Bosses ‘switch’ firms leaving huge student and company debt

Serious questions are being asked of the Skills Funding Agency, after it allowed directors to switch the ownership of a successful provider they ran from one parent company to another, before transferring out a large amount of money, liquidating it, and leaving learners and creditors on the hook for millions of pounds.

After a month-long investigation by FE Week, the SFA has finally agreed to look into the complex web of companies owned by Paul Alekna (pictured), who ran one of the UK’s largest training subcontractors until he liquidated it in August.

The SFA originally declined to object to an ownership change for the Worcestershire-based provider Options 2 Workplace Learning Ltd, to which it had allocated around £2m for apprenticeships and advanced learning loans during the last academic year. Ownership was switched from one parent company – called eResponse Training Ltd – to another – eResponse Recruitment Ltd, which was dormant at the time. All of these companies were owned by Mr Alekna, with his brother Joe as managing director.

paul-alekna

However, eResponse Training Ltd, since renamed to ER Training and Development Ltd, went bust in August, leaving learners in limbo and creditors desperate to recover more than £3m debts – but not before assets worth £5.6m were moved to a new company that’s still trading and providing government-funded training.

The SFA took more than a week to respond to FE Week’s initial enquiries, and then insisted that it would not be investigating. However, pressed two weeks later to look again at the findings of our investigation, a spokesperson said on Tuesday (September 27): “We are aware of the issues raised in relation to Options Workplace Training and are following our published procedures.”

This is civil service-speak that effectively confirms they are following a path to a formal investigation.

There is a lot of public money involved and individuals have lost a lot too

The original parent company, now called ER Training and Development Ltd, went into liquidation on August 31. It was previously named eResponse Training Ltd for less than a month in July, and before that, eResponse Recruitment Ltd.

Its most recent accounts, ending September 2015, show a healthy business, with £2.4m profit, £1.1m taken in dividends, and a turnover of £27m. The accounts from the year before, lodged with Companies House, similarly show a £2.7m profit for the year and £1.2m in dividends.

When the original parent company went into liquidation, learners were left unable to complete courses, and a range of creditors faced a total shortfall of more than £3m.

But Mr Alekna, who sits on the Worcestershire local enterprise partnership business board, continues to run Options 2 Workplace and a new parent company – which to add to the confusion retains the eResponse name. Its website offering recruitment, training, skills and development services.

One of the declared creditors, who did not wish to be named, told FE Week: “We feel angry about this as there is a lot of public money involved and individuals have lost a lot too.

“We have worked with eResponse for many years but following their actions we hope it will be investigated by the authorities, as at present they could do the same thing again. I don’t want to see it happening again to anyone else.”

We have worked with eResponse for many years but following their actions we hope it will be investigated by the authorities

FE Week asked Mr Alekna about the transfer of £5.6m before the company went into liquidation.

An eResponse Group spokesperson said: “The £5.6m dividend is not a dividend of cash. No money passed to eResponse Ltd. There was a long-planned and legitimate separation of the training and recruitment businesses, which included the transfer of its recruitment activity to the Newco.”

He added this was part of a restructuring process that had been going on for more than a year.

The demise of ER Training and Development Ltd was, he claimed, down to “bad debts, the loss of ESF contracts, and a reduction in classroom subcontracting”.

Mr Alekna at first told FE Week that “no learners associated with eResponse Training have been disadvantaged and learning will continue through to completion with the support of our resources within Options 2”.

However, a number of students claimed that, following the cancellation of their courses, they had been left with advanced learner loans to pay off, but had not been offered alternative provision.

“We’ve run a report and can confirm all learners’ (loans) have been cancelled apart from those who have completed the course,” insisted Mr Alekna.

The Students Loans Company declined to comment on the situation with the students’ loans.

COMPANY STATEMENT

An eResponse Group spokesperson said: “During the last 12 months we have suffered a series of bad debts, the loss of ESF contracts, and a reduction in classroom subcontracting, down from £4.5m 2014/15 to £500,000 in 2015/16.

“We acquired the services of an in-house bid writer early in 2016 to help source new funding and bid on future ESF contracts.

