Information on the support available for help with childcare costs and the Government’s proposals for reform.
The debate is sponsored by Gareth Thomas MP. He made the case for this debate in a meeting of the Backbench Business Committee on 12 February 2019. There is a transcript from this meeting.
Why are some SFCs converting to academies?
All SFCs, including Catholic ones, are treated differently to schools and academies with regards to VAT. Colleges and SFCs are required to pay VAT on their purchases, whereas schools and academies are allowed to reclaim non-business VAT on the goods and services that they buy. The Sixth Form Colleges Association has said that the average SFC pays around £300,000 per year in VAT.
A number of SFCs have converted to academies to benefit from the different VAT regime. Information for SFCs wanting to convert to academy status is available in a Department for Education publication, Becoming a 16 to 19 academy: advice for sixth-form colleges, January 2017.
What is the issue with Catholic SFCs?
According to the Catholic Education Service website, there are 15 Catholic sixth form colleges in England and Wales.
Catholic SFCs say that they are prevented from converting to academies as their religious character which is protected under the Further and Higher Education Act 1992, would not be maintained under current government rules – they suggest that they would lose protections in areas of curriculum, acts of worship and governance.
The director of the Catholic Education Service, Paul Barber, said in an article “that because academisation legislation for SFCs was developed separately from schools, the same safeguards given to schools were omitted for Catholic SFCs”.
An article in FE Week, “Catholic sixth-form colleges demand academisation protection”, 13 April 2018 discussed the issue:
Becoming an academy, and in doing so enjoying the luxury of not paying VAT, has been an option for nearly all SFCs since former chancellor George Osborne changed the rules in November 2015.
However, a group of 14 which are Catholic-run claim they are prevented from doing so due to their religious character, which would not be maintained under current government rules. If they converted, they would lose protections in areas of curriculum, acts of worship and governance.
A short clause in the education bill could “easily rectify this”, according to the Catholic Education Service and the Sixth-Form Colleges Association, which have been in joint talks with the Department for Education.
But 28 months after the option of academisation became available, no action has been taken.
The deadline to apply for funds from the government’s £726 million post-area review restructuring facility – which 31 SFCs have so far used to cover the costs of converting to academy status – ends in just five months’ time.
Under current rules, if a Catholic SFC decides to become an academy it will remain as an FE institution but won’t be governed by the statutory provisions in the Further and Higher Education Act 1992, which contains protections for religious character.
The CES has been “working closely” with the DfE to reinstate the legislative protections for the colleges as 16-to-19 academies in the next education bill, but the DfE is yet to commit.
James Kewin, deputy chief executive of the SFCA, insisted there is a “pressing need” to make progress, especially as the restructuring fund approaches its end.
“With no education bill likely in the foreseeable future, we are keen to explore non-legislative solutions to breaking this impasse,” he told FE Week.
The Association of Colleges document, Briefing Academy conversion – advice for SFCs, 1 July 2016 also says that the current SFC academisation process may not suit Catholic SFCs:
The conversion deal, articles of association and funding agreement may not be sufficiently customised to meet their requirements. DFE has been negotiating the terms of academy conversion with the Church of England and Catholic Education Service.
Deadline for conversion
The process of converting to an academy could trigger the repayment of any VAT relief that a SFC had received on buildings completed after March 2011. To offset this cost the Government announced in 2016 that funding from the area review restructuring fund would be made available to help colleges with these costs.
An article in FE Week, “Protests at the deadline for sixth form colleges’ conversion to academies”, 16 November 2018 said that SFCs could lose this potential restructuring funding if they did not apply to convert to academies before March 2019:
“The government must continue to support those colleges that wish to academise after March – after all, some, such as the Catholic colleges, have not yet been free to adopt academy status because of a technical barrier that is no fault of theirs,” he told FE Week.
Gareth Thomas MP has raised this issue in Parliament:
Gareth Thomas (Harrow West) (Lab/Co-op)
Because of their religious character, Catholic sixth-form colleges such as the nationally renowned St Dominic’s in my constituency cannot, even if they wanted to, take advantage of the financial inducements available that converting to an academy might offer. What steps, then, will the Secretary of State take to end the double discrimination against Catholic sixth-form colleges and allow them access to the extra financial resources that academies get? 
The Minister for Apprenticeships and Skills (Anne Milton)
I visited St Dominic’s only last week, as the hon. Gentleman will be aware, and was astounded at the brilliant work it is doing. I am very aware of the problem facing Catholic sixth-form colleges, as is the Secretary of State, and we are considering it.
Sixth Form Colleges: Catholicism: Written question – 127097
Gareth Thomas: 06 February 2018
To ask the Secretary of State for Education, whether he plans to permit Catholic sixth-form colleges to join Catholic multi-academy trusts; and if he will make a statement.
Anne Milton: 20 February 2018
The department has put in place arrangements, which allow all sixth form colleges to convert to become academies and join multi-academy trusts. The Catholic Education Service has made clear that they and their dioceses will only allow Catholic Sixth Form Colleges to convert if the existing legal protections for their faith character are carried over once they become academies. Such a change will require primary legislation and we will keep this under review.
News articles and further reading
The Sixth Form Colleges Association has published a briefing for this debate which can provide further information.
There has also been commentary in some sector-level news outlets:
- Funding made available to address college VAT loophole for academy conversion, Times Educational Supplement, 12 May 2016
- Catholic sixth-form colleges demand academisation protection, FE week, 13 April 2018
- Protests at the deadline for sixth form colleges’ conversion to academies, FE Week,16 November 2018
- Time to close the loophole that harms Catholic SFCs, FE Week, 22 April 2018
There will be a Westminster Hall debate on the impact of increases in the cost of living on further and higher education students on Tuesday 19 September at 4:30pm. This is a one hour debate sponsored by Paul Blomfield MP.
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