England Training Provider Compliance: Funding, Reporting, and Audit Readiness

Publicly funded training providers in England face overlapping compliance requirements from multiple regulatory bodies. The funding landscape shifted significantly in 2024-2025, with the Adult Education Budget (AEB) replaced by the Adult Skills Fund (ASF), the Education and Skills Funding Agency (ESFA) closed and its functions transferred to the Department for Education (DfE), and Ofsted introducing a renewed Education Inspection Framework from November 2025.

For providers operating across devolved and non-devolved areas, the complexity increases further. Approximately 60% of adult skills funding is now devolved to Mayoral Combined Authorities (MCAs), each with their own commissioning arrangements and funding rules.

The Regulatory Landscape in England

Training providers delivering adult education in England must navigate requirements from several bodies.

• Department for Education (DfE) administers the Adult Skills Fund for learners in non-devolved areas and sets national funding rules, statutory entitlements, and data collection requirements through the Individualised Learner Record (ILR).
• Ofsted inspects the quality of education and training through the renewed Education Inspection Framework, which from November 2025 introduces report cards replacing single overall grades.
• Mayoral Combined Authorities (MCAs) commission and fund adult education for learners resident in devolved areas. Each MCA publishes its own funding and performance management rules, though many align with DfE national rates.
• Ofqual regulates qualifications on the Regulated Qualifications Framework (RQF), which providers must use for funded provision.

The practical challenge for providers is that compliance requires alignment across all these frameworks simultaneously. A learner record error in the ILR can trigger funding clawback. An Ofsted inspection finding can affect future contract allocations. A qualification that loses Ofqual approval mid-year creates immediate delivery issues.

Key Compliance Areas

Adult Skills Fund Compliance

The Adult Skills Fund replaced the Adult Education Budget from the 2024-2025 academic year. The core compliance requirements include learner eligibility verification, funding rate application, evidence retention, and adherence to subcontracting rules.

Providers must verify learner residency using the devolution postcode dataset to determine whether funding comes from DfE (for non-devolved areas) or from the relevant MCA. Statutory entitlements for English, maths, digital skills, and first full qualifications at levels 2 and 3 must be fully funded for eligible learners.

For detailed ASF compliance guidance, see Adult Skills Fund Compliance for Training Providers in England.

Ofsted Inspection Readiness

The renewed Education Inspection Framework introduced in November 2025 replaces single overall effectiveness grades with a report card format. Providers receive graded evaluations across multiple areas including curriculum, teaching quality, achievement, inclusion, leadership, and safeguarding.

Inspections now assess providers on their contribution to meeting local skills needs, with reference to Local Skills Improvement Plans (LSIPs). The emphasis has shifted toward continuous improvement and self-evaluation rather than inspection as a one-off event.

For detailed Ofsted preparation guidance, see Ofsted Inspection Readiness for FE and Training Providers.

ILR Data Compliance

The Individualised Learner Record remains the primary mechanism for collecting learner data in the further education and skills sector. Providers must submit monthly ILR returns through the Submit Learner Data service, with data used to calculate funding, monitor performance, and support national statistics.

Accurate ILR data is essential for funding claims. Errors can result in funding adjustments, audit findings, and performance management interventions. The Provider Data Self-Assessment Toolkit (PDSAT) helps providers identify potential data errors before submission.

For detailed ILR guidance, see ILR Compliance and Data Quality for Training Providers.

Devolution and MCA Commissioning

For providers working with learners in devolved areas, compliance requires understanding individual MCA funding rules. While many MCAs adopt DfE national rates, some set different priorities, funding rates, or eligibility criteria.

The current devolved authorities with adult skills funding responsibility include Greater London Authority, Greater Manchester Combined Authority, West Midlands Combined Authority, Liverpool City Region Combined Authority, West Yorkshire Combined Authority, South Yorkshire Mayoral Combined Authority, Cambridgeshire and Peterborough Combined Authority, Tees Valley Combined Authority, North of Tyne Combined Authority, and North East Mayoral Combined Authority.

Additional areas including East Midlands, York and North Yorkshire, and Cornwall have received or are receiving devolved adult education functions from 2025.

For detailed devolution guidance, see Devolved Adult Skills Funding: MCA Compliance Guide.

Annual Compliance Calendar

Training providers should plan compliance activities around the academic and funding year cycles.

• August to October: New funding year begins. Verify updated funding rules. Check qualification funding approval status. Update learner eligibility verification processes for any rule changes. Submit R01-R03 ILR returns.
• November to January: Mid-year monitoring period. Review PDSAT reports for data quality issues. Address any performance concerns before allocation reviews. Submit R04-R06 ILR returns.
• February to April: Performance review period. Funding bodies assess delivery against allocations. Subcontracting declarations due. Submit R07-R09 ILR returns.
• May to July: Year-end closeout. Final ILR return (R14) due for funding claim. Prepare evidence for any audit activity. Begin planning for next funding year.
• Ofsted inspections can occur at any point, though inspections pause in the weeks before the Christmas break and resume in November following framework changes.

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Evidence and Documentation

Effective compliance requires systematic evidence management. Providers should maintain documentation in several categories.

• Learner eligibility evidence includes residency verification, prior attainment checks, employment status confirmation, and benefit documentation where relevant. Evidence must be available at audit with clear audit trails.
• Learning delivery evidence includes attendance records, learning plans, assessment records, and achievement documentation. For apprenticeships and work-based learning, evidence of employer engagement and on-the-job training is essential.
• Quality assurance evidence includes self-assessment reports, quality improvement plans, observation records, learner feedback, destination data, and employer satisfaction measures.
• Governance and management evidence includes policies, procedures, staff qualifications, safeguarding records, and complaints handling documentation.

Common Compliance Risks

Analysis of audit findings and inspection outcomes reveals recurring compliance issues across the sector.

• Learner eligibility errors remain the most common cause of funding clawback. Issues include incorrect residency verification, failure to check prior attainment for statutory entitlements, and claiming funding for ineligible learning aims.
• ILR data quality issues include incorrect funding model codes, missing or inaccurate outcome data, and inconsistencies between ILR records and learner evidence files.
• Subcontracting non-compliance includes failure to publish required information, exceeding subcontracted delivery limits, and inadequate due diligence on subcontractor quality.
• Safeguarding gaps trigger immediate serious concern in inspections. Issues include incomplete DBS checks, inadequate Prevent duty training, and failure to act on safeguarding concerns.
• Curriculum and teaching quality issues include programmes that do not prepare learners for progression, insufficient employer involvement in curriculum design, and teaching that does not address learners' starting points.

How Yotru Supports Compliance

Training providers use Yotru to support several compliance-related functions.

• Learner documentation can be standardized across cohorts using Yotru's CV and document tools, ensuring consistent formatting and content quality that supports audit evidence requirements.
• Employability outcomes are a growing focus of both funding rules and inspection frameworks. Yotru's platform for training providers helps evidence learner progression and destination tracking.
• Quality assurance benefits from systematic approaches to learner-facing materials. Providers can use Yotru to ensure all learners receive equivalent support regardless of cohort or delivery location.

For providers seeking to improve learner job outcomes, integrated employability support strengthens both compliance positioning and actual learner results.