Fast-growing adult education provider suddenly closes

Clawback for 'associate agreements' and failed legal challenge for AEB bid contribute to collapse

Clawback for 'associate agreements' and failed legal challenge for AEB bid contribute to collapse

A training provider with multi-million-pound adult education contracts across several mayoral combined authorities has suddenly closed down.

Vocational Skills Solutions (VSS) was one of the fastest growing training providers just a few years ago, but has now been forced to call in the administrators.

Managing director Phil Juniper told FE Week several factors led to the “heart-breaking” decision that now impacts hundreds of learners and scores of staff.

The reasons include the pandemic, a “substantial” clawback due to undeclared associate agreements, a failed legal challenge against the West Midlands Combined Authority’s (WMCA) decision to deny it a contract worth over £3 million, and, ultimately, a “significant downturn in income”.

VSS was a national provider that started out as a subcontractor in 2012. The company secured its first direct contract with the Education and Skills Funding Agency in 2017 to deliver adult education budget (AEB) funded courses.

It also had a brief stint delivering apprenticeships but swiftly pulled out after “making significant losses” with the programmes.

The provider went on a period of significant growth around the time of AEB devolution in 2019, securing £4 million worth of adult education contracts in the mayoral combined authorities of Manchester, London, Liverpool and the West Midlands.

VSS had around 50 adult learners in 2019 and grew this number to over 2,150 by the end of 2020.

Juniper told FE Week the business was then hit “very hard” by Covid-19 and associated lockdowns which forced the firm to take out several loans.

Learner numbers fell by half over the next 12 months as recruitment struggles continued, leaving the company with a “much longer period of recovery than anticipated”.

“We had all the funding we could spend, but without learners coming through the door, we continued to make losses,” Juniper said.

In November 2021 the provider was further hit with a clawback of over £1 million after it used associate tutors from other training providers under “associate agreements”, which was determined as “undeclared subcontracting” by the ESFA and Liverpool City Region.

Juniper said: “This was a business error, and we agreed to pay the money back to keep our contracts, which we were successful in doing so in the main. However, this added further pressure to the financial position of this business.”

Despite the substantial clawback with Liverpool City Region, VSS was given a boost when it was awarded a five-year contract for £1 million per year starting in August 2022 with the authority.

But the future of the business relied upon securing more contracts in other areas.

The company re-tendered for its West Midlands contract of around £3.4 million but was informed in March 2023 that it was unsuccessful, having not made it through stage one of the process.

Juniper claimed that not one current provider in the region had won the contract, or even made it through stage one, “highlighting that there had been a significant failure in their tender process”.

His firm issued a legal challenge to the WMCA, requesting several documents and information about the qualifications and training of the evaluators, which was denied.

However, VSS was provided with a “different scoring methodology than the one provided in the tender specification, which caused a complete loss of confidence in the WMCA’s ability to manage a procurement exercise from this point on”.

A spokesperson for the WMCA responded: “Whilst we’re disappointed in the outcome of the initial call, in which only a small number of bidders were successful, we remain committed to achieving our ambition to secure provision that best supports our residents – and have recently completed a further call to secure local place-based provision for our residents. All of our procurement is conducted through a fair, robust and transparent process.”

Juniper said the WMCA contract refusal left his business’ financial position “at breaking point” and was forced to close the West Midlands operations down at the end of March.

He added: “Throughout April, the business suffered a significant downturn in income, and as the West Midlands response to my legal challenge was somewhat very dismissive and lacking in any accountability from them, and no future tendering opportunities seemed to be in the pipeline, with the advice of my advisory board and financial advisors, I made the heart-breaking decision to cease trading with immediate effect on April 28, 2023, paying as many staff as I could prior to closing the doors.”

VSS has now handed back its other AEB contracts. The company’s accounts for 2022 show net liabilities of £1.6 million.

Juniper said: “VSS has changed the lives of over 28,000 learners throughout the last 12 years and has contributed tens of millions to the economic growth of the regions we operated in. This is something I am personally very proud of.

“I would like to take this opportunity to personally thank all my staff for their hard work and dedication. I am most sorry for them, as they now try to source work in an industry that is in a significant crisis.”

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  1. Tony Williams

    It’s down to their funders WMCA who did no due diligence at the application stage or in fact at any stage. Many providers got through who shouldn’t have this was just one.Others have since either closed down or been liquidated eg GB Training, Go Train etc.
    Surely an investigation needs to be carried on WMCA as to how they are managing public funds.