Adult Skills Fund Compliance for Training Providers in England

The Adult Skills Fund is the primary funding stream for adult education and training in England for learners aged 19 and over. Administered by the Department for Education (following the closure of the Education and Skills Funding Agency in March 2025), the ASF funds qualifications, English and maths provision, essential digital skills, and community learning.

For providers, ASF compliance requires attention to three interconnected areas: verifying learner eligibility before enrollment, applying correct funding rates and models, and maintaining evidence that can withstand audit scrutiny. Failures in any area can result in funding clawback, performance management intervention, or contract termination.

Learner Eligibility Requirements

Determining learner eligibility is the foundation of ASF compliance. Providers must verify eligibility at the start of each learning aim, not just at initial enrollment.

Residency Requirements

To be eligible for DfE-funded ASF, learners must be resident in a non-devolved area of England. The devolution postcode dataset, published by DfE, identifies which postcodes are funded by DfE and which fall under Mayoral Combined Authority jurisdiction.

Learners resident in devolved areas are funded by their relevant MCA, not by DfE. Providers must check the learner's home postcode at the start of each learning aim using the current devolution postcode dataset. The Source of Funding (SOF) code recorded in the ILR must match the appropriate funding body.

Residency is determined by where the learner lives, not where they study. A learner living in Greater Manchester but studying at a provider in a non-devolved area would be funded by Greater Manchester Combined Authority, not DfE.

Age Requirements

Learners must be aged 19 or over on 31 August within the funding year to be funded through the ASF. Learners aged 16-18 are funded through separate 16-19 funding arrangements.

Learners aged 19-24 who started programmes when aged 16-18 and are continuing those programmes ("19+ continuers") remain funded through 16-19 arrangements, not ASF.

Immigration Status

Eligible learners must have the right to live in England and meet residency requirements. This includes British citizens, EU Settlement Scheme holders with settled or pre-settled status, refugees, and individuals with other qualifying immigration statuses.

Providers must verify immigration status and retain evidence. For individuals using the Home Office online system (following the move to fully online status verification from January 2025), providers can use share codes to confirm residency status.

Learners on certain visa types may have restrictions on access to public funds. Providers should verify eligibility using the detailed immigration status guidance in the ASF funding rules.

Statutory Entitlements

The ASF includes four statutory entitlements that must be fully funded for eligible learners. Providers cannot charge co-funding contributions for statutory entitlement provision.

• English and maths up to and including level 2 for learners aged 19 and over who have not previously attained a GCSE grade A* to C (or grade 4 or higher). This includes functional skills qualifications and GCSE resits.
• First full level 2 qualification for learners aged 19 to 23 who do not already hold a full level 2 or higher qualification.
• First full level 3 qualification for learners aged 19 to 23 who do not already hold a full level 3 or higher qualification.
• Essential digital skills up to and including level 1 for learners aged 19 and over whose digital skills are assessed as being below level 1.

Funding Models and Rates

The ASF uses several funding models for different types of provision. The funding model determines how funding is calculated and the applicable rules.

• Adult skills (Funding model 35) covers most classroom-based adult education including regulated qualifications and functional skills. Funding is calculated using hourly rates multiplied by guided learning hours (GLH), with rates varying by sector subject area.
• Tailored learning (Funding model 11) replaced community learning designations. This covers provision that does not lead to regulated qualifications but supports personal development, health and wellbeing, or progression to further learning.
• Free courses for jobs provision receives uplift payments on top of base qualification funding rates. From 2025-2026, the offer has expanded to include level 2 qualifications in the construction sector.

Funding Rates

The 2024-2025 academic year introduced new skills funding bands, replacing the previous matrix of rates. Qualifications are assigned to funding bands based on their sector subject area at tier 2 level, with hourly rates ranging from approximately £6 to £12 per guided learning hour depending on the sector.

Providers must use the correct funding band for each qualification. The Learning Aim Reference Application (LARS) database contains funding validity and rate information for qualifications approved for ASF funding.

Co-funding

For learners who do not qualify for full funding and are not in statutory entitlement provision, the ASF operates a co-funding model. The learner (or their employer) is expected to contribute, with DfE funding reduced by 50% of the base qualification rate.

