Hundreds of colleges and training providers have between them failed to deliver £73 million of allocated funding, exclusive FE Week analysis has revealed.
Education and Skills Funding Agency figures show that 441 providers delivered less provision over 2016/17 than the money they were allocated from the adult education budget would have allowed.
This will be a source of major frustration for huge swathes of the sector, especially considering the heavy criticism directed recently at the government for wider underfunding of FE.
Julian Gravatt, the deputy chief executive of the Association of Colleges, claimed the fault lies with “restrictive” rules and low funding rates, rather than providers.
And an email sent last month by the ESFA to one provider that underspent, seen by FE Week, states that officials are reviewing college budget forecasts and comparing them with delivery projections.
It goes on to offer “voluntary” ways to lessen the impact of funding claw-backs for under-delivery, such as reducing their current allocations either mid-year or in 2018/19.
We found a whopping shortfall of £73,050,404 between what providers were allocated compared with what they actually delivered.
Of the 441 providers affected, 11 underspent by more than £1,000,000.
This was on top of the £5,059,522 that was paid to 86 colleges and local authority providers for courses that didn’t take place, thanks to a three-per-cent tolerance rule on grant-funded AEB under-delivery.
With the exception of independent training providers, FE institutions receive their AEB funding through a grant, which means they have to repay any cash they’ve been overpaid.
The ESFA no longer automatically reduces AEB allocations year-on-year where providers have under-delivered, which can mean some get allocations that are larger than the level of provision they expect to deliver.
To compound matters, the introduction of FE loans for learners aged 19 to 23 in 2016/17 meant that courses that used to be funded through the AEB were no longer included.
“The government should introduce more flexibility into the rules, because there are millions of adults who could benefit from adult education and retraining”.
Mr Gravatt insisted restrictions are too tight on what can and can’t be funded through the AEB, and urged the government to “introduce more flexibility into the rules, because there are millions of adults who could benefit from adult education and retraining”.
A spokesperson for the University of the Arts, London said that “like many providers” it was affected “by changes in government funding arrangements, from funded adult learning to FE loans for 19+ students”.
UAL was one of the worst culprits, delivering just £83,605-worth of adult education, from an allocation of £1.5 million. Despite this shortfall, its allocation is unchanged for 2017/18.
Capita had the largest shortfall of any provider, with actual delivery almost £2.5 million lower than its £4 million allocation.
A spokesperson said this was due to “a change in customer demand” over the year.
Lambeth College under-delivered by £1.5 million on its £11 million allocation, which Monica Box, the college’s principal, claimed was because it had moved out of one of its campuses at the beginning of that year.
It had been unable to find space for the courses that had been delivered on the closed campus and “this situation had a significant impact on our ability to meet our AEB funding target for 16/17”.
Both Lewisham Southwark College and Telford College had shortfalls of more than £1.5 million, but were unavailable for comment.
Earlier this year Anne Milton admitted that the “mainstream participation element” of the AEB had been underspent by £63 million over the year.
The revelation prompted Mark Dawe, the boss of the Association of Employment and Learning Providers, to demand that any unspent cash be reallocated to other providers.
A change in procurement rules meant that private providers were forced to tender for a slice of just £110 million in AEB funding in 2017/18, while their competitors – most notably colleges and local authorities – did not.
Mr Dawe now wants the government to oblige every provider to have to bid for its share of adult education funding.
The 86 colleges and local authorities allowed to keep £5m
Eighty-six colleges and local authorities were allowed to keep more than £5 million in adult education budget funding for courses that didn’t take place in 2016/17.
The £5,059,522 windfall was the result of a funding rule in which a three-per-cent tolerance is applied to grant-funded AEB under-delivery.
Twelve colleges and one LA provider each received more than £100,000 for provision they didn’t deliver over the year as a result of this rule, according to the ESFA’s 2016/17 final funding year values, published on Wednesday.
The largest payment went to Birmingham Metropolitan College, which delivered adult education worth £13,798,372 against an allocation of £14,189,878 – meaning it was overpaid by £391,506.
The rule states that “where your delivery of the overall AEB is at least 97 per cent of your funding allocation, we will not make a year-end adjustment to your funding allocation and you will not have to pay back any unspent funds”, according to the ESFA’s 2016/17 AEB funding and performance management rules.
However, it doesn’t apply to independent training providers, which will be subject to a “year-end adjustment” to their funding allocations for any under-delivery and “must pay back any unspent funds”.
The AoC’s Julian Gravatt said the existence of the tolerance “recognises the fact that the system itself is quite complicated because every learning aim taken by a student is separately priced”.
At the opposite end of the spectrum, 74 providers over-delivered provision that was not paid for, worth a combined total of £2.6 million.
However, this is set to change: the ESFA recently announced it was “committing to fund three-per-cent over-delivery at the end of the 2018 to 2019 funding year for all providers” to “ensure providers can deliver adult education budget provision with confidence”.
The funding and performance management rules for 2018/19 have yet to be published, so it’s not yet known if the three-per-cent tolerance for under-delivery will remain after 2017/18.