Lifetime Training’s losses more than double to £21m

Poor financial position in latest accounts partly caused by £5m ESFA clawback

Poor financial position in latest accounts partly caused by £5m ESFA clawback

26 Jul 2024, 15:36

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Losses at England’s largest apprenticeship provider more than doubled to £21 million in the last financial year – partly due to a £5 million penalty to the government’s skills funding agency.

Lifetime Training reported the figures in the company’s accounts, published today, for the turbulent 18-month period to July 2023 which included two leadership changes.

The firm, which trains almost 20,000 apprentices a year for over 200 companies including Tesco and McDonalds, put the results down to a “historically challenging period including the legacy of the Covid-19 pandemic and its impact on business operations and clients”.

Lifetime’s main economic sectors include hospitality, care, active leisure, retail, healthcare and leadership and management.

The company was sold by private equity parent Silverfleet Capital to the lenders Alcentra in 2022. Its turnover fell from £71.1 million to £68.4 million over the following accounting period, while after-tax losses increased from £9.2 million to £21.1 million. The company had made a profit of £6.9 million in the year ended July 2020.

The accounts state that the tough trading environment was made worse by the “lack of upward adjustment to the funding caps on apprenticeship standards, which had remained static for several years”. 

Lifetime’s cost base had also “not been appropriately aligned to the volume of learners for much of the period under review”.

The company’s highest-paid director, which would have included former bosses Alex Khan and Jon Graham’s salaries, totalled £513,739. FE Week understands this figure includes the pair’s severance payments. Individual figures cannot be released due to confidentiality agreements.

ALS clawback significantly reduced

Lifetime’s losses were exacerbated by a £5 million clawback to the Education and Skills Funding Agency, staff restructuring costs of £1.2 million and software implementation costs of £500,000.

The clawback relates to a long-running dispute over the company’s claims of additional learning support (ALS) funding, which is available to meet the costs of putting in place reasonable adjustments for apprentices with a learning difficulty or disability.

Lifetime’s previous accounts had set aside a contingent liability of £13.7 million to settle the dispute following an audit. 

While £5 million has been included in today’s accounts, a final repayment figure is still to be determined through further audit work. This could increase the total liability by around 20 per cent, or £1 million, according to the accounts.

The financial statements said the ESFA has agreed that any future liability will be subject to a mutually agreed repayment plan to protect the working capital of the company.

During the last accounting period, Lifetime said it transitioned back to a largely face-to-face delivery model and, “given the national reach of our business operations”, this resulted in “significant incremental costs associated with travel and learning coach numbers”.

The move did however pay off in terms of quality of delivery, as Ofsted upgraded the provider from ‘requires improvement’ to ‘good’ in a report published earlier this month.

‘The issues raised have now been largely addressed’

A Lifetime spokesperson told FE Week that under new leadership, with former Post Office managing director David Smith joining the firm in July 2023, the issues raised within the accounting period “have now been largely addressed”.

A “major” restructuring of the group’s balance sheet took place this month which reduces Lifetime’s group debt and “eliminates interest charges by over £100 million, thereby improving future cash flows”, the spokesperson said.

They claimed this will “enable us to bid for new contracts more easily and, potentially, take on debt so we can invest further in the business”, adding that the company is “now profitable”.

Funding caps on apprenticeship standards are being reviewed upwards and several standards offered by Lifetime in retail and care have already had pricing uplifts from August 2023, which will benefit the business by around £1.5 million in 2023/4, the accounts said.

Similarly, with effect from January 2024, the government boosted funding rates for functional skills by 53 per cent which will “positively impact group profits by £800,000” this year.

Lifetime’s spokesperson said the company’s financial position has been shared “extensively” with ESFA and the agency is “happy with the corporate results as reported in the full accounts up to July 2023”.

“There is no current intervention, and we’ve found common ground with ESFA around our historical learning support payments and are expecting to settle this in the coming months,” they added.

Low apprenticeship achievement rates have plagued Lifetime Training in recent years, which sat at 35 per cent in 2022/23.

This month’s Ofsted report said the proportion of the provider’s apprentices completing and achieving their programme has now increased to half – around the same level as 2018/19. However, the company’s spokesperson offered a different figure today.

They said: “We are forecasting a rise in qualification achievement rates of 10 per cent over the next reporting period and we retain positive ongoing relationships with our employer partners, who continue to put their trust in us to deliver quality skills and apprenticeship programmes for learners.”

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9 Comments

  1. James DiSalvo

    Another one sided article from this editor who seems to want to discredit this company at any opportunity! What’s the CEO being at the Post Office many years ago got to do with the substance of this article other than to try and discredit!? FE week needs to do better with their reporting or state clearly authors intended biases at the start of each article!

  2. Phil C

    Glad to see others recognising Billy Camden’s clear agenda and tabloid style reporting. I bet you couldn’t wait to land this one Billy after having to report some positivity recently with Lifetime’s grade 2 OFSTED. As James has pointed out, the Post Office comment has zero relevance.
    Absolute trash reporting.

  3. Jordan Rhodes

    I have read the article 3 times. What is crystal clear is that Billy is reporting actual facts and statements. There is no opinion or personal view permeating throughout the piece. And it was the Lifetime spokesperson who contributed the point about the new leadership from the Post Office. For the reader, that point is useful because it provides a glimpse of the experience at the top of Lifetime. By all means hammer FE Week when you can find low quality journalism but there is none here at all. And I’ve never met Billy but based on the evidence in the article, there is no hidden agenda.

  4. Phil Hatton

    The article seems very balanced and the reader should be aware that Lifetime was chalk and cheese different between the quality of adult and apprenticeship training. Most readers of FE Week will feel sorry for those who were adult learners. Being with the the PO is certainly something worth raising as anyone who has followed the investigation will know there was insufficient oversight of their senior managers.