Further education funding in England

The further education funding system in England is complex and has undergone a number of changes in recent years. Currently, 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.

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. In 2021/22, the total amount of ESFA funding for 16-19 learning was £6.6 billion.

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 ESFA-funded Adult Education Budget (AEB) provides most of the public funding for non-apprenticeship, 19+ further education in England, including classroom-based courses and informal community learning.

Alongside the AEB, there are several additional funding streams for non-apprenticeship adult learning, including the National Skills Fund and Advanced Learner Loans. From 2025, the Lifelong Loan Entitlement is intended to provide individuals with a loan entitlement to the equivalent of four years’ worth of post-18 education to use over their lifetime.

Capital funding

Capital funding is used by further education providers to repair, upgrade, or expand their buildings, facilities, and equipment. The 2020 Budget committed £1.5 billion over five years 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 November 2021 that 16-19 funding had experienced the biggest drop in funding of any education sector:

Further education colleges and sixth forms have seen the largest falls in per-pupil funding of any sector of the education system since 2010–11. Funding per student aged 16–18 in further education and sixth-form colleges fell by 14% in real terms between 2010–11 and 2019–20, while funding per student in school sixth forms fell by 28%.

The report said that extra funding in 2020 and 2021 had been “…eroded by rapid growth in student numbers.” But per student funding is expected to increase in the future:

As a result of additional funding in the 2021 Spending Review, total spending per student in 16–18 education is set to rise by 6% between 2021–22 and 2024‑25.

On 19+ funding, the report said:

Spending on adult education and apprenticeships will rise by 30% between 2019– 20 and 2024–25. However, as with spending on 16–18 education, this only reverses a fraction of past cuts; combined spending on adult education and apprenticeships will still be 15% below 2009–10 levels. Spending on adult education on its own (i.e. excluding growing levels of spending on apprenticeships) fell by 49% 2009–10 and 2019–20, and will still be 33% below 2009–10 levels even with the additional funding announced in the 2021 Spending Review.

The previous year’s report commented on longer term trends:

Spending on adult education is nearly two-thirds lower in real terms than in 2003–04 and about 50% lower than in 2009–10. This fall was mainly driven by the removal of public funding from some courses and a resultant drop in learner numbers.