Colleges will be exempt from VAT on important training supplies following a landmark European Court of Justice ruling – with refund claims expected to amount to £10 million – FE Week can reveal.

A long-running dispute with Brockenhurst College and the taxman, centred on whether supplies for the college’s training restaurant was exempt from VAT, is still awaiting final resolution through the UK courts.

But Her Majesty’s Revenue & Customs Service today confirmed to FE Week that it had already accepted the consequences of a European court judgement, delivered last month on the case, that these “may be regarded as supplies ‘closely related’ to the principal supply of education”.

The judgement added they should “accordingly be exempt from VAT”.

A legal expert has now told FE Week that this will set a costly precedent for the government, as HMRC confirmed colleges can now start applying for refunds.

The Times newspaper had published a report on the court case, which prompted FE Week to ask HMRC today if all colleges would be exempt from paying VAT for similar facilities, like hair and beauty salons, in the future.

A spokesperson said in response: “The [EU] court found that Brockenhurst’s supplies of catering and theatre performances were not made to earn income, so were not in competition with other providers.”

“This is why they were exempt from VAT. HMRC will apply the guidance of the court to that case and to any other case in the same circumstances.”

The HMRC also confirmed that colleges are able to apply for refunds if they feel that they provide services in the same circumstances as Brockenhurst. These claims will be capped at four years and may be subject to verification, the HMRC said.

Noel Tyler, director of VATangles, the VAT consultancy which advised Brockenhurst College, said he expected the refunds to reach up to £10 million.

“Colleges will absolutely be able to apply for refunds,” he said. “They will be able to go back four years and recover such claims.

“I would say anything up to £10 million will be claimed. Anything from £20,000 to £250,000 for individual colleges [could be claimed].”

Mr Tyler added: “This is extremely good news for the sector.

“It is indicative that HMRC policy with regards to a lot of things in FE is wrong and needs to be amended.”

Limor Feingold, vice principal and director of finance at Brockenhurst College, said he was “delighted” by the ruling.

But he added: “Questions remain with regard to the interpretation of competition and the VAT status of specific students.

“As these questions will still have to be answered by the UK courts, the college is not yet counting its chickens in terms of VAT refunds from HMRC.”

In the European Court of Justice’s summary of the case proceedings, the judges also wrote that the ruling would apply “provided that those services are essential to the students’ education and that their basic purpose is not to obtain additional income for that establishment, by carrying out transactions which are in direct competition with those of commercial enterprises liable for VAT”.

The court agreed with the arguments made on behalf of the college, that VAT was not due on the income generated from areas such as the training restaurants or hair and beauty salons, where members of the public pay for services supplied by students as part of their courses.

David Hughes, chief executive of the Association of Colleges, said: “VAT is a complex issue and a big cost for Colleges. It is helpful that HMRC have confirmed they will refund claims to colleges in a similar position to Brockenhurst, but some colleges may struggle to prove that their catering outlets are not competing with local commercial cafes and restaurants.  The long term issue is to secure a post-Brexit VAT system which reduces the number of anomalies and allows college funding to be spent where it should be – on students and learning.”

 

Striking union members have been criticised for trying to cause “maximum disruption to the community”, by taking the unusual step of holding their industrial action on a college’s weekend enrolment day.

The University and College Union announced today that strikes will take place at the Willesden and Wembley campuses of the College of North West London, on Wednesday (June 28) and Saturday (July 1), in a row over the sacking of their colleague.

The union openly admitted that the aim of the latter strike will be to “disrupt an enrolment day for students looking to start courses in September” – with potential learners and their parents likely to come into contact with picketing staff.

It provoked a college spokesperson into saying: “It is disappointing that UCU has chosen to target key dates in the college’s calendar for this action, particularly on the Saturday which appears to have been chosen in order to cause maximum disruption to the community.

“We will be doing everything possible to minimise disruption to learners on Wednesday and will proceed as planned with our enrolment day on Saturday.”

FE Week invited the union to respond to this criticism.

Una O’Brien said that while any walk-out is a last resort, “effective strike action is supposed to cause disruption”.

“The college would be best off focussing its efforts on resolving the dispute, rather than sniping about the action union members feel they have been forced into,” she said.

UCU members have already walked out twice in support of mathematics teacher Indro Sen, who the union said was suspended in October 2016 while representing a former colleague at an employment tribunal.

