To ask the Secretary of State for Education, what assessment she has made of the potential impact of energy costs on the financial security of further education colleges; and what steps the Government is taking to support further education colleges with those costs.

The department knows that alongside pay and inflationary pressures, one of the biggest challenges facing some colleges is the rising cost of energy. We are keeping under review the potential impacts of the rising cost of energy on providers across the department’s remit.

Colleges are autonomous institutions responsible for their own financial sustainability and are taking actions to respond to inflationary pressures, for example through reducing energy consumption.

The department assesses and reviews colleges’ financial health on a regular basis and uses this information to determine where we can help colleges to improve their position. Information about this process can be found here: https://www.gov.uk/government/publications/college-oversight-support-and-intervention.

The Energy Bill Relief Scheme currently provides a discount on wholesale gas and electricity prices for all non-domestic consumers. This includes public sector organisations, voluntary sector organisations like charities, and businesses. The scheme came into effect on 1 October 2022 and will run until 31 March 2023.

The government has announced a new business energy scheme from 1 April 2023 to 31 March 2024 for eligible non-domestic consumers in Great Britain and Northern Ireland. This includes public sector organisations. Wholesale gas prices have almost halved since the current scheme was announced. The new scheme therefore strikes a balance between supporting businesses over the next 12 months and limiting taxpayers’ exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes.

Schools and colleges in England have also been allocated a share of £500 million in capital funding in financial year 2022/23. This comprises £447 million for schools and sixth-form colleges and £53 million for further education (FE) colleges, to spend on energy efficiency upgrades.

This will not only help schools and colleges save money, but it will also make them more energy efficient during the cold period and increase winter resilience for future years. A FE college group will receive £290,000 on average from that additional funding. Allocations were published on 6 December 2022 to help colleges plan and payments are expected to be made in January 2023.

In addition to the capital funding, the department has recently announced that in financial year 2023/24 we will be using £125 million of available funding to support all institutions’ costs by increasing the national funding rate by 2.2% from £4,542 to £4,642, and increase the programme cost weightings for specific high-value subject areas. That will help institutions with the additional costs of recruiting and retaining teachers in these vocational areas.