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An update on key funding issues for colleges

16-18 funding

After a slight delay - this information is normally available by December- DfE has confirmed 16-18 funding rates for 2024-5. AoC's statement in the announcement is here

On the details:

  • Funding rates are up 1.89%. The main (band 5) rate rises by £90 (from £4,753 to £4,843).
  • Officials say that the 2021 spending review commitment to maintain funding rates per student by the “forecast GDP deflator increase” which is 1.69%. The extra 0.2% keeps the 16-18 increase in line with the schools increase and is equivalent to £10 per student
  • There are also details on the maths and resit funding first announced by the PM when he promised an Advanced British Standard. There’s a £375 per resit subject English and maths payment (£375 in 2024-5; details for future years not yet confirmed). This is for all those who have “not yet attained a grade 9 to 4 in GCSE or equivalent in either or both subjects” which means that it is available whatever the level of course (ie can be paid for those taking Level 4 courses) and also for 19+ continuers
  • DfE are introducing minimum teaching hours for resit students: 100 hours a year for English and 140 hours for Maths. This will be added to the condition of funding and, given 30 weeks of teaching before GCSEs start, work out at 3 hours week for English and 4.5% for maths. They won’t be collecting the data for this until 2025-6 (via new ILR and school census fields) and any clawback related to this condition of funding won’t take effect until 2027-8 allocations so there is a little bit of time to act but it’s an unwelcome DfE interference in timetables of colleges (the organisations who accept resit students), is not based on any research and, by our estimates, will require another 400 full-time equivalent English and 800 Maths teachers in colleges. The late confirmation of GCSE results and the restrictive admissions policies of many 11-18 schools (in that they often refuse to let pupils stay in sixth forms if they get less than a 4) makes it very hard for colleges to predict numbers of resit students in advance. This will compound their problem in planning timetables. Rather than focusing on how to help with this problem, DfE is introducing a new financial penalty.
  • There’s also a new £900 Core Maths Premium paid for every instance (every Core Maths enrolment) alongside a higher £900 Advanced Maths Premium which is paid for every instance above the revised 2023-4 baselines (calculated from 2019-20 and 2020-1 data). CMP and AMP cannot both be paid for the same student.
  • Many colleges will be getting larger 16-18 allocations in 2024-5 to teach the extra numbers of students they have enrolled this year (funding works on a lagged basis) but the 1.89% increase in rates is a significant slowdown on the cash increases in recent years which took the headline rate up 18% in 4 years (up from £4,000), significantly increased programme factors and delivered enough extra money in 2023 to allow a majority of colleges to make a 6.5% pay rise and to deal with higher increases in the national minimum wage.
  • It is worth noting that the extra cash for 16-18 education in recent years has barely kept up with inflation (CPI has risen 22% since late 2019) and has also been used to fund a 7% increase in teaching hours.
  • 16-18 funding is only a share of college income (averages around 55%) and other rates are more static (0% inflation assumption overall, increases in some skills rates as part of a new formula and increases in rates for 5% of apprenticeship standards) Unless there are further delays.
  • Colleges expect to get most of their funding information by the end of March and will be setting budgets in June and July.

Julian Gravatt
13 February 2024


College funding basics

  • Courses free at the point of use: Colleges get funding to keep education and training free or low cost for young people (aged under 19) or for adults to overcome some form of disadvantage
  • National and formula-based: A national funding formula has been used for colleges for 25 years
  • Funding is a tool of policy: Government uses funding to influence behaviour (eg. Funding is uses to ensure colleges enrol right students on the right course at the lowest cost).
  • Education activity drives funding: Who students are and what they do, affects income
  • Data: Vast data collection systems make everything work.

There are several funding systems in further education and they differ from the systems used to fund schools and universities.


Main funding lines

  • 16-to-18 education: The Education and Skills Funding Agency (ESFA) pays colleges based on the numbers of students they are expected to enroll using national funding rates adjusted by a weighted average calculation based on their characteristics. Colleges need to offer study programmes including A-levels. Students without GCSE in English or maths at grade 4 have to resit. National funding rates did not change between 2013 and 2019, were increased by 4.7% in 2020-1 and by 8% in 2022-3 (to pay for extra teaching hours)
  • Adult education budget (AEB): ESFA uses a different formula for adults. About half of the adult education budget has been devolved since 2019-20. AEB is used to support courses at lower levels, including English and maths to Level 2, first full level 2 and first full level 3 up to age 23.
  • Apprenticeships: ESFA is manages funding for apprenticeships. Levy paying employers get an account and contract directly with approved providers at rates determined by a formula. Colleges and providers have an allocation for non-levy paying employers using the same formula.
  • Student loans: The student Loan Company administers tuition fees on behalf of HE and FE students