Funding for education at all levels in Wales is provided by the Welsh Government, which determines overall spending priorities.

The Welsh Government has four main sources of funding:

• funds which are allocated to it by the UK Government
• money raised in Wales through taxation and other charges
• borrowing (e.g. by local authorities (LAs) and other public bodies to finance their capital spending)
• money received from the European Union up to the end of UK’s EU membership

UK Government funding for all three devolved administrations (DAs) (Wales, Scotland and Northern Ireland) is determined as part of the regular Spending Review, and in accordance with the policies set out in the Statement of Funding Policy (2020).

Funds are allocated as a block grant and each devolved administration is free to determine how this grant is allocated in its own budget. Since the late 1970s, annual changes in the block grant have been determined by the ‘Barnett Formula’. The UK Government provides other grants outside the block grant. These are for less predictable demand-driven spending. Changes in these grants are not determined by the Barnett Formula, but are negotiated by the UK and Welsh Governments.

The block grant is paid to the UK Government’s Secretary of State for Wales, who retains the funding needed to run the Wales Office and transfers the balance to the Welsh Government. This forms the Welsh Consolidated Fund and the Welsh Budget sets out how this Fund will be spent. The procedure for setting the Budget is set out in Standing Orders, which are the rules that govern the running of the National Assembly for Wales.

The approved Welsh Government Budget is broken down into main expenditure groups, which include education and broadly mirror ministerial responsibilities. Arrangements for the transmission of funding for education to providers vary by phase of education (early childhood and school education, higher education, and adult education and training).

Early childhood and school education 

Education is provided free of charge from ages 4/5 up to the age of 19. Compulsory education (ages 5 to 16) is provided in schools. From ages 16 to 19, young people may choose to continue their education in a school sixth form or a further education college, undertake work-based learning, or start work.

Free, part-time early years provision is also available for all 3- and 4-year-olds whose parents want it. This is available for 10 hours per week, for 38 weeks of the year. These funded, part-time places are provided in a range of settings, including publicly funded primary and nursery schools; integrated children’s centres offering education, care, family support and health services; and private and voluntary settings. Working parents of 3- and 4-year-olds can access 30 hours of early education and childcare per week for up to 48 weeks of the year. Parents may extend this provision by paying for additional hours of care for their child.

Funding is provided through the Welsh Government’s education budget and is transferred to early years education providers and maintained schools via local authorities (LAs). 

Further education colleges providing education for 16- to 19-year-olds also receive funding direct from the Welsh Government.

Fee-paying independent (private) schools receive no direct public funding. In January 2019, of the 1569 schools in Wales, 75 were independent schools.

Higher education 

Higher education institutions (HEIs) in Wales receive their funding from a variety of public and private sources.

Public funding for teaching and research infrastructure is distributed through the Higher Education Funding Council for Wales (HEFCW), a Welsh Government sponsored body, working within a policy framework set by the Welsh Government.

The direct costs of specific research projects are funded by UK Research and Innovation (UKRI), which brings together the seven Research Councils in the UK, Innovate UK and Research England. UKRI is principally funded through the UK Government's science budget, administered through the Department for Business, Energy and Industrial Strategy (BEIS).

An increasingly large part of funding for HEIs now comes from student tuition fees. Students are able to apply for loans to pay tuition fees and for grants and loans to cover maintenance (living) costs while studying. 

HEIs also receive income from services provided for students (e.g. residences and catering); income from endowments or charitable donations; income from sponsorship; or from obtaining commissions for research projects from industrial or commercial firms.

Reform of HEFCW: In August 2019, the Welsh Government confirmed plans to establish the Commission for Tertiary Education and Research (CTER), which will replace the HEFCW. This new, independent Welsh Government Sponsored Body will oversee strategic planning of educational and skills delivery across all post-compulsory education and training; be responsible for funding, contracting, quality, financial monitoring and audit of all post-compulsory education and training; and manage and fund all Welsh Government supported research and innovation. Subject to legislation, the CTER will be established by 2023.

Adult education and training 

Public funding for formal and informal adult learning is provided by the Welsh Government in accordance with policy objectives and priorities for adult and community learning, and for the development of employability and skills

This funding for post-19 education and training is distributed directly to providers by the Welsh Government. It is made available for adults to:

• participate in formal (accredited) and informal (non-accredited) adult and community learning to acquire new skills
• gain nationally recognised qualifications
• help them improve their skills to enable them to enter the labour market or to respond to the changing demands of the labour market
• undertake apprenticeships (from age 16).

Further education (FE) colleges (non-profit private corporations) are at the centre of provision, but funded programmes are also delivered by employers, training providers, higher education institutions and community venues.

Depending on the learner and type of programme, adult learners may be entitled to full government funding, which means that no tuition fees are charged. Some programmes and learners are part-funded by government. Other learners, or their employers, meet the full cost of their programmes/studies.

Article last reviewed December 2020.