This article covers public funding for education for adults aged 19+ and for apprenticeships and traineeships, which are available for young people from the age of 16. The funding of education for 16- to 19-year-olds in schools and colleges is covered in the article on ‘Early Childhood and School Education Funding’.

Public funding is made available for adults over the age of 19 to:

• gain nationally recognised technical or professional qualifications
• help them improve their skills to make a successful transition into the labour market and gain English and maths qualifications where appropriate
• undertake traineeships or apprenticeships
• participate in community learning, which is usually unaccredited and enables adults of all ages to acquire new skills.

This funding is provided by the Department for Education (DfE) through the Education and Skills Funding Agency (ESFA), which is an executive agency of the DfE. The ESFA was formed in April 2017 following the replacement of the Education Funding Agency (EFA) and the Skills Funding Agency.

Funded programmes are delivered by a wide range of providers including employers and training providers, but further education (FE) colleges, which are non-profit private corporations, are at the centre of the sector.

Different funding arrangements apply depending on the programme or qualification and age of the learner. Programmes may be:

• fully-funded, which means that learners are not charged any tuition fees
• co-funded, which means that they are partly funded by government
• loan-funded, which means learners may be provided with financial support
• funded entirely by learners themselves or their employers.

Main funding principles

Government funding priorities 

The Education and Skills Funding Agency (ESFA) provides funding in support of adult education and training to providers of both adult skills and community learning in accordance with the strategy and priorities set by the Department for Education. These priorities have developed from the main skills strategy documents published under the Coalition Government in office from 2010-2015 - Skills for Sustainable Growth (2010) and Rigour and Responsiveness in Skills (2013). These highlighted the need to simplify the skills system at the same time as making it more rigorous, and ensuring it is responsive to need and engages employers. Since publication of the strategy documents, the Government has introduced traineeships for 16- to 24-year-olds with little or no experience of work, made apprenticeships more employer-led, and begun to diversify the streams of funding for adult education and training.

The Government publishes the overall level of funding available to the further education and skills sector in a funding letter. This also confirms the key policy priorities on which this budget is intended to focus. The 2019-20 letter continues the longer-term strategic direction for the sector for 2016-2020, established by the 2016-17 skills funding letter. This introduced a new Adult Education Budget (see below), and confirmed the Government’s intention of creating more diversified funding routes for adult education and training through contributions from government, employers and individuals. The overarching aim is that of ensuring high quality provision that gives good value for money and focuses on young adults, the low-skilled and those who are unemployed. See the article ‘Development and Current Policy Priorities’ for further information.

The policy priorities set out for 2019-2020 include:

• supporting the opening of new Institutes of Technology from 2019-20, which will deliver higher-level technical skills
• supporting the devolution of the Adult Education Budget (see below)
• exploring the extent to which funding is a barrier to learning for adults, as part of the the wider plan of establishing a National Retraining Scheme, which aims to help people reskill and up-skill as the economy changes
• re-affirming its commitment to an adult digital skills entitlement which will be introduced from 2020-21, following a consultation about how to improve adult basic digital skills which concluded in early January 2019.

Note: In February 2018, the Department for Education (DfE) launched an independent review of post-18 education and funding (the Augar review), which examined the value for money and accessibility of post-18 education. The final report was published in May 2019 and included a number of recommendations for Government to consider, including increasing flexible learning options and lifetime learning; and reforming and refunding the further education college network so it can play a role in the delivery of higher technical and intermediate level training.

For an overview of how adult education funding has changed since 2010, see this House of Commons briefing, published in March 2019.

Mechanisms for allocating public funds 

Funding from the Education and Skills Funding Agency (ESFA) to providers is divided into two main streams: the Adult Education Budget (AEB) and apprenticeship funding for adults. The AEB was introduced in 2016/17 as a single funding stream to replace what had been three separate funding lines – funding for adult further education outside of apprenticeships (provided as part of the Adult Skills Budget); community learning; and discretionary learner support.

