Training providers said they could be left thousands of pounds “out-of-pocket” after the government unexpectedly doubled functional skills rates.
The Association of Employment Learning and Providers (AELP) is currently in talks with the Skills Funding Agency (SFA) about the impact English and maths rates more than doubling has had upon growth requests from providers to the agency for the first quarter of the year (Q1).
SFA issues providers contracts and at each quarter assesses how they’re performing. If they’re underperforming they can deduct money and if they’re over-performing providers can put in a case for growth to get more money — a growth request.
Paul Warner, director of employment and skills at AELP, said many providers had expressed “anxiety and confusion” because the functional skills rate rose after Q1 growth requests had been submitted, meaning many providers had now “topped out their contracts”. This has led to some having to turn away apprentices with the loss of thousands of pounds.
Matt Garvey, managing director of West Berkshire Training Consortium, told FE Week the functional skills rates increase was welcomed but the “unintended consequence” was his not-for-profit organisation would have to use money from reserves so they didn’t have to turn away learners.
“We’ve got one group of 12 unemployed adults starting this week and we didn’t feel we could cancel them so we have paid out of our own pocket,” he said.
“We cannot put any additional starts on.
“We’re now having to remove learners from our contracts and having to find providers who are underperforming to see if they’ll take them off us which is giving us a competitive disadvantage,” he said.
“It feels uncomfortable but our priority is that the learner can continue.”
He said the issue would cost his organisation between £7,000 and £10,000 per group.
“So far we’ve had to pay £30,000 delivery that we can’t fund in the pipeline,” he said.
Mr Warner said: “We have had a good deal of anxiety and confusion over Q1 growth requests. Many providers have run out of their contracts faster than they thought they would. Some are now in a situation where because they’ve topped out their contract value they cannot afford to start further starts because there’s no guarantee they’ll get further growth in Q2.”
“We’re trying to work with SFA to figure out how to make the Q2 growth process get over this issue. Through no fault of their own some providers were caught out by a rates rise that they weren’t able to factor into their growth requests.”
The SFA said in their publication Performance Management of the Sector for Quarter Two 2012/13: “The agency will look at funding needed to support changes introduced for English and Maths. Then, where funding allows, we will continue to expand the offer to the unemployed and provide growth for Apprenticeships where there is clear employer demand.”
An SFA spokesperson said: “The updated allocation/maximum contract values will be published at the end of January.
“Following the quarter 2 review the agency will publish the updated allocations/maximum contract values during April.”