This is an update on adult skills funding allocations for the academic year 2025 to 2026, including changes to our funding methodology.

Funding allocations timeline

As confirmed in our allocations timeline, they aim to complete the issue of funding allocations for advanced learner loans and adult skills fund (ASF) in April 2025.

They will issue all allocations through manage your education and skills funding.

Changes to funding methodology for ASF

They will communicate all the information you need to understand your funding allocation in our allocations guidance. They will update this for the different types of adult funding allocations as they start to issue them.

they are changing elements of our funding methodology for this academic year. Our adjustments aim to ensure that funding available reaches providers with the strongest delivery track record. This means that our allocations methodology still recognises where providers have delivered above their allocations. they are applying the new funding rates to the allocations in the same way they did last year. They are making this choice because these new funding rates recognise delivery in certain subjects, such as engineering or construction, which will support people to get good jobs and deliver economic growth for the nation.

In previous academic years, there has been under-delivery against the budget and they could afford to over allocate. Now that delivery has improved, they cannot over allocate the budget for academic year 2025 to 2026.

Devolution

They will continue to reduce allocations to account for devolution to new areas. In academic year 2025 to 2026 there will be 3 new areas receiving ASF as part of devolution plans:

• York and North Yorkshire
• East Midlands
• Cornwall

These areas will be responsible for funding providers serving learners in their area to manage ASF.

Over-delivery

When calculating your baseline allocation for academic year 2025 to 2026, they will take into account over-delivery from 2023 to 2024, up to 10%.

Under-delivery

They are making these changes for all grant and contract for services providers.

Providers with under-delivery between 97% and 100% of their allocation

In previous years, they have been able to keep your baseline calculation at 100%. This year, they will reduce your baseline to your actual delivery.

Providers with under-delivery in academic year 2022 to 2023 and 2023 to 2024

they will not provide the additional 10% uplift buffer when they reduce your funding allocation.

Affordability factor

Once they have completed our delivery calculations for academic year 2025 to 2026, they will apply a 6% reduction across all organisations and providers to ensure that the allocations are affordable within the overall budget.

This will apply to these funding lines :

• core ASF
• tailored learning

They do not need to apply the affordability factor to Free Courses for Jobs to deliver within budget. Across the ASF, they are not reducing the rate at which provision is paid for, and the ASF funding rates recognise providers for delivering courses that are valuable to learners and the economy.

Sector Reaction

David Hughes, Chief Executive, Association of Colleges said:

“Colleges in the areas of England not covered by devolution deals have responded over recent years to government encouragement by shifting their adult skills funding into courses which support key sectors of the economy and helping people get into work, so it is ironic that instead of a budget increase, there is a 6% slice to allocations to keep Department for Education spending within a budget that has not increased in cash terms since 2016.

“Adult skills funding delivers exactly what the Work and Pensions Secretary of State has said is needed – helping people get the skills and confidence to gain productive work as well as supporting the government’s economic growth objectives but cuts like this make it harder and harder to reach the adults who want that support.” 

University and College Union (UCU) general secretary Jo Grady said:

‘This shockingly cruel cut to adult education funding will hit learners hard and makes it less likely they will gain the skills needed to get good jobs or move on to further education.

‘It is especially perverse to be cutting adult education budgets while simultaneously slashing disability benefits on the basis it will get people into work.

‘Labour urgently needs to change course and provide the sector the funding needed to boost adult educator pay and give people the educational opportunities that will get them into work and helping to grow the economy.’