Government agrees with PAC over mishandling of Learndirect and accepts all recommendations

The government has accepted that it did not have proper oversight of Learndirect, and has agreed to take action on all of the recommendations made by a public accounts committee inquiry held on it.

Members of the committee grilled the organisations which have been closest to the debacle surrounding the nation’s biggest FE provider at a hearing in January, which was followed by a report in March.

Learndirect was sensationally hit with an ‘inadequate’ rating from Ofsted in August.

The giant provider was then found to have received special treatment from the DfE, which allowed it to retain its contracts for almost a year – much longer than the usual three-month termination period.

Five recommendations were made by the PAC to ensure history doesn’t repeat; they have all now been accepted in the Treasury’s response.

These recommendations and the government’s responses are set out below:


1. Do not hand so much power to private giants

“The government recognises the need to better understand its contractual relationship with suppliers, and is taking a number of steps to improve this information,” the response said.

This work is being led by a cross-government network of commercial professionals, called the government commercial function.

The GCF is “developing a tool which will provide departments with spend and contract data on suppliers across central government”.

Officials are also introducing commercial contract management for “high-risk arrangements directly under professional commercial governance”, as well as a commercial assurance questionnaire.

All of these have a target implementation date of April 2020.


2. Develop a new framework for identifying providers who are too big to fail

The government claims to have already taken steps to “identify and monitor large and essential suppliers”.

“The Cabinet Office is working with central government departments to improve capability in the management of critical and strategic suppliers,” today’s report said.

“It has developed, with departments and a number of industry experts, a best practice guide and toolkit for departmental strategic supplier relationship management.

“The Cabinet Office recognises the need to develop a comprehensive risk framework for large and essential suppliers and will report on progress by December 2018.”

The government is now “developing the necessary tools to identify and manage supplier performance”.

This includes a “pipeline of procurement activity, a central data repository of all contracts and grants held with third parties, forming a commercial assurance team and an SSRM programme to target strategic suppliers”.

A target date of September 2019 has been set.


3. The ESFA should publish its expectations on management fees

“The funding agency will work with providers to determine the services that should be offered to subcontractors and the corresponding fees that it is reasonable for providers to retain,” the response said.

“It will publish these expectations in advance of the next academic year and providers will be required to comply with them as a requirement of maintaining their funding agreement with ESFA.”

The ESFA will finally publish subcontracting fees for providers across the country in June.

Previous rules dictated that providers publish this information on their own websites every year, but many did not obey. Some, like Learndirect, had charged “unusually high” top-slices of 40 per cent to its subcontractors for years.

New rules now require individual providers to inform the ESFA of their management fee figures, which should then be published centrally.


4. Ofsted must urgently review its plans for assessing risks of private provider failures

Ofsted is “ensuring” that it takes full account of the size of a provider in terms of its learner’s numbers and complexity of provision in the case of very large providers during risk assessment by “actively putting greater emphasis on these factors”. This was implemented in April 2018.

While Ofsted already plans “well in advance” for inspections, it is now taking “special steps” to do this for particularly large providers.


5. A new inspection deferral policy is required for commercial providers

Work is already underway and Ofsted is “reviewing the current deferral policy and will give specific consideration to its approach to commercial providers”.

An updated policy is expected to be published this month.

Where there are “imminent” plans for closure or major change at a provider, Ofsted is “dependent on receiving clear and regularly updated information from other parties”.

“To this end, Ofsted is working closely with ESFA to progressively improve the accuracy and reliability of the information which it receives to inform deferral decisions.”

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