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Education Funding for 18-year-olds

Volume 574: debated on Tuesday 28 January 2014

Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Lancaster.)

It is a pleasure to serve under your chairmanship this morning, Mr Williams. I am very glad to have secured this debate on a subject that affects not only the excellent Trafford college, which serves my constituency, but further education and sixth-form colleges right across the country, as is demonstrated by the presence of so many colleagues.

On 10 December last year, without any prior notice or consultation and before any impact assessment had been published, the national director for young people at the Education Funding Agency announced a 17.5% cut in funding per full-time student aged 18 at the start of the academic year 2014-15, as part of a strategy to achieve the savings required in the 2015-16 spending review period. The cut, which it is estimated will affect 100,000 students and save £150 million, means that the funding per student would be reduced from £4,000 to £3,300, at an average cost to FE colleges of £600,000 per college, although some will suffer much greater cuts—in some cases, in excess of £1 million. Sixth-form colleges will also be hit, many of which have already suffered substantial funding cuts; some face the loss of as much as a third of their funding over the lifetime of this Parliament.

I hope that my hon. Friend realises that the student opportunity fund will also be cut. That will badly affect Coventry university, which will receive a cut of £790,000. The figure for Warwickshire college is £361,000, and for North Warwickshire and Hinckley college it is £162,000. Effectively, Coventry and those Warwickshire colleges will have a cut—so much for helping young people to find jobs and acquire skills. What does she think about that?

My hon. Friend is right to draw attention to the wider context of the cuts faced, both by the FE sector and by this particular age group.

I congratulate the hon. Lady on securing the debate. While we are focusing on the impacts on sixth-form colleges, does she agree that this is not a double but a triple whammy, because sixth-form colleges are facing the VAT problem, in that they have to pay VAT whereas other schools do not? In a sense, it is a really unlevel playing field. Colleges such as Brighton, Hove and Sussex sixth-form college and Varndean college in my constituency simply cannot understand why there are double standards, particularly when we add in the fact that academies are being set up and getting funded for sixth-form, and sixth-form colleges are not.

The hon. Lady is right. The issue of the uneven playing field in relation to VAT charging was raised in this Chamber shortly before Christmas by my hon. Friend the Member for Wigan (Lisa Nandy), and many other hon. Members have repeatedly brought the matter to the Government’s attention.

Ministers have argued that the cut announced just before Christmas is justifiable because they want to focus spending on 16 and 17-year-olds, and because 18-year-old students would already have received two years of post-16 full-time study. Perhaps Ministers believe that the affected students are undertaking a repeat year of study in order to resit their A-levels and upgrade their results, but that is not the case at all. As has been pointed out by the Association of Colleges, the 157 Group and others, the students most affected are most likely to be those on vocational courses.

Those students may have achieved good GCSE results at school but may have had no opportunity to undertake vocational study at key stage 4. If they wish to pursue a technical route, they cannot begin level 2 vocational studies until they enter college post-16. Colleges report a reluctance among, and lack of incentive for, schools to co-operate with them to provide early vocational training to students aged 14 and 15, and it seems particularly unfair that such students should be penalised.

However, it is perhaps even more concerning that many of the students who will be affected are likely to be those whose school experience was the least successful. For such students, full-time study undertaken at college offers a vital second chance. These are the students who may have found the school environment difficult, but who flourish in a college setting. They may have had their education disrupted by health problems or difficult family circumstances. Some will have started out their studies in a school sixth form but will have left after the first year, having failed to attain good AS grades —often as a result of the poor information, advice and career guidance offered in the school.

I thank the hon. Lady for giving way and for securing this very important debate. Does she agree that there is also an issue with the number of schools not providing information about the existence of FE colleges and sixth-form colleges? There needs to be a much better link, with schools encouraging people to look at apprenticeships and other opportunities.

I very much support what the hon. Gentleman says. This is a matter of the incentives and funding arrangements, and it is about having a level playing field for all educational institutions, something that I know other hon. Members will wish to allude to in the debate.

I congratulate my hon. Friend on securing the debate, and apologise for the fact that I will not stay until the very end. A lot of emphasis has been put on the impact assessment. Sheffield college and Sheffield’s Longley Park sixth-form college, in my constituency, are somewhat bewildered as to who could possibly have undertaken an impact assessment that so grievously missed the point about what the cut will do to young people from the most disadvantaged backgrounds. Does she agree that it would be possible to avoid the cut if new institutions and small sixth-form developments that have not recruited to the level for which they were funded had that money properly clawed back in a timely fashion? That would be better than hitting the most disadvantaged students.

I very much agree, both with the concerns that my right hon. Friend raises about the impact assessment, and with his comment about potential alternative sources of funding that would allow us to avoid the need to introduce this cut. On his comments about which students will be most affected, an analysis of the situation at Trafford college, which serves my constituents, bears out his concerns. Ministers know that level 3 is the standard that employers increasingly look for, and it is the standard that we should expect students to achieve as a minimum. It is worrying that the majority of students at Trafford who will be affected are studying vocational courses at level 3. The majority had low attainment at age 16 and, contrary to the suggestion in the Government’s impact assessment, the majority come from the borough’s most disadvantaged wards.

I have looked carefully at the breakdown of the courses that students at Trafford college are taking. They include English, maths, biology, chemistry, and vocational courses in plumbing, training as an electrician, vehicle maintenance and cabin crew training—a testament to the important relationship that the college has forged with nearby Manchester airport. Those courses could not be more pertinent or relevant to the career prospects of young people, so it comes as no surprise that college principals have expressed concern that a cut in funding, which will have the effect of reducing access to such courses, increases the risk of these young people becoming NEETs—not in education, employment or training.

I congratulate the hon. Lady on securing this important debate. Her experience in Trafford is exactly the experience that is being fed back to me by the principals of Cornwall college, which has campuses in Newquay and St Austell, and Truro and Penwith college. They say that very vulnerable people, whom we should be helping the most to get that second chance in education, are likely to be affected. Does she not find it surprising, as I do, that although the Government’s impact assessment suggests that disadvantaged people will be affected by the cut, we are moving ahead with it anyway?

I very much agree with the hon. Gentleman that the impact assessment, which paints a rather puzzling picture, does not appear to support the decision that the Government have taken. It certainly attempts to paint a rosier view than the one that college principals and sixth-form college heads have painted. The Government’s somewhat thin assessment pays no attention to wider issues, such as the implications for bursary funding, and it pre-empts the outcome of the Cabinet Office review of provision for 16 to 25-year-olds.

I am grateful to my hon. Friend for securing a debate on this very important issue. She has talked about what college principals are saying. Let me quote what the principal of Newham sixth-form college has said, describing those affected:

“These are ambitious and aspirational students who have stuck with their commitment to education. They are doing the right thing…How were they to know that the system would decide that they don’t deserve to be funded for 3 years of further education at the same rate as those students who only need 2 years?”

Is not it a very arbitrary and damaging cut that has been introduced?

It is indeed a damaging and arbitrary cut. Little attention seems to have been paid to the educational life chances of these students and why they need this additional year of full-time education at age 18.

