The Education and Skills Funding Agency has made a U-turn over funding for adult education.

In early April, the government announced that a 90 per cent threshold for delivery on its adult education budget (AEB) would be introduced. Last year, the threshold was lowered to 68 per cent, due to the coronavirus pandemic and its impact on the education sector.

The news sparked outrage throughout the sector, and today the ESFA said it was allowing providers to submit business cases to avoid losing crucial funding through no fault of their own. 

In an update, the ESFA said: “Following the year-end claims submissions, whilst the 90 per cent threshold remains unchanged, we are developing arrangements to allow grant-funded providers to apply for support on one or both of the following grounds:

• That local circumstances made it impossible for the provider to deliver at or close to the 90 per cent level and recovery of funds based on the 90 per cent threshold would lead to the provider’s costs of AEB [adult education budget] delivery not being covered.
• That applying the full amount of AEB clawback would cause significant financial difficulties for the provider

“The evidence supplied in any business case would be assessed against criteria to determine whether support should be provided, and if so, how much. The details of the new arrangements, including how this will operate, are being finalised and we expect to publish these in early September 2021.”

Providers given chance to avoid clawback of adult education funding

Julian Gravatt, the Association of Colleges’ deputy chief executive, said: “After months of AoC and others calling on government to rethink this rigid approach to the adult education budget clawback, we are pleased to see that colleges will be allowed to submit business cases to avoid losing crucial funding through no fault of their own.

“The hardline 10 per cent tolerance was never going to be fair in a year disrupted by the pandemic from the outset and now more than ever, colleges need to stabilise their finances. The timing will be tight, with colleges given just a few weeks to return financial information, but ESFA’s flexibility is better late than never.”  

Eileen Milner, chief executive of the ESFA, said: “As we move to recovery, we have learnt that grant-funded providers continue to deliver successfully both face to face and remotely where needed. However, we recognise that there is a risk that some colleges will face financial difficulty so we will continue to monitor them, offer early support, and intervene when necessary.

“As part of the support offer, after extensive talks and listening to the sector, we are developing a process to consider business cases through which providers apply for support.

“The process will consider whether local circumstances made it impossible for the provider to deliver at or close to the 90 per cent level and whether recovery of funds based on the 90 per cent threshold would lead to the provider’s costs of AEB delivery not being covered. It will then determine how much (if any) help should be provided.

“We will continue to fund delivery up to 103 per cent of providers’ ESFA-funded AEB grant allocation. We’ve increased the threshold from 110 per cent to 130 per cent for 16 to 18 traineeships (without a 16 to 19 contract) and 19 to 24 traineeships in 2020 to 2021.

“AEB reconciliation arrangements will return to normal in the 2021 to 2022 academic year, with the usual reconciliation rate of 97 per cent of delivery.”

Toby Perkins, Labour’s shadow minister for further education and skills, said: “The Conservatives have finally listened to Labour and U-turned to prevent colleges seeing thousands in vital funding being clawed back by the Treasury.  

“However, this decision has come so late that colleges may well have already made redundancies based on the financial crisis they expected.

“Once again this shows the Conservatives’ disrespect for the further education sector, which undermines any claims they have to being committed to a skills-based recovery.”