A collapsed apprenticeship provider is being chased for £8.4 million of alleged dodgy funding claims, according to a liquidators’ report that also reveals the firm made large payments to “connected companies” of its high-profile owner days before closure.
GB Training (UK) Ltd went bust in October 2020 due to what managing director Lawrence Barton (pictured), a West Midlands entrepreneur, claimed was a “combination of reasons of which Covid-19 was a critical factor”.
But it has now emerged the firm closed after the government’s Education and Skills Funding Agency suspended starts and withheld payments following a probe into the legitimacy of its apprentices’ jobs.
The ESFA uncovered cases of taxi drivers who were either not employed or self-employed on GB Training’s books listed as apprentices. The agency is demanding over £4.7 million be repaid.
Meanwhile, the West Midlands Combined Authority is seeking over £1 million from GB Training for “ineligible” funding claims on an adult education contract, and North East Surrey College of Technology (NESCOT) is seeking more than £2.6 million.
Barton has denied wrongdoing and claimed the government’s Insolvency Service determined there was no misconduct on his part as a director.
A progress report by liquidator Kevin Mawer, published by Companies House and first reported by Birmingham Live, delved into intercompany transactions made in the days running up to GB Training’s demise.
On September 18, 2020, four days after the firm decided to go into liquidation, GB Training made three payments to companies controlled by Barton or members of his family – nightclub The Nightingale, GB Holdings, which traded as Village Inn, and a manufacturer called Good With Wood.
When GB Training went into liquidation on October 19, 2020, £1.7 million had been paid to the three companies.
Mawer said documents show The Nightingale and GB Holdings were not in a position to repay debts to GB Training “for some time prior to the liquidation”.
He stated that whilst there appeared to have been intercompany trading – whereby the connected firms invoiced for services provided in connection with the training business – there “appears to be no commercial justification for advancing such large sums to these connected companies”.
Around £130,000 was repaid by the connected companies by July 2024, according to the liquidator report, and two of them – The Nightingale and GB Holdings – have since gone into administration.
Good With Wood is continuing to repay its debt.
Lawrence Barton is now the festival director of Birmingham Pride and has held roles including leadership commissioner for the West Midlands Combined Authority and board director of Birmingham Southside Business Improvement District, a community regeneration initiative.
He was appointed to be a deputy lieutenant of the West Midlands in March 2020, in “recognition of his community activism”, according to his personal website.
Mawer’s report said there was “little prospect” of GB Training’s largest creditors, including the ESFA, ever being repaid.
Apprentices that were never apprentices
GB Training traded for 20 years and trained thousands of apprentices and adult learners until its closure in 2020. Around 70 jobs were lost.
The ESFA sent a letter to the provider on June 10, 2020, referring to “potential irregularities” in relation to apprenticeship funding claims. GB Training notified the ESFA it had ceased trading on September 24.
A month later the agency told the company it had found “material evidence of non-compliance” with funding rules.
The ESFA said numerous apprentices claimed they were employees of private hire taxi companies and confirmed that they received no training, or they were not in employment or were self-employed.
Some apprentices were also enrolled as employees of “newly formed companies that lacked sufficient trading/business operations to support the productive purpose requirements of an apprenticeship”.
According to Mawer’s report, the ESFA relied upon the 2016, 2017 and 2018 academic years, when 123 apprentices were provided training at a company which had never filed any company accounts, had no internet or social media presence and operated from a terraced house in Birmingham, which the company recorded as the delivery location of the training.
Some of the delivery locations where GB Training claimed training took place were virtual offices or the company owner’s home address.
The ESFA also allegedly heard from some learners who were supposed to have completed training with the provider, but stated they never worked for the companies in question and had not undertaken an apprenticeship.
Other findings included learner file comments attributed to assessors and learners that had been duplicated across different learners and years.
West Midlands Combined Authority also claimed an audit report by RSM, dated December 8, 2020, showed “ineligible claims or funds at risk” in 44 per cent of the audited claims.
This included a number of learners being contacted and stating they did not undertake the courses referred to, did not complete the courses referred to, and problems with learners’ employment status.
NESCOT, which used GB Training as a subcontractor, was forced to repay the ESFA £2.5 million in 2022 as the college was ultimately responsible for some of the ineligible claims in its position as the prime contract holder.
The college is now trying to recover this funding from GB Training. A spokesperson told FE Week that leadership was continuing to “actively pursue” the claim.
Barton said: “The Insolvency Service conducted a full and independent two-year investigation into my role as a director following a complaint made by ESFA in respect of GB Training.
“After an extensive review of all relevant evidence, they determined that no action was necessary and there were no findings of misconduct. That decision was reached independently by the UK’s official regulatory body for director conduct and remains a matter of public record.
“While I am unable to comment further due to legal and commercial considerations, the outcome of this investigation speaks for itself.”
The Insolvency Service declined to comment.
Barton and Mawer said in a joint statement they would reach a “settlement” in the “coming days”, but the terms of any settlement would be confidential.
A West Midlands Combined Authority spokesperson confirmed the authority wrote to the liquidator “raising concerns” but could offer no further comment as proceedings are still active.
The ESFA declined to comment.
Read the liquidators’ report in full here.
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