AEB funding rules published in draft - but without threatened subcontracting limits

Draft rules for funding the adult education budget in 2020/21 have not included any changes to subcontracting despite the government’s warning of an overhaul.

The sector had been bracing itself for big amendments, including a funding and distance cap on the provision, following the Education and Skills Funding Agency’s ‘subcontracting post-16 education and training’ consultation, which closed on March 17.

The plan was to start implementing rule changes at the start of 2020/21 but none surfaced in the draft rules published today.

The ESFA said the rules are “our current advice for the funding year” and they “may publish further updates about the impact of Covid-19 on our funding rules as these become clear”.

The subcontracting consultation was launched earlier this year after the agency’s boss, Eileen Milner, sent a sector-wide letter warning she will take strong action against any provider that does not play by their rules, following scandals such as at Brooklands College.

When the call for views got underway in February, the ESFA said it was aiming to “eliminate subcontracting that is undertaken for purely financial reasons”.

Ten recommendations followed, including a percentage cap on provision of 25 per cent of a provider’s ESFA post-16 income in 2021/22, and further reducing that percentage to 17.5 per cent in 2022/23 and to 10 per cent in 2023/24.

It also proposed that where the aggregate value of a subcontractor’s delivery exceeds more than £3 million of ESFA funded provision, the agency would make a referral to Ofsted for the subcontractor to be subject to a direct inspection.

Another key recommendation was to introduce “stronger criteria for subcontracted provision delivered at a distance”, stating that as a “broad rule of thumb”, partners should be no more than one hour away from the prime contractor by car.

Further plans include stricter controls on the circumstances in which the whole of a learner’s programme can be subcontracted, as well as tighter oversight of sport related provision as it is a “particular concern” to the ESFA.

A new “rationale for subcontracting” requirement as part of provider subcontracting declarations is also in the works. Providers will need to “state the educational intent for entering into subcontracting arrangements and that governors and boards have agreed this”.

The consultation states that “entering into subcontracting arrangements for financial gain” will not be considered as an acceptable reason for doing so.

FE Week analysis of ESFA data shows that subcontracting accounted for £650 million in government funding for adults in 2018/19, and the practice fully or partially funded 25,230 students aged 16 to 19 at 587 subcontractors.