University technical colleges Contents

1UTCs’ financial performance

1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Education (the Department) about university technical colleges (UTCs).1

2.UTCs are a type of free school in England, focused on teaching students who are mainly aged 14 to 19. They provide technical courses and work-related learning, combined with academic studies, so that students receive a rounded education. The Department’s vision when it launched the UTC programme in 2010 was for employers and universities to work together, with educational experts, to open new institutions to deliver technical education in specialist areas that met the needs of local employers and the economy. In total 58 UTCs have opened since 2010, but 10 of these have subsequently closed. One further UTC is due to open in September 2020.2

3.UTCs are publicly funded state schools, which are independent of local authorities. Each UTC is part of an academy trust, directly funded by, and accountable to, the Department, via the Education and Skills Funding Agency (the ESFA). The Department spent a total of £792 million on the UTC programme between 2010–11 and 2018–19, excluding the per-pupil funding which all schools receive. This included £680 million in capital funding for land, buildings and equipment. The Baker Dearing Educational Trust, a charity founded by Lord Baker and Lord Dearing in 2010, owns the UTC brand and issues licences to schools wishing to operate as UTCs.3

4.The Department has a three-year programme to improve UTCs, which began in September 2017. The measures of success for the programme are: firstly, for the proportion of UTCs rated as good or outstanding by Ofsted to be the same as for free schools generally; and secondly, for the proportion of UTCs on the ESFA’s national concerns list to be the same as for academies generally. At August 2019, of those schools it had inspected, Ofsted had rated 52% of UTCs as good or outstanding, compared with 84% of free schools. At July 2019, 26% of UTCs were on the national concerns list, compared with 1% of academies.4

Number of students

5.The National Audit Office found that UTCs have struggled to recruit students at age 14, partway through the normal period of secondary education. It concluded that this had affected their financial viability as the amount of funding that each school receives is mainly determined by the number of students it has. At January 2019, the 48 open UTCs were operating at 45% of capacity on average, with 13,572 students in total compared with a maximum capacity of 29,934. The two longest-standing UTCs were 96% and 101% full respectively, but 36 UTCs (three-quarters of open UTCs) had occupancy rates of less than 60%.5

6.The Department told us that, to help UTCs attract more students, since 2017 it had required local authorities to write to the parents of prospective pupils to set out the options on offer. In addition, in 2018, it had put forward legislation, which Parliament had supported, to require secondary schools that were not UTCs to provide their pupils with information about the neighbouring UTCs. The Department confirmed that it had since written to five multi-academy trusts that were failing to comply with this requirement and these trusts were now letting their pupils know about the existence of UTCs.6

7.To help boost numbers, some UTCs have started to take students who are younger than age 14.7 The Department told us that, if it did not appear possible for a UTC to be financially sustainable with a 14 to 19 age group, it would extend the age range to 11 to 19. It said that three UTCs would now be taking students from age 11.8

8.The Department described how UTCs were working well where they had strong partnerships with universities and employers. It told us that there were great examples of employers putting in investment—such as machinery and equipment—in the way that the UTC model was designed to work and bringing through applicants accordingly. It accepted that UTCs needed to show they could offer something special—for example, being particularly strong on apprenticeships or early adopters of T levels.9 We received written evidence from the Mulberry Schools Trust, which told us that, because employers influence the curriculum, students leave UTCs ‘industry ready’, able to hit the ground running on entry to the workforce. It highlighted that Mulberry UTC focused on delivering high-quality technical education in health, the creative industries and business.10

9.The previous Committee concluded in 2018 that departments were making insufficient progress in addressing the gender imbalance in many areas of STEM learning and work.11 Girls are under-represented at UTCs, as most students are boys—at January 2019, 72% of UTC students were male, compared with 50% in all secondary academies and free schools. We asked the Department what it was doing to encourage more girls to enter UTCs. The Department could not answer our question during our evidence session, but committed to writing to us with details of this work.12

Financial sustainability

10.In 2017/18, 14 UTC academy trusts reported cumulative revenue deficits totalling £7.7 million, representing nearly 10% of the deficits of the 195 academy trusts that reported deficits. The Department told us that the financial challenge that UTCs faced was driven by the difficulty of recruiting as many students as expected, and that UTC debts were a consequence of estimates of student numbers that were not, in practice, realised. It said that, in order to reduce the amount of debt, the ESFA was now assessing UTCs’ financial sustainability, on the basis of the number of pupils that each UTC was realistically likely to have, rather than on the basis of their total capacity. It also told us that the ESFA had sent school resource management advisers to most UTCs to identify the potential for savings.13

11.The Department provided extra revenue funding totalling £36.8 million between 2015–16 and 2018–19 to support UTCs’ financial position, for example by reducing their debts, including £28.0 million of transitional funding. Every UTC received transitional funding, but this was not available to other schools. The Department told us that transitional funding had been £200,000 per year for each UTC but the amount would halve to £100,000 in 2020–21, which would be the final year of transitional funding. Between 2015–16 and 2018–19, the Department also provided a total of £8.8 million to 18 UTCs to address budget deficits, of which £4.4 million was recoverable. The Department told us that UTCs had not yet repaid any of this money. It confirmed that this money was due to be repaid, and committed to writing to us with a schedule of when these payments will be made.14

12.The Department told us that it was seeking to ensure that the UTC programme was sustainable and successful, but acknowledged that a number of UTCs were at risk and a number were in deficit.15 In order to secure the financial future of UTCs, the Department explained it was increasingly encouraging them to move into multi-academy trusts. Of the 48 open UTCs, 12 began as part of multi-academy trusts with the remainder starting as single-academy trusts. The Department told us that there were now 21 UTCs in multi-academy trusts, and it expected the number to rise to 30 or more in the next year or so.16

13.We asked the Department about intervening when it had concerns about the financial sustainability of a UTC, particularly whether there was a trigger point after which the Department would need to make a decision whether to monitor more closely, or close, a UTC, other than the UTC itself raising concerns. The Department asserted that it had been taking a tough approach and would continue to do so. It told us that it had carried out a review after the 2015 exam results had made clear that the programme was facing a significant challenge. It subsequently put in place a dedicated team within the ESFA to scrutinise the finances of each UTC. On the basis of a three-year plan, this team determined whether the UTC would be able to reduce their deficit and could be sustainable. If the Department judged a UTC was sustainable, it would put in extra funding, subject to conditions such as joining a multi-academy trust. If the Department did not think that a UTC was sustainable, it would close it. It explained that so far it had closed 10 UTCs. The Department expected that, in three years’ time, it would be able to point to having secured financially sustainable plans for all UTCs or to have closed them down.17

1 C&AG’s Report, Investigation into university technical colleges, Session 2019–20, HC 101, 30 October 2019

2 C&AG’s Report, paras 1, 1.1, 2.3, 3.1

3 C&AG’s Report, paras 1 (What this investigation is about), 7, 1.5

4 C&AG’s Report, para 4.2

5 C&AG’s Report, paras 2, 2.6–2.7, Figure 5

6 Q 62

7 C&AG’s Report, paras 4.7, 4.10

8 Qq 17, 34

9 Qq 19–20

10 Ev xx Mulberry Schools Trust submission

11 Committee of Public Accounts, Delivering STEM skills for the economy, Forty-Seventh Report of Session 2017–19, HC 691, 22 June 2018