Ex-SFA deputy director slams funding management ahead of Ney review

An ex-deputy director of the government’s skills funding agency has called for a return to “supportive” contract management for providers.

Writing in FE Week, Tony Allen has criticised the way the Education and Skills Funding Agency manages funding contracts ahead of an imminent report by Dame Mary Ney (pictured) into oversight of college finances.

Ney’s review is expected to heavily criticise the ESFA for the calculations it uses to determine the financial health scoring and grading; as had it been more robust, it could have intervened in failing providers sooner.

Allen said when he worked at the then named Skills Funding Agency: “We had a much better sense of what was going on.

“We advised and supported, managed risks and dealt with issues as they were arising. Face-to-face support by individual and group methods headed off many early problems.”

Allen worked in government for 13 years in a variety of roles including director of the SFA’s Large Companies Unit, before starting his own apprenticeship consultancy in 2016.

The SFA replaced Learning Skills Councils in 2010 and handled funding for the FE and skills sector before being replaced by the ESFA in 2017.

As part of Department for Education staffing cuts in 2016, the ‘supportive’ approach was dropped in favour of what Allen summarised as “a service desk approach” that is unusual in the public sector for allowing organisations to be given millions of pounds and told to “get on with it”.

“It was made clear that giving advice and support to colleges, and especially independent training providers, was not part of a ‘funding body’s’ role,” he says.

“Nobody was interested in the positive side of contract management or the benefits that could accrue, such as promoting apprenticeship growth.”

The agency now calculates financial health with a scoring system which allows providers to self-grade themselves by inputting three measures: one based on cash, another on debt and then margin.

This set of metrics then formulates an overall financial health grade of ‘outstanding’, ‘good’, ‘requires improvement’ or ‘inadequate’.

Allen believes there is a “clear correlation” between the government’s abandoning the supportive approach and the number of high-profile financial failures among providers, including First4Skills, 3aaa and Hadlow College.

He is the latest sector leader to go public with criticism of the ESFA’s approach to overseeing college finances: Association of Colleges deputy chief executive Julian Gravatt said last week that the ESFA’s current approach was in need of change.

Aside from Ney’s report, it is also expected the National Audit Office’s value for money review on the management of colleges’ financial sustainability will be published in the summer.

A Department for Education spokesperson said: “The ESFA operates a risk-based approach to the oversight and monitoring of colleges, so that those at risk get regular contact with ESFA staff.

“Last year the department announced an independent review into how the government monitors colleges’ finances and financial management. Results of the review will be published in due course.”