There are also, it is fair to say, a number of flaws in the methodology used in the Government’s impact assessment. It compares 18-year-old students with all 16 to 18-year-olds, not with 16 and 17-year-olds, which means that the distinct circumstances and backgrounds of 18-year-old students and their particular needs and characteristics are obscured. It fails to do a comparison with students in school sixth forms, and so underplays the disproportionately diverse backgrounds of FE and sixth-form college students. It ignores 18-year-olds studying for between 450 and 539 hours, and it makes no mention of the disparity between the funding for five to 15-year-olds, and the funding for 16 to 18-year-olds, which the Association of Colleges has pointed out already stands at 22%.

Even so, as the hon. Member for Cornwall—I forget the exact constituency—[Interruption.] It is not all of Cornwall. As the hon. Member for St Austell and Newquay (Stephen Gilbert) pointed out, the impact assessment does acknowledge that there is a disproportionate impact on disadvantaged students. A disproportionate number of black and ethnic minority students are affected. It also recognises that the majority of students affected are undertaking vocational courses of study.

The impact assessment recognises that five out of six students affected are in FE colleges. That means in practice that the effect of the policy overall is a 5% funding cut for FE colleges, compared with a 1% cut for schools. It is likely that, in colleges, the effect will be felt not just by 18-year-old students, but by all 16 to 18-year-old students, because they are often taught together as a single group.

The impact on colleges is compounded by the lagging in their funding, which was highlighted when the Secretary of State appeared before the Select Committee on Education on 18 December 2013. That lag means that the effect of the introduction of a cut in August 2014 is that the funding received for students who have already started two-year courses will be at a rate lower than had been anticipated and budgeted for in their second year. That means that colleges are having to rethink fundamentally their budgets and business plans for next year, and their future admissions policies. I was encouraged by the fact that the Secretary of State recognised that point when it was raised with him at the meeting of the Select Committee and agreed to give it further consideration, including the possibility of delaying the cut until September 2015. I very much hope that this Minister will be able to update us today on what further thought has been given to that.

In conclusion, there are real concerns about the impact of the cut both on institutions, especially further education colleges and sixth-form colleges, and on the students they teach. The policy appears to run counter to all the Government’s ambitions to increase social mobility, to invest in vocational education, to increase the employability of young people at risk of becoming NEET, and to level the funding playing field for colleges and schools.

Of course everyone understands the scale of the challenge, given the financial settlement in the spending review 2015-16, but as has been pointed out, other spending choices could have been made. As the Chair of the Select Committee, the hon. Member for Beverley and Holderness (Mr Stuart), pointed out on 18 December, colleges are losing out, while free schools and academies are being funded for what he graphically described as “phantom students”, often in areas where there is already plenty of provision.

The Sixth Form Colleges Association points out that nine free schools for 16 to 19-year-olds established since 2011 will educate just 1,557 students when they have recruited fully in line with their plans—if they manage to do so—compared with an average of 1,687 students per single sixth-form college, so the investment in free schools certainly does not look like an efficient use of funds at a time when spending for this age group is under such pressure.

Against that background, the choice to cut funding for vocational training, and to cut funding that is more likely to reach students from less advantaged backgrounds—the very group that the system has repeatedly failed—seems at best ill informed and at worst simply perverse. That approach is likely to have a far-reaching impact on the life chances and prospects of the very group of young people for whom we should want to do most. I very much hope that Ministers will take a step back for further reflection and rethink their approach, given the widespread concerns, and I very much look forward to the Minister’s response to those concerns.

Order. At least 10 hon. Members have written in to say that they want to contribute to the debate. The Chairman of Ways and Means has therefore authorised me to impose a time limit on speeches, which will be five minutes. I appeal to hon. Members to keep interventions—and the answers—short.

I congratulate the hon. Member for Stretford and Urmston (Kate Green) on calling the debate. I was minded to attend it only after I visited my local college last Friday. I come from an area that is not ethnically mixed or socially diverse—it is not socially deprived anyway; it is fairly socially diverse—but people at the college reminded me that there was an issue in all parts of the country and for all colleges.

Most students and, I guess, most people in this room have followed a fairly orthodox path in education: attending school from 11 to 16, staying on to 18 or going into further education, and subsequently going to university or into employment. That is a fairly characteristic profile. Most people, when they look back at their own educational history, will see that they have that characteristic profile, but some people find themselves at the age of 18 still in FE. These are to some extent the exceptions, rather than the rule, and a decision has in effect been made to fund them less, so colleges will provides less for them, opportunities will diminish for them, and courses specifically for them will decrease. We have to ask ourselves, as the hon. Lady did, who these people are who are less fundable.

I have read the pack prepared by the Library for the debate and I am fairly clear on some things. These people are certainly not the disabled, for whom special provision is made. They are not those without qualifications in English and maths, because they will not be affected. They are disproportionately from the black and ethnic group, and that seems to be agreed both by the colleges and by the Department for Education. There is some dispute between the Department and the colleges about whether they are disproportionately from socially deprived areas, because I understand that the impact assessment from the Department says that they are not. They are certainly not repeat grade hunters, as the hon. Lady made clear; they are not people just looking to enhance an already good educational career. They are not eternal students—people wanting to do courses just for the sake of it. They are people who are there for a specific purpose.

We are talking about people who are likely to have had a slightly unorthodox educational career. They are likely to be people who have made mistakes, either in course choice or in their adolescent life, as many people do. They are likely to be people who have encountered social or emotional problems during their education. I notice that the hon. Member for Romsey and Southampton North (Caroline Nokes), who will speak later, has tabled several questions along those lines, asking what happens to children who, through no fault of their own, have lost out on a year or two because of illness. During my A-level years, I had a year out because of illness.

Those who will be affected are disproportionately likely to be on vocational courses, and they are more likely to suffer as a result of not completing their course. The cost of not funding those students is potentially considerable, and the risks are appreciable. The Government will respond that savings must be made somewhere, and that it is not fair to criticise the Government without suggesting other ways in which savings might be made. I agree with the hon. Member for Stretford and Urmston that an audit of the academy and free schools programme would realise significant funds that could be used to defray those costs, because, frankly, money is being squandered in that area. The Government can do some good by making that move, and they can reduce the risk.

I do not want to take up too much of hon. Members’ time, but Martin Doel on behalf of the Association of Colleges has summed up the situation rather well:

“We all understand the financial constraints on the public purse”,

as indeed we do,

“but this funding cut is ill-targeted, under-researched”—

that is undoubtedly true—

“and full of unintended consequences”.

I believe the Minister will have some difficulty explaining why that is not true.

I congratulate my hon. Friend the Member for Stretford and Urmston (Kate Green) on obtaining this important debate. I want to start by asking the Minister a question that sixth-form colleges have raised with me—how he thinks colleges should respond to the cut. Now that full-time students aged 18 will be funded by some £700 a year less than other students, it is not clear whether he thinks that colleges should continue to support those students in their third year with the same quality of education despite not having the money to do so, or whether he wants colleges to offer such students only two years of education. It is important to have a clear answer to that question on the record.

