AEB contracts boost will be paid from unspent £200m

Funding increases in adult education budget contracts for private providers will be paid from the massive underspend on adult training last year.

The government announced a U-turn on AEB funding for independent training organisations on Friday, just a few hours after FE Week revealed that FE providers had dramatically underspent their allocations for the 2016/17 academic year by £200 million.

This will bring new funding levels for all private providers up to the value of at least 75 per cent of the amount they had in 2016/17, bringing much-needed parity to those that felt aggrieved by the massive funding cuts imposed after their “successful” bids in the recent tender process.

“We cannot confirm the budget at this stage of the procurement as contract talks are still taking place,” a spokesperson for the Department for Education said, though he did clarify that “the amount will be published once all contracts have been signed. This money comes from underspends in the adult education budget”.

Multiple sources confirmed to FE Week that around 13 per cent of the £1.5 billion AEB budget went unspent in 2016/17 – a situation sector leaders described as “worrying” and “frustrating”.

Many ITPs would also have at first been infuriated by news of the unspent £200 million.

This is because, unlike FE colleges and councils, they were forced to tender for part of a pot worth just £110 million.

The tender’s outcome was catastrophic: providers which did not bid, or which failed their tender, were given contracts worth 75 per cent of their previous year’s allocation to spend in 2017/18, but organisations which won contracts typically received a fraction of their old AEB.

The Education and Skills Funding Agency attempted to make amends on Friday, writing to aggrieved ITPs to inform them that extra money had become available for their AEB allocations.

Shadow skills minister Gordon Marsden previously said it would have been a “scandal” if the unspent £200 million had gone back to the Treasury, and not been spent on more FE provision.

AELP boss Mark Dawe added that the underspend was the “final piece of evidence” that proved the government should “start a transitional shift to full procurement of the whole budget, with greater prioritisation to meet the Brexit skills challenge”.

“The fact that the recent tender was six times oversubscribed tells you all you need to know about demand for the programme,” he said, pointing out that the size of underspend could be used to treble allocations to independent providers.

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