“The restructure was completed in May 2016 following the required tax clearances from HMRC and confirmation from our accountants.

“During July we then suffered an additional loss of £800,000 with Pera Training confirming they are to pay back 1.3p in the pound.

“Our largest creditor could not provide extended credit terms and so the business was regrettably put into voluntary liquidation.

“This is the reason for the closure of the business.”

He insisted that “no one actually got a penny” of the £5.6m transfer, as “it was an approved accounting exercise”.

With regards to the restructuring process, he said: “The board of directors have been working with professional auditors, accountants and our legal team on restructuring the business – essentially to separate its recruitment and training operations.

“Taking advice, it was deemed simpler to move out the recruitment business as the existing business boasted the accreditations with delivering training services.”

IMPACT ON THEIR LEARNERS

Paul Alekna told FE Week that no learners associated with eResponse Training (which became ER Training and Development Ltd) had “been disadvantaged”.

A number of learners, who have asked to remain anonymous, disagree, claiming that their lives have been blighted by having their courses cancelled when the firm went into liquidation.

    learners learners2 learners3 learners4
 

eresponse

Since FE Week published the above article, eResponse have issued this statement.

Exclusive: Further delays to controversial provider register

The controversial new apprenticeship provider register has been delayed, FE Week can reveal.

The first wave of applications now won’t be accepted until the end of October instead of the 3rd of next month as previously stated.

Mark Dawe, chief executive at the Association of Employment and Learning Providers was quick to contact FE Week, saying: “while we can understand the delay, we think it is incredibly unfair to not give providers a revised date. These are busy people and busy businesses who need to plan.”

David Hughes, chief executive at the Association of Colleges is also concerned. He is now, for the first time, calling for the whole programme to be delayed, saying: “The changes being proposed to apprenticeship funding and regulation are complex and risk undermining the high quality provision already in place. If there is a delay in opening the register or confirming funding rates, I would like to see a more phased implementation.

“More than anything colleges, providers and employers need certainty and confidence about the changes, with a timetable they can rely on to plan how they will continue to deliver apprenticeships. It is a tough call for the Minister, but perhaps now a delay in implementing the new arrangements would be the most prudent.”

The government wants the new register to work alongside the existing register of training organisations, widely known as the Roto.

Guidance issued in August explained how providers will have to meet strict criteria to be included on the register, which will then be used by employers looking for training for their apprentices.

FE Week exclusively revealed ahead of the guidance being published, that colleges could be excluded from accessing apprenticeship funding because of low Ofsted ratings.

This will not apply to those which are given a grade four overall, but whose apprenticeships provision is given a better rating.

The guidance also clarified that any organisation wanting a role in delivering apprenticeship training from next May will have to apply to be on the register.

At the moment, subcontractors which deliver less than £100,000 of SFA-funded provision each year do not need to apply.

FE Week was made aware of the delay after the Association of South East Colleges cancelled an event due to take place on the 3rd of October. They wrote to member colleges saying: “We have been informed that Ministers and the Skills Funding Agency have changed their timings for the release of the register.”

Update: The SFA Update bulletin, published online almost two hours of our story, subsequently said the following on the issue:

“In August, we launched our proposals for the new register of apprenticeship training providers to invite your feedback. Our proposals stated we planned to open the register for applications on Monday, 3 October. As we are now making changes to the register proposals and approach, reflecting your comments and feedback, the opening of the new register will be delayed. We will announce the revised timetable shortly.”

An almost identical message has also now been published on gov.uk.

SFA pauses loans process after FE Week exposes delays

Growth requests for advance learner loans have been paused until further notice, after FE Week exposed lengthy delays with processing.

The announcement was made by the Skills Funding Agency in this evening’s online Update bulletin.

It said the agency was “changing the way providers apply for growth to their loans facility” and would not accept any new growth requests “until the new approach is in place in autumn”.

FE Week revealed on September 23 that providers had been left waiting for a response on loan growth requests made as long ago as June and July, with the government understood to be struggling to cope with extra demand for new 19 to 23 loans.

That goes against SFA guidance that growth requests should be responded to “within two working days”.

