The Department for Education is pleading with the Education and Training Foundation to return up to £7.5 million after the charity earned a huge, unexpected surplus on a T Levels contract.
Just under £76 million has been awarded to the ETF by the DfE to deliver a T Level Professional Development (TLPD) programme between 2020 and 2024 – £15 million of which was released in 2020/21. An additional £8 million was paid in 2019/20 to deliver the “first phase” of the project.
But delivery of the scheme has been much cheaper than anticipated, which the contract didn’t account for. ETF and the DfE refused to confirm the value of the unexpected surplus. However, FE Week understands this to be in the region of £9 million so far.
Officials in the DfE are now pleading with the ETF to repay up to £4.8 million from the surplus in 2020/21, and potentially £2.7 million from 2019/20.
But the ETF has sought legal advice – an action that FE Week understands has angered the DfE – and believes the maximum the foundation should have to return is £1.5 million.
The ongoing dispute, which cannot be challenged legally because the contract requirements have been delivered, even led to a delay in signing off the ETF’s accounts.
November 2021 board minutes for the foundation said: “The board noted that due to the ongoing discussions regarding the treatment of the TLPD contract, the 20/21 audit and the production of the annual accounts had not been finalised. As a result, the board agreed to postpone its review of the accounts.”
ETF’s 2020/21 accounts detail the repayment costs being requested by DfE and state that the TLPD contract is “complicated”.
Jenny Jarvis, who took over as interim chief executive of the ETF after David Russell quit as the foundation’s boss earlier this month, told FE Week that changes to planned activity caused by Covid-19 and related lockdowns, including reduced face-to-face interactions and events, led to the “unexpected surplus generated on our TLPD contract”.
She said the ETF notified the DfE of this “issue” and “actively addressed this surplus in a prudent manner by making provisions in our accounts for a possible repayment, ensuring that it has no impact on the ETF’s current or future activity”.
Jarvis added: “Our direct engagement with the DfE has resulted in active discussions to agree a mechanism to determine any repayment of these unspent funds. These conversations are ongoing and remain commercially sensitive.”
The DfE told FE Week that it is working “collaboratively” with the ETF to ensure that payments made under the contract “reflect the impact of Covid on the delivery of services to date, which will continually be kept under review as service delivery continues”.
Russell, who was the ETF’s first permanent chief executive and has led the organisation since it was launched in 2013 to deliver professional development for the FE sector, resigned on April 6. This was less than a week after cuts were announced to the grant funding the ETF receives from DfE.
The ETF claimed that the TLPD contract dispute and loss of grant funding are unrelated to Russell’s sudden departure.
The ETF initially claimed Russell was heading to a new job as an executive in residence at the Oxford Saïd Business School. But FE Week has now learned that Russell will remain an ETF employee while he sees out his notice period, during which time he will be researching “a self-improving system in FE” at the business school. The project, which will start in May, is expected to last 12 months.
The TLPD programme is designed to promote understanding of the government’s new flagship T Level qualifications. Over 50 TLPD courses have been released to date – 28 online and 26 face to face.
Jarvis said: “Our work through this important programme has resulted in tens of thousands of continuing professional development activities being undertaken. Feedback from attendees has been very positive, with attendee satisfaction levels at over 90 per cent, and the vast majority believing it will benefit their professional development.”
The ETF has significantly increased its headcount in recent years to account for the TLPD contract and other grant-funded programmes: staff numbers shot up from 75 in 2019/20 to 141 in 2020/21.
Jarvis said the ETF’s relationship with DfE “remains strong, open and collegiate” despite the contract stand-off.
But FE Week understands the issue has created tension.
ETF’s accounts show it had unrestricted reserves carried forward at the end of 2020/21 of £12.7 million, up from £7.9 million the year before. Its total income for 2020/21 was £37.9 million.
The ETF was launched in 2013 and was initially funded entirely by the then Department for Business, Innovation and Skills but “owned” by the Association of Colleges, Association of Employment and Learning Providers and adult education provider network HOLEX.
AELP ditched its “ownership” of the ETF in 2018, claiming it is “no longer an organisation run by the FE sector for the sector”.
Presumably we can expect the government to pursue other contracts that have resulted in a ‘surplus’ with equal vigour (PPE anyone?). Or is it different if you call it ‘profit’?