Providers failed to deliver on nearly 17 per cent of the Skills Funding Agency’s £3.8bn allocation for the past academic year, FE Week understands.

An industry source said around £630m of agency funding had not been delivered by providers.

And changes announced last week mean colleges will keep the cash without having delivered training.

The agency said it “did not recognise” the £630m figure. A spokesperson referred instead to its financial year accounts and cash that had not been handed out to providers.

This figure, 0.6 per cent of the agency’s total skills budget, was included in its accounts published in June. But it wasn’t until two months later that the last provider funding returns reached the agency, which would have allowed it to identify under-delivery.

“The agency published its 2011/12 accounts in June 2012,” said the agency spokesperson.

“This confirmed we delivered to within 0.6 per cent of the total skills budget we are accountable for. The agency does not recognise the figures quoted.”

It would seem the under-spend happened because providers were not allowed to fund courses they previously offered.”

It declined to review its statement after FE Week pointed out the agency was referring to its accounts rather than allocations.

“We have nothing more to add to our statement. Our budget position is set out in our published accounts,” said the spokesperson.

The government announced in November two years ago that for 2011/12 it would no longer fully-fund learners on inactive benefits, such as working tax credit.

As a result, many colleges either cut courses or struggled to meet recruitment targets.

FE Week also understands that increased apprenticeship funding targets have not been met.

In a policy revision published online, the agency said: “The sector continues to work on aligning provision to meet the needs of learners and employers.”

Shadow FE minister Gordon Marsden said the government was to blame for the alleged £630m under-delivery by providers.

“This figure suggests almost a fifth of agency’s entire allocations for last year has been under-utilised,” he said.

“It seems to relate to failures in terms of delivery and failures to understand the impact of changes in government policies on its budget.

“This speaks volumes for the way in which providers and learners appear to have been let down.

“It would seem the under-spend happened because providers were not allowed to fund courses they previously offered.

“I shall be writing to the agency and the minister urgently to ask for a full explanation of the situation.”

The alleged under-delivery was revealed to FE Week just days before the agency relaxed its rules on how much cash could be kept by colleges who failed to deliver provision they’d been paid for.

Last year’s rules, relating to the 2010/11 academic year, allowed colleges to keep all of their funding, even if they delivered only 97 per cent of their allocation.

But now a more complex “reconciliation” system allows colleges that deliver just 90 per cent of the provision they’ve been paid for to hold on to nearly 100 per cent of their allocation.

However, the agency spokesperson defended the system.

“The agency’s performance management systems ensure that allocations reflect the performance of the sector,” she said.

“We work at all times to ensure public funding is provided for the benefit of learners and employers.”


Editor’s comment

The scale of under-delivery, as revealed by a trusted source and reported on our front page this week, is astonishing — and scandalous.

It would be easy to blame providers for failing to enrol enough students and missing their funding target.

Yet, this outcome was inevitable when the government re-wrote the funding eligibility rule book for 2011/12.

It completely underestimated how many employed learners on inactive benefits would be turned off by the prospect of tuition fees.

Consequently, some colleges underrecruited while others simply faced a shortfall and were forced to cut or shut courses.

The problem was clear to me and many others from the outset. In fact, early last year I posed the question in The Guardian: “How exactly are colleges and training providers expected to make up the shortfall?”

And so it has transpired, there appears to be a huge shortfall, and many colleges will keep funding that has no delivery attached.

Essentially, colleges are being rewarded for failure (in some cases for the second year in a row).

Conversely, colleges that spent money to hit their targets, as well as private training providers that are only paid on delivery, will see no such reward.

A sad day for taxpayers, learners, fairness and FE.