I want to focus on a few matters to do with Southampton. Two consequences of the policy have not been made clear by the Government. Although the Government have said that they will try to protect the base budget, colleges do not teach the students in question separately, so the effect will be felt across the college. The decision will concentrate the cuts on a subset of colleges, particularly those in areas with a higher than average level of deprivation and areas of historically weaker school performance, which will throw up more able students who require a third year to reach level 3 or A-level. The decision will target colleges in relatively small areas, because a concentration of students from more deprived backgrounds with weaker prior school attainment will not be offset by a wider catchment area of students who do not suffer such disadvantages.

That, in a nutshell, is the position that Southampton faces. There are two sixth-form colleges and City college, which is the FE college. They all perform well on inspections and completion rates, but they have a disproportionate number of students with weaker prior school attainment and higher levels of deprivation. The principals estimate that the cut across the three colleges is approximately £500,000. In City college, of the 246 18-year olds, 78% have not yet achieved a C at GCSE English or maths, so they have yet to achieve the basic level of attainment that we are all aiming for; 44% are from disadvantaged postcodes; and 44% are taking level 3 courses. At Richard Taunton sixth-form college there are 212 18-year-olds, of whom 46% come from priority neighbourhoods. Of those third-year students, 49% took a level 2 course before progressing to level 3, 28% are on bursaries to support their attendance and 24% speak English as a second language.

I want the Minister not only to clarify the aim of the policy but to understand how his decision targets institutions such as those in Southampton. In the impact statement, the estimate of the impact on sixth-form colleges is 1.2%. I can only say that some sixth-form colleges must be barely affected, because the effect is nothing like that for the sixth-form colleges that my constituents attend.

I have had an e-mail from the principal of the sixth-form college in my constituency, who says that the cut to that institution is 17.5%, which will affect 120 students. The college will lose £85,000 of funding that had already been committed, so it will be hit incredibly hard. I agree with my right hon. Friend; I just do not know where that figure comes from.

The attendance at this debate suggests that many hon. and right hon. Members across the House simply do not understand the logic behind the Government’s decision, and their lack of awareness of the impact on individual institutions.

It is a pleasure to serve under your chairmanship, Mr Williams. I add my congratulations to the hon. Member for Stretford and Urmston (Kate Green) on securing the debate. I draw attention to a declaration of interest: I am an advisory governor of Eastleigh college in the neighbouring constituency to mine.

Hampshire has a fine tradition of sixth-form colleges. Some of the best in the country can be found in our fine county, including Peter Symonds college, which I attended. However, my constituency has no sixth-form provision whatsoever in the state sector, which means that virtually every 16 to 19-year-old is sent elsewhere. The colleges that they attend have different specialisms and are of very different sizes. Some focus on vocational training and others are highly academic. They cater for different types of students from different backgrounds, some of whom have excelled at GCSE and some of whom have not.

I want to mention some of those colleges, not as an exercise in name checking my favourite college principals but to highlight the variety of experience. Some are huge, including Peter Symonds college, Barton Peveril sixth-form college and Brockenhurst college, all of which cater for well over 3,000 students. Others are much smaller. It is a pleasure to follow my neighbour, the right hon. Member for Southampton, Itchen (Mr Denham), who mentioned Richard Taunton college, which is less than half the size of some of the bigger colleges in the area. Brockenhurst has a particular specialism in special educational needs, and when I visited last year I was particularly impressed with its dedication to those who faced different learning challenges. Sparsholt college, one of the country’s leading land-based colleges, provides a significant focus on vocational qualifications. It has emphasised that it has only 44 18-year-old A-level students, but it has 358 18-year-olds on vocational courses.

Why might students need an additional year at college, and what would be the financial impact on colleges? I will not revisit the VAT issue, but the Minister is well aware of it. There are many reasons why a young person might not achieve the results to which they aspire at GCSE, at A-level or in a vocational course. We all remember the problems with GCSE English last year, which in Hampshire particularly affected boys, and I recall how the colleges I have mentioned really stepped up to the plate and met those challenges. They compromised, put on additional classes and held resits of English GCSE. How much less flexible might they have been if they had thought that a fiscal penalty would result from their keeping those young people for another year?

What of Brockenhurst, which has a phenomenal track record of helping those with physical disabilities and special educational needs? Why should it receive less funding for a third year of study for a student who has overcome physical problems, as a result of which they need an extra year of study? Surely, we want to encourage young people to stay in education to achieve their maximum potential and we do not want to give colleges a reason to say no.

I am the mother of a 15-year-old, so I have been completing college application forms recently. I was struck by the additional information form that was required by the outstanding college in Hampshire, which asked for any additional reasons why a student might not complete their study, and I wonder how much more rigorous such forms will become. Two years ago I visited April House, a specialist eating disorder unit in the constituency of my neighbour, the right hon. Member for Southampton, Itchen. I emphasise that although eating disorders can affect anybody, they particularly strike 17-year-old girls who are high achievers academically. Three of the girls I met were at the same sixth-form college, but their studies had been disrupted—forced to a temporary halt—by their condition. It was not their fault, it was not the college’s fault and it certainly was not their parents’ fault, but all three girls had been negatively affected. Nevertheless, they were hoping to go back to college. I do not want colleges to have an excuse to say no to that type of student—to see illness as a reason not to accept them back on to their course because they can foresee a negative fiscal impact in having them back.

There are some great colleges that do a brilliant job of getting teenagers back on the road to education. I cite in particular Richard Taunton college, and we have heard the figures from the right hon. Member for Southampton, Itchen: 212 of 1,159 full-time students are 18, and 30% of them have come from other colleges. I always used to say to students, “You’re a long time old. Education is critical, but getting it wrong, admitting that you have made a mistake, making the necessary changes and moving on is all part of the learning process.” I will be a lot more reluctant to say that to them now.

I have 20 seconds, but I wanted to touch on the subject of summer-born babies, who we know are statistically likely to perform less well than their older classmates. That is measureable through GCSEs, A-levels and university admissions. What about those teenagers who, just through a freak of their date of birth, might require resits to achieve the required grade?

I shall finish with the thought that we must also think about those who come to the UK late, whose parents get divorced, who are bereaved or who have been sick.

I congratulate my hon. Friend the Member for Stretford and Urmston (Kate Green) on securing this debate, and I am happy to follow some excellent Back-Bench speeches. The policy we are debating will stop people getting the second chances that they need. If they do not have such chances, their life opportunities will be restricted, but it will also be bad for us and for the economy.

We all proclaim how much we support apprenticeships and welcome measures that are taken to boost them. Often, however, we know that far too few apprenticeship schemes reach the hardest-to-reach young people; the ones who, for good or ill, have been passed over by education up to and sometimes over the age of 16. Education has not given them the start in adult life that they would want. As well as being bad for young people, that is bad for the economy. It actually costs us as taxpayers in the long run, as well as the Government. That cost will not be taken away simply by cutting housing benefit for young people at some point down the line.

We also need those young people. The level and number of apprenticeships is often most advanced in the larger companies. They have the cushion of size—the human resources departments and the rest of it—to cope. For small companies, taking on apprentices can seem complicated and daunting. They are not sure what is at the end of it. That is why they need the confidence that they can go forward with young—sometimes not so young—people who are job-ready, or at least ready to be upskilled. That is where further education comes into the picture to provide the necessary education, training and aspiration, which are precisely what the policy is going to hit.

