Awarding body writes off £2.5m as T Level recruitment stalls

Lower than expected T Level student numbers have hit charity NCFE's books

Lower than expected T Level student numbers have hit charity NCFE's books

23 Feb 2024, 11:00

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A major T Level awarding body has written off over £2.5 million because of low student recruitment on the flagship qualifications.

NCFE’s latest accounts, published this week, reveal the charity added the loss to its planned deficit for 2022/23 as an “impairment charge” due to lower-than-expected enrolments on the T Level courses it has developed.

It follows the news that the government’s Institute for Apprenticeships and Technical Education is taking steps to make the next wave of T Level licenses “more commercially attractive” for awarding organisations as low student numbers and high development costs are leaving awarding organisations out of pocket.

Kris Todd, NCFE’s chief financial officer, told FE Week the write-off was a “prudent” step to accurately reflect the value of T Levels on the organisation’s books.

He said: “T Levels represent a long-term investment by NCFE and as such we recognise their development costs as assets on our balance sheet. In line with financial reporting standards, and subject to external audit, we are required to consider the value of these assets in our accounts each year.”

NCFE’s accounts state that “to date, student enrolments have fallen below expectations”.

“As a result, we have written down our development investment relating to T Levels which has resulted in an impairment charge of £2.5 million in the year,” the financial statements added.

The accounts go on to explain that the charity’s deficit for the year of £6.8 million, and group deficit of £7.9 million, were budgeted for, except for the T Level impairment charge.

Prudent write-down

Guidance from the Charity Commission says charity trustees should typically expect full costs to be met when a public authority is purchasing a service from them.

However, trustees can decide to use charity funds to subsidise or supplement a service purchased from a public authority, but only if doing so furthers the interests of the charity and its beneficiaries.

Todd said: “If we believe the value of the [T Level development] assets are overstated, we are required to make an adjustment. We do not anticipate generating the same level of surplus over the life of the contracts as we initially did and have prudently taken the decision to write down the value of the assets accordingly.”

NCFE generated £43 million in income in its 2022/23 financial year, up from £39 million the year before. Its expenditure however increased to £50.8 million, up from £41.9 million.

Previous accounts explained that the charity had budgeted for deficits because of its “planned and significant” investment in its business, including developing T Levels.

The latest accounts said the charity plans to get back to a surplus position in the next two years as its investment programmes are delivered.

T Level losses

NCFE currently holds exclusive contracts with the Institute for Apprenticeships and Technical Education (IfATE) to develop and award T Levels in education and early years, health and science, and digital.

Ministers last month scrapped the development of the T Level in hairdressing and barbering, which NCFE was contracted to develop, citing low interest from employers. NCFE is continuing with the development of a T Level in beauty and aesthetics with VTCT, though it won’t be launched for students until at least 2025. These courses were originally scheduled for delivery in 2023. 

And in July last year, NCFE passed its licenses to develop and award the T Levels in craft and design and media, broadcast and production to Pearson.

Awarding licenses are currently up for grabs for so-called “gen 2” T Levels in education and early years, construction, and digital to replace the current contracts as they expire. A separate procurement is due to launch next month for health, healthcare science and science T Levels.

NCFE is yet to declare whether it will put itself forward to continue to run the T Levels.

IfATE is taking steps to make T Levels more “commercially attractive” to awarding organisations in its gen 2 contracts through a funding model that would guarantee a certain level of profit.

Low student take-up

The new contracts will feature a “demand-sensitive” adaptive pricing model which will mean awarding organisations can charge providers higher fees if student numbers are lower than expected. Fees could also be reduced if student numbers are higher.

Awarding organisations with generation two T Level licenses will be allowed to make a “one-off adjustment” to the entry fee it charges providers if the projected number of students increases or decreases over the contract term.

The move was slated by college leaders when FE Week broke the news last month for forcing providers to pick up the risk for low T Level recruitment at a time when students and parents are questioning the value of the qualifications in light of the government’s plans to replace them with the Advanced British Standard.

A survey carried out by the Association of Colleges in October 2023 found that 11 of the 18 T Level subjects being taught in colleges had under-recruited in at least 50 per cent of colleges. The T Levels which under-recruited the most in the surveyed colleges were in digital, health and construction.

DfE’s latest T Level action plan reported 1,750 students starting a T Level in digital, 2,150 in education and early years and 1,800 starts in health and science in 2022.

Several colleges cancelled T Level courses this year, blaming falling GCSE maths and English pass rates among school leavers.

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One comment

  1. Stephanie Mayne

    Unfortunately, in our experience the T-levels have been a waste of time. Industry placements aren’t available and pupils are doing whatever work their placement advisor gives them whether it’s relevant to their industry or not. One of the reasons my sone decided on the course was because of the industry placement and the opportunities that might offer to network in his chosen field. It’s been a let-down and still, some universities have asked us what a T-level is! Not great…needs a serious overhaul or scrapping!