Adult further education funding in England since 2010

There are two systems of revenue funding for post-16 further education (FE) in England: the 16-19 funding system and the adult education funding system. This briefing provides information on the latter. Information on the former is provided in Library Briefing 7019, 16-19 education funding in England since 2010.

The initial teaching and learning funding allocations for adult further education (FE) and skills in England fell from a 2010‑11 baseline of £3.18 billion to £2.94 billion in 2015‑16, a reduction of 8% in cash terms or 15% in real terms. The allocation for 2015‑16 fell further as a result of the 2015 Summer Budget, which reduced the non-apprenticeship part of the Adult Skills Budget (ASB) by an additional 3.9%.

While funding for community learning and offender learning stayed fairly constant over the period, ASB funding declined by 29% in cash terms between 2010-11 and 2015-16 – this in part connected to the replacement of grant funding with loan funding for some learners from 2013-14 onwards. The minimum annual funding allocated to adult apprenticeships increased by 113% between 2010-11 and 2015-16, meaning that non-apprenticeship funding comprised a smaller proportion of the reduced ASB.

Actual expenditure on adult FE by the Skills Funding Agency (the predecessor funding body to the ESFA) shows a similar pattern, with expenditure on community learning and offender learning staying constant but ASB spending falling by 32% in cash terms between 2010-11 and 2015-16, from £3.63 billion to £2.48 billion. Within the ASB, expenditure on adult apprenticeships increased from £0.45 billion to £0.71 billion over the period (an increase of 58%), while non-apprenticeship ASB spending fell by 54%, from £2.50 billion to £1.14 billion. It should be noted that these figures, and the chart opposite, do not include spending on Advanced Learner Loans. In the 2013‑14 academic year, the Student Loans Company paid out £116 million in loans; in 2014-15 it paid out £145 million, and in 2015-16 it paid out £182 million.

Under the Spending Review 2015 settlement the newly created Adult Education Budget (comprising non-apprenticeship ASB plus community learning and discretionary learner support) was set to be held constant in cash terms at £1.5 billion up to 2019-20. However, the Government subsequently decided that a portion of the AEB would be retained centrally to spend on other Department for Education priorities. As a result, the annual AEB was reduced to £1.34 billion from 2016-17 onwards.

Under the Spending Review settlement, funding for apprenticeships and loans was set to increase by 92% and 140% respectively between the 2015-16 baseline and 2019‑20. From 2017-18 onwards, apprenticeship funding has, in part, been provided via the apprenticeship levy.

The Spending Round 2019 set out the Government’s spending plans for 2020‑21 only. The overall settlement comprised a 3.3% real-terms increase to the DfE resource budget compared to 2019-20, including an additional £400 million for 16-19 education. The Spending Round document did not refer specifically to adult FE.

Analysis published by the Institute for Fiscal Studies in September 2019 stated, among other things, that:

• Spending on apprenticeships and other work-based learning for adults fell by about 25% in real terms between 2009-10 and 2018-19. Specific spending on apprenticeships (including 16-18 and 19+ apprenticeships) rose by about 36% in real terms over the same period.
• Funding for other adult education (mostly classroom-based and community learning) peaked at around £4.1 billion in 2003-04. It then fell by nearly two thirds by 2018-19 (32% fall between 2003-04 and 2009-10 and a further 47% fall between 2009-10 and 2018-19).
• Most of the fall in non-apprenticeship adult FE can be accounted for by declining learner numbers, which fell from 4.4 million in 2004-05 to about 1.5 million in 2017-18.

In February 2018, the then Prime Minister, Theresa May, announced a wide-ranging review of Post-18 Education and Funding. She additionally stated that the review would be informed by advice from an independent panel led by Philip Augar.

The report of the independent panel was published on 30 May 2019. It highlighted the fall in funding for adult skills between 2009-10 and 2017-18 and stated that the impact of this could be seen in declining learner numbers. The report made a number of recommendations concerning adult FE funding generally and specifically relating to FE at Levels 3, 4, 5 and 6.

In October 2019 the Government stated that it had “not taken any decisions with regards to the recommendations” and would “provide Parliament with an update later in the year.”