Further education funding in England

The further education funding system in England is complex and has undergone a number of changes in recent years. Further education providers are allocated funds from different sources depending on the type of courses they provide and on the age of their students. There is also capital funding available for upgrading the college estate.

This briefing provides some background information on the financial sustainability of the further education sector. It then goes on to explain the different funding systems and examine recent funding announcements and trends.

16-19 funding

In the 16-19 system, the Education and Skills Funding Agency (ESFA) funds further education colleges, schools, and independent learning providers in England to provide education for learners aged 16 to 19-years-old. From 31 March 2025, the ESFA’s functions will be transferred within the Department for Education.

A national funding formula is used to calculate the allocation of funding that each provider receives each academic year. Several additional elements that are not part of the formula, including high needs funding and student support schemes, contribute to the total funding amount awarded to an institution.

19+ funding

The majority of public funding for non-apprenticeship, 19+ further education in England is currently provided by the ESFA through the Adult Skills Fund (ASF).

The ASF replaced the Adult Education Budget (AEB) in 2024. It incorporates funding for the government’s ‘free courses for jobs’ offer. Following reforms to the education funding and accountability systems, the ASF has a greater focus on outcomes. Guidance published by the ESFA states:

The purpose of ASF is to support adult learners to gain skills which will lead them to meaningful, sustained and relevant employment, or enable them to progress to further learning which will deliver that outcome.

Within the ASF, there is also funding for “tailored learning”, which has replaced AEB community learning and non-regulated provision. The primary purpose of tailored learning is to support learners into employment and to progress to further learning, but it will also support wider outcomes, including improving health and wellbeing.

There are additional streams of funding for classroom-based adult education, which include:

• Funding for the delivery of Skills Bootcamps, which are free courses for adults typically lasting up to 16 weeks, available across a range of sectors.
• The UK Shared Prosperity Fund, which was created to replace EU structural funds and is currently funding the numeracy programme Multiply.
• Advanced Learner Loans, which fund certain level 3 to 5 qualifications. From the 2026/27 academic year, this funding will begin to be replaced by the Lifelong Learning Entitlement.

Funding for adult education in England is being increasingly devolved to local areas. Around 60% of the Adult Skills Fund is currently devolved to nine mayoral combined authorities and the Greater London Authority. Other funding streams, including Skills Bootcamps and the UK Shared Prosperity Fund are also devolved.

Capital funding

Capital funding is used by further education providers to repair, upgrade, or expand their buildings, facilities, and equipment. The Autumn Budget and Spending Review 2021 committed £2.8 billion of capital investment across the further education sector between 2022-23 and 2024‑25. This is for capital spending across all further education sites in England, including colleges and designated institutions, sixth-form colleges, Institutes of Technology, and T Level providers.

Funding trends

The further education sector has experienced a prolonged period of reduced funding. The Institute for Fiscal Studies latest Annual report on education spending in England, concluded in January 2025 that 16-19 education funding had experienced substantial cuts during the 2010s and adult education had seen for an even longer time period. Recent increases to per student funding had done little to reverse the earlier cuts.:

Between the 2010–11 and 2019–20 financial years, funding per student aged 16–18 fell in real terms by 14% in colleges and 28% in school sixth forms.

In the Autumn Budget 2024, the government announced a £300 million cash-terms boost to college and sixth-form funding. Because of rising student numbers and inflation, we calculate that this is only sufficient to deliver a real-terms freeze in funding per student. Combined with increases under the previous government, this leaves college funding per student about 11% lower in real terms than in 2010 and school sixth-form funding per student about 23% lower.

They added that rising 16-19 student numbers man that the government would need to increase real funding levels by around £200 million in 2027 to maintain real funding at current levels.

Source: IFS ,Annual report on education spending in England: 2024-35, 8 January 2025

Funding cuts for classroom based adult education have been larger than in the 16-19 sector. The IFS report said:

Total spending on adult skills and apprenticeships is expected to increase by 12% in real terms between 2019–20 and 2024–25. However, this only reverses a fraction of past cuts: total spending in 2024–25 will still be 23% below 2009–10 levels. Spending on classroom-based adult education has fallen especially sharply, driven by falling learner numbers and real-terms cuts in funding rates, and will still be over 40% below 2009–10 levels in 2024–25 even with the additional funding.