Of those in further education, 71% of those over 18 are studying vocationally based courses. Two thirds of the young people affected are disadvantaged in some way and require additional support. As other Members have said, we may be talking about black and minority ethnic students, or those with lower attainment at 16. At Bournville college in my constituency, 68% of those affected are likely to be disadvantaged in some way, including by previous poor attainment, deprivation, disability and learning difficulties. What impact will that have on the young—sometimes not so young—people who need support so that they have life chances? Who will provide job-ready or training-ready people for the firms that need them?

A lot of what I and other Members have said about post-18 education sounds like we are talking about people who are just over 18, going into their 20s. I have said several times that they are sometimes not so young—people who need chances later in life will also be hit. Look at the numbers of people we are talking about in my constituency. In December 2009, there were 100 people aged 24 and under who had been claiming benefits for more than 12 months. In December 2013, there were 240. That has more than doubled. There is a persistent problem of long-term unemployment among young people. If we look at the equivalent figures for people over the age of 24, there were 360 in December 2009 and 785 in December 2013. If we are to do something about increasing the chances for young people hit by persistent, long-term unemployment—even if there is a dip in unemployment overall—the policy we are debating will take us in the opposite direction from achieving that.

I know that the Minister will say that hard choices have to made, and they do, but we cannot simply do the sums and trade off chances up to 16, at 16 to 18 and post-18. We can do the sums in a different way. Let us start factoring in the cost to us, to taxpayers and to the young people themselves if they do not get life chances because their education is cut in an arbitrary, ill-targeted way. That is what the Government are doing with this policy. I plead with the Minister to think about it again. He will see that the objections do not come just from the Opposition; they come from the Government Benches as well. I really hope that he will rethink on this issue.

It is a pleasure to serve under your chairmanship, Mr Williams. I congratulate the hon. Member for Stretford and Urmston (Kate Green) on securing this debate.

My concern is that the funding cut will disproportionately affect those towns where further education and sixth-form colleges are playing a major role in the education of 18-year-olds. That is the situation in Lowestoft in my constituency. I am grateful to the Minister for listening to the concerns that have been raised with him in recent weeks. In this instance, I am concerned that although the Government have carried out an impact assessment of their decision, they have failed to highlight the fact that the impact of the policy is concentrated in specific locations where it will hit certain—often vulnerable—communities hard.

There are four reasons why I believe that the proposed cuts will hit Lowestoft particularly hard. First, schools in Suffolk are not currently doing as well as they should be. Lowestoft college and Lowestoft sixth-form college are doing important work to address the situation, which often involves students staying on in education or training for an extra year. As a fellow Suffolk MP, the Minister will be familiar with the need to raise standards and levels of achievement in schools across the county. A variety of measures have been put in place, by both the Government and the local education authority, to address challenges and raise standards, but they will take some time to come to fruition. In the meantime, the two colleges are playing an extremely important role which should not be undermined.

A high proportion of the students who have become disengaged while at school either need to resit GCSEs or are following a vocational course. Lowestoft college advises that only some of its students follow the traditional course of completing GCSEs at 16, doing two years at A-level and then going to university. Instead, many pursue a variety of different paths that may include, for instance, a year at level 2 followed by two years at level 3. As a result, 25% of the 16 to 18-year-old students are aged 18 at the start of each academic year. That brings me to my second point: all post-16 mainstream education in Lowestoft is provided in the two colleges and there are no other schools or colleges where students can take A-levels. That is because four years ago, when the schools moved from a three-tier to a two-tier education system, it was decided to discontinue the individual sixth forms in each high school and replace them with a single sixth-form college—a centre of excellence. That was a good idea, and it is working, but the reduction in funding could undermine much of the good work.

My third point is that in Lowestoft there is a higher than average percentage of pupils from disadvantaged backgrounds living in deprived areas. Research by the Association of Colleges shows that 18-year-old learners are more likely to live in deprived areas than 16 or 17-year-old learners. There is a real worry that disadvantaged students will be hit the hardest as they are the ones who take longer to finish courses. That could have a negative knock-on effect on the number of NEETs.

I declare a personal interest. I never went to university; I attended a vocational college course. Kirklees college in Huddersfield is transforming young people’s lives under the inspirational leadership of Peter McCann. My hon. Friend has rightly highlighted what colleges give post-18 learners and the challenges that they face: in my area, for example, there are pupils who have recently moved to this country, who have behavioural difficulties, who have been in care, who are pregnant or for whom English is not their first language. Will he join me in asking the Minister to reconsider the funding reduction?

I am grateful to my hon. Friend for raising that matter. I will indeed join him in asking the Minister to reconsider the funding reduction.

Finally, it should be pointed out that larger colleges with larger budgets are better placed to handle reductions in funding; they may have more room to manoeuvre and put in place their own mitigating measures. Lowestoft college and Lowestoft sixth-form college are relatively small. Although they are performing extremely well in challenging circumstances, they are not as well placed as larger establishments to withstand the impact of such income reductions.

I will try to be brief. My hon. Friend is quite correct that there will be a significant funding impact for many sixth-form colleges and further education providers. Could another impact be that such institutions, including for example the excellent King Edward VI college in Nuneaton and North Warwickshire and Hinckley college, are disincentivised from taking students at age 18?

My hon. Friend raises an interesting point. It is one of a number of issues that I do not believe the impact assessment addressed.

It should also be noted that the late announcement of the decision has made it difficult for colleges to make contingency arrangements. I am grateful to the Minister for listening. For the reasons that I have outlined, I believe that the measure hits Lowestoft particularly hard. As I look around the Chamber, I realise that there are numerous such communities all over the country. In Lowestoft, we have two colleges that are playing a vital role in difficult circumstances, raising educational standards and providing young people with the skills that they need to take up a variety of opportunities. The two colleges need the resources to carry on with that excellent work, and the proposal both handicaps them and penalises 18-year-olds living in Lowestoft, where there are no school sixth-form colleges for them to attend.

It is a pleasure to serve under your chairmanship, Mr Williams. I congratulate my hon. Friend the Member for Stretford and Urmston (Kate Green) on securing this important debate and other colleagues for laying out some of the challenges. I will make my comments brief.

There are two issues here: the cut itself, and the unfairness of it—not just the £700 per student, but the impact on individual institutions and the manner of its introduction, which has not been particularly mentioned and which I will discuss in a moment. The Government’s own impact assessments says that the measure will hit further education colleges disproportionately, much worse than schools. I quote from the impact assessment:

“Fewer than one in five of 16 to 18-year-olds funded by the EFA are aged 18 at the start of the academic year, although clearly this will vary by institution”,

which is one way of glossing over the issue.

As has been highlighted, the measure clearly hits vocational students much worse than academic students, due to the need to stay longer on vocational courses. Critically, it hits London worse than other regions, including Hackney community college in my constituency, which has imaginatively gone with the flow of many funding changes over the years but is once again being penalised for doing excellent work with 18-year-olds. Only last week I visited the college, meeting three students who had had difficulty achieving at GCSE level but had found at the college—one was becoming a chef, one went into painting and decorating and another was on a fashion course—vocations that worked for them and gave them the opportunity to achieve and secure jobs. However, they were over 18.

