Brexit will have a significant impact on all areas of the education sector, particularly if volatility in the economic and business environment prompts a review of government spending at a future stage.

Schools and academies are facing funding changes with a stage 2 consultation on the national funding formula due to close on 22 March 2017. It is being heavily reported that schools and academies are already facing significant funding challenges, with talk of increased class sizes, reduced staffing and aging estates. The move towards multi-academy trusts may become more compelling once the national funding formula is finalised, as this may facilitate some economies of scale.

The Spring Budget 2017 announced funds of £216m for maintenance of school buildings to reflect the ageing estate across the sector and schools should be alert to application opportunities.

The vote to leave the EU will also have an impact on higher education. UCAS figures published in January 2017 showed a 7 per cent fall in applications from students in the EU (with an overall fall of 5 per cent). In October 2016, the government confirmed that students commencing their studies in 2017/18 would be eligible to access student support funding for the duration of their studies, even if the UK exited the EU during this time. Nonetheless, the reputational impact of Brexit, alongside the increasing competitiveness from other countries, does seem to have reduced the numbers who have applied.

The demographics of the UK over the next few years provides for a challenging environment for higher education providers, with new entrants competing for a smaller pool of UK undergraduates. As such, the already highly competitive market for non-EU international students could well intensify as higher education providers seek to ensure that they fill the places they have available. Non-EU international student numbers held for the January 2017 application statistics. This will remain a key part of the internationalisation agenda of the higher education sector.

In further education, the European Social Fund has supported a number of projects to deliver skills training to those in work who are seeking to upskill or re-skill as well as to young people not in education, employment or training. Lifelong learning has been at the heart of the further education sector for many years, as part of the Spring Budget 2017 £40m will be provided by 2018/19 to pilot approaches to lifelong learning to facilitate re-training and upskilling throughout peoples’ working lives. Whilst this is welcome, it is less than the ESF funding that the sector has deployed in recent years.

The Skills Funding Agency also uses European funding to match fund a great deal of the adult provision that it supports. Given that once Article 50 is triggered it will take up to two years to exit the EU, it is likely that funding will remain in place until 2018. Thereafter, any funding will be dependent on the negotiations and settlements reached.

As the details of the relationship with the EU in terms of trade, free movement and relationships are formed, the education sector needs to work with young people to help them understand the implications for their careers and international opportunities for study and employment over the next few years of uncertainty.

If you would like any further information on this, please get in touch with Louise Tweedie or your usual RSM contact.