Plans for audit of ‘rip-off’ provider fees shelved

Plans for a government clampdown on “rip-off” provider fees have been shelved as industry leaders look at self-regulation.

The Skills Funding Agency had said providers who subcontracted would need to prove they weren’t charging excessive management fees.

But its plans to introduce stricter controls, revealed in FE Week in July, were dropped in favour of input from within the industry.

That input, due from December, will come from  the Association of Employment and Learning Providers (AELP) and the Association of Colleges (AoC).

An agency spokesperson said: “We are continuing to work with the sector on a range of issues relating to effective supply chain management.

“An external advisory group is currently working with the agency to assess how to effectively implement this.

“We have agreed not to invoke this particular clause until the work is complete.

“This has been communicated to all providers and as soon as the work of the advisory group has been completed, the outcomes will be shared with the sector.”

One subcontractor, who wanted to remain anonymous, spoke to FE Week in June, branding some FE college fees a “rip-off”.

We advocate sector-led self-regulation rather than mandatory structures.”

And Sally Garbett, an independent consultant and trainer for Read On Publications, told FE Week the following month: “One FE college hiked their management fees from 20 to 30 per cent this year and will now retain £1.9m of the 16 to 18 apprenticeship funding.

It had got nearly £5m for 16 to 18 apprentices.

“I find it hard to think that any admin operation could cost £1.9m. And I know that the advice and support they provide amounts to little more than quarterly visits and administrative monitoring.”

However, the days of such fees could be numbered as the agency gets advice on management issues.

Paul Warner, director of employment and skills at the AELP, said: “It was a very positive step by the agency to take these proposals off the table while the advisory group is still undertaking its work.

“This will give the sector an opportunity to come up with solutions that avoid burdening colleges and providers with costs that take money away from frontline training – and this, after all, is what the issue is about.

“I am confident that we are well on course to produce an accord that will help to put an end to poor practice while safeguarding legitimate business arrangements between providers.”

An AoC spokesperson added: “We advocate sector-led self-regulation rather than mandatory structures.

“We are working hard with AELP to ensure that best practices are shared across all providers who sub-contract any of their funding.”