A pivotal role in raising work skills

University and college funding. THES reporters assess the impact of the chancellor's pre-budget statement

Further education will play a key role in the government's plans to address Britain's skills shortage and tackle unemployment, as outlined this week in chancellor Gordon Brown's pre-budget statement.

Colleges will be expected to take on the first element of Mr Brown's "employment challenge" by providing skills for work.

Figures in the pre-budget report show increases in recent years in skilled labour shortages and in recruitment difficulties in the services and manufacturing sectors.

Mr Brown said the government would shortly publish proposals for Individual Learning Accounts and a University for Industry to help meet the challenge these shortages presented.

An extra Pounds 83 million allocated to further education colleges for 1998-99 will reduce the efficiency gain required of the sector to at most the cost of inflation, according to the government's spending guidance.

Roger Dawe, director general of the Department for Education and Employment's further and higher education and youth training directorate, told the Further Education Funding Council this week that the new money would ensure that cash-strapped colleges face a baseline cut to budgets at or below the inflation rate for 1998-99.

Inflation is at 2.75 per cent and is projected to rise to 3 per cent next year. Even so, it would represent an easing of the financial position for the further education sector, which bore a 7.5 per cent efficiency gain last year and a 5.3 per cent squeeze this year.

Mr Dawe has confirmed that Pounds 60 million of the extra Pounds 83 million being provided for further eduction will be added to the baseline grant. A further Pounds 3 million will be earmarked to improve access, which will raise the access fund to Pounds 9 million. The government expects the funding council to raise the remaining Pounds 20 million from employers. The implication is that the government will discuss with the FEFC how best to achieve this.

The government has said that the funding priority is to expand participation for people aged over 19 and to increase participation for 16- to 19-year-olds.

Although it will mean targeting and attracting new students, the funding council has also been told to set year-on-year performance targets for each college. The aim is to improve student retention and achievement.