Angry providers have slammed the government’s failure to fully fund all their apprenticeship growth requests as “appalling” and “destabilising”.

The comments were made by respondents to an FE Week survey carried out in the wake of the Skills Funding Agency (SFA) announcement on 5 February explaining how the money would be portioned out.

The funding agency said it had awarded £25m to colleges and training providers to deliver 16 to 18 apprenticeships in 2015/16 — but that left many providers short-changed, with many receiving much less than they had asked for.

In addition, no requests for traineeship growth had been funded.

The 30 people who completed our survey told FE Week they had put in a combined total of £3,187,179 in 16 to 18 apprenticeship growth requests for the period from August to March 2015/16 (period 1 to 8), but had only received 63 per cent — or £2,009,466 — of that amount.

Jill Nagy, the chief executive of Rochdale Training Association (RTA), said that while they had received all the 16 to 18 apprenticeship growth requests they’d put in for period 1 to 8, they had received no growth funding for the period from April to July.

RTA had already committed to over-delivering to the tune of £150,000 for this period, which was “a risk to us as a charitable body which could potentially rise to £350,000 if we dare to continue to recruit”, she said.

Mark Durham, the chief executive of the Training Trust, in Essex, called for “answers from government” on the situation, adding that “the public need to know this to put the pressure on”.

Adrian Gunner, the managing director of South West Regional Assessment Centre (SWRAC), described the news that there was no cash for traineeship growth as “appalling”.

SWRAC put in a bid for £100,000 in traineeship growth over period 1 to 8, having been effectively encouraged to over-deliver, Mr Gunner said.

As a result, they now have “a substantial number of very vulnerable learners whom we now have a big doubt over how we can help them”, he said.

Steve Roe, chief executive of Yorkshire-based Avant Partnership, which had unsuccessfully bid for extra apprenticeship and traineeship cash, described the situation as “potentially destabilising for the whole sector”.

In a statement, the SFA said: “We assess all provider growth cases to ensure they secure high quality opportunities for young people.”

SFA chief — we can’t operate in a demand-led environment

Peter Lauener, chief executive of the Skills Funding Agency and Education Funding Agency, was asked about the growth requests chaos during a talk at The Skills Summit in London on Thursday. He said: “We were not able to allocate so much money to 16 to 18 apprenticeship growth although we were able, after carefully balancing the books in the Department for Education, to allocate £25m additional funding in the current year. It took three weeks longer than we’d originally hoped, but I don’t think we reached a bad place even if not everyone got everything that they asked for.

“What no department or agency can do is allocate money that’s not there. We’ve never been able to give an absolute guarantee on growth funding. But we then need to work that into future plans. We’re looking now at the allocations for 16/17, which of course are due out very soon. And we’ll say, have we got enough in the apprenticeship pot? And if more young people are going into apprenticeships, are there fewer young people going into other routes? We’ve got the data on that, so we’re having to adjust and calibrate.

“We did allocate £25m extra. What we can’t do is operate in a demand-led environment. We can’t allocate money just on whim. That would get me appearing at the Public Accounts Committee in an indefensible case faster than anything else.”

Jill Nagy, chief executive, Rochdale Training Association

“SFA has given us funding for period 1 to 8 to cover all 16 to 18 apprentices on the system at the of period 4 – 100 per cent of period 1 to 8 request. No new funding for traineeships and no growth funding for periods 9 to 12. Our existing apprenticeship carry-in value to period 9 to 12 already exceeds our MCV by circa £150,000. This is a risk to us as a charitable body which could potentially rise to £350,000, if we dare to continue to recruit. The SFA performance management process clearly broke down at review point 1. We now have no confidence in the system and have been given no reassurance that funding will be available and that timetables will be adhered to. The notification that we had been successful with our bid for period 1 to 8 came 80 per cent of the way through that financial period. This is clearly not a sustainable model for managing any business, let alone something as important as growing apprenticeships by 3 million in this parliament.”

Mark Durham, chief executive, Training Trust (WFCCTT)

“I think we need some answers from government, not just through the Skills Funding Agency. Also the public need to know this to put the pressure on, not just kept between us in the wider college/provider network.

These numpties were elected on the promise of a future in building the country from within and now the goal posts have been ripped out of the pitch, nowhere to aim at now!”

Steve Roe, chief executive, Avant Partnership

“We will also not be the only provider in this position. Many others, like us will have invested substantial resources (including staff time, equipment, materials, marketing and liaison with referral agencies) in developing what we understood to be priority provision for young people. It is unacceptable and extremely inefficient to continually operate on a stop/start basis, which is unprofessional but also potentially destabilising for the whole sector. How would the SFA want us to respond to the young people and employers?”

