Provider directors, shadow directors or governors deemed by the government to have acted “dishonestly” or in “breach of ethical standards” could see their funding terminated through a beefed up performance management policy.
The Department for Education has refreshed its ‘Funding higher-risk organisations and subcontractors’ rules to include an enhanced list of offences and breaches that it can use to take action against colleges, independent training providers and employers with Education and Skills Funding Agency (ESFA) contracts.
‘Inadequate’ Ofsted ratings, financial instability and contractual non-compliance remain in the policy, which was last updated in 2022, as reasons for the department to consider a provider high risk.
However, the new policy, nearly 1,500 words longer than the old one, now lists additional grounds for penalties based on the actions of “connected persons” to the provider.
This not only includes anyone with significant control of the provider, but now any director, trustee, governor or other person with “representation, decision, influence, management or control including through a blind trust, partner organisation or parent organisation”.
A company with a connected person who is subject to an ongoing investigation or has been subject to action from a previous investigation will be considered a high-risk provider.
Simon Ashworth, deputy chief executive and director of policy at the Association of Employment and Learning Providers, said the updated policy “strengthens the DfE’s position on ensuring providers consider the circumstances of individuals they work closely with”.
He added: “This serves as an important reminder for providers to carefully evaluate their partnerships and conduct through due diligence to ensure that associated individuals are not only credible but are also not associated with any concerning past activities.”
Newly listed grounds for identifying high-risk providers also include any connected person found to have committed “professional misconduct”, tax-related misconduct, labour market misconduct, such as offences related to modern slavery, or who poses a threat to national security.
The refreshed policy adds that a provider will be considered high risk if any connected person has a prohibition order against them from the Teaching Regulation Agency unless “compelling” evidence convinces DfE public funds are not at risk.
Legislation is currently going through parliament to extend the remit of the Teaching Regulation Agency, which has powers to issue lifetime bans from teaching in cases of serious misconduct, to the further education sector.
If the DfE deems a connected person to have “engaged in professional misconduct which brings into question the providers’ or the connected person’s integrity”, the provider that the person is connected with will be considered high risk.
The policy defines “professional misconduct” as “dishonesty, impropriety, or a serious breach of ethical or professional standards.”
Connected consequences
Actions the DfE can take once a provider has been identified as high risk are largely unchanged from the previous version of the policy, however who is in scope has been clarified.
For example, provision delivered through contracts with devolved authorities and providers that only deliver skills bootcamps are not in scope. But independent training providers, colleges, employer providers, and their subcontractors that deliver post-16 education and training, including apprenticeships, are in scope.
Through the policy, a provider identified as high-risk can be refused funding contracts, excluded from allocations, have payments restricted or have one or all contracts terminated.
Before that, providers have the right to make their case against any action proposed against them, unless the offence warrants an immediate termination set out in the relevant funding contracts.
In coming to its decision, the policy states that the department will consider “the level of risk associated with the provision of funding to the provider” and “information that the department has from its own knowledge or intelligence from records it maintains”.
Appeals will not be accepted, but the department will hear complaints about process.
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