The Education and Training Foundation was heading for a £7m underspend this financial year, FE Week can exclusively reveal.
A spokesperson for the foundation, which was officially launched four months ago, said it was handing £7m of the £18m budget back to the Department for Business, Innovation and Skills (BIS) on condition it was spent on the FE sector.
A spokesperson for the foundation, formerly known as the FE Guild, conceded delays with setting up a competitive tendering process had prevented it from committing funding to several large contracts before the end of the financial year.
It is understood to be one of the main reasons behind the foundation’s predicted underspend.
It has the same £18m indicative budget for 2014-15 and is set to get up to £10m the following year.
David Hughes, the foundation’s interim chair, told FE Week: “We have worked hard to establish the foundation on simple principles of transparency, sector ownership and impact.
“That required thorough work on setting priorities through consultation, new procurement and commissioning processes and an honest relationship with the government as the initial sole funder.
“I am pleased with the progress we have made and that we have been able to announce new projects and funding so quickly.
“We are making the best possible use of our 2013-14 funding through all our commissioning and direct spending to secure effective impact.
“It takes time to commission and procure the right services to implement the advances we are all seeking.”
A BIS spokesperson confirmed the underspend money would remain destined for FE.
A spokesperson said: “We have confirmed a commitment to ensure that the sector is able to access the full level of intended 2013-14 funding support whether that is direct via the Education and Training Foundation or via other routes.
“These routes may include grants or bursaries to improve and strengthen the workforce, especially in the key areas of English and maths.”
Mr Hughes, who is also chief executive of the National Institute of Adult Continuing Education (Niace), and foundation interim chief executive Peter Davies announced last month that they were binning contract bids received under a previous non-competitive tendering process.
Organisations involved have since been invited to re-submit bids in a competitive process.
However, £75,000-worth of contracts awarded to member organisations such as the Association of Colleges (AoC) and Niace under the old rules were allowed to go ahead.
The foundation, with its sector ‘self-improvement’ role, is seen as the replacement body of the Learning and Skills Improvement Service.
But within weeks of its launch, Sir Geoff Hall, the interim chief executive, quit resulting in the temporary return of former FE Guild consultation project leader Mr Davies, who took on Sir Geoff’s post.
Department for Education policy director David Russell, a governor at Central Sussex College. was last month announced foundation’s first permanent chief executive.
Paul Mullins, chair of the BIS-sponsored Industrial Development Advisory Board since January 2012, was also named the new foundation chair, replacing Mr Hughes. Both men are yet to take up their new posts.
The foundation is funded by BIS, but “owned” by the AoC, Association of Employment and Learning Providers and the Association of Adult Education and Training Organisations (also referred to as Holex).

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