A union spokesperson said:  “The college says that Sen did not have time off to attend the hearing and that representing his co-worker amounted to gross misconduct. UCU feels that the college is using this as an opportunity to sack Mr Sen for his trade union activities.”

The college firmly denied this allegation.

“Mr Sen was not dismissed for representing a colleague at a tribunal, but for gross misconduct following a disciplinary investigation and hearing in line with established procedures, which included an appeal,” the spokesperson added.

“The college rejects any suggestion that Mr Sen’s dismissal was the result of anything other than the disciplinary matter mentioned above.”

A private equity firm has reportedly paid a massive £700 million to buy out a major independent training provider.

The sale of a majority stake in IT provider QA Training – from previous owners Bregal Investments, which bought the firm in 2007, to CVC Capital Partners – was announced today.

The deal is reported to be worth £700 million, according to the Financial Times – although the parties involves have refused to disclose the actual sum paid.

William Macpherson, QA chief executive said the firm had “expanded rapidly” under its previous ownership to achieve “exceptional growth”.

“I am looking forward to forging an equally successful partnership with CVC,” he said.

“Their record of supporting expansion, together with their UK and international reach provides QA with a significant platform for success as we seek to execute our ambitious growth plans.”

Richard Blackburn, managing director at CVC, said: “William and his team have built a very high quality business, which is a clear leader in rapidly-growing markets, helping with the vital task of enhancing technology and business skills across the UK workforce.”

He added: “We look forward to working together to continue QA’s track record of success.”

QA Training, based in Slough but with multiple locations across the country, provides a range of IT training services including apprenticeships. QA Apprenticeships is part of the organisation.

It has a funding allocation of more than £20 million for 2016/17, according to the latest Education and Skills Funding Agency figures, which includes £6.4 million for adult apprenticeships and £13.5 million for 16 to 18 apprenticeships and traineeships.

The provider, which successfully applied to the register of apprenticeship training providers, was rated outstanding across the board at its most recent Ofsted inspection, in October 2013.

But the proportion of QA’s apprentices completing their courses dropped 16 per cent from 2014/15 to 2015/16, according to the latest national achievement rate tables published by the Department for Education on June 15.

They show that 70.2 per cent of apprentices achieved their qualification in 2015/16, compared with 86.2 per cent in 2014/15.

Update 1 : At 17:45 the DfE responded by saying the data they published for May is not full the full month. A Department for Education spokesperson said: “The data published did not reflect the full vacancy figures for May, and was only for the first few days of the month. The updated data covering the whole of May will be published shortly with an explanatory note, as part of the June release.”

Update 2 : At 17:46 the DfE published new apprenticeships vacancy files labeled June, although there were no figures included for June. However, they did include full month figures for May. This article has been amended to include the full figures for May

Latest government figures for apprenticeship vacancies, published this morning, appear to show a fall in vacancies and employers posting them, for the month of May compared to the same month the previous year.

Last May there were 3,490 employers posting  17,310 vacancies, compared to 2,850 employers posting 16,750 vacancies

Any reduction will be of concern to those that feared the levy reforms, which went live last month, would result in employers switching their provision to support only existing employees.

AELP chief policy officer Simon Ashworth said: “These figures simply confirm what our members have been telling us over the last few weeks, namely that apprenticeship start figures have plummeted since the levy started.  Levy-paying employers are holding back on their starts and the predicted calamity with the size of the non-levy funding allocations is being realised. 

“We are also getting a lot of feedback that employers in some sectors are refusing to pay the 10 per cent co-investment contribution and in other sectors there is definitely a shift to high-value management training rather than highly valuable level 2 and 3 sector-specific apprenticeships.  We hope that the government would want to use our expertise and intelligence to help determine what action needs to be taken.”

 

 

The government still won’t say when the results of the first ever procurement process for the adult education budget will be published – after previously claiming it would be revealed after the general election.

FE Week revealed in May that the Education and Skills Funding Agency had emailed providers via FASST, the online services hub for organisations working with agency,  to confirm a “pause” of the process following Theresa May’s call for a snap election.

The Department for Education’s “sourcing team”, who sent the email to providers, said it would update on when results would be published after the general election on June 8.

But, with the time lapse now approaching two weeks after the election, the ESFA is still not saying when it will publish the much anticipated AEB results.