Areas with high numbers of black and minority ethnic pupils and disadvantaged students are particularly hit, which is a double whammy for Hackney South and Shoreditch and other disadvantaged areas. I take the Government at their word about their desire for greater social mobility—I represent an area where that is an important issue—yet I say to the Minister that I cannot see how the measure will help social mobility. It is disadvantaged students who need a second chance sometimes, as highlighted by the hon. Member for Romsey and Southampton North (Caroline Nokes), or who often just choose a different path of study that does not fit within the traditional tramlines for 16 to 18-year-olds. In further education environments, particularly Hackney community college, classes are very mixed, so it is not abnormal for 17 and 18-year-olds and much older pupils to be there. Sometimes students in a class range from mid-teens to late adulthood, as the painter and decorator to whom I talked last week highlighted, so 18-year-olds will often be in a class among other people.

I said that I would discuss the manner of the announcement. It was made very late, at the end of last year, with little, if any, discussion and no time for colleges to prepare. Colleges plan their academic studies ahead. Suddenly shifting course at such short notice is challenging. They will have made commitments to teachers and lecturers and tried to secure students through recruitment routes. Although they can often adapt at short notice, it is ridiculous and not very sensible for a major education sector—one that is within the Minister’s purview—to have to cobble things together in that way. It is not as though it were a great surprise that the Government are trying to manage the budget in this way and by taking such measures, so a little bit of forethought would have been a good thing.

By hitting colleges as it does, the measure goes against the policy intent and last year’s moves to equalise school and college funding. Can the Minister clarify one particular point? If a child is 18 years old on 1 or 2 September—old for their cohort, but within the normal cohort—will their funding be cut? I imagine not, but it would be good if he were explicit about it. I also point out that as others have said, this debate is well attended for Westminster Hall. MPs from around the country and from all parties have come. We are not bleating; we are raising a serious concern.

I know that the Minister is a thoughtful man, so I am sure that he is listening, but I am sure that he will also listen to the Secretary of State for Education who, when challenged by the Chair of the Select Committee on Education to push for even a one-year intervention to smooth things over, said:

“Let me have a look at that. It is a very fair-minded and generous suggestion”.

I appeal to the Minister to be fair-minded and generous, to follow the lead of his Cabinet colleague and to take a different approach. One alternative to a smoothing budget might be a flat-rate reduction across 16-to-18 funding, which would halve the effect on London colleges and be a fairer spread, allowing colleges to plan better. We recognise the challenge in funding, but this way is the wrong way.

It is a pleasure to serve under your chairmanship in this excellent debate, Mr Williams. I warmly congratulate the hon. Member for Stretford and Urmston (Kate Green) on securing it. There is clearly passion about the issue throughout the House.

The further education and sixth-form sector has been neglected and under-supported for many decades. It has not had the rightful support that it needs, which is a great shame, because it does extremely well with the resources that it has. We have heard that education for 16 to 18-year-olds gets about 22% less funding than for pupils up to 16, which seems problematic. We in Cambridge are hit particularly hard, because our county gets the lowest funding in the country for all schools, followed by poor funding afterwards. That is a separate issue and not for the Minister, but I hope the Government will correct the long-standing anomaly that pupils in Cambridgeshire get £600 less each per year than the English average. That does not seem fair to me.

My constituency is served by three excellent institutions, all of them for some reason right on the boundary; some are just inside, some just outside. They are Long Road sixth-form college, Hills Road sixth-form college and Cambridge Regional college, and they do extremely well. Hills Road sixth-form college has a national reputation for leading the way in the sector. If one looks at entry into Oxbridge, which I do not think is the only way to measure success, its performance is right up there; it gets more pupils in than anywhere other than Eton and Westminster, and it is a state-funded sixth-form college. That is what we should be aspiring to in state-sector education throughout the country.

However, the Government changes, of which the measure we are discussing is one, will make it hard for those colleges to provide the four A-levels that they have often provided and that are often provided in the private sector. They are worried about whether the example that they have set for so many years will continue, or whether that excellent exemplar of what the state can provide will be lost. They have huge problems.

Hereford sixth-form college is another outstanding performer. Does the hon. Gentleman agree that the Government could—it would be much appreciated by everybody if they could—consider how much VAT such schools can reclaim?

The hon. Gentleman is right. I was going to say that next. I have debated this matter in the House, as have many other hon. Members. One big problem is that the general education sector does not have to pay VAT, but the sixth-form sector does. If equal money is given at the beginning but one sector has to pay VAT and the others do not, that is a huge problem. A sixth-form college’s VAT load is typically £300,000. If the Minister could fix the problem with the Treasury, that would be solved. Cambridge Regional college pays £1 million in VAT. That is a huge difference and there should be a much easier way to solve the problem.

Does the hon. Gentleman agree that it adds insult to injury that because the Office for National Statistics classifies free schools and academies as public, they have a much more favourable VAT situation than sixth-form colleges, which have, because of an anomaly, been beset with this problem? That ought to be sorted out now.

I agree. It is perverse to say that a free school or academy is more public than a sixth-form college or a regional college; it simply does not make sense and must be changed.

Long Road sixth-form college has its own problems. It has one of the lowest levels of funding of any sixth-form college; it has £480 per pupil per year less than the average. If it got average funding it would have an extra £940,000 and there would not be such a problem. It does not get protection, because it was not one of the high-funded sixth-form colleges, and it gets hit by another £70,000 or so, and pupils will miss out as a result. It was also hit years ago, because the Learning and Skills Council told it to put together a bid for new buildings that it desperately needed, but the calculations were done wrong and there was no money available, and it is stuck with poor buildings. Yet despite that it is in the top 10% of value added in the entire sector.

All three institutions do well and they would be delighted if the Minister visited—it is not a long distance—to look at what they are doing and at the problems they face. They do a great job, but this is the straw that can break the camel’s back, because it is not something that they can do much about.

Long Road sixth-form college does not have a way of changing its curriculum offer to students who are already enrolled in level 2 courses at the moment; it will not have the opportunity to take on a new system. It would be completely wrong to say, at the end of somebody’s level 2 year, “Sorry, you can’t do the course you signed up for. You can only do a 12-unit applied qualification: two A-levels rather than three.” That simply cannot be done; that would not be reasonable.

No, I am afraid I will not. I have given way twice already.

The speed of the proposal is a problem. It is not helpful, either, because the non-qualification elements that the Government talk about are things that we should want to see and should not want to take away—employability skills, work experience, skill building and personal and social development. An investment now will save a huge amount of money over the lifetime of those pupils. Let us not cut the support there.

These institutions do a phenomenal job. Cambridge Regional college has responded actively to the Government’s drive for apprentices; it has just had its 10,000th apprentice and 4,000 are studying now. That is a huge increase. Such institutions throughout the country do their best to deliver education and social mobility on a fairly limited budget. Let us not have these small but incredibly damaging cuts—and they should certainly not be announced so late. I urge the Minister to listen to what all hon. Members have said and to think again.

It is a pleasure to serve under your chairmanship, Mr Williams. I congratulate my hon. Friend the Member for Stretford and Urmston (Kate Green) on securing this debate. The attendance demonstrates how important this debate is inside this building and—more importantly—outside.

