Demise of subcontracting brokers – finally

Using brokers in subcontracting deals will be a “serious breach” of funding rules next year, the government said today as it announced the first steps to clamping down on subcontracting in FE.

Training providers have also been told to publish a “rationale” for subcontracting, their management fee structure and a list of subcontracting partners on their websites by October 31.

The measures were outlined in new subcontracting guidance for 2020/21, published today by the Education and Skills Funding Agency.

Last month, the ESFA released its response to a consultation that was run earlier this year and proposed major changes to subcontracting.

The agency wants to see a “significant reduction” of the practice in FE and will roll out strict measures, such as volume caps, over the next three years.

For academic year 2020/21, the ESFA said today that the use of brokers to source a subcontracting partner is “not permitted and will be treated as a breach of contract/funding agreement”.

“By brokers we mean where a third-party matches, for a fee, a provider with an unused allocation with a provider that can secure enrolments of learners to utilise it,” the agency explained, adding that they have “strengthened our levers to act and will do so where we find cases of provision being subject to brokerage”.

FE Week has reported on multiple cases of brokers cashing in on last minute subcontracting deals in recent years.

In March we revealed on how a learner find firm was attempting to broker a subcontracting deal for 16 to 18-year-old trainees who had already completed their placement at football clubs.

The only other change coming into force next year is a requirement for “all providers to publish a clear educational rationale for their subcontracting position on their website alongside their management fee structure and a list of subcontracting partners”.

The guidance states that directly funded institutions should “set out in their organisation’s strategic aims their reason for subcontracting, which must enhance the quality of their student offer”. The rationale “should be signed off by governors and boards and published on their website”.

The ESFA said they expect this information to be published by 31 October 2020 and it should be “easy to navigate to from the front page of the organisation’s education and training web pages”.

Other reforms will be introduced in 2022 and 2023.