The agency published a longer statement on gov.uk today explaining why the action was being taken.

It said: “The advanced learner loans programme continues to grow and establish its market within the FE Sector.

“This is in line with the planned expansion of the loans programme to support 19 to 23- year-old learners for the first time.

“We wish to continue to support growth in 2016 to 2017 and beyond, so we are taking the opportunity to review our approach to managing loans facilities.”

It added the agency has seen a 25 per cent increase in loan applications compared to this time last year, and the review would help ensure the programme “continues to be effectively and robustly managed”.

Latest government figures showed that total loan applications made between May 1 and July 1 2016/17 had reached 19,450 – the highest figure for that time of year since the loans scheme started for the 24-plus age group only in 2013.

Just over a quarter of these requests (5,140) were made by 19- to 23-year-olds, who were able to apply for the loans in May for the first time.

An SFA spokesperson told FE Week last week that the organisation was reviewing “a significant number of requests as the loans programme continues to grow” and expected “to inform the majority of providers shortly”.

AoC calls for delay to apprenticeship funding reforms for first time

The Association of Colleges’ has for the first time added its voice to organisations calling for a delay to the implementation of reformed apprenticeship funding from May 1.

Chief executive David Hughes spoke out after FE Week exclusively revealed yesterday that publication of the controversial new apprenticeship provider register has been delayed – news that was later confirmed by the Skills Funding Agency.

The register was meant to open for applications on October 3, but this has now been put back to at least the end of the month.

Mr Hughes told FE Week after it is understood the matter was discussed at an AoC board meeting yesterday: “The changes being proposed to apprenticeship funding and regulation are complex and risk undermining the high quality provision already in place.

“If there is a delay in opening the register or confirming funding rates, I would like to see a more phased implementation.

“More than anything colleges, providers and employers need certainty and confidence about the changes, with a timetable they can rely on to plan how they will continue to deliver apprenticeships.

“It is a tough call for the minister, but perhaps now a delay in implementing the new arrangements would be the most prudent.”

The AoC previously stopped short of calling for the process to be delayed after the National Audit Office raised significant worries about poor government management of apprenticeship reforms in a report published on September 6.

The Association of Employment and Learning Providers had previously demanded a transition period between the existing register of training organisations and the new apprenticeship training provider register.

Its response to the government consultation on the new provider register called for non-levy paying employers’ apprenticeships to be delivered by existing providers on their current contracts until the end of July next year.

And, as exclusively reported by FE Week in July, the Confederation of British Industry is calling for the launch date for the apprenticeship levy – currently set for next April – to be put back.

Mr Hughes’ comments come on top of widespread concern over the findings of exclusive FE Week research showing how proposed funding changes, to work alongside next April’s apprenticeship levy launch, could mean rates being cut by up to 50 per cent for the most deprived 16 to 18-year-olds.

The research, published in August, provoked a huge national backlash.

Damning letters were sent by more than 50 Labour MPs, led by Tottenham MP David Lammy and shadow skills minister Gordon Marsden, to new apprenticeships and skills minister Robert Halfon.

The damning figures have also prompted FE Week’s first ever official campaign, launched last week in the Houses of Parliament, to oppose the cuts.

 

It’s a CEO hat-trick for Peter Lauener, as Institute for Apprenticeships added to EFA and SFA

Peter Lauener has been appointed shadow chief executive of the Institute for Apprenticeships with immediate effect.

He will take on the role on a part-time basis alongside his existing responsibilities as head of the Skills Funding Agency and Education Funding Agency, the Department for Education announced this morning.

Mr Lauener’s appointment comes four months after former IfA shadow chief executive Rachel Sandby-Thomas announced she would be leaving – after just two months in the job.

The DfE’s statement today said that Mr Lauener would work closely with Antony Jenkins, the shadow chair for the institute.

Mr Jenkins is the former group chief executive of Barclays and the current chair of business in the community.

Michael Keoghan, currently director of FE at the DfE, will be supporting Mr Lauener as deputy chief executive, the DfE said.

DfE Permanent Secretary Jonathan Slater said: “I am delighted to announce that Peter Lauener has been appointed as Shadow Chief Executive for the newly formed IfA.