The fact is that students at colleges are 22% less funded per student than in the 5 to 16 sector, so this sector is already under serious pressure, financially. Frankly, the Government are cutting this sector because they have chosen to protect 5 to 16-year-old funding and they have nowhere else to go to cut the funding further. However, at the same time there are political choices, because the Government have created nine new 16 to 19 free schools at a cost of £62 million. The answer to my written question shows that students in those schools are funded at £5,500 per student, compared with £4,000 per student in other colleges.

No. I have to allow other hon. Members to get in.

Political choices are being made, which is why these colleges, and these youngsters, are being hit again.

Essentially, post-16 there are two types of institution: widening participation institutions, which include further education colleges and about half of sixth-form colleges, and selective institutions, including most schools and some sixth-form colleges. Essentially, the measure will hit widening participation colleges, which take a gamble, or work to invest, in students who are highest-risk in respect of Ofsted outcomes and in terms of needing the most work in them while they are there; and now they are the highest-risk in terms of cash. Hon. Members are right to say that the result will be perverse outcomes, in terms of behaviours of people in various areas.

Three types of students are affected: first, those who have not achieved their five A* to C grades at the end of compulsory education, coming to 16, and need an extra year to do their intermediate level, before going on; secondly, those who change course during their level 3 provision, often for good reasons, and take three years to do their level 3; and thirdly, students who have to take a year out to care for somebody or to have a baby, or for other crises that happen. These are the hardest students to support and they are the biggest risk, and now they bring in the least money. So the measure is damaging in that regard. It also contradicts the Government’s framework. To raise the participation age, for example, there should be rewards, not penalties, for taking these students forward. There is a desire to close the achievement gap and these are the very students to whom that applies. There is a desire to invest in vocational education and the Government’s own impact assessment demonstrates that this is hitting vocational education worst of all. Everybody recognises that the forgotten 50% need further investment and these students are the forgotten 50% who need it, to be able to deliver.

There is a danger. Let me quote Paul Wilson, principal at Regent college, who said that, in the area of Leicester in which his inclusive college operates, his is the institution in the partnership that is delivering for these students. If there are disincentives for him to do that, he might start to say, “Thank you, goodbye” to these students, and then where do they go? We will have a rising issue with people not in education, employment and training at 17 and 18, as well as beforehand.

It is really dreadful. I know, from my experience as a college principal, that schools would at the end of the first year send students with Ds at AS-levels to us, up the road, because they no longer wanted to deal with them, because they were too high-risk. This means that other students will be too high-risk. There is a danger that we will let down a generation—this forgotten 50%—yet again. There will be an impact on colleges, such as John Leggott college and North Lindsey college, which do an excellent job for students in my constituency.

On behalf of my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton), I shall put the case for both of us regarding the situation around the country and, because it is appropriate and we are the representatives, speak for Worthing college, which is, in effect, a sixth-form college for our town and district, and for Northbrook college, our further education college.

More than 600 students will be affected and the amount of money involved is more than £400,000. I do not want to play the numbers game, because some places will be affected more and others less. The question for the Minister is to what extent this is all compatible with the aims he set out in the skills funding statement 2012-15, which he made 13 months ago, in which he spelt out the four achievements he was after.

One issue facing the Government—the proposal having been announced in December and the impact statement produced on 13 January—is to what extent the Minister and his Departments are able to engage with the Treasury and talk not just about the still photograph of how it affects people now, but about the moving picture he can expect as other education reform changes bring forth their fruit.

For example, a significant number of students have had the extra year to get the qualification in maths and English now required for BTEC courses. I expect that more 16-year-old students in schools, academies and colleges will get the maths and English qualification, so fewer people will need support later on. That will help to cut some of the other costs to the education and training system.

We must also face transition issues. Colleges will on average lose 2% to 3% in-year. Their funding from September is based on decisions that they and the students took a year previously, so there is no way of escaping from that or adjusting the intakes. I do not argue, in any case, that intakes should be adjusted. The colleges are there to help people who will benefit. To go back to the analysis, I take the view that about 10% to 20% of people in their teens should be able to get out of the school and college system a year early, and about 10% to 20% could take an extra year at least. I do not think that we are all so normal and should be treated like racehorses, whose birthday gives the year cohort in which they will work. We need more flexibility.

I should declare that when I was at university my parents were not judged sufficiently well off to be able to pay anything for my maintenance, let alone my fees, and I am grateful to the taxpayers who kept me going. We should be asking how we can achieve a system in which those who fail or who have been hindered or slowed, for some reason, in their progress can get full support at college. There is a question whether people get to college at all: Worthing college was built 40 years ago for 600 students and there are now about 2,000, which is a sign of growth not just in population but participation. Northbrook college has done remarkably good things during its development and, with the use of initiative, has rebuilt its premises at relatively low cost to public funds.

I do not want to repeat the points made by Lynne Sedgmore, the executive director of the 157 Group of colleges, published in The Times Educational Supplement on 23 January; people will have read those. I urge the Minister to talk to MPs, consult heads of colleges and tell the Treasury that we need permission for a transition process, and that we should give up the idea that someone aged 19 who is in college needs less support or a shorter course. Those people are there at 19 for a reason, which is that the college can give them what they should have been able to get at 16 or 17.

My final comment is about the impact assessment. I believe that if a comparison had been made between 18-year-olds and 16 and 17-year-olds, there would have been far larger differences than from comparing 18-year-olds with 16, 17 and 18-year-olds; the Office for National Statistics should have prevented the Department from doing that sort of thing.

I intend that the winding-up speeches should begin at 10.40. If hon. Members who want to speak will confine themselves to just under four minutes apiece, they will all get in.

The proposal to cut further education funding for 18-year-olds disproportionately will have a major impact on disadvantaged young people in Croydon North. I spent some time last week at Croydon college so that I could better understand the impact of the decision, and was alarmed to learn that the college believes that it will be the worst-hit general further education institution in the country if the cuts are imposed as the Government intend.

Many incorrect assumptions underlie the Government’s decision. The assumption that 18-year-olds require fewer taught hours is simply wrong. At Croydon college, as at many other FE colleges, students with a range of ages are taught together, as my hon. Friend the Member for Stretford and Urmston (Kate Green) described. Eighteen-year-olds cannot be separated out from their classmates and put on to different programmes with fewer hours’ teaching time, so the cuts will affect students of all ages—something that the Government have said they want to avoid. Further, 18-year-old students are often the ones with the most risk of not being in education, employment or training, as a result of failure to achieve in education at an earlier age. They are often returning to make up for past failure and they need additional support, not less, to achieve. The Government have often stated that they want to reduce the number of young people who are not in education, employment or training. Yet the proposal will have the opposite effect.

Croydon North has a higher rate of unemployment than any neighbouring constituency and high levels of poverty and disadvantage. Many of my younger constituents attend Croydon college, trying to better themselves and make themselves more employable, but the cuts are particularly acute for the college. Nationally, 22% of learners in the 16 to 18 group are aged 18, but at Croydon college the figure is 35%; students in that age group are more likely than 16 or 17-year-olds to be from deprived backgrounds or minority ethnic groups, and are the least likely to have achieved level 2 by the time they enter college.

