ESFA concern: providers subcontracting to employers

Providers using employers as subcontractors in ways that are “contrary to the spirit” of the apprenticeship reforms will face the consequences, the Education and Skills Funding Agency has warned.

Keith Smith, director of funding and programmes at the agency, told delegates on the first morning of the Association of Employment and Learning Providers’ conference that the practice was “a bit of a theme at the moment” and that the agency was “increasingly concerned” about it.

“Some providers [are] trying to get employers involved as sub-contractors, getting them below the £100,000 radar, and actually trying get money back to the employer for stuff they do already, which is contrary to everything we’re trying to achieve,” he said.

“So as soon as we see a provider or a employer working against the intent of the rules we will intervene – the provider will be removed from register and also potentially other larger consequences as well,” he warned.

Mr Smith’s words prompted confusion from AELP boss Mark Dawe, who asked for “some explanation and clarity around what is good and what is bad there”.

Current funding rules do allow for providers to use employers as subcontractors – although FE Week warned about the potential for this rule to be exploited as a loophole back in March, when the rules were updated.

As soon as we see a provider or a employer working against the intent of the rules we will intervene

“You’re absolutely right, we want employers to have a place in the system where they can be engaged and they can be supported in delivery, that’s what we want,” Mr Smith said.

He continued: “What we don’t want to see is specifically where employers are being brought into the system in essence to recoup costs that they would generally incur themselves anyway.”

Such cases were “presented as a financial inducement”, Mr Smith said.

“It’s being presented as, you did a deal with us, there’s nothing more you need to do, we’ll put you as doing the induction, we’ll say that you’re doing it, we’ll pay you back X per cent or X amount, and therefore you can get this from us and it’s all fine as you can be a subcontractor, and you won’t have to go and worry about going to the ESFA,” he explained.

He added: “It’s not in any way about trying to stop employers owning some of the delivery being part of the delivery – those are all really, really good things”.

Mr Smith also outlined the agency’s plans to reform the audit process for existing providers.

This would involve “moving the end year audit into look at more thematic approaches”, with the aim of “trying to track stages of the apprentices as they go through their journey”.

The agency was looking “very much at the eligibility and initial assessment, and how the 20 per cent off the job is being put together,” at the moment, he said.

“It is a bit too early to say where that is going to go but I think if we take away lessons that this isn’t going to just stop at new providers,” he said.

“Potentially we’ll move away from the kind of looking back angle type view, I want to see audit happening much more regularly much more frequently to get more assurances as we go through the different stages of the programme,” Mr Smith said.

The ESFA had carried out a mystery shop that looked at how providers were responding to the new system, Mr Smith said.

Among the feedback from this mystery shop was the finding that colleges were “more likely [than independent training providers] to explain how they could help the employer in other areas”.

Mr Dawe later told Mr Smith that providers might feel “a little hurt” by some of the findings – although Mr Smith stressed that it wasn’t about “pulling providers up” but was instead about support.

“We really do care that we’re doing enough to support you,” he said.

Mr Dawe also quizzed Mr Smith on the long-awaited adult education budget procurement exercise.

“It’s imminent,” he said.

“I think it’ll be good news for the sector. And I think you’ll see it’s a very sensible way of managing the transition from the current contracts to the new ones,” he added.

Click here to download Keith’s slides.

Published in our #AELP2017 supplement – click here to download.

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  1. Robert Bruce

    How is Keith Smith still employed? Surely he should have been sacked by now, due to the monumental mess ups that have been evident over the last 6 months.

  2. David A

    Personally, I believe when saying “the spirit” of a contract is another way of saying “we didn’t think of that!” When writing guidelines why not include those at the coal face who know what some providers will do. Having a hole in a cintract the size of a bus will allow a wide range of vehicles to drive straight through.

  3. Terry Carter

    Now things get more confusing they say it’s not in the spirit of things? Firstly whose version of the spirit do we follow? Secondly how can it not be in the spirit of it when it is in the rules? In fact whole section on it

    They say contact the ESFA for guidance, hold on the same department that doesn’t reply or when if does refers you to the rules, that doesn’t help One bit

    I get the significant impression we have had a shift since the election, pre elevtion £3m more apprentices, Tory manifesto no mention of 3m and all of a sudden things start to change, is the target still 3m? Doesn’t seem so

    What’s wrong with employers partnering with providers to design and deliver a robust program?

    Employers could have great teams but don’t have the back engine to help it succeed and don’t hold the volume to Warrent it

    I can only assume the government are hell bent on turning a levy into a tax.and are keen to find ways to make that a reality