Nearly £1 billion of funding allocations for the tertiary sector confirmed by Medr

Universities, colleges and education providers across Wales will receive a share of almost £1 billion this year, Medr has confirmed as it shared details of its funding allocations for 2025/26.

In January Medr set out the funding assumptions it intended to provide to tertiary education providers for the 2025/26 academic year. Following final confirmation of its budget from the Welsh Government, Medr has now confirmed those allocations and has provided further details about how budgets will be distributed across the tertiary sector.

This is the first time in Wales that total budgets from across the tertiary sector have been presented alongside each other, and includes breakdowns across apprenticeships, local authority school sixth forms, local authority adult community learning, further education and higher education, including research and innovation.

James Owen, Chief Executive of Medr, said: “This is a significant milestone for education in Wales. The publication of our first funding allocations demonstrates our commitment to transparency  and high-quality education and research opportunities for all. With Medr now operational for a year, we are excited to see the positive impact this investment will have on our learners and communities.

“Our comprehensive approach to funding, aligned with the priorities set out in our Strategic Plan, will support institutions to be well-equipped to provide learners with the best possible experiences and meet the challenges of the future.”

Table 1: Total funding for the 2025/26 academic year

	AY 2024/25 £ million	AY 2025/26 £ million
Ring-fenced
Apprenticeship contract	134.520	134.520
Junior apprenticeships	0.400	0.600
Core
Local authority sixth form *	116.664	116.853
Local authority Adult Community Learning *	6.479	6.479
Further education mainstream	409.066	422.826
Further education Additional Learning Support	16.741	16.741
Further education Financial Contingency Fund	7.192	6.880
Withheld from the allocations to support increased participation once evidenced in 2025/26.		21.126
Higher education research and innovation ** 1	97.295	97.121
Higher education teaching funding ** 2	69.434	69.745
Degree apprenticeships	9.411	9.411
Strategic
Access, well-being and inclusion ***	23.962	28.469
Employability and skills ***	3.320	3.320
Research and innovation ***	1.733	2.000
Student/learner and workforce ***	8.254	8.254
Data and technology ***	3.993	3.993
Strategic developments	2.250	3.500
Capital
Higher education	10.000	10.000
Further education digital	3.000	3.000
Total	923.240	964.838

Minor inconsistencies may occur due to rounding.

Providers were informed of their core allocations well ahead of the 2025/26 academic year.

Medr’s funding allocations for academic year 2025/26

Notes

In January 2025, Medr wrote to providers to set out, in broad terms, the funding assumptions that underlie the planned distribution of its budget for the 2025/26 academic year, and received final confirmation of its budget from the Welsh Government in March 2025.

Medr funding assumptions for academic year 2025/26 (January 2025)

The Welsh Government allocates funding to Medr annually on a financial year (FY) basis from 1 April to 31 March. Medr allocates funding to the majority of eligible institutions and providers on an academic year (AY) basis from 1 August to 31 July. It uses this format, FY 2025-26, to denote the financial year to 31 March 2026, and this format, AY 2025/26, to denote the academic year to 31 July 2026.

Table 1 notes:

¹ This includes Quality Research (QR), postgraduate research (PGR) and Research Wales Innovation Fund (RWIF).

² This includes full and part-time premiums, credit-based and per capita allocations.

*  Historically, local authority sixth form and Adult Community Learning allocations have been derived on a financial year basis. For AY 2025/26, Medr’s Board agreed that local authorities would receive a 16 month allocation from April 2025 through to July 2026, allowing Medr to move all tertiary core provision funding to an academic year budget cycle. The above table includes the 12 month commitment only covering the academic year.

**  In AY 2024/25, Medr’s predecessor body the Higher Education Funding Council for Wales (HEFCW) applied a one-off pro rata reduction of £11 million to core funding lines for higher education and research to reflect a reduction in the funding available from the Welsh Government. As Welsh Government funding in FY 2025-26 does not reverse this position, the figures are now presented in this table based on the figures post-reduction, pro rated against each line for comparative purposes.

