Guidance

Adult education and skills funding allocations: update for 2025 to 2026

Published 18 March 2025

Applies to England

1. Update

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

2. Funding allocations timeline

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

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

3. Changes to funding methodology for ASF

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

We 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. We are applying the new funding rates to the allocations in the same way we did last year. We 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 we could afford to over allocate. Now that delivery has improved, we cannot over allocate the budget for academic year 2025 to 2026.

If you have concerns regarding the impact of these changes and need to discuss this, please contact your place-based team contact or our customer help centre. 

4. Devolution

We 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.

5. Over-delivery

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

6. Under-delivery

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

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

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

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

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

7. Affordability factor

Once we have completed our delivery calculations for academic year 2025 to 2026, we 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

We do not need to apply the affordability factor to Free Courses for Jobs to deliver within budget. Across the ASF, we 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.