The financial impact on Croydon college will be upwards of £511,000. That is a higher percentage of the college’s total budget than elsewhere because of the higher proportion of students that will be affected. The college informs me that that is the highest percentage reduction in funding for any college in the sector. Given the level of deprivation that many of the students live with, and how hard they are trying to turn their fortunes around, cuts on that scale are a bitter blow that will severely damage our community as a whole. The cut, which comes without consultation, runs contrary to the Government’s policy on raising the participation age and supporting young people to stay longer in education and training, to develop the higher-level skills that the economy needs. That is vital if we want to improve our competitiveness globally.

The young people affected are not, as the Secretary of State imagines, in need only of a short period of study to resit their A-levels. They may, for instance, need a longer programme of study to improve their maths and English so that they can secure a traineeship or make themselves employable. I urge the Minister to reconsider the proposal and to minimise the impact on the most disadvantaged young people by adopting a different funding formula that recognises the needs and aspirations of young people from the most deprived communities, instead of cutting their future off at the knees.

I thank my hon. Friend the Member for Stretford and Urmston (Kate Green) for obtaining an important debate. I confess that I was unaware of the impact of the cuts to funding for 18-year-olds until it was brought to my attention by the principal of Hopwood Hall college in Rochdale, who wrote pointing out that the effect on students in our town will be hugely damaging. Hopwood Hall does a fantastic job, providing young people with vocational skills and enabling them to achieve their educational and employment goals. It also runs an excellent trainer restaurant, where I have eaten—the Riverside restaurant. It is an excellent venue with great food. There is a catering department, which provided the cake for my relatively recent wedding; the hair and beauty salon at the college also provided support—[Interruption]not for me, but for my wife; I clearly did not require those services.

I am extremely concerned that the good work done by colleges such as Hopwood Hall will be undermined by the cuts. I am told that it is expected that more than 400 students will be hit by the changes, and the college stands to lose some £400,000 in teacher funds. We all know that inequality in society is partly caused by inequality in education, and the funding cut will serve only to widen that inequality. As Derek O’Toole, the college’s excellent principal, has said:

“The majority of learners affected in Greater Manchester will be those from disadvantaged wards.”

That is the reality of the policy. I understand that there are strong financial constraints on the Government, but there must be a fairer way to allocate the funding, so that the deep implications of the policy do not adversely affect communities such as Rochdale.

I have one or two blunt points to make. I am particularly concerned about the Department’s impact assessment, which is clearly faulty, as other hon. Members have pointed out. I find it shocking that the Government contradict their own principles. The proposal seems to undermine completely their goal of reducing the inequality gap. By limiting the potential of students such as those who attend Hopwood Hall college, the Government do more harm than good.

On a personal note, I left school at 16 and I know how important it is for young people to get support to equip them for the world of work. That support was not there for me when I left school in the 1980s, and it was a struggle for me to get the skills and training I needed. We should be determined not to leave students in places such as Rochdale in the same position. We need to support colleges, not cut their funding.

It is a pleasure, Mr Williams, to serve under your chairmanship. I congratulate my hon. Friend the Member for Stretford and Urmston (Kate Green) on securing this important debate, and I welcome the contributions from throughout the Chamber. We are united in our concern about the impact that the decision that the Minister and the Department made just before Christmas will have on 18-year-olds, given the drastic cut in funding for further education colleges. Colleagues from across the Chamber and I want to hear from the Minister, so I will not go through the speeches of individual Members, but I want to pick up some of their points.

As my hon. Friend the Member for Stretford and Urmston highlighted, the funding cut from £4,000 to £3,300 per 18-year-old student will have a massive impact on more than 150,000 young people, particularly in FE colleges. I represent a London constituency and have received representation from the FE college that I attended. There will be a disproportionate impact in London because of the high number of young people who continue their post-16 education in FE colleges and the high number of ethnic minority students. The Government’s belated impact assessment also highlights the disproportionate impact on ethnic minority groups, white people from disadvantaged backgrounds and many other vulnerable students. Those points were well made by hon. Members, including my hon. Friends.

There is particular concern about the consultation process. We are all deeply worried about lack of consultation and the irresponsible and reckless way in which the decision was made. The Minister should know better than to leave FE colleges, which work hard to support millions of young adults with varied life circumstances, high and dry and having to deal with a set of decisions that will cause disruption. I appeal to the Minister to listen to my hon. Friends, and his many hon. Friends, who said that the decision must be rethought. At the very least, we need some breathing room for FE colleges so that there is no disruption in the system, which many, including the Association of Colleges, have said is likely.

There is deep and genuine concern that there will be a disproportionate effect on young people who desperately need a second chance. Almost all hon. Members highlighted that. For various reasons and in various circumstances, as the hon. Member for Romsey and Southampton North (Caroline Nokes) eloquently highlighted, young people, including young women who are high achievers, may suffer crises—bereavement is an example—and may need an additional year. It is unbelievable that the Government are so short-sighted that such circumstances are not taken into account, because those young people may end up with the other 900,000 who are not in education, employment or training. Surely we should not increase the number of people in that category. Surely the Minister wants young people to stay in the education system and take vocational courses, so that they can service our economy, which needs the technical skills and high-quality apprenticeship schemes that FE colleges are increasingly delivering.

My hon. Friend the Member for Rochdale (Simon Danczuk) told us that his local students rose to the occasion and serviced his wedding preparations. We are direct beneficiaries of educating young people, and many of us who attended FE colleges recognise the significant contribution that they make to the life chances of people from a variety of backgrounds.

The principal of Brockenhurst college in my constituency has made similar points about people who have gone on to serve the nation—for example, in the police and armed forces. Does the hon. Lady have a policy on the point that was made so clearly by the hon. Member for Cambridge (Dr Huppert) about the differentiated VAT regimes for sixth-form colleges and other schools? If so, what is that policy, and will she urge it on the Minister?

The issue has been discussed; my hon. Friend the Member for Stretford and Urmston mentioned it, and hon. Members have raised concerns about it. The question today is for the Government, and the hon. Member for New Forest East (Dr Lewis) should focus on getting a response from them. We will certainly look at the issues and at how we respond when we form a Government. There are deep concerns about the issue, and we need to look at how to ensure parity across providers. He should focus his question at the Minister. Too often, the Government throw questions back at the Opposition as though we were still in government. The Government are in their final year and they should take responsibility for issues, particularly today. Perhaps the Minister will respond to the question.

I want to highlight the issue of the education maintenance allowance, which played a big role in reducing the number of young people not in education, employment or training. Reducing the allowance will risk adding to the number of people in that category, which surely cannot be acceptable for anyone, including the Government.

I conclude by reiterating points that colleagues in all parts of the Chamber have mentioned: the disproportionate impact on those who need a second chance; the pressures on the FE sector at a time when it already faces drastic changes and cuts; and the fact that the FE sector often takes risks with students whom other institutions are not prepared to take, as hon. Friends have said.