“He will be able to apply his deep knowledge of skills and apprenticeships, as well as his senior experience as chief executive, to great effect in establishing the IfA in the run up to its go live date in April next year.”

Mr Jenkins said: “I am very pleased with the appointment of Peter, who I know will apply his excellent skills and expertise to ensure that the institute is up and running from April.”

On June 9, FE Week reported that the Department for Business Innovation and Skills (BIS) had appointed former Barclays chief executive Anthony Jenkins as shadow chair of the IfA, and former managing director for Trade at UK Trade & Investment Nicola Bolton as shadow chief operating officer.

At the time, a BIS spokesperson said the remaining board members of the institute would be appointed through a public appointments process by the end of 2016.

On June 27, BIS advertised eight board member roles for the new Institute, with a salary of up to £15,000 available for each position. The application closing date was set as July 20, with interviews scheduled for September.

FE Week also reported on May 27 that Rachel Sandby-Thomas – the first appointment to the Institute – was leaving her role as shadow chief executive of the Institute, just two months after it was announced that she had been appointed.

A BIS spokesperson confirmed at the time that she would instead join Warwick University as its registrar from September.

Rayner backs ‘important’ appenticeships campaign at Labour conference

The shadow education secretary Angela Rayner has reaffirmed her support for FE Week’s #SaveOurApprenticeships campaign at a Labour Party Conference rally this evening.

Speaking at the rally in the Pullman Hotel in Liverpool, Rayner described it as a “really important campaign”, and one which is very close to her heart.

The campaign aims to send out a message to the government that cuts of between 30 and 50 per cent to apprenticeships funding, which are planned for 16- to 18-year-olds in some of the most deprived areas of the country, are simply not acceptable.

“I came up through the FE route with a national vocational qualification in care, and let’s face it, it’s a lifeline for learners like me, to do well in our work, and people who maybe failed in their GCSEs but actually have some really good solid vocational skills,” Rayner told FE Week.

She said apprenticeships offered young people a “really good career” in whatever they wanted to do, but said they needed to be “proper quality apprenticeships” and warned that the government would damage the economy if it failed to listen to the campaign.

The stark drop in funding recently exposed by our exclusive analysis has prompted a furious backlash – more than 600 people have already written messages pledging support for FE Week’s first official campaign.

Our damning findings on the impact of apprenticeship funding reform plans have already provoked shadow skills minister Gordon Marsden and more than 50 other MPs led by Tottenham’s David Lammy to write a letter to the government begging for a change of heart.

Marsden told the event tonight that the government needed to be “very clear” that they were being “watched very carefully”, and warned they had form when it came to “disappointing 16 to 18-year-olds over apprenticeships”.

Senior politicians from across the political divide, including skills minister Robert Halfon, who defended the cuts, spoke at the launch of the campaign earlier this month.

It took place on the same day that Theresa May was asked about the issue during Prime Minister’s Questions, when she told the Commons that she “does not recognise” that there will be cuts of 30 to 50 per cent – even though the numbers come from her own government.

Mr Lammy insisted during his campaign launch speech that “it’s an absolute scandal for the PM to say she doesn’t recognise the figures. It’s her funding agency, they’re her figures.”

However, he insisted: “We will force a U-turn.”

Mr Marsden warned that the cuts were “an elephant trap in his [Mr Halfon’s] in-tray”.

Education secretary Justine Greening was also asked that morning about how proposed cuts might affect social mobility during an education select committee hearing.

Lord Baker rejects post-16 academic and vocational divide

Controversial plans for a post-16 academic and vocational divide have been rejected by key backer of under-fire university technical colleges Lord Baker.

The Tory peer, who founded the Baker Dearing Educational Trust to promote UTCs for 14 to 19 year-olds, took his stand in a new Edge Foundation report called ‘14 – 19 education – a new baccalaureate’.

The government’s ‘Post-16 Skills Plan’, which followed-up on from Lord Sainsbury’s recommendations also unveiled two months ago, involves replacing 20,000 post-16 vocational courses with just 15 “high-quality routes”.