The earnings threshold determines full funding eligibility for learners aged 24 and over. For 2025-2026, learners earning below £25,750 gross annual salary qualify for full funding on most provision. Providers must verify and document earnings evidence.

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Evidence Requirements

Audit-ready evidence is fundamental to ASF compliance. Providers must maintain documentation that supports every funding claim.

Learner File Evidence

Each learner file should contain evidence supporting eligibility and funding claims. This includes identity verification (passport, driving license, or other accepted documents), residency evidence (utility bills, bank statements, or similar showing the learner's home address), and evidence of right to study where immigration status requires verification.

For statutory entitlements, prior attainment declarations and any available verification (such as Personal Learning Record checks) should be retained. For earnings-based full funding, evidence of gross annual salary should be documented.

Learning Delivery Evidence

Providers must evidence that learning actually took place as claimed. This includes enrollment documentation showing the learner agreed to undertake the learning aim, attendance records demonstrating participation, assessment records showing progress and achievement, and evidence of the planned end date and any withdrawals.

For achievement funding, evidence of qualification certification or other outcome must be retained.

Retention Periods

Evidence must be retained for six years after the end of the funding year, or longer if specified in the funding agreement. Providers should maintain secure, accessible storage systems that allow retrieval for audit purposes.

Subcontracting Rules

Providers who subcontract delivery must comply with specific subcontracting rules. These apply to any delivery by a third party to a learner's programme of learning.

Publication Requirements

Lead providers must publish annual subcontracting declarations including total value of subcontracted provision, names of subcontractors, contract values, and the rationale for subcontracting. This information must be published on the provider's website and reported through the subcontractor declaration system.

Funding Retention

When subcontracting, the lead provider may retain a portion of funding for management and quality assurance functions. The proportion retained must be reasonable and justifiable. Excessive retention that does not reflect genuine management costs is a compliance risk.

Due Diligence

Lead providers are responsible for the quality and compliance of their subcontractors. Due diligence must be conducted before entering subcontracting arrangements and maintained throughout the contract period. This includes verification of the subcontractor's capacity, quality, and financial health.

Common Audit Findings

Analysis of funding audit outcomes reveals recurring compliance issues that providers should address proactively.

• Learner eligibility errors are the most frequent cause of funding clawback. Issues include enrolling learners without verifying residency, claiming statutory entitlement funding without checking prior attainment, and failing to update eligibility checks at the start of new learning aims.
• Evidence gaps result in funding adjustments even where delivery occurred correctly. Missing enrollment agreements, incomplete attendance records, and undocumented withdrawals are common findings.
• ILR data mismatches arise when the data submitted does not align with learner file evidence. Incorrect funding model codes, wrong start or end dates, and missing outcome data all create audit issues.
• Funding rate errors include applying incorrect sector subject area rates, claiming uplift payments for ineligible provision, and incorrect application of co-funding reductions.

Performance Management

DfE monitors provider performance against allocations and may take action where delivery significantly under- or over-delivers against contract values.

• Under-delivery may result in allocation reductions in subsequent years. Providers with persistent under-delivery may face contract non-renewal.
• Over-delivery beyond agreed thresholds is generally not funded. Providers must manage their delivery within allocation limits unless specific in-year growth arrangements have been agreed.
• Quality concerns identified through Ofsted inspection or other monitoring may trigger additional conditions of funding, notices to improve, or contract termination. Providers graded "inadequate" face immediate intervention.

Performance data is shared between DfE and devolved authorities, so issues in one funding stream can affect relationships with other commissioners.

Compliance Checklist

Providers should verify the following as part of regular compliance monitoring.

Before enrollment:

• Learner residency verified against current devolution postcode dataset
• Immigration status and right to study confirmed where applicable
• Prior attainment checked for statutory entitlement provision
• Earnings evidence obtained for earnings-based full funding
• Learning aim funding validity confirmed in LARS

During delivery:

• Attendance recorded accurately and consistently
• Assessment records maintained showing progress
• Any changes to planned end dates documented
• Withdrawals recorded with reasons and dates

At completion:

• Achievement or other outcome recorded in ILR
• Certification evidence retained
• Learner file complete and audit-ready

Ongoing:

• PDSAT reports reviewed monthly
• Sample learner files audited internally
• Subcontractor performance monitored
• Staff trained on current funding rules

How Yotru Supports Compliance

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