The Government’s decision and their belated impact assessment, which acknowledges the disproportionate impact on ethnic minority groups, suggest that the Minister is, at best, indifferent to the impact on some groups. Considering the high number of black Caribbean boys and white working-class boys who are affected, it is shocking that the Minister is not taking the issue seriously. I hope that he will do so today, because we cannot tolerate the creation of greater inequality and social immobility. The Government’s policy is damaging for young people in general and particularly those who need a second chance, and it is damaging for our economy, our society and our ambition of promoting equality of opportunity and social mobility. It is a complete contradiction of the Government’s rhetoric. I hope that the Minister will think again and consider the issues that hon. Members have raised.

It is a great pleasure, Mr Williams, to respond, under your chairmanship, to a forthright debate. I am grateful for the opportunity to set out the context and some of the issues surrounding our decision, which was not an easy one to take. Many of the points raised were not quite accurate, so I hope to provide some reassurance on them, and on how we will deal with the impact on individual colleges, not least because several hon. Members raised the concerns of colleges that are particularly hard hit; I am looking at the hon. Member for Croydon North (Mr Reed). At the moment, we are confirming with colleges the individual allocations.

Before we get to the meat of the debate, let me say that the process for making the decision was completely in line with the process for making such funding decisions under this Government and the previous Government. Say that following the overall allocation in a spending round, it becomes clear that savings have to be made in the Department for Education, outside the ring fence for education for 5 to 16-year-olds; the overall funding policy for the following academic year should be set out before Christmas, in December, in a letter from the Education Funding Agency. That is the normal way of doing things. Someone implied a criticism of the EFA, but there should be absolutely no criticism of the EFA over this, because such decisions rightly rest with Ministers. In February, normally, we come up with the allocations for individual colleges. That is the process we are going through: we are looking at the impact on colleges. We have estimates of those impacts, but we need confirmation from each college. That is the normal process, followed by the previous Government as well as this one. There has not been a problem in the process, but we can go into the individual decisions.

First, earlier information about a cut would have been helpful and welcomed by colleges. Secondly, although the process described by the Minister is accurate, for the first time that I can remember, a decision will affect people already enrolled on courses. If they are on a two-year course, the cut will impact on them and, because of the lagged funding, that is particularly difficult.

I will certainly respond to that point. The irony for those already in education who are affected by this decision is that the funding is being returned to the 2012-13 level that it was at when they enrolled. An important piece of context has not yet been mentioned: the decision, which regrettably had to be made because of pressures on the public finances, changes funding for 18-year-olds back to the 2012-13 level. I understand and appreciate the pressures on the budgets of FE colleges, but in 2012-13, pupils were funded for 450 hours, and we raised that to 540 hours—an increase of 16 and two thirds per cent.—and we are now debating a cut of 17.5%, which is of almost exactly the same order of magnitude. The discussion about the impact on colleges and the conversations with college principals need to happen in the context of the fact that this changes the funding rate per pupil for 18-year-olds back to 2012-13 levels, which was only last year.

I accept that the Government have done a lot of good work in the FE sector. The Minister says that further discussions will take place with specific colleges. For the record, MidKent college, which will lose £800,000 and have 1,000 students affected, is being told that it will get a cut of 3.4%, and yet there are high levels of deprivation in that area. Will the Minister have discussions with the college to see how things can be taken further?

I will absolutely ensure that that happens. In fact, I will ensure that such discussions take place with all colleges. It is important, however, to set out why we took the decision we did.

We were faced with a cut across Government to make savings to reach our goals on reducing the budget deficit. I need not stress the wider argument about the necessity of reducing the deficit, but life would be easier for a Minister and throughout our country if we did not have a budget deficit of £100 billion, and if we had not had an even bigger deficit three years ago. We all know who is responsible for that. There is tension on the Opposition Benches between those who recognise and acknowledge the need to deal with the problems left by the Labour Government and the others. Not least, I recognise the reasonable approach taken, and the suggestion of alternatives, by the hon. Members for Hackney South and Shoreditch (Meg Hillier) and for Rochdale (Simon Danczuk); that is in contrast simply to complaining about things and saying, “Aren’t we in a terrible mess?” It is difficult being a Minister when there is no money left, but we all know whose fault that is. I will not stress that any more.

I care about the individual impact on colleges. For example, I would be delighted to visit Cambridge—I think I have a campaigning visit in the diary. According to our figures, which we are in the middle of confirming with colleges, as a result of the decision, Long Road sixth-form college will have a reduction in funding of 0.7% and Hills Road college of 0.2%. Those figures are to be confirmed with the institutions, but that is the scale in those instances. The impact assessment sets out the effect for types of colleges.

The reason for our decision is partly that it is in tune with other things that we are trying to do, not least raise the participation age. Many people have talked about NEETs, and I bow to no one in my support for FE colleges and their work in reducing the number of NEETs, but the biggest impact comes from the level of education at the age of 16, and from those who are in FE at 16 and 17 and whom we have to keep there. We are raising the participation age up to 18 years, with cross-party agreement, and are insisting that everyone stays in some form of education up to that age. We are focusing the funding on that.

The reasons underpinning the funding decision, therefore, are the decision to return funding for 18-year-olds to last year’s levels; our raising of the participation age; the need to do so much work to ensure that people stay in education at 16 and 17; and the fact that on average—this is not the case for everyone—18-year-olds spend less time on their education, even when it is full-time education. Furthermore, as the impact assessment says—this ought to be recognised in the debate—those who are 18 in education are no more likely to be disadvantaged than anyone else.

I had an exchange with the hon. Member for Bethnal Green and Bow (Rushanara Ali) earlier. Given that there will be this extra emphasis on people up to the age of 18, is it at least the Government’s aspiration to get rid of the value added tax anomaly?

I am well versed in the VAT issue and recognise the argument. Removing the VAT anomaly would cost £150 million, which is the same amount that we have had to save through the measure we are debating, so I am afraid that I simply have to plead having no money to deal with it. All I will say is that I fully acknowledge the argument.

A sixth-form or FE college has a private sector designation from the Office for National Statistics that leads to the VAT charge, but it also gives the college much more power over borrowing. On the one hand, a sixth-form or FE college has much more power to manage its finances, but on the other hand, it has to pay VAT. I note that in the past couple of years, there have been two new sixth-form colleges. Yes, there have been new 16-to-19 free schools, but there have also been new sixth-form colleges, so some people have taken the decision, even though they know that they will have to pay VAT, to go down the sixth-form college route, because they get extra flexibility in managing their finances. I completely acknowledge the VAT issue, but there is a flip side to the argument, which is why some people go for paying the VAT, even though they might not need to do so.

The Minister is explaining himself extremely well, but there is a bit I do not get. Why did he make the commitment to colleges that they could have 540 hours, which they then budgeted for, only to take it away, leaving them with a problem?

My life would certainly have been easier had the decisions been taken together, and had that not happened. I am simply putting that forward as an explanation of the context we need to think about when considering the size and scale of the cuts.

We are looking at the individual implications. I am happy to ensure that the EFA and my team talk to any college that is concerned. We need to recognise, however, that the reason for the decision was that savings had to be made across Government. There is also a policy explanation: there is the fit with other things on which there is consensus across the House. I am not looking for adulation over this policy decision; I am looking to explain myself as well as I can. I am happy to talk to colleagues and colleges further, because my goal is to support colleges and education to the best of my ability.