***  Strategic budgets are made up of strategic funding lines transferred to Medr from the Welsh Government and HEFCW. 49 strategic funding lines have been grouped into six thematic budget lines. A largely cash flat budget has allowed for stability in the levels of funding with increases in the access, well-being and inclusion budget (£2 million to recognise the Welsh Government steer of a £2 million increase for mental health support) and the research and innovation budget. It has also allowed for development of proposals for approximately £3.5 million of currently unallocated funding to support tertiary education providers to deliver against Medr’s operating plan. These groupings may change in subsequent years following evaluation of the impact and outcomes of these strategic investments.

Local authority funding for school sixth forms

A unit rate increase of 3.0% has been applied to the funding rates per learner. The methodology for calculating the local authority sixth forms’ allocations has been used since FY 2015-16 and was slightly amended in FY 2023-24 to account for a consistent drop-off of pupil headcount numbers from Year 10 to Year 11. For FY 2025-26 it is slightly amended further due to an added contribution for Teacher Pension Scheme (TPS), added at a rate of 3.91%. The funding methodology uses a combination of historic learner numbers and predicted demographic learner numbers for each local authority, multiplying these by a calculated average programme value. Uplifts for deprivation, sparsity and Welsh medium provision, along with a 3% local authority centrally-retained allowance and the 3.91% TPS contribution, are added to determine the final allocation. Two local authorities, Merthyr Tydfil and Blaenau Gwent, have no school sixth form provision.

Further education

Full-time provision includes A-level and vocational provision across all educational levels from entry level to level 4 to around 44,000 learners. The methodology for calculating the full-time allocations has been used since 2015-16 with a small changes made in the 2023/24 academic year to account for a consistent drop-off of pupil headcount numbers from Year 10 to Year 11. For the 2025-26 financial year, it is slightly amended further due to an added contribution provided by the Welsh Government towards the increased costs of the Teacher Pension Scheme (TPS) for FE providers, added at a rate of 2.56%. The funding methodology uses a combination of historic learner numbers and predicted demographic learner numbers for each provider, multiplying these by a calculated average programme value. Uplifts for deprivation, sparsity and Welsh medium provision along with a 3% centrally retained allowance, 2% estate maintenance allowance and the now 2.56% TPS contribution are added to this to determine the final full-time allocation. A unit rate increase of 3.0% has been applied to the funding rates per learner.

Additional learning support (ALS) allocations

The total ALS budget available is proportionally split according to each college’s mainstream allocation. This recognises that where a college sees an increase/decrease in learners, it is likely that ALS needs will increase/decrease proportionally.

Higher education

Medr has allocated strategic funding to the Open University in Wales to the value of £605k, the same amount as in AY 2024/25.

Performance element funding for conservatoire provision is allocated to the University of South Wales for provision at the Royal Welsh College of Music and Drama (RWCMD), which is part of the University of South Wales Group. An allocation of £585k to support strategic developments at the RWCMD is provided in addition to the performance element funding provided through the expensive subjects premium. This strategic funding is the same amount as last year.

Premium funding includes allocations for:

Full-time undergraduate provision for:

• Expensive subjects (clinical medicine/dentistry and conservatoire performance element provision).
• Higher cost subjects (non-clinical medicine/dentistry, science, engineering and technology, and mathematical sciences, IT and computing).
• Welsh medium modules.

Part-time undergraduate provision for:

• Welsh medium modules.
• Access and retention.

All modes and levels for:

• Disability premium.  

Research and innovation allocations include:

• Quality Research (QR) funding, which rewards sustainable research excellence;
• Research Wales Innovation Fund (RWIF), which supports the range of knowledge exchange activities that result in economic and social impact, including the wider civic mission role of providers; and
• Postgraduate research (PGR) training.

Strategic budgets

Medr inherited 49 strategic budget lines from HEFCW and the Welsh Government. To enable a more tertiary-focused strategic approach, these separate budget lines have been merged into a smaller number of strategic pots. This signals a move towards a tertiary education approach, breaking down barriers between parts of the tertiary education sector in the way funding is allocated in the future, in line with Medr’s Strategic Plan.

In the future Medr will consult on and publish a funding policy that will set out principles for funding tertiary education, research and innovation in Wales. This will be informed by the new higher education register, where only those in the core category of the register will be eligible for higher education and research and innovation funding. The policy will also take into account Medr’s strategic duties.