Colleges stand by multi-million pound subcontractor despite insolvency issues

Three colleges have insisted they will stand by a multi-million pound subcontractor, despite it entering into insolvency arrangements.

JTJ Workplace Solutions Limited owed more than £500,000 to HM Revenue and Customs, and £246,000 to Pearson.

This is according to the report of a meeting approving it entering into a corporate voluntary arrangement, published on Companies House last December.

The total amount due to the company’s 12 creditors was £938,366 and the CVA has shored up its finances for the time being, with structured repayment arrangements in place.

FE Week approached the 10 colleges with £6.4 million of subcontracted provision, as of January this year, to ask if they planned to continue with the arrangements in view JTJ’s financial problems.

The three that confirmed they are still subcontracting with JTJ, told FE Week they had no intention of cancelling the arrangement.

Gateshead College, with a contract worth around £2.5 million with JTJ; West Nottinghamshire College, with £810,000; and the Grimsby Institute of Further and Higher Education, with £345,000, each confirmed they were aware of the situation but would continue with JTJ.

Adam Hayes, one of the directors of JTJ, told FE Week that the company was fine to continue with the provision.

It is still trading with “most of the creditors in the CVA (100 per cent of creditors supported the CVA)”, expects “to deliver over 4,000 apprenticeships over the next 12 months” and is “enrolling more learners”.

He said: “We’ve renegotiated commercial terms. That improves the working capital equation which allows us to deliver more apprenticeships for our college partners.”

The Department for Education told FE Week it was difficult for it to comment on this case, because JTJ as a subcontractor worked for the colleges, not the government.

However, a spokesperson added DfE was aware of the situation and monitoring it.

West Nottinghamshire College confirmed it had 368 apprentices with JTJ Workplace Solutions.

Of these learners, 282 are apprentices still currently on-programme.

The remaining 86, who have completed their learning and are awaiting certification include apprentices, trainees, and classroom based learners.

Lesley Roberts, vice-principal for employer engagement and business development at the college, said: “We are aware that JTJ has entered a CVA, which allows it to continue to legally operate.

“The college is monitoring the situation closely and has put additional, yet precautionary, measures in place, as any responsible contractor would do.”

A spokesperson for the Grimsby Institute said: “We are aware that JTJ has a CVA in place and we will continue to work closely with them while monitoring the situation.”

Similarly, a Gateshead College spokesperson said the college was aware of the CVA and was monitoring the situation, but had no plans to terminate.

Garry Phillips, chief executive officer of Ealing, Hammersmith and West London’s College, added: “We’ve received no information that would suggest any learner’s apprenticeship at our college will be affected”.

A spokesperson for North Warwickshire and South Leicestershire College said: “We don’t currently have any learners with JTJ Workplace Solutions.”

She added: “We have had no more enrolments so there are no implications for any on learners.

“We have regular reviews of our sub-contracting arrangements with third parties and JTJ will be part of this review process.”

A spokesperson for the College of Haringey, Enfield and North East London said: “Our last students completed their programmes with them in October 2016.

“There are no plans for further subcontracting to JTJ in the 2016/17 academic year and none of our students are affected by current issues within the provider.”

Barnet and Southgate College, Bromley College, Central College Nottingham and the WKCIC Group were unable to comment by the time of going to press.

Here are the full subcontracting arrangements as of January:

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  1. Tom Carter

    I have to say this is an odd approach for lead providers to take given the funding rules and contract for services with the SFA clearly which state

    Section 22 in the contract for services 16-17 22.1.3 it states the SFA would terminate the contract

    Also check out the funding rules 16/17 common rules

    re subcontracting govenence

    A48.2. who your governing body/board of directors and your accounting officer (senior responsible person) determine as being of high quality and low risk, and provide written evidence confirming this

    A56.3. If the outcome of your annual financial health assessment, we carry out is inadequate.

    A58. You must not award a subcontract to any organisation if:

    A58.1. it has an above-average risk warning from a credit agency 

    A58.2. it has passed a resolution (or the court has made an order) to wind up or liquidate the company, or administrators have been appointed, or 

    Surely the company in question would have a bad credit rating if it was Insolvant and therefore should not hold a contract

    I also find it shocking that public money is being issued to business’s when they don’t pay Tax payments due to Hmrc

    I think we forget where the funds originate from