Functional literacy in Anglo-Saxon England was surprisingly high, especially by the end of the period, although it would likely be less so in the eighth century. English as a vernacular language was widespread and could be read by many people if not necessarily written. Latin, on the other hand, was an entirely different case altogether and was unlikely to be spoken by anyone who was not from the Church or from the highest echelons of society with the luxury of a tutor. At the 709 Synod near York, for example, the senior laymen had to ask for the papal letters addressed to the synod to be translated and read out in English as they were unable to read or understand the Latin. So by the end of the eighth century, a Mercian priest would be able to read and write a language his parishoners likely would not, converse in it openly and likely have a reasonable education.

By the 870s on the other hand, there was a widespread government-lead encouragement of learning for the establishment of a distributed bureaucracy, with King Alfred mandating that ealdormen in charge of towns or shires be able to read and capable of basic numeracy.

Sources: Textual and Material Culture in Anglo-Saxon England by D. G. Scragg, Kingship, Legislation and Power in Anglo-Saxon England by Gale R. Owen-Crocker and Brian W. Schneider and Anglo-Saxon England by Frank Stenton, also my own field.