The Education and Skills Funding Agency (ESFA) is set to be closed next year as part of the latest changes to the academies system being rolled out under the new Labour government.

Education secretary Bridget Phillipson has announced that the ESFA will close on 31 March 2025.

The functions of the ESFA will be integrated into the Department for Education, which said the move will “support the launch of Regional Improvement Teams by January 2025”.

The announcement comes after the DfE said last week that under changes to inspections outcomes, schools identified as having weaknesses in sub-categories will be offered support from new Regional Improvement Teams.

ESFA closure ‘will improve accountability’

Ms Phillipson said that moving the agency’s functions back into the department “will enable a single, joined-up approach to funding and regulation to improve accountability”.

In response to the move, one school leaders’ union warned that “shifting the deckchairs” will not solve the “totally inadequate” funding levels for schools and colleges.

But Leora Cruddas, chief executive of the Confederation of School Trusts, said her organisation had “long called for a single regulator” and described the move as an “opportunity to strengthen regulation” of the sector.

The ESFA - an executive agency of the DfE - was first set up under former Conservative education secretary Justine Greening in 2017.

It funds academy trusts, special schools, colleges and maintained schools and early years institutions, through local authorities. When formed, it brought together the Skills Funding Agency and the Education Funding Agency.

• ESFA delays: School leaders’ workload warning as ESFA announces election delays
• ESFA chief: Late teacher pay decision undermined MAT budgets
• Government: ESFA to face independent review

The organisation is responsible for £70 billion in funding for the education and training sector and is responsible for providing accountability to Parliament over the use of public funds.

In addition, it provides financial support for providers, and contacts trusts about their financial health.

The education secretary had previously warned while in opposition that there was a need for more transparency and accountability in the regional “layer” of the school system.

Closure in two steps

Ms Phillipson said that the closure of the ESFA will take place in two stages.

The schools financial support and oversight functions will transfer from 1 October and be brought together with the Regions Group within the DfE

Ms Phillipson said the move will provide “a single, seamless voice to schools and ensure that financial improvement is central to school improvement”.

The ESFA will formally close on 31 March 2025, when the government will centralise funding and assurance functions into the DfE. This will put “certainty, support and assurance in the core of the department”, the DfE said.

Commenting on the announcement, Pepe Di’Iasio, general secretary of the Association of School and College Leaders, said the union welcomed the move “if this reorganisation produces a more efficient and joined-up approach to the oversight of school and college funding”.

But he added: “Shifting the deckchairs will not solve the overriding problem that the current level of school and college funding is totally inadequate.”

However, he called on the government to address school funding shortfalls in the forthcoming autumn budget.

David Withey, chief executive of ESFA, said the change will “ensure a fully joined-up regulatory environment, and a more cohesive approach to the service we offer to colleges, schools and independent training providers”.