An executive agency of the Government which manages the delivery of £75 billion of public funding to tens of thousands of education and skills providers is set to close next year, the Education Secretary has announced.

Bridget Phillipson said the functions of the Education and Skills Funding Agency (ESFA) will be fully integrated into the core Department for Education (DfE) by the end of March 2025.

In a written ministerial statement, the Education Secretary said she hoped the closure of the executive agency of the DfE will “bring benefits” to education organisations as well as the taxpayer.

She said: “It will enable a single, joined-up approach to funding and regulation to improve accountability.”

The functions of the ESFA – which allocates funding to 25,000 early years settings, schools and further education providers in England – will be integrated into the DfE in two stages.

From October 1, the agency’s Schools Financial Support and Oversight functions will transfer over to the DfE to provide a “single seamless voice to schools”, the Education Secretary said.

It is hoped the move – which comes ahead of the launch of Regional Improvement Teams by January 2025 – will ensure financial improvement is central to school improvement.

In a statement released on Wednesday, Ms Phillipson said the Government will then centralise their funding and assurance functions into the DfE alongside the closure of the ESFA on March 31.

She said: “Moving the agency functions back into the department will bring benefits to the individuals and organisations we support as well as to the taxpayer.”

Since 2017, the ESFA – an executive agency of the DfE – has administered funding to deliver education and skills, from early years through to adulthood.

Under the new structure, this work will continue but will be delivered from within the heart of the DfE.

Ms Phillipson added: “We will be working closely with our staff, unions, stakeholders across the education sector to finalise and deliver our plans for closing the agency.”

Pepe Di’Iasio, general secretary of the Association of School and College Leaders (ASCL), said: “If this reorganisation produces a more efficient and joined-up approach to the oversight of school and college funding that is obviously something we welcome.

“However, shifting the deckchairs will not solve the overriding problem that the current level of school and college funding is totally inadequate.

“This is the issue that we most need the Government to address at the forthcoming autumn Budget.”

David Hughes, chief executive of the Association of Colleges (AoC), said: “I am broadly supportive of this decision by the Department for Education, and I hope that these changes bring efficiencies and can allow for a simpler funding system for colleges.

“As public sector institutions, colleges are forced to spend too much of their time dealing with multiple funding lines, rules and regulations which get in the way of effective learning and skills.

“Strong work has already begun to simplify this system, and that must continue through these changes.”

Susan Acland-Hood, permanent secretary at the DfE, said: “Now is the right time to move the agency’s functions back into the department, building on the good work done, and enabling a single, joined-up approach to funding and regulation to improve accountability and drive school improvement seamlessly and well.”

David Withey, chief executive of the ESFA, said: “I am proud of the achievements of the ESFA – delivering timely and accurate funding, positive support to providers in financial stress and strong assurance to taxpayers on how their funding is used.

“That has been driven by the quality of our people, and I am really confident that our strong performance will continue as part of the department.”