AELP fear funding agency considering outright subcontracting ban

The Association of Employment and Learning Providers (AELP) has today recommended a new, more “robust approach” to subcontracting in an effort to avoid an outright ban.

Subcontracting in FE, the practice of one provider paying another to deliver the training, has never been far from scandal and controversy. It has already been banned for advanced learner loan funded courses.

In what the AELP describes as a “last chance saloon” for subcontracting apprenticeships and adult education budget funding, its chief executive, Mark Dawe, claims “by incorporating the recommendations in our submission into its rules, the agency can avoid ministers demanding a ban”.

“Examples of subcontracting malpractice do not justify at all a call for an outright ban on subcontracting”

The ESFA announced plans last month for a radical overhaul of its subcontracting rules amid high-profile cases of fraud, while Ofsted has launched research into the practice.

In its submission, the AELP said the “vast majority” of subcontracting is “high quality” and officials must not take a “damagingly blunt” approach to address the behaviours of a small number of providers.

The requirement and expectations of main providers who subcontract out government funding should be “much more robust” in order to ensure integrity.

AELP has produced a checklist of the “minimum expectations” of the main provider, which they say is significantly above and beyond the current ESFA rules and “should be adopted across the sector”.

This includes: acceptable fees, charges and additional services, quality monitoring and quality assurance, MIS, audit and ILR services, and contracting management (read the full report here).

The association says there also needs to be clarity on the “different types of subcontracting and what is and what isn’t a subcontract to help alleviate confusion across the sector, including with employers”.

AELP has used its submission paper to again call again for fees and charges not to exceed 20 per cent of the funding – a recommendation that has been adopted by the Greater London Authority and other mayoral combined authorities with devolved adult education funding.

This maximum cap would “block the profiteering of a small number of providers who commoditise their privileged access to government funding and ensure value for money”.

AELP adds that there should be a clear policy on management fees and charges being only applicable to core funding and not additional funding “designed to support specific groups of learners or to support certain additional needs”.

ESFA should also procure funding from providers that is “continuously subcontracted out on a transitional basis”, the association’s submission said.

“Recent examples of subcontracting malpractice do not justify at all a call for an outright ban on subcontracting in the sector, but a much more robust approach on the part of the ESFA and Ofsted would make a huge difference in stopping further examples occurring,” Dawe (pictured) said.

“Over the last ten years, AELP feels that the ESFA has rather dragged its heels in making the required changes needed in its funding rules to put the issue to bed and we are probably now in the last chance saloon.”

“Let’s have no more prevarication around this issue”

He added: “Let’s have no more prevarication around this issue which has been damaging the sector’s reputation for far too long. Change the rules now.”

Eileen Milner, the chief executive of the ESFA, sent a sector-wide letter last month warning of rule changes to subcontracting and that she will take strong action against any provider that abuses the system.

She said there are currently 11 live investigations into subcontracting, with issues underpinning them ranging in seriousness from “complacency and mismanagement”, through to matters of “deliberate and systematic fraud”.

She revealed the government will review its current subcontracting rules later this year.

Ofsted’s research will mainly look at whether management fees, which have controversially grown to as much as 40 per cent on subcontract values, are having a detrimental impact on learners’ education.

There have been a number of high-profile subcontracting scandals in recent years. The most recent involved Brooklands College and resulted in the ESFA demanding a £20 million clawback.