Hundreds of young adults on security and rail traineeships were made to work illegal hours, a government investigation into a college subcontracting debacle has found.
Strode College is currently negotiating a “substantial” clawback with the Department for Education after an extended audit identified breaches of two funding rules. The issue threatens to drop the college’s financial health from ‘outstanding’ to ‘inadequate’.
The investigation spans the three academic years between 2019/20 to 2021/22 when the college received around £7.5 million and subcontracted it out to other training providers to deliver traineeships.
Principal John Revill, who discovered the blunder on the first day of the job when he joined in June 2022, described it as a “technical breach” which occurred due to weak subcontracting oversight processes in place under the former leadership.
He is clear that this wasn’t intentional fraud, all learners were real, and the majority had good outcomes that led to employment.
Katy Quinn was principal of Strode College between 2017 and 2022, before she left to lead the newly merged City of Portsmouth College. Quinn and Portsmouth College did not respond to requests for comment from FE Week.
Revill said he is currently weighing up whether to take action against the training providers the college subcontracted to, including by demanding they repay the funding they received. The providers remain unnamed at this stage.
Traineeships were introduced in 2013 as a flagship pre-employability programme but were scrapped this year as a standalone qualification amid years of low starts. The course involves pre-employment training and unpaid work placements from six weeks to one year for eligible 16 to 24-year-olds.
Under government rules, all elements of the programme, including work placement, are subject to a maximum of 35 hours activity each week to “meet the requirements of state benefit rules”.
Revill told FE Week a “good chunk” of the college’s traineeship learners were working up to 50 hours a week in the security and rail industries.
“They were doing consecutive days without a break and working over Christmas,” he said.
Revill said the government’s investigation also found rail traineeship learners working on unofficial railway lines, which is against funding rules. The learners were working on steam and recreational lines, for example, but because they were not official British Rail (Network Rail) lines they were deemed ineligible, the principal explained.
In his first week in the job Revill put a stop to subcontracting at the college, and five senior leaders who were involved in traineeship provision at a decision-making level have now left the organisation. A new chair is also in place, as well as a vice chair.
He said: “This was a technical breach of the rules, which should have been spotted. But I’m struggling to see where that would have been picked up with the processes that were in place at the time.
“Within traineeships, it’s a binary funding system, so if you breach any elements of it, you lose the entire funding, which is where it can rack up to be quite significant clawback.”
Revill said the learners the college works with are mostly “extremely disadvantaged young people in London”, some of whom are ex-offenders, ex-gang members and rehabilitating drug users. He claimed that 75 per cent of the traineeship learners moved into permanent employment in 2021/22, which is a “fantastic thing”.
“This is why it’s a technical breach, my mitigation is that we’ve met policy intent.”
The government published a financial notice to improve for Strode College last month after discovering the misuse of funding, which also explains why the college is yet to publish accounts for 2021/22.
Its financial statements for 2020/21 show the college recorded 1,264 students undertaking traineeships, a big increase from 467 the year prior.
According to those accounts, the college had ‘outstanding’ financial health after it returned a cash operating surplus of £1.58 million.
Strode College is now due a visit from the FE Commissioner’s team.
Revill said it is “too early to say” just how badly the clawback will impact the college. “We’re financially robust, we have money in the bank, but if the debt is a significant debt, then that would be a different conversation,” he warned.
He added that the fiasco “is a distraction and it really is business as usual for the college”.