It said that 16 year-olds would be “presented with two choices: the academic or the technical option” in the form of these 15 routes covering “college-based and employment based (apprenticeship) education”.

But Lord Baker said in an Edge Foundation report out this morning that while he backed Lord Sainsbury’s “ideas for simplifying technical education for young people aged 16 to 19”, he has “concerns about reinforcing an artificial divide at 16 between the academic and technical routes”.

He added: “I am convinced that many young people would benefit from taking a mixture of technical and academic programmes, in varying proportions according to their talents and ambitions, throughout the period from 14 to 18/19.”

Lord Baker’s opposition to the conservative government’s plans come as little surprise – as he was the principal architect behind the UTC model of technical-based education starting from 14 instead of 16.

Yet in July Ofsted’s former chief inspector Sir Michael Wilshaw slammed UTCs, telling them that they need to make “radical improvement” if the model is to survive.

It followed FE Week research in February, which found that forty per cent of UTCs opened between 2010 and 2013 saw student numbers fall for the last academic year.

Many have now been forced to close, such as UTC Lancashire which said in a statement on May 3 that it would close for good just three years after it opened — due to difficulties in enrolling enough students “to secure future financial viability”.

Lord Baker also spoke out in the Edge report against the government’s “narrow” English Baccalaureate.

The EBacc is a new performance measure, brought in by the coalition government, which is achieved when school pupils get a grade C or above in a “core” group of seven subjects: English (x2), maths, science (x2), a modern foreign language (MFL), or history and geography.

Lord Baker called on the government to expand it to take on technical qualification from age 16 – with programmes delivered in “cities and large towns by clusters of mainstream schools and colleges and specialist institutions modelled on UTCs, career colleges and studio schools”.

In rural areas, he called for “dual enrolment” with students spending the bulk of their time in their local school, and travelling “one or two days a week to a college or specialist institution to learn from people with first-hand industrial, creative and commercial experience”.

He added: “In my vision for 2025, all students would follow a single, coherent 14-19 framework leading to a leaving diploma recognising the full range of academic and technical achievement including GCSEs, A-levels and technical qualifications.”

A Department for Education spokesperson said: “The EBacc is studied as part of a broad curriculum and provides a strong academic foundation, while allowing students to study additional subjects that reflect their individual strengths and interests. We agree that subjects like technology are important and have worked closely with employers to review the curriculum to make sure young people have the skills they need to succeed in the 21st century.”

Lord Baker slams government over ‘narrow’ EBacc | FE Week

 

Principal of inadequate college resigns despite ‘full backing’ from governors

The principal of a troubled college is stepping down just six weeks after he was given the “full backing” of his governing body, following a damning grade four Ofsted verdict.

Stuart Wesselby’s resignation from Tresham College of Further and Higher Education will take effect from September 30, the college has confirmed.

It comes after the college was rated inadequate overall in a report published by the education watchdog published on August 10. It was previously rated ‘good’ in 2009.

A Tresham spokesperson said at the time that Mr Wesselby, who has been in the post since 2012, had the “full backing of the college’s governing body to remain as principal” despite the verdict.

But Simon Evans, Tresham chair of governors, told FE Week today: “It is with regret that I must confirm that Stuart [Wesselby] has decided to step down as principal of Tresham College.

“I would like to thank him for the contribution he has made to the development of the college and its students during his time as principal.

“Stuart has always been a passionate advocate of Tresham, its students and staff and I wish him well in all his future plans.”

He added Corrie Harris, vice principal for curriculum and quality, will be interim principal “pending the recruitment of a longer term appointment”.

According to his LinkedIn profile Mr Wesselby took over as principal at Tresham in January 2012, having previously led East Durham College from 2010 to 2012. Prior to that he was vice principal at Tresham from 2008 to 2010.

FE Week understands that the Ofsted report took longer to be published than the usual six weeks for a grade four, as the college tried and failed to challenge the verdict.

The college, which had an Education Funding Agency allocation of £13.3m and a Skill Funding Agency allocation of £5.7m in 2015/16, was heavily criticised by inspectors for poor achievement rates.