Angela Middleton, chief executive, MiddletonMurray

‘’The position we, along with many other training providers, now find ourselves in is disappointing. The system permits growth requests but in order to be in a position to prove your ability to meet such requests you need to have over-achieved contract tolerance which due to the success of our award-winning 16 to 18 programme, is exactly what we’ve done. To then be told that due to the national overspend in 16 to 18 provision there is now no funding for growth after all, effectively means that MiddletonMurray has made a ‘donation’ to the government of over £600k in free training. Whilst we pride ourselves on our commitment to the communities we serve, we hadn’t planned on being quite so altruistic as this!”

Adrian Gunner, managing director, South West Regional Assessment Centre

“In response to government policy we have worked to develop traineeship provision to meet a significant need within the local authority areas of Bournemouth, Poole and Dorset. A provision which has been successful and well received by the authorities – working with the most NEET people. The SFA had alluded that growth in this area could be requested and it was clear that the only way to demonstrate an ability to meet growth was by over-delivering. We are now in a position where the SFA have effectively encouraged us to work for no income and we have a substantial number of very vulnerable learners whom we now have a big doubt over how we can help them. For the SFA/EFA and government to take so long to come up with this is appalling and their inefficiencies really do need to be called into question.”

The Skills Funding Agency’s decision to slash funding rates for a popular level three apprenticeship framework has been labelled a disaster. It was announced on Wednesday that the IT, Software Web and Telecom Professionals apprenticeship framework would be cut by about £2,000 from 1 April.

The SFA has not reduced apprenticeship framework rates since 2012/13, after a freeze was imposed during plans to switch to the new standards funding system.

Providers warned that the reduction in funding would only decrease the number of apprentice starts and quality of provision.

Ben Pike, managing director of QA Apprenticeships, one of the largest providers for this framework, said: “The lack of consultation and short notice for the drastic cut in funding for tech frameworks is met by surprise.

“The most significant concern for employers is that such large reduction in funding will directly lead to lower quality delivery, particularly as providers will have to reduce contact time and no longer be able to afford to utilise the high-cost specialist tutors and assessors that are required to develop the skills the sector needs.”

Anthony Hobbs, managing director of Baltic Training Services, another provider of the IT framework, said: “It comes as a complete shock and is nothing short of a disaster.

“This decision simply does not reconcile with the direction the economy is heading in where the need for a robust digital skills strategy and investment is needed.

“It will definitely reduce the number of apprentice starts, reduce the quality of provision available and reduce the investment available to ensure tech education remains current.”

The announcement comes three years after the National Audit Office criticised the SFA for a “lack of reliable evidence to support the estimate of training costs”, which it said “may mean that some frameworks have become more financially attractive to offer than others”.

The report added that the SFA was “not in a position to judge the extent to which providers may be generating significant surpluses or losses due to the rates paid on individual frameworks”.

“The agency is proposing to simplify the funding rates and increase transparency on adult skills funding from 2013/14,” it said.

However, the agency confirmed in December 2013 it was scrapping plans to simplify the rates, which until now have remained unchanged. The SFA said the rate for the competence qualification would fall from £8,673 to £6,650, a 23 per cent reduction.

For a fully-funded 16-18 year-old learner, this would equate to a fall from £9,299 to £7,131 as part of a framework that typically attracts funding of more than £15,000.

The update bulletin, where the announcement was made, said: “This is part of our regular review of apprenticeship framework costs to ensure value for public funds.

“From 1 April 2016, we will reduce the funding values for new apprenticeship starts only; those already on programme will remain on their existing rates.”

Stewart Segal, chief executive of the Association of Employment and Learning Providers, told FE Week he would be calling on the SFA to review the timing of its decision.

He said this “very short notice” change had not been thought through and would “inevitably disrupt starts for learners and employers”.

Providers have been left waiting, as the Skills Funding Agency admits to having “fully committed” the budget for the Apprenticeship Grant for Employers (AGE) facility for 2015-2016.

AGE 16 to 24 supports businesses that would not otherwise be able to recruit 16 to 24 year olds into employment through the apprenticeship programme. The facility works on a first-come-first-served basis for employers with fewer than 50 employees. They can receive up to five grants in total, each worth £1,500.

FE Week made enquiries with the SFA after being approached by a college, which said it had put in a growth request using AGE funding for 2015 and had been told there was no money left.

The college’s deputy principal said: “It does seem crazy to me that we are expected to go to small businesses, sell them apprenticeships for the first time, tell them the government wants to support them with a £1500 grant — only to then tell them that the government has no money to pay them.

“I can see a number of these small employers then deciding that they cannot afford to keep the apprentice on,” he added.

In response to FE Week’s enquiries, an SFA spokesperson explained that the agency was now looking to recall AGE funding that was not being used, in order to meet other providers’ growth requests.

She said: “For the 2015 to 2016 financial year, we have acknowledged and responded to all AGE facility requests. AGE is a finite budget.

“All available budget is committed (i.e contracted) in provider facilities, however this is not all being utilised by providers.

“We are about to run our performance management process to support the reallocation of funds to those providers requiring growth. We aim to fund all AGE eligible growth claims, subject to affordability.”

She added: “In the meantime, we are contacting providers with unutilised AGE budget to advise them of the need to reduce their facility, