Funded by the Nuffield Foundation
In recent years, there have been a number of major reforms to skills policy, including the introduction of T levels, the roll-out of skills bootcamps and the launch of the lifelong loan entitlement from 2025.
In the 2021 Spending Review, the government allocated £900 million in extra day-to-day funding for adult education and apprenticeships as compared with 2019–20. However, over the last decade, there have been significant cuts to public spending on adult education, which will only be partially offset by this extra money.
Adult education funding system
In the remaining analysis in this chapter, we divide skills spending between classroom-based courses and apprenticeships. Public spending on classroom-based adult education is complex and comes from multiple sources, which we set out in Table 6.1.
Table 6.1. Adult education funding sources
In 2017, the government introduced the apprenticeship levy. Under the levy, large employers with a total pay bill in excess of £3 million pay 0.5% of their pay bill above that level as an apprenticeship levy. This is transferred into a digital account and topped up by 10% of public funding, which can be used to pay for the costs of apprenticeship training. There is also a generous system of public funding for non-levy-paying firms, who only have to pay 5% of the costs of apprenticeship training. As a result, apprenticeships at levy- and non-levy-paying firms receive very similar levels of public funding (up to funding caps for different courses).
Adult education spending over time
In the 2021 Spending Review, the government allocated additional skills funding across a range of different channels:
an extra £550 million for adult education in 2024–25 as compared with 2019–20;
£170 million in increased apprenticeship funding by 2024–25;
£560 million from the UKSPF to be spent on ‘Multiply’ to improve numeracy skills across the UK. This is to be spread over three years and so will amount to about £190 million per year on average.
Taken together, this equates to about £900 million in extra day-to-day spending in cash terms on adult education and apprenticeships in 2024–25 as compared with 2019–20. To set this in historical context, Figure 6.4 shows spending on adult education and apprenticeships since the early 2000s up until the present day, and the projected level of spending in 2024–25.
Total spending on adult skills is set to increase by 22% between 2019–20 and 2024–25. Part of this additional spending has already been realised: total spending on adult education and apprenticeships increased by almost 3% in real terms between 2019–20 and 2021–22. This is likely to be a slight underestimate of the true growth up to 2021–22 as published figures do not include spending on skills bootcamps or the Multiply programme. However, given that these programmes have only recently launched and are not yet fully rolled out, expenditure is likely to be comparatively small in 2021–22, which means the 2021–22 spending figure should not be too far from the true level of spending. Indeed, spending on skills bootcamps is likely to have been under £50 million in 2021–22, increasing to a higher figure of £150 million in 2022–23.
As with spending on 16–18 education, planned increases in spending only reverse a fraction of past cuts: total skills spending in 2024–25 will still be 22% below 2009–10 levels (this includes expected spending on skills bootcamps). Spending on classroom-based adult education has fallen especially sharply, and will still be 40% below 2009–10 levels even with the additional funding.
It is important to note that we only look at direct public spending on adult education. In particular, Figure 6.4 does not include spending on Advanced Learner Loans (ALLs), which totalled around £145 million in the 2021–22 academic year. The repayment terms for these loans are very similar to those for higher education.