Controversial plans to clawback some of this year’s unspent adult education budget grant funding are back on the cards, the Education and Skills Funding Agency announced today.

In its weekly update, the agency said any grant-funded provider that delivered less than 68 per cent of their allocation in 2019/20 is now at risk of having to repay their funds.

The ESFA will “consider reconciling any under delivery up to 68 per cent” unless the provider can justify why they shouldn’t by submitting a business case.

It means that, for example, if a provider’s performance was 60 per cent then the agency will consider recovering 8 per cent of the allocation.

This policy only applies to grant-funded providers such as colleges and local authorities who are paid in advance of delivery. It does not apply to independent providers who have to tender for their funds.

Original ESFA guidance published in March said they would “not carry out the final reconciliation for grant funded providers in receipt of ESFA funded AEB” in 2019/20 due to the pandemic.

But in July the agency announced that providers and colleges would retain their full 2019/20 allocation only if they attempted to continue delivering during lockdown and they delivered 80 per cent of activity in the whole year.

A sector backlash followed and the ESFA withdrew the plans one week later.

Announcing the new threshold for clawing back unspent AEB funds today, the agency said: “We recognise that this has been a challenging year and our primary concern remains the stability of providers going into 2020 to 2021, whilst ensuring the proper use of public funds through an approach that will be fair, open and transparent, and in line with the intention of the March Covid guidance.

“This intention remains not to reconcile most providers and so the approach will use a threshold that has been lowered in line with average delivery to identify providers that are significantly under delivering in relation to their peers at R14, rather than assessing the mid-year funding claims, which would be hard to implement fairly.

“Providers that are below the thresholds will be able to submit a business case to allow us to consider any exceptional challenges, impacts on vulnerable groups and moderate any adverse outcomes.”

Full details have been set out in the updated 2019/20 funding claim guidance, which states: “If your [AEB] performance is between 68 per cent and 99.9 per cent then we will not reconcile your allocation.

“Where performance is below 97 per cent, you will be required to confirm through a declaration in the claim process, that you sought to continue to deliver within the Covid-19 period and maintained your subcontracting relationships.

“If your performance is less than 68 per cent of your allocation, then we will consider reconciling any under delivery up to 68 per cent. For example, if your performance is 60 per cent then we will consider recovering 8 per cent of your allocation.

“If you feel that there were extenuating circumstances for your under delivery due to the Covid-19 lockdown, or that the funding you will retain is less than the costs of your delivery, then you will be able to submit a business case. We will assess your business case and if we approve this, then we will adjust your claim accordingly.”

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