Subcontracting

Devolved subcontracting in the dark

Hundreds of millions worth of deals hidden by MCAs

Hundreds of millions worth of deals hidden by MCAs

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Transparency of subcontracting deals in further education has “taken a step backwards” following devolution of the adult education budget (AEB), an FE Week investigation has found.

The Education and Skills Funding Agency publishes a list of declared subcontractors annually for nationally funded provision and tells prime providers to refer to it for due diligence purposes.

But a big chunk of subcontracted training is now hidden as eight of the ten mayoral combined authorities, which have taken control of the AEB for their region from the ESFA, publish no such information.

Just two of them told FE Week they release equivalent subcontractor lists for their areas. The eight that do not account for almost £600 million of public skills funding.

Those who don’t publish subcontractor lists include London, Manchester and Liverpool.

An experienced auditor working in the FE sector, who wished not to be named, said: “Subcontracting is the provision at highest risk of fraud, so transparency is critical.

“Oversight appears to have taken a step backwards since devolution and should be urgently addressed by all mayoral combined authorities.”

While the agency does continue to publish a list of subcontractors, it has reduced in transparency. It used to break subcontracted deals down by apprenticeship provision and other funding streams, but now only publishes deals for post-16 provision in general.

It also only publishes cumulative values of £100,000 and over.

The ESFA has embarked on a series of reforms to substantially reduce the amount of subcontracting in FE in recent years to tackle “poor oversight and fraud”.

They include a cap on volumes and a new externally assessed “standard”, which all providers will need to meet in order to subcontract agency funds.

The ESFA is also creating a new list of independent training providers – any provider not on the list will not be granted funding agreements or be allowed to subcontract with another provider who is on the list.

Six mayoral combined authorities and the Greater London Authority began taking control of their AEB from 2019, followed by three more MCAs in subsequent years.

While they vary in the level of transparency, all require declarations for subcontracted delivery annually.

The largest authority with AEB is London, which controls £323 million annually. A spokesperson did not explain why they do not publish a list of subcontractors, but said “less than ten per cent” of its provision in 2020/21 was subcontracted.

The two MCAs that do publish lists of subcontractors are West Midlands and Tees Valley.

Liverpool City Region said it plans to introduce its own list this year.

Asked whether it plans to place any requirement on MCAs and the GLA to publish their own list of subcontractors, the ESFA said: “They are each responsible for the management of any AEB subcontracting arrangements in their respective areas.” 



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