A plan to provide funding boosts worth up to an extra 50 per cent for in-demand adult education courses has been scrapped to cut costs.
The Education and Skills Funding Agency had previously said it would surpass the usual 10 per cent bump-up for successful courses midway through the academic year, which is achieved by reallocating cash from courses that miss their recruitment targets.
But ESFA officials have now said the system, which applies to independent training providers with procured contracts, will revert to a 10 per cent maximum due to affordability issues.
The government has argued it has less money available to reinvest in the adult skills fund (ASF), formerly known as the adult education budget, due to “significantly high” delivery rates and devolved areas eating up more of the budget.
The announcement comes weeks after mayoral combined authorities were told to expect budget reductions of two to three per cent for the 2025-26 academic year.
‘Unmet demand’
Mark Dawe, CEO of The Skills Network which has a £2.5 million contract with the ESFA, described the situation as a “triple knock” ahead of anticipated ASF cuts and a shrinking national contract, as the portion of adult education funding devolved to combined authorities grows from 60 per cent (about £828 million) to at least 70 per cent over the next two years.
He said: “At The Skills Network we have unmet demand from thousands of learners across the country.”
“While I understand the financial pressures on government, this raid on an already small and significantly reduced budget appears counter to the government’s claim to be focussing on growth, productivity and skills.”
Association of Employment and Learning Providers deputy chief executive Simon Ashworth said: “When you piece it together it’s a full-frontal attack on adult funding ahead of the Treasury spending review, and the DfE is probably putting on a bit of a squeeze to find money to return.”
“The adult education budget was £3 billion 10 years ago – it constantly gets pinched and eroded.”
“When you add [long-term cuts, mayoral combined authority cuts and in-year growth savings] together it’s quite an assault.”
Adult provision up ‘significantly’
The DfE declined to comment on the record but provided background information to FE Week that explained the adult education delivery of independent training providers had risen significantly in the current and previous academic year, although no figures were given.
The department emphasised that any growth to ASF contracts was always subject to affordability.
Funding allocations for this year were rolled forward unchanged from the previous year as they were communicated during the pre-election period, it added.
The most up-to-date figures shared by the DfE through freedom of information requests show cumulative adult education underspends of £394 million out of a total budget of £5.2 billion between 2017 and 2023.
Contract review point
The funding system for contracted provision in non-devolved areas works on an academic-year cycle, with allocations under the ASF and smaller Free Courses for Jobs fund confirmed in the summer, and reviewed for amendments in December and January.
The review point allows the ESFA to redistribute funding from underperforming providers to those with stronger delivery performance.
But in a letter to providers this month, the ESFA told contracted providers in non-devolved areas their contract values would not be increased beyond the usual 10 per cent for over-delivery, regardless of demand.
Officials from the ‘in-year calculations team’ said: “We know this news will be disappointing, we appreciate your understanding and remain committed to supporting 10 per cent over-delivery at year-end reconciliation.”
Excitement dashed
An update to funding rules for 2024-25 had previously told providers that, “subject to affordability,” the ESFA would increase funding by up to 50 per cent of their contract value for independent training providers that had delivered 90 per cent of their standard national profile by December 5, had a “good track record,” and met their key performance indicators.
Luke Muscat, CEO of the Back2Work Group, which has a £2.5 million national contract, said: “We were excited when they put the extra wording into funding rules this year, it seemed quite clear cut as to what [we] would have to do to be eligible for growth.”
“Clearly, the intention was there, but something has changed for whatever reason.”
“The Department for Education is probably using it to cover other areas of their budget – I know they’re feeling the pressure.”
It follows two decades of budget reductions to adult education funding, which has dropped from a total of £5.1 billion in the early 2000s to £1.7 billion in 2023-24.
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