Hundreds of learners will be hoping for new providers after the Skills Funding Agency (SFA) said it would tear up two training contracts — forcing the closure of one provider and criticism of the decision to axe funding.

Both Four Counties Training Limited (FCT), in West London, and Venture Learning Limited (VL), in Greater Manchester, independent learning providers (ILPs) were rated as inadequate by Ofsted in January having previously been graded as outstanding.

The FCT grade four result saw the SFA reveal it would be tearing up its contract, as did the Education Funding Agency (EFA), which said it would terminate its funding of “less than five learners in total” at the end of 2014/15.

The SFA is also terminating its contract with VL, where a spokesperson told FE Week it would therefore have to close in June.

It is understood there are 191 apprentices at VL and 961 at FCT but, said an SFA spokesperson, “we anticipate that this number will reduce prior to the contracts ending, as some apprentices will complete their learning. We are currently working to transfer learners to other providers.”

Barry Lord-Gambles, contract director at VL, said the firm, which runs hairdressing apprenticeships and also offers childcare and business administration training, had issued redundancy notices to its 17 staff and would close after its SFA contract was terminated on May 31.

He added that “business had never been better before the inadequate report” for VL, which was allocated £661,313 for 16 to 18 apprenticeships and £122,934 for 19+ apprenticeships in 2013/14.

He said: “We could have easily sorted out the issues highlighted by Ofsted and I don’t think it’s fair that inadequate-rated colleges keep their funding but ILPs are forced to close.”

An FCT spokesperson said the firm, which had more than 600 transport operations and maintenance apprentices in December and also runs health and social care apprenticeships, “did not anticipate” having to close, despite losing the government funding from August.

He added that the firm, which was allocated £259,859 for 16 to 18 apprenticeships and £1.2m for 19+ apprenticeships by the SFA and £209,913 by the EFA in 2013/14, had a “very high employer and learner satisfaction rate”.

“The number of learners to be transferred is much lower than 961 as we have been given a three-month extension to complete as many as possible,” he said.

“A number of clients are also negotiating with FCT to continue using our services on a commercial basis, rather than see learners transferred to less experienced providers.”

He added: “It does seem very odd a provider with 21 years’ experience and previously excellent results, including two grade ones in inspection, is not given the chance to rectify the situation.”

The SFA spokesperson said: “This decision [terminate contracts] was taken in line with our Approach to Intervention guidelines following an inadequate Ofsted inspection.”

The EFA declined to comment on its rules for pulling funding from grade four ILPs.