Adult education budget used to bail out struggling colleges

The adult education budget is being used to cover the cost of emergency handouts to struggling colleges – causing outrage with the Department for Education.

But in the same week that news broke of a £63 million AEB underspend, the government has repeatedly refused to say exactly how much is being used for these bailouts.

AELP boss Mark Dawe said he was appalled that AEB cash was being used for this purpose.

“Complete transparency is needed and instead of bailing out failed institutions, any underspend should be reallocated to support the participation of learners by effective providers,” he said.

“We shouldn’t need clever sleuthing from FE Week to get a fuller picture of the scale of the bailouts; nor should we just receive incomplete answers on the size of the AEB underspend and what it’s being used for.”

FE Week found out about this unplanned use of the AEB during a weeks-long attempt to discover how much government money is being spent on failing institutions.

This was itself prompted by the DfE’s accidental revelation earlier this month that more than £11 million had been dished out to 12 colleges in December alone.

At the time, the DfE told us that information about colleges’ exceptional financial support (EFS) funding could be “found in individual colleges’ annual accounts” and that “the value of the EFS loan book is reported in the Education and Skills Funding Agency annual accounts”.

EFS is only available to colleges that are “encountering financial or cashflow difficulties that put the continuation of provision at risk”, and which have “exhausted all other options” – and it can come as a loan or a grant.

When we asked two weeks ago whether details of the EFS grants were published anywhere, we were told they were paid from the AEB – information which was included in the ESFA’s 2016/17 accounts.

However, a spokesperson conceded the accounts did not include the level of detail we were looking for.

FE Week is still waiting for a response to a Freedom of Information request submitted last month asking for more details on how much EFS has been doled out so far.

We may not get one however; the DfE is claiming an exemption on the basis that it intends to publish the information in the future.

The £63 million underspend was revealed via a parliamentary question answered by skills minister Anne Milton. Her response was met with anger and disbelief by Mr Dawe earlier this week.

He said it was “disappointing” that the answer only referred to the “mainstream participation element of the budget” and not the whole budget.

The heavily over-subscribed AEB tender – which saw independent training providers bid for their share of £110 million – was evidence of “unmet demand” for the budget, he argued.

However, Julian Gravatt, the deputy chief executive at the Association of Colleges, said the AEB underspend happened “because the rules are too restrictive and because the funding rates are too low”.

“If the DfE used money from this budget for temporary financial support, this is better than not using it all. Better still would be to fund adult further education properly,” he said.

FE Week has reported on a number of colleges that are dependent on EFS support – including Bradford College, which was bailed out twice in one month, and Stoke-on-Trent College.

The bailout tap will be turned off later this year once the insolvency regime – introduced as part of the Technical and Further Education Act 2017 – comes into effect.