Providers that drop to a grade three Ofsted rating will be allowed to keep taking on new trainees under new government guidelines.
Providers that fell below a good (grade two) rating previously had to stop taking on new trainees, but they could let existing learners finish their programmes.
Now providers that were outstanding (grade one) or good when they started running traineeships, but are deemed by inspectors to be in need of improvement (grade three) within the 2013/14 academic year can carry on recruiting trainees.
It is thought the government relaxed the rules because of a disappointing uptake for its flagship youth unemployment policy launched last August for 16 to 23-year-olds.
A document explaining the revised rules, published jointly by the Skills Funding Agency (SFA) and Education Funding Agency (EFA), stated: “We do not see this approach as compromising the quality of the traineeship programme.
“We are minimising the risk to quality provision, but employing a pragmatic approach which will minimise the disruption of the delivery of traineeships.”
The report added providers with a grade three rating will now be expected to “improve rapidly” with help from an assigned Ofsted inspector, before they are re-inspected within 18 months.
Stewart Segal (pictured left), chief executive of the Association of Employment and Learning Providers, said: “This is a welcome and pragmatic amendment that will benefit young people and employers already engaged with traineeships.”
Julian Gravatt (pictured right), assistant chief executive at the Association of Colleges, said: “Traineeships are a new programme and the funding agencies are having to adjust the rules month by month as they see how they work in practice.
“We’ve always had some doubts about a rigid use of Ofsted grades to judge which organisations can and cannot offer traineeships, so we had no objections to this latest amendment.”
The document stressed providers must not increase the size of their traineeship programmes until they are re-inspected and achieve a grade one or two.
Providers that drop to a grade three in 2013/14 and are not re-inspected before the start of 2014/15 can continue to deliver in 2014/15.
However, they cannot deliver beyond those levels delivered in 2013/14 until they are re-inspected and achieve a grade one or two.
They will have to stop running traineeships if they fall short of a grade one or two in their first re-inspection.
Lynne Sedgmore, executive director of the 157 Group, said: “We are already concerned that important programmes such as traineeships are not available to all based on often out-of-date inspection results. These changes seem to muddy the waters still further.”
Despite there being no official figures yet, Ofsted FE and skills director Matthew Coffey told delegates at the Association of Colleges conference last November the traineeship uptake had been “disappointing”.
Kwik Fit said last month it had dropped plans to launch a traineeship programme after Ofsted inspectors gave it a grade three rating.
The firm came under fire when an FE Week investigation, which led to a BBC Newsnight probe, found it was looking to take on trainees, unpaid, for up to 936 hours across five months.
A Kwik Fit spokesperson said the firm had no plans to relaunch its traineeship programme in light of the rule changes for the “foreseeable future”.