This evening the Department for Education said that it will not, as would typically be the case, serve a three-month termination notice on Learndirect contracts when its Ofsted grade four is published on Thursday.

During the judicial review hearing, as reported in FE Week, the Learndirect lawyer said they expected to be given a three-month termination notice, based on a conversation between the managing director, Andy Palmer, and the Education and Skills Funding Agency.

The conversation was described as ending with the ESFA saying they would not give Learndirect special treatment.

However, in a move that appears to be an intervention from the highest levels within the DfE, Learndirect has been given an additional eight and a half months, on top of the typical three months, so will receive funding until July 2018.

The DfE spokesperson told the Financial Times the special treatment is to minimise disruption for learners. 

A spokesperson said: “Following the publication of Ofsted’s report ‎we are working closely with Learndirect, employers and apprentices to find a course of action that ensures learners can complete their courses with minimal disruption.”

All adult education budget contracts end in July 2018 and the DfE spokesperson said that Learndirect would not get the opportunity for an extension.

But in a move that looks contrary to the claim that special treatment is simply to avoid disruption to existing students, the DfE spokesman also said “yes” when asked if Learndirect would be permitted to the recruit new and additional adult education budget funded learners until July 2018.

The move will come as a surprise not only to Learndirect, but to the rest of the further education sector.

In March, another very large provider with thousands of apprentices, First4Skills, was served with a three-month termination notice following a grade four.

On receiving the notice, they immediately brought in the administrators, despite having over £700,000 in the bank and three months remaining on their ESFA contract.

It is understood the Learndirect funding will end in July 2018, for apprenticeship and adult education budget funding.

However, it seems despite the termination, this will not stop Learndirect receiving funding for apprentices beyond July 2018.

In March 2016 the owners of Learndirect Ltd incorporated Learndirect Apprenticeships Ltd and successfully applied to the Register of Apprenticeship Training Providers with the new company.

Learndirect Apprenticeships Ltd also acts as a subcontractor, according to the latest ESFA list, contracting with Learndirect Ltd, as well as the supermarket giant Tesco.

As previously reported, when Learndirect were told in March they were to be inspected, they failed in an attempt to persuade Ofsted to exclude the apprenticeship provision on the basis they were moving it all to the new company.

FE Week understands that despite the grade four and the ESFA Notice of Serious Breach for Learndirect Ltd, this does not apply to the new company Learndirect Apprenticeships Ltd, so apprenticeship delivery is expected to continue.

The DfE has confirmed that neither of the two Learndirect companies have a non-levy funding allocation.

Mark Dawe, chief executive of the Association of Employment and Learning Providers, to which Learndirect is a member, told FE Week: “If special treatment has been given, then the government must be clear about what it is and whether in future it will apply to all providers whatever their size.

“Protection of the interests of current learners may be a sound motive for adopting this approach, but not if the quality of provision is poor.  There are a large number of high quality providers ready to take on the affected learners and potentially offer them an improved learning experience.”

FE Week has sought clarification from the DfE as to whether Learndirect Ltd will be permitted to recruit any new apprentices or adult education budget funded learners.

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  1. Very annoyed

    How is this fair and transparent for the sector? Surely the whole system is broken if providers are not expected to abide by the same rules? Special treatment and the ability to set up in a new name, sub contract to yourself and wipe the slate clean of poor ofsted grades and poor achievement rates? If it’s this easy to avoid regulation, really what is the point? What is to stop other providers doing the same?

    • Blue Boy

      The sector has always had different rules apply to accommodate convenient decisions. FE college providers are always treated differently to independent providers for a kick off!

  2. David Douglas

    Did no-one at SFA/ESFA suspect that the change of name was a move designed to circumvent the system and escape the revelation of continuing poor results.

    It is suspicious to say the least and now we learn that unlike other providers they will given special help and continue to recruit.


  3. Tony Allen

    They should be terminated now! The argument that they are protecting existing learners is nonsense…..they are being protected in inadequate provision! Spineless ESFA again!

  4. If the ESFA set a precedent for a huge provider who has a problem with the quality of what they are delivering (a 40% success timely rate indicates this without other examples such as lack of ILPs)it will be interesting how they can then not apply the same rules to other smaller providers. For example, how can you not apply it where the apprentices are achieving at least at the national average and equivalent to recent good providers but have gone down on inspection because of a dubious decision on how a judgement has been made on safeguarding from an Ofsted team lacking credible experience in apprenticeships and how safeguarding should be judged for a 22 year old (there is a reason I use this example). In one case we have a clear disadvantage in what apprentices and employers are receiving on a large scale while in the other the provider is acknowledged as giving employers the training they want totally delivered in the workplace? The ESFA cannot suddenly change the rules for one provider by virtue of its size and influence and then kill off a long standing provider who are delivering apprenticeships that are valued by those receiving them?

    • Catherine Murray

      Sorry about that – our editor’s been out and about all day. We’re approving some comments now although some may take time as this is a legally sensitive story.

  5. Ed Chesney

    Nick Linford describes himself as an FE funding expert so it is surprising that he is surprised by the response of the ESFA to the LearnDirect predicament.

    Essentially LD is too big to fail which is what would happen if all the funding was withdrawn immediately with the consequent loss of jobs and impact on learners. One has to assume that the ESFA has agreed some form of wind-down / transitionary arrangement with LD but it can’t simply pull the rug overnight.

    The tragedy is that Government / SFA allowed LD to become so big in the first place, the frankenstein of the FE sector. All the FT/FE have done is trawl through public information and it is difficult to believe that the SFA were not aware of the same financial circumstances long before now. I assume they were terrified of doing anything because LD was too big to fail.

  6. Sue Wright

    This is appalling and sends all the wrong messages to the sector. Learndirect have managed to fail a high number of apprentices, and their achievement rates are on a downward spiral. Other providers have been treated quite differently. The argument that ESFA are protecting learners was not a concern with First 4 Skills, so why now. They have deliberately set up new companies and presumably will be paying out dividends (remember this is taxpayers money) going forward. Too big to fail??

  7. Crusader

    Basically, what the DfE is saying is that if you are a small provider you will be fed to the lions, but if you are LearnDirect they will be happy to support a poor quality provider where 40% of learners successfully achieve their apprenticeship in a timely fashion.

    “Where do I sign up? I really want my 2000 staff to complete a Learn Direct apprenticeship program” – said no CEO ever!

    Wonder if their clients Tesco and New Look will continue LD to deliver their apprenticeships….

  8. Anne-marie Morris

    I wonder if there will be any recourse for other providers such as First4Skills, I can understand the need for special treatment when in this case the decision effects over 70,000 people but where will the bar be for future special arrangement-over 1 or over 69,000 Learners? There must be measures put in place to ensure quality provision for the Learners this effects and they are not just used for revenue.

  9. Learndirect should be treated like any other provider in the past, who have received the lowest grade possible from Ofsted. It’s bad enough that they have been given the extra time on top of the three months, but to be allowed to recruit new learners up to July 2018 is totally irresponsible.

  10. I had a Training company that delivered NVQs.
    We consistently achieved over 95% timely achievements.
    When the government pulled the plug on funding for NVQs I had to close the company putting staff out of work.
    Learners now have to sign up for an ‘apprenticeship’ when all they need is an NVQ.
    Total waste and undervalues the worth of apprenticeships.

  11. Its appalling. The rules can be bent or reshaped depending on the size of the company and whose involved! And allowing a sub company to contract too is just another way to manipulate funds! We jump through hoops to ensure value for money, and an excellent service to employers and learners! Why bother! Apparantly it dosent matter if OFSTED class you as a Grade 4! Carry on anyway!