Bridget Phillipson announces closure of ESFA. Sector Reaction

Education Secretary, Bridget Phillipson has announced the Closure of the Education and Skills Funding Agency (ESFA) on 31 March 2025.

• ESFA set to close in March 2025, bringing the functions into the Department for Education
• Move will mean more joined-up delivery for education settings and ensure financial improvement is central to school improvement
• Comes as part of move to establish Regional Improvement Teams to drive high and rising standards in schools

The Education and Skills Funding Agency (ESFA) is set to close, bringing the current functions into the Department for Education, the government has announced today (Wednesday 11 September).

Since 2017, the ESFA has administered funding to deliver education and skills, from early years through to adulthood.  Under the new structure, this work will continue, but will be delivered from within the department, giving education settings a single point of contact for financial management and support.

The government is determined to drive high and rising standards for every child, and effective financial management is a cornerstone for successful schools. To ensure financial improvement is central to school improvement, the ESFA’s Schools Financial Support and Oversight (SFSO) teams will move to Regions Group from 1 October. This will support the launch of Regional Improvement Teams by January 2025.

Other core functions will be moved into the department as part of the Operations and Infrastructure Group in March 2025, centralising the agency’s centres of excellence together with related functions in the department.

Susan Acland-Hood, Permanent Secretary at the Department for Education, said:

“The ESFA has been an important part of the education landscape since 2017. Now is the right time to move the agency’s functions back into the Department, building on the good work done, and enabling a single, joined-up approach to funding and regulation to improve accountability and drive school improvement seamlessly and well.

“We will be working closely with stakeholders across the education sector as well as with our excellent staff to finalise and deliver our plans for bringing the agency into the heart of the Department.” 

David Withey, Chief Executive of ESFA said: 

“Moving the ESFA’s functions into the Department will help ensure a fully joined up regulatory environment, and a more cohesive approach to the service we offer to colleges, schools and independent training providers.

“I am proud of the achievements of the ESFA – delivering timely and accurate funding, positive support to providers in financial stress and strong assurance to taxpayers on how their funding is used. That has been driven by the quality of our people, and I am really confident that our strong performance will continue as part of the department”

Establishing Regional Improvement Teams is a key element of the government’s plan for raising school standards – a single regulator model with governance and accountability sitting in one place. These teams will, from early 2025, work with struggling schools to quickly and directly address areas of weakness.”

This new structure will therefore ensure the department is set up to deliver its priorities, while ensuring ESFA’s expertise, service delivery and functions are protected.

Education Secretary, Bridget Phillipson Statement:

Today I am announcing the closure of the Education and Skills Funding Agency on 31 March 2025. The functions of the ESFA will be integrated into the core Department for Education. The ESFA is currently an executive agency of the Department.

This will happen in two stages. Schools Financial Support and Oversight functions will transfer from 1 October 2024 and be brought together with Regions Group, part of the Department. This will provide a single seamless voice to schools and ensure that financial improvement is central to school improvement.

We will then centralise our funding and assurance functions into the Department for Education alongside the closure on 31 March 2025, putting certainty, support and assurance in the core of the department.

Moving the agency functions back into the department will bring benefits to the individuals and organisations we support as well as to the taxpayer. It will enable a single, joined-up approach to funding and regulation to improve accountability.

We will be working closely with our staff, unions, stakeholders across the education sector to finalise and deliver our plans for closing the agency.

Sector reaction to the closure of the ESFA

David Hughes, Chief Executive, Association of Colleges (AoC), said:

“The work of the Education and Skills Funding Agency (ESFA) is often under-estimated and taken for granted; on the whole payments to colleges go very smoothly and this is testament to the hard work the ESFA staff do day in, day out. I’m sure that will continue after this structural change.

“I am broadly supportive of this decision by the Department for Education, and I hope that these changes bring efficiencies and can allow for a simpler funding system for colleges. As public sector institutions, colleges are forced to spend too much of their time dealing with multiple funding lines, rules and regulations which get in the way of effective learning and skills. Strong work has already begun to simplify this system, and that must continue through these changes.”

Ben Rowland, Chief Executive Officer of AELP, said:

“AELP welcomes today’s news that the ESFA’s functions are to be integrated into the Department for Education. Bringing operational funding and compliance closer to policy and strategy should be a positive move, and something AELP highlighted in the review of the ESFA in 2022. This change is also an opportunity to remove regulatory duplication, an increasing concern for AELP’s members. That said, this is not a fundamental change, and audit and compliance should continue as normal. At AELP, we have built a strong relationship with the ESFA, with recent collaboration on the handbook. We look forward to continuing this relationship, while the integration is taking place.”

Commenting on Education Secretary Bridget Phillipson’s announcement of the closure of the Education and Skills Funding Agency on 31 March 2025, Pepe Di’Iasio, General Secretary of the Association of School and College Leaders, said:

“If this reorganisation produces a more efficient and joined-up approach to the oversight of school and college funding that is obviously something we welcome. However, shifting the deckchairs will not solve the overriding problem that the current level of school and college funding is totally inadequate. This is the issue that we most need the government to address at the forthcoming autumn budget.”