Huge adult education budget procurement underspend by colleges

Colleges underspent their original funding allocations awarded through the controversial 2017-18 adult education budget (AEB) procurement by a huge 26 per cent, new FE Week analysis has shown.

In stark contrast, all other providers exceeded their initial contracts by 31 per cent.

On top of this, four of the 19 colleges that won in the tender failed to deliver any of their procured AEB funding, and admitted that their non-procured contracts were sufficient to meet demand. Despite this, all four were awarded much larger procured contracts in 2018-19.

Perhaps it’s time the NAO took a hard look at what’s going on

The findings will be frustrating for the many private providers who were given much smaller than expected AEB contracts, or denied them altogether, following the tender.

“How much evidence does the government need that the current system of AEB funding is totally discredited and delivering poor value for the local communities that the programme is meant to support?” said Mark Dawe, chief executive of the Association of Employment and Learning Providers.

“As the latest FE Week analysis once again shows, independent training providers have no problem using up their allocations in full, and when they hear that the Department for Education hands back to the Treasury over £300 million in underspends from various budgets, they get doubly frustrated.”

Independent providers were told in 2016 their AEB contracts would come to an end in July 2017, rather than being automatically renewed as normal, and they were forced to take part in a procurement process for a pot worth around £110 million.

Colleges did not have to take part in the bidding war, as their contracts were to be automatically renewed, but they were allowed to tender to gain additional funding.

Nineteen colleges subsequently won £5,071,369 between them.

FE Week’s analysis compared figures showing the ESFA’s final 2017-18 funding year values with the first contract allocation for November 2017 and their final allocation for June 2018.

By June, their combined final allocation dropped slightly to £5,063,495.

Figures published last week show the colleges actually ended up spending £3,999,962 – which means they missed their year-end allocation by 26 per cent compared to November, and 21 per cent compared to July.

Just four colleges achieved or overspent their year-end allocation.

The DfE said the funding that was not utilised was taken back and then recycled into the next year’s allocations budget, which is then distributed across all AEB providers. 

Non-college providers were awarded £81,964,837 between them in November 2017, but their allocations increased to £115,705,143 in July 2018. Final figures show all non-colleges spent £107,609,652 by the end of the academic year, which is 31 per cent up on their original allocation but 7 per cent down on their July figures.

The four colleges to not spend any of their procured contracts in 2017-18 were: Abingdon & Witney, Middlesbrough, South Gloucestershire and Stroud, and St Helens.

A spokesperson for Abingdon & Witney College said: “In 2017-18 our non-procured AEB allocation proved to be sufficient to meet the demands of the local market. However, in 2018-19 we will fully utilise our procured contract.”

The DfE extended the contracts it procured for 2017-18 to 2018-19 and maintained funding levels.

However, it said allocations could have increased for several reasons, including: the previous year contracts were only for nine months following delays with procurement, and growth funding available in 2017-18 was consolidated into the following year.

Abingdon & Witney College was given a £230,679 procured AEB to use in 2018-19 – a 250 per cent increase on the £65,869 available to it in 2017-18 that it failed to spend.

A St Helens College spokesperson said following its merger in December 2017 with Knowsley Community College that it “revisited all business plans and as a result, the additional procured allocation was deemed to be no longer required”.

It has been given £328,208 procured AEB for 2018-19.

Zoe Lewis, principal of Middlesbrough College, said when her college bid for procured adult education budget funding in 2017-18 that it was in the process of setting up “sector-based work academies to expand our work with unemployed people”.

But this took “longer than we’d anticipated and we therefore did not use our allocation last year”. 

However, Middlesbrough College’s new academies are “now established” and it is “on track” to spend its procured contract for 2018-19, which amounts to £416,974, as well as “exceeding our AEB contract delivery by more than 3 per cent”.

South Gloucestershire and Stroud College, which has £263,674 procured AEB to use in 2018-19, declined to comment.

The DfE said it was aware of non-delivery issues but would not comment on specific cases. It added that options for future contracting of AEB are being reviewed.

Dawe said giving bigger procured contracts to institutions who didn’t deliver on their previous ones “just adds insult to injury”.

“Perhaps it’s time for the National Audit Office to take a hard look at what’s going on here,” he added.