Adult Education Budget (AEB) 

The AEB aims to engage adults and provide them with the skills and learning they need to equip them for work, an apprenticeship or other learning. The funding supports the provision of flexible, tailored programmes of learning (which may or may not lead to a qualification) and which engage eligible learners, help build their confidence and/or enhance their wellbeing. In offering funded opportunities to adult learners, providers are also increasingly expected to respond to priorities set by local commissioners and other stakeholders, such as Local Enterprise Partnerships (LEPs). The latter are business-led partnerships between local authorities and local private sector businesses which play a central role in determining local economic priorities and undertaking activities to drive economic growth and job creation, improve infrastructure and raise workforce skills within the local area.

The AEB provides funds to further education colleges, higher education institutions (HEIs), training organisations, and employers that have a funding agreement with the ESFA (and, from 2019-20, the devolved authorities below) to provide education and training. In some instances, learners and / or employers are expected to share responsibility for funding eligible provision. This is known as co-funding.

From 2019-20 onwards, responsibilities for certain adult education functions funded by the AEB have been transferred (or devolved) to 6 Mayoral Combined Authorities (MCAs) and the Greater London Authority (GLA). Responsibility for apprenticeships training and traineeships for 19- to 24-year-olds has not been devolved. From 2019-20, the AEB has therefore been divided into devolved and non-devolved budgets; approximately half has been transferred to the devolved authorities, whilst the remaining half continues to be administered by the ESFA for learners in England that are resident outside of the devolved areas. Further information about how this division is calculated can be found in guidance from the ESFA. Statutory guidance for devolved authorities in exercising their adult education functions has also been published. Further information is provided in this June 2019 House of Commons briefing paper.

The devolved authorities publish their own funding rules which apply to providers in receipt of devolved AEB funding, although they are required to fully fund statutory entitlements to eligible learners (see below) and need to ensure that eligible learners aged 19 and over in their respective areas have access to appropriate education and training to meet the needs of their area. They are supported in this by Skills Advisory Panels – local partnerships which help them understand their current and future skills needs and labour market challenges. Further information can be found in the article on ‘Distribution of responsibilities’.

The table below details the types of provision – or learning aims – that are funded by the ESFA.Where courses lead to qualifications, or qualification components, these must be regulated qualifications that are eligible for AEB funding.

 Source: Adult education budget (AEB) funding rules 2019 to 2020, p.33.

Learners who are employed, but earning a low wage and unable to contribute towards the cost of co-funding fees, may be fully funded by providers. The eligibility requirements for learners to receive full funding are that they:

• are eligible for co-funding
• earn less than £16,009.50 (€18,087.78*) annual gross salary.

Note that from 2020-21, an entitlement to fully-funded digital qualifications will be introduced, alongside the existing legal entitlements to English and maths. Adults with no or low digital skills will have the opportunity to undertake improved digital qualifications based on new national standards. The Department for Education (DfE) consulted on draft subject content for these new qualifications in 2019, in preparation for their first teaching from 2021.

The AEB also funds learning which is not subject to external accreditation in the form of a regulated qualification. This non-regulated activity can be designed, delivered and certificated by a provider or another organisation and can include independent living skills and engagement activity; employability and work skills; labour market re-entry; technical education tasters (short courses); and community learning.

The amount of funding an individual provider receives from the ESFA (note that this also applies for traineeship funding for providers which are funded by devolved authorities) is determined by the following.

• Funding rates for learning aims (whether this is a qualification or other learning activity) and work placements (part of traineeships).
• A funding formula, which is a rate for the learning aim, ‘uplifted’ for disadvantage (to support the most disadvantaged learners to enter and remain in adult education) and for area cost (to support the higher cost of delivering adult education and training provision in some parts of the country, such as London and the South East).
• The earnings method, which is based on the principle that funding follows the learner. It is distributed over the period of learning as monthly instalments and, if the learner leaves early, the monthly instalments to the provider stop. The funding is directly linked to the completion of a learning aim and 20% of the funding is paid only when the learner achieves this aim. There is an annual funding cap (limit) of £4400 (€4971.18*) for each learner each year.
• Learning support funding, which is funding available at a fixed monthly rate of £150 (€169.47*) if a learner has a learning support need associated with an identified learning aim or is entitled to reasonable adjustment (to ensure that they aren’t disadvantaged) under the Equality Act 2010. Where support costs exceed this amount, there are procedures for providers to claim the excess. Learners who need considerable additional support (which costs more than £19,000 – €21,466.5* – in a single funding year) can access Exceptional Learning Support.

