The Chancellor's Spending Review includes large funding increases for schools, colleges and adult education.

The overview of the Spending Review, as presented by the DfES, shows major increases in funding:
- Spending on education in England will rise by an average of 6% a year in real terms over the next three years, from £45.0 billion in 2002-03 to £57.8 billion in 2005-06.
- By 2005-06, the proportion of GDP spent on education will rise to a forecast 5.6% from 5.0% in 2001-02.
- Capital investment on education and skills will rise from £1 billion a year in 1997-98 to £7 billion a year by 2005-06, of which £1.2 billion will be through the private finance initiative.

For post-16 education, the major change is that from September 2004, Education Maintenance Allowances will be available throughout England. 16-19 year olds will get up to £30 a week, depending on parental income, with additional bonuses for attendance and achievement.

Other main points for FE and adult education:
- A 1% annual real terms increase in unit of FE funding for further education colleges that commit to stretching performance targets ensuring high standards.
- Improving the basic skills of one and a half million adults by 2007 and reducing by at least 40% the number of adults in the UK workforce lacking NVQ2 or equivalent qualifications by 2010.
- Expanding Modern Apprenticeships and work-related qualifications with over a quarter of young people entering Modern Apprenticeships by 2004.
- More money for science to keep university research at the cutting edge.

Estelle Morris added: "Too many adults have been failed by the system in the past and many have not reached their potential. We’ve got to develop the skills of these adults, both for their own quality of life and if we are going to close the productivity gap with countries such as the US, France and Germany. "By reforming and investing in further education and by getting more adults into training, we will tackle this problem head on."