The report said that learners on study programmes, who made up the majority of the college’s 4,700 students, “make inadequate progress towards their learning outcomes” with the proportion “who achieve the grades expected of them” also inadequate.

Apprenticeship achievement rates, particularly for 19- to 23-year-olds, were also “too low”.

At the time, a spokesperson for Tresham told FE Week that Mr Wesselby was “extremely disappointed” with the verdict, particularly on outcomes, which was based on results from 2014/15.

The college had already put in place a number of improvements which were predicted to lead to better outcomes in 2015/16, but these had not been taken into account by Ofsted, the spokesperson said.

Why you should contribute to the LIFES inquiry

What is the purpose of FE & Skills Providers? Local economic improvement? The national economy? Supporting local businesses? Guaranteeing gainful employment? Delivering social mobility? All of the above?

No organisation, and no sector, would attempt wholesale strategic change without understanding where it has been, but most importantly, where it is going. Further Education and Skills should be no different. What is our vision for the sector? More importantly, how do we achieve it?

The last year, and 2017 to come, looks set for some of the most substantive changes I’ve seen: the impact of Brexit, the inevitable change in the labour market, advances in digital technology, the introduction of the Apprenticeship Levy, global economic pressures… I could go on.

Change is not an alien concept to us in the Further Education and Skills sector but it does carry its own set of risks and opportunities. The greatest risk that is posed to the sector is that in responding to change, we forget why it is we exist and who it is we serve. We as sector leaders, have to find time to get out of the trenches and into the watch tower. Providers need to have a vision and programme to ensure that we can lead through this time of change for the foreseeable future. As baseball legend Yogi Berra said, “If you don’t know where you are going, you’ll end up someplace else.”

With that in mind, I have been chairing an independent inquiry into leadership, innovation and change through FE & skills (LIFES). The Skills Commission has been travelling the country to investigate the extent that innovation is being born of devolution, apprenticeships, college amalgamations and more.

In our very first session, we heard that “Innovation is change. Adapting to pressures whilst understanding one’s purpose.”

For instance, one thing that really sticks in my mind is when the Skills Commission heard about a college inviting local SMEs physically into the college space by renting out office space to them. Done right, the impact is instant: SMEs are in direct contact with the college and its staff, the college’s physical space grows its “year round offer” and learners are brought into contact with potential future employers.

There has never been a more opportune time for the FE and Skills sector to lead innovation

The Commission has seen, particularly in its engagement with colleagues from Wales, Scotland and Northern Ireland, that the change affecting FE and skills in England is not taking place in isolation. Rationalisation, regionalisation and the reduction of college numbers is already a reality in each of the UK nations, except England. So why are we not finding time to look across our national borders and learn from colleagues who have already come out the other side of changes that are bearing down on those of us in England?

Engagement with the local economy is essential, whether it be learners getting the qualifications they need to join a local employer; or employees understanding how the curriculum is aiding their business; or a provider working with an employer to develop their programme.  It’s clear from our evidence collecting that making providers integral to the local economy is not something we just “do”- it requires ongoing strategic placement in the economic environment. If a learner doesn’t know there is a brilliant company down the road, they won’t make the right decisions to get there. If the company doesn’t know of the qualifications our FE & Skills providers are teaching our students, they won’t go to employ them.

If this is true, there has never been a more opportune, or necessary time, for the Further Education and Skills sector to lead innovation. I extend an invitation to all who are interested to contribute to the LIFES inquiry.

By innovating, and learning from one another, the sector can not only survive, but thrive. By replicating, emulating and understanding innovation already taking place, skills providers can become integral to their communities the length and breadth of the United Kingdom. Now more than ever, the UK needs a skills pipeline that can feed the economy today, and grow it in to the future. Now is the time to make sure we, as a sector, are integral to that effort.

Neil Bates is Principal and CEO of Prospects College of Advanced Technology. He is Chair of the LIFES inquiry, investigating innovation in the Further Education and Skills sector. For more information, and to submit evidence to the LIFES inquiry, please contact Aaron Bowater on 0207 202 8576 or aaron.bowater@policyconnect.org.uk by Friday 30th of September 2016.