of banking fines over the next three years will support military charities and other good causes, including:

  • SkillForce £1.6m – to engage the hard to reach within the school system using ex-Service mentors
  • Jon Egging Trust £1.5m – to improve the life chances of vulnerable young people in deprived areas using the skills of serving and veteran military personnel.

The National Citizen Service will be expanded to fund up to 300,000 places annually by 2019-20.

The government will expand support for Social Impact Bonds, investing £105m over the Parliament to help deal with issues including homelessness, poor mental health and youth unemployment.