*Exchange rate used: €1 = £0.88, ECB, 16 September 2019.

Apprenticeship funding 

In accordance with the apprenticeship funding rules for 2019/20, which apply to all apprenticeship programmes started on or after 1 August 2019, a funded apprenticeship must be a genuine job (i.e. a paid role or roles, with a contract of employment long enough to enable the apprenticeship to be completed), with an accompanying skills development programme. The aim of an apprenticeship programme is for an individual to gain the technical knowledge, practical experience and wider skills needed for their immediate job and future career. These skills are gained through a combination of workplace learning, formal off-the-job training and opportunities to practise new skills in a real work environment.

Apprenticeships are moving from an apprenticeship framework to an apprenticeship standards system (see the subheading ‘Other types of publicly subsidised provision ’ in the article on ‘Main Types of Provision’ in the Adult Education and Training chapter) and, since April 2017, all apprenticeship standards and frameworks have been placed in a funding band. This sets the maximum amount of funding that can be used towards training and assessment costs over the length of each apprenticeship.

The method of funding varies depending on whether the employer pays the apprenticeship levy or is a smaller employer for whom the levy doesn’t apply.

Levy-paying employers

All employers in all sectors with an annual pay bill of more than £3 million (€3.389 million*) pay the apprenticeship levy at a rate of 0.5% of their pay bill. These levy funds are available for employers to spend on apprenticeship training through an account created on the online Digital Apprenticeship Service (DAS). This account enables employers to receive levy funds, manage apprentices, pay training providers and stop or pause payments to training providers. In addition, the Government (via the Education and Skills Funding Agency, ESFA) adds 10% to the funds in the account each month.

Levy-paying employers receive incentive payments towards the additional costs associated with training apprentices aged between 16 and 18, and with training those aged between 19 and 24 who have an Education, Health and Care (EHC) plan or who have been looked after by the local authority.

Non-levy paying employers

Smaller employers, who do not pay the levy, share the cost of training and assessing their apprentices with government through co-investment, with the employer paying 10% (for new apprenticeship starts before 1 April 2019) or 5% (for apprenticeship starts from 1 April 2019) towards the cost of apprenticeship training, and government the remaining 90% or 95%, up to the funding band maximum. Non-levy paying employers will not have digital accounts before mid-2019.

For employers with fewer than 50 employees, the Government funds all apprenticeship training costs up to the maximum value of the funding band where the apprentice is aged between 16 and 18, or where the apprentice is aged between 19 and 24 and either has an EHC plan or has been looked after.

Detailed information on the apprenticeship funding methodology, the rules for levy- and non-levy paying employers, and on the apprenticeship funding bands is available in this government guidance (updated March 2019).

*Exchange rate used: €1 = £0.88, ECB, 16 September 2019.

European funding 

The Education and Skills Funding Agency (ESFA) uses European Social Fund (ESF) structural funds to support adults and young people through a number of initiatives, including the following.

• The Skills Support for the Workforce (SSW) programme aims to help employees in small- and medium-sized enterprises to move on to higher levels of learning or on to apprenticeships.
• The Skills Support for the Unemployed (SSU) programme provides skills support to unemployed individuals on benefits who are looking for work but are not able to get a job because of lack of skills.
• Skills Support for Redundancy (SSR) offers training opportunities to individuals at risk of redundancy.
• Community Grants provide grants to small community organisations to support activities that help people in the hardest to reach communities to enter the labour market.

Capital funding 

Colleges fund capital expenditure themselves using a combination of their own cash, bank borrowings and government grants.

Sixth-form colleges can apply for capital funding to the annual bidding round of the Condition Improvement Fund (CIF). The main priority for CIF is to address significant condition need, keeping sixth-form college buildings safe and in good working order.

Further education colleges can apply for financial support from the Government's restructuring facility. The fund supports further education colleges that need to make major changes following an area review recommendation and cannot fund it themselves.

