‘Significant’ in-year cash boost to national adult education budget funding

A “significant” boost to national adult education budget funding has been announced for this academic year and next to help ease delivery challenges faced by the sector.

But the increases, which involve a 20 per cent uplift for “vital” subjects such as engineering and maths and are expected to cost around £20 million in total each year, will not be funded with new money – it comes from the existing AEB.

Experts have also pointed out that the commitment from the Education and Skills Funding Agency still lags below the increases announced by several mayoral combined authorities in the devolved areas.

The ESFA announced on Wednesday that colleges and training providers will be paid for any over-delivery up to 110 per cent of their contract value in 2022/23 and 2023/24, as they were in 2021/22 – up from the usual threshold of 103 per cent. The ESFA said this was a “permanent” change going forward.

A 2.2 per cent increase to the final earnings for all AEB formula-funded provision – excluding associated learner and learning support – will then also be applied.

It means that, if a provider delivers 109 per cent of its allocation, they will receive a 2.2 per cent boost to 111.2 per cent.

In addition, the ESFA will apply a 20 per cent boost on top of earnings for AEB provision in six sector subject areas: engineering, manufacturing technologies, transport operations and maintenance, building and construction, ICT for practitioners, and mathematics and statistics.

The earnings uplifts come ahead of the introduction of new funding rates that will apply to the ESFA’s new skills fund from 2024/25.

Robert Halfon, the minister for skills, apprenticeships and higher education, said he was aware that the FE sector was facing “financial pressures in key subjects like engineering, mathematics and construction, which is why we’re giving an additional significant boost in funding for these essential courses”.

The annual AEB pot stands at about £1.5 billion. The ESFA currently dishes out about 40 per cent of the total budget, with the rest devolved to 10 mayoral combined authorities.

Sector leaders welcomed the ESFA’s earnings uplifts, particularly because the current formula rates for the national AEB have not changed in 10 years. But they flagged that the policy does not go as far as some devolved areas, such as London, the West Midlands and West Yorkshire, that have already implemented new funding rates that at least match inflation of 10 per cent.

Simon Ashworth, director of policy at the Association of Employment and Learning Providers, said: “In the current circumstances, any uplift in funding rates is always welcome, especially as rates for AEB qualifications haven’t changed for ten years.

“However, the uplifts disappointingly still lag below increases already announced by a number of the mayoral combined authorities in the devolved areas which better reflect the increases in costs that providers are experiencing.”

Marguerite Hogg, senior policy manager for adult education at the Association of Colleges, added: “While we look forward to the new formula with higher rates set to be introduced in 2024/25, this interim measure will go some way to easing the burden for colleges during the current economic climate.

“Some mayoral combined authorities have gone further than this, with 10 per cent increases in rates, and we would encourage the others to learn from their example.”

The ESFA told FE Week that, based on existing patterns of delivery, it expects the earnings uplifts to cost around £20 million in each academic year they apply. A spokesperson also admitted this is not additional funding, it represents an allocation of underspend from the AEB.

The ESFA said it will apply the uplifts automatically to providers’ total earnings at the end of each of the two academic years, meaning providers will not see the increases in their earnings each month through the current system.

Officials promised to provide further details on the operation of the earnings boosts and allocation thresholds in the AEB funding rates and formula guidance.

Sue Pember, a former director of FE funding in the Department for Education who is now policy director of adult education network HOLEX, said: “This seems a good short-term solution to use the existing AEB budget. However, at the next spending review, there needs to be new money and increased funding in all areas including health and care programmes and adult community learning.”

This week’s announcement comes in the middle of the ESFA’s national AEB tender process, which requires bidders to submit enrolment numbers and funding values based on current formula and rates.

The ESFA told FE Week that providers will not be expected to factor the earnings uplifts into their bids. The deadline for tender bids is March 6.