Funding for providers of 16-19 education, including further education institutions, already follows the principle of funding per student. Funding is based on the characteristics of the student and the courses they study, alongside student numbers from the previous academic year. The system of lagged funding is well established and understood because it provides institutions with clear allocations each year based on student data, allowing them to make plans with confidence. Where institutions see a particularly large increase in student numbers in a year, they typically qualify for exceptional in-year growth funding, in addition to the lagged funding, to help them with the extra costs of these students, though this is subject to affordability. We do not have any plans to remove the system of lagged funding at this time.
The lagged funding system does not currently apply to funding for adult provision. On 15 July, we published a government consultation on reforms to the further education funding and accountability system, to gather views on how colleges and other providers can focus on supporting learners to develop the skills needed by employers and local labour markets. As part of this, we are seeking views on how government funding can be administered more simply and effectively which includes asking for views on whether we should move to a lagged system for core adult funding.