Financial autonomy and control 

In order to qualify for funding from the Education and Skills Funding Agency (ESFA), all providers must meet the appropriate funding agreements as laid out in contracts for services and conditions of funding.

Fees paid by learners

Depending on the programme or qualification, some adult learners are entitled to full government funding, which means that no tuition fees are charged. Some learners qualify for co-funding by government or loan-funding through the Advanced Learner Loan. Other learners have to meet the full cost of their studies. The level of the fee is set by the provider.

Fully-funded learners 

Learners whose courses are fully-funded include:

• all learners aged 19+ who have not achieved a Level 2 qualification in English and / or maths and who are following a course in English and / or maths up to and including Level 2
• unemployed adults over the age of 24 who are studying for a first full Level 2 qualification or who are following a programme of learning to enable them to progress to Level 2
• 16- to 24-year-olds on traineeship programmes
• 19- to 23-year-old learners who are studying for a first full Level 2 qualification, or who are following a programme of learning to enable them to progress to Level 2, or who are studying for their first full Level 3 qualification.

Learners who are employed, but earning a low wage and unable to contribute towards the cost of co-funding fees, may be fully funded by providers. The eligibility requirements for learners to receive full funding during the trial are that they:

• are eligible for co-funding (see below)
• earn less than £16,009.50 (€18,087.78*) annual gross salary.

Note: the Education and Skills Funding Agency (ESFA), which allocates adult education and training funding to learners, has removed the requirement for all the delivery it funds to be in the form of a qualification.

*Exchange rate used: €1 = £0.88, ECB, 16 September 2019.

Co-funded learners

Learners whose courses are co-funded include:

• employed adults aged 24+ who are studying for a first full Level 2 qualification, or who are following a programme of learning to enable them to progress to Level 2
• employed adults aged 24+ who are following a programme of learning up to and including Level 2, and who have already achieved their first full Level 2 qualification.

Loan-funded learners 

Learners whose courses are loan-funded include employed and unemployed adults aged 24+ who are studying for their first full Level 3 qualification.

For further information on loan funding, see the subheading ‘Advanced Learner Loans’ below.

Financial support for adult learners 

Financial support for adult learners is provided largely through a system of loans, although some grants and bursaries are also available.

Loans 

Advanced Learner Loans have been available for individuals aged 19+ since August 2016 to undertake approved qualifications at Level 3 to Level 6 at an approved college or training provider. Advanced Learner Loans give individuals access to financial support for tuition costs similar to that available in higher education (see the article ‘Financial Support for Learners' in the chapter on Higher Education Funding) and are administered by the Student Loans Company (SLC). Loan eligibility is not income-dependent and borrowers are only required to repay the amount once they have completed the course and are earning over £25,725 (€29,064.51*). Payment is collected through the tax system.

Learners in receipt of Advanced Learner Loans can also apply for funds from their provider’s Loan Bursary Fund to help pay for accommodation and travel; course materials and equipment; childcare; or classroom assistance for a disability or learning difficulty. In some instances these funds must be repaid.

The GOV.UK website provides further information on Advanced Learner Loans, which were introduced in 2013/14 and were originally only available to individuals aged 24+ undertaking a Level 3 or Level 4 qualification.

Professional and Career Development loans were available until January 2019.

Discretionary Learner Support 

Discretionary Learner Support (DLS) is available to learners aged 19+ who are on a further education course and facing financial hardship. Learners apply to their learning provider who decides on the amount and type of support – which may be a repayable loan or a non-repayable direct payment. DLS can be used to help learners with costs including course materials and equipment, childcare, and accommodation and travel.

Grants and bursaries 

Grants and bursaries are also available to adult learners from national and local organisations, including charities. These are sometimes available to students on particular courses, e.g. social work or industrial relations.

*Exchange rate used: €1 = £0.88, ECB, 16 September 2019.

Subsidies for private providers 

Most adult education and training in England is provided by further education colleges, which are non-profit private corporations, or by private training providers and employers. As described in the previous sections of this article, these providers may receive some public funding in respect of this provision. They may also provide full-cost courses, funded only by tuition fees.

Article last reviewed December 2020.