11 things we learned from the ESFA's first annual report and accounts

The Education and Skills Funding Agency has this afternoon published its annual report for 2017-18, revealing huge bailouts, questionable bonuses and resource issues.

This is the first set of accounts for the agency, which formed last April, bringing together the Education Funding Agency and the Skills Funding Agency.

FE Week has the main findings:

 

  1. The agency reported a loss of £67 million, mainly because of college Exceptional Financial Support loans

The college with the biggest amount waived was Hull, where the ESFA abandoned £21,267,000. The second was Central Sussex College with £12,098,000, followed by Bournville College, which had £10.5 million waived.

Three failed University Technical Colleges – Daventry, Greater Manchester, and Lancashire – had a combined total of £3,137,000 written off as a result of closure.

 

  1. The ESFA gave away failed UTC and studio school sites worth almost £15.5 million as ‘gifts’

When UTC Lancashire closed at the end of 2016/17, the site reverted back to the ESFA which identified the University of Central Lancashire as “the most suitable occupier”. The transfer of the site to the university “resulted in a gift of £10.3 million being recognised”.

Future Tech Studio School closed in August 2017, and the ESFA took over the lease of the site – valued at £3.2 million – from the academy trust which had operated the school. As it does not intend to occupy the site, it has been leased to the Warrington Vale Royal College and recognised as a gift.

Finally, the Devon Studio School closed at the end of 2016/17. The ESFA did not own the site, but the total capital refurbishment and equipment costs paid for the studio school were £3.6 million. The report said the ESFA has made a “clawback agreement” with the academy trust, which is valued as a gift of £2.1 million.

 

  1. The agency underspent by £314 million – largely because of FE

Its budget was £60.7 billion but the actual outturn was £0.3 billion below this.

A total of £159 million of the underspend came from “Revenue Departmental Expenditure Limits”, which included £99 million from the further education Restructuring Facility, “due to inherent uncertainties on the timing and amount of the grants”, and £67 million across apprenticeships, adult education and early years budgets.

The remaining underspend, totalling £155 million, came from its “Capital Departmental Expenditure Limits”. This included £29 million from Restructuring Facility capital grants, and £127 million schools capital.

 

  1. Less than half of the £300 million restructuring facility was used

During 2017-18, the ESFA introduced an end-to-end payment and repayment process to manage the release of a new funding line to colleges – the Restructuring Facility.

As of the end of March just £140 million was paid to support their internal restructuring to achieve greater financial sustainability.

The Association of Colleges previously blamed the slow take-up on “a lack of transparency”.

 

  1. Peter Lauener received the biggest bonus, despite multiple procurement fiascos

The former chief executive was handed a bonus of between £20-25,000 when he left last November – £20,000 higher than any other staff member, even though he didn’t work the full year.

It also came despite debacles with the adult education budget and non-levy procurement processes, which left training providers fuming. The ESFA even had to spend an extra £16 million to fix the AEB tender after it changed rules at the eleventh hour. The agency surprisingly said in today’s accounts that both tenders ran “successfully”.

Lauener’s total pay package was between £120-125,000 this year.

The most highly paid directors at the agency were people responsible for FE.

Matthew Atkinson, director of the Transactions Unit and Kirsty Evans, associate director of adult education, received remuneration packages worth up to £170,000 – largely because of huge pension contributions of £47,000 and £61,000 respectively.

 

  1. £56.6 million allocated to providers to build capacity T-levels work placements

The cash was spread out between 415 training providers who “submitted successful implementation plans, to build capacity for places and to start the deployment of industrial placements”.

 

  1. 110 colleges were in early intervention at some point during the year

Of these: four moved to formal intervention; 27 were no longer in early intervention at the end of the financial year; and nine colleges merged or became an academy.

As at April 2018, three out of 63 sixth-form colleges and 39 out of 167 further education colleges were in formal intervention.

 

  1. 31 more college mergers were completed

During 2017-18, 31 college mergers were implemented, taking the total number of mergers completed since the start of the area review programme to 41.

This is more than two-thirds of the mergers agreed through area reviews and is the “most concentrated period of structural change since the establishment of the further education sector in 1993”.

In addition to the mergers that have been completed, 18 sixth-form colleges have converted to academy status during the year, resulting in the FE sector now standing at 204 colleges and 64 sixth-form colleges.

 

  1. Enquiries to the ESFA have surged because of T-levels, apprenticeship reforms, and the Grenfell Tower fire

The agency handled 5,951 enquiries from, or related to, FE providers throughout the year. This is a 27 per cent increase from 2016-17 (4,687 enquiries). The increase is “largely attributable to recent announcements about T-levels, and work to report cladding on publicly-funded education buildings following the Grenfell Tower fire”.

The ESFA saw an increase in programme queries related to funding, data and systems for training and skills provision, handling 38,233 enquiries in 2017/18 (compared to 33,625 in 2016/17).

The increase has been put down to the growing Register of Apprenticeship Training Providers, along with the impact of a “more complex funding landscape” during the implementation of apprenticeship reform.

 

  1. Speaking of RoATP…

As of 31 March 2018, there was a total of 2,588 organisations on the apprenticeship register, with 998 providers being added in 2017-18, and 92 removed.

 

  1. But all of the added work is giving the ESFA a resource issue

“As the agency’s remit expands further in 2018-19 and beyond, there is a risk that the agency will not have the people resources it needs to be able to effectively deliver all of its priorities and remit,” it said.

Discussions are however taking place with the Department for Education to “review future year resource requirements and to seek agreement to fund sufficient skills and capabilities that are needed”.