FE Week first asked the agency before midday on June 15 for an expected date of publication, then followed it up with a nunmber of enquiries on Friday and this morning, before a spokesperson finally responded half an hour ago – but only to say that the results would be published in “due course”.

Providers that didn’t have to tender for AEB funding will have already received their allocations, but those relying on the process for their financial support will be frustrated by the news.

Mark Dawe, chief of the Association of Employment and Learning Providers, previously called for a long-term pause relating to the AEB procurement on April 25.

He said at the time: “The ESFA have just set a precedent for placing a pause on the non-levy apprenticeship procurement, so why not set aside the AEB invitation to tender for a year and give ITPs an allocation for the year 2017/18 essentially based on what they had before?”

It is thought around 500 training providers will have applied for a share of the AEB, which totals around £1.5 billion.

But only around £250 million of the budget was actually up for grabs through the tendering process, because colleges, local authorities and universities – which contract with the ESFA through a grant funding agreement – were not affected by recent changes and therefore did not have to tender.

The former Skills Funding Agency first wrote to independent training providers last autumn and told them that their current AEB contracts would come to an end in July, rather than having them automatically renewed as before.

FE Week then reported in January that the resulting procurement process for such contracts for ITPs had finally been launched by the SFA.

A previously struggling university technical college has performed a remarkable turnaround to be rated ‘good’ by Ofsted just eight months after receiving the lowest possible rating.

The education watchdog awarded UTC Cambridge grade two across the board – making it the first of the 14 to 19 institutions to have come back from a grade four.

The latest report praised leaders – who took over in October following the previous inspection – for their quick action in transforming the 14 to 19 institution’s fortunes.

“The new headteacher has acted quickly to establish a culture where teachers and students enjoy working hard in an atmosphere that is highly conducive to learning,” it said.

Inspectors noted that “leaders’ systematic and organised approach” had “rapidly and successfully addressed the flaws found at the previous inspection”.

Students’ “attendance and punctuality” had “dramatically improved” in the past nine months, which the report said was “an example of passionate and effective leadership”.

In addition, “leaders work successfully to engage with parents” and “the new principal has listened to parental concerns and acted upon them,” inspectors found.

Principal Sian Foreman took the helm at Cambridge as acting principal in November 2016, following the previous Ofsted visit, and became headteacher in April.

According to the Ofsted report, the UTC has been receiving support from the Parkside Federation of Academies, and is set to formally join the multi-academy trust in September.

Ms Foreman had been supporting the school in her role as specialist leader of education at the federation prior to her appointment, the report said.

She said: “Students come to UTC Cambridge because they have a passion for science and I am delighted that the Ofsted report recognised the ‘wonderful opportunities’ that are open to our students here.”

Ms Foreman added that: “With the support of our parents and governors I want to lead the college to become the ‘outstanding’ centre for science education in Cambridge.”

Today’s report comes after the education inspectorate slammed Cambridge UTC for its poor leadership and management and ineffective safeguarding arrangements in a report published in November 2016, but based on an inspection in September 2016.

“Leaders and governors have failed to ensure that the procedures to safeguard the most vulnerable pupils are effective,” it said, and “the management of attendance and punctuality” was deemed “inadequate”.

But the UTC, which opened in September 2014 and currently has 232 pupils, was rated ‘good’ in all other areas, including 16 to 19 study programmes.

These areas continued to be rated good in today’s report.

It said that “the provision that was judged to be good at the previous inspection has improved further,” and “leaders have high expectations” of 16 to 19 students.

Inspectors found that 16 to 19 standards “were not met last year”, which they attributed to “an attempt to recruit students onto courses for which they were not suited, but also a lack of systems at the time to ensure student progress”.

“However, standards are rising,” the report said.

As reported by FE Week earlier this month, Cambridge UTC is one of a number of the institutions to be expanding to recruit from year 9.

The move, which will take effect from 2018/19, will mean the school will have to halve the number of students it can take in year 10 from 100 to 50 in order to accommodate the year 9 intake.

FE Week reported in March that just nine out of the 20 UTCs to have been inspected to date had been rated good or outstanding – while six had been rated as ‘requires improvement’ and five had been graded ‘inadequate’.

Since then Bolton UTC has also been rated inadequate, while three UTCs have been graded as requires improvement – Heathrow Aviation Engineering, Lincoln and Sir Charles Kao.