ColegauCymru has highlighted the increasing financial pressures facing further education colleges in the recent Senedd Finance Committee consultation on the Welsh Government Draft Budget 2023 - 2024.
As we continue to navigate uncertain economic times, we reiterated that the breadth and depth of the financial difficulties ahead should be recognised. Colleges are facing a range of different challenges to their overall operating budgets, which include rising energy costs, the tapering out of EU funding, lack of clarity over Shared Prosperity Fund allocations, and changes to Additional Learning Needs budgeting. This perfect storm of economic uncertainty facing colleges is unprecedented. It is critical that the FE sector has sufficient funding to be able to navigate the recession, and the course to economic recovery.
A key theme in our response was cost-of-living pressures. The graph illustrates the anticipated increase in energy prices FE institutions in Wales will have to absorb in the coming years. Between 2021/22 and 2022/23, the cost of electricity and gas is expected to rise by up to 56% and 51% respectively. By 2023/24, as a result of the ongoing uncertainty, it is anticipated that there will be a further dramatic rise. An increase of 164% in energy prices is expected from 21/22 to 23/24.
Further funding arrangements for FE needs to continue to meet the very real challenges that exist, not only as a result of Covid-19 but also the pressures of rising inflation. Between 2022-23 to 2023-34, the total Welsh Government budget will be £4bn less in real terms than when it was set. The effect next year will mean a real term loss of £1.5 billion. Whilst we recognise the challening circumstances facing the Welsh Government, a flexible approach to supporting the FE sector in its future budget is now essential.
Not only do these rising costs have a significant impact on FE institutions, they also increase pressure on both staff and learners. ColegauCymru noted that colleges and Work Based Learning providers’ need to meet the rising wages of the professionally registered workforce is directly affecting staff retention, particularly those who are returning to industry where salaries are higher. Our consultation response also reflected the need for the budget to consider the ongoing dialogue about pay settlements in FE, recognising the long-established principle of pay parity between teachers in schools and the FE Post-16 sector in Wales. We further highlighted the importance in the need for stability in green funding to ensure colleges are supported as they prepare to meet current and future demands for green skills development and future proofing the workforce - part of the Net Zero Skills Action Plan.
While funding increases over recent years have been welcome, the impact of inflation should be considered. It is essential that the 2023-24 Welsh Government budget for FE is sufficient and flexible, to be able to deal with the challenges ahead.
Welsh Government Draft Budget 2023-24
Jamie Adair, Policy and Public Affairs Assistant