The Education and Skills Funding Agency, which distributes £62 billion of education funding, has published its annual accounts for the year end March 31, 2021.
Here’s your FE Week guide to the key findings …
Funding overclaims from ITPs contribute heavily to £9.5m cash losses
The ESFA recorded 48 cases of “cash losses” totalling £9.5 million in 2020-21.
The largest sums lost related to unrecoverable overpayments to independent training providers that went bust.
The debts arise mainly where providers have overstated funding claims for delivery during a contract, for example where a learner started but did not complete.
In such circumstances, the ESFA seeks to recover the overpayments from providers in cash or from deductions against future payments. But in a number of cases, funds are unable to be recovered due to the provider closing down. If, after a prolonged period of time, insufficient funds from the provider’s receiver or liquidator are received or the provider is dissolved, the ESFA simply abandons the claim.
Un-recoverable grant overpayments above £300,000 in 2020-21 include:
Accent On Training Ltd = £2,466,000
Positive Outcomes Ltd = £2,073,000
Provident Training Ltd = £1,352,000
Education & Youth Services Ltd = £532,000
AMS Nationwide Ltd = £608,000
Bankrupt college makes up biggest proportion of £33m waived funding claims
In 2020-21, there were 24 claims waived or abandoned by the ESFA totalling £33 million.
Balances owed by academies and colleges may in some circumstances be waived to facilitate the re-brokerage of the academy or college to a more sustainable academy trust or college, or support closure.
West Kent and Ashford College, which is one of the first two colleges to be going through the education administration process, saw £20.6 million waived in 2020-21. The ESFA estimated that the total cost of putting West Kent and Ashford College, and its sister Hadlow College, through administration will probably run to over £60 million.
Another notable waiver for FE was Watford UTC, which had £463,000 abandoned.
£500k lost on Erasmus plans
The ESFA posted “fruitless payments” of £520,000 relating to work staff did on evaluating the feasibility of a successor to the Erasmus+ grant scheme in the run-up to Brexit.
However the agency was not chosen as the “preferred delivery partner” so stopped the work. A fruitless payment is one which “cannot be legally avoided because the recipient is entitled to it even though nothing of use to ESFA will be received in return”.
Only half of planned risk meetings with FE providers conducted
As part of the ESFA’s move to identify vulnerable colleges and providers early, the agency conducts meetings with those who are identified to be “high risk”, with the aim of identifying financial and/or quality issues before they become real problems.
A total of 438 of these meetings were carried out in 2020-21. This was, however, around half of the planned target.
Post-16 provider relief totalled £11m
The ESFA launched five different provider relief schemes, such as for apprenticeship and adult funding, to give “lifeline” financial support to providers during the pandemic.
Today’s report shows these schemes totalled £11 million, which in turn “protected provision and supported 32,800 learners and apprentices”.
No colleges enter formal intervention
The agency conducted 23 assessments of further education colleges in 2020-21. None resulted in formal intervention. Five of them led to the colleges’ plans being endorsed and the rest continue to work with ESFA to improve their plans.
There are 68 live investigations into FE providers
At 31 March 2021, the ESFA had a total of 80 live investigations and allegations in triage to carry forward into 2021-22.
This comprised 12 ongoing academy trust cases at “various stages” of the investigation cycle and 68 live cases relating to colleges and independent training providers.
The agency said the cases carried forward from both sectors “continue to reflect the complex nature and longevity of investigation casework”.
“ESFA investment in counter fraud and investigations, and the enforcement team, has ensured an appropriate response to increasing demand whilst also championing continuing improvements to mitigate and prevent future issues arising,” the report added.
Top ESFA staff bag bonuses totalling £60k
Eight of the 13 officials who held executive roles during the past year got a bonus. Matthew Atkinson, director of provider oversight, was handed a bonus between £15,000 to £20,000, while three others got bonuses between £10,000 to £15,000.
Former chief executive Eileen Milner was the ESFA’s highest-paid on £150,000 to £155,000.
Her replacement, former regional schools commissioner John Edwards, is paid £125,000 to £130,000 a year.
The ordering and tone reads a little like ITP’s are the bad guys and overclaiming is rife.
Bottom line is that Colleges aren’t allowed to go bust, unlike ITP’s. Underclaiming and poor financial management is arguably a bigger risk, but not really the prime focus of audit.
The £20m for one bankrupt college far exceeds the £9.5m for 48 ITPs, though all of it means less money spent on actual delivery.
It’s probably fair to say that the the money ‘spent’ on the administration of 2 colleges, was probably the ESFAs biggest mistake in history. Maybe a payback by instalments from the former FE commissioner would be good for public accountability and funding. Wonder what plan B would have been had someone independent look at it. One good thing is that it raised the dialogue that nobody was brave enough to have between the harassment and bullying of the ESFA and the sector. Well done Mary Ney. Every cloud.
Yes £33million losses due to Bankruptcy looks pretty unrecoverable and running to £60million for on one set of colleges “West Kent and Ashford College, and its sister Hadlow College, through administration will probably run to over £60 million” In my maths that looks like £73 million of losses waived to colleges or for compared to £9.5 million for ITP – as ITP were allowed to go to the wall during Covid –
For those interested in what this means equivalent to funding 14600 Apprentice HGV drivers – that should have been the headline and the lead paragraph,
Also article in 2018 about the shortage of HGV drivers – 2018 – ESFA asleep at the wheel-
Article published 26 Feb, 2018|- identified shortage of HGV drivers of 50,000 to rise to 150,000 by 2020 –
Headline ESFA funds lost to failing Colleges to run to £73 million equivalent to 14600 priority Apprenticeships in one year, and asleep at the wheel on HGV driver Apprenticeships?
https://www.anthonyjones.com/why-is-there-a-shortage-of-haulage-drivers-in-the-uk/#:~:text=In%20the%20UK%20there%20is%20a%20drastic%20shortage,is%20predicted%20to%20increase%20to%20150%2C000%20by%202020.#
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How much of this is due to deliberate fraud? You’d think that with, “ESFA investment in counter fraud and investigations, and the enforcement team, has ensured an appropriate response to increasing demand whilst also championing continuing improvements to mitigate and prevent future issues arising,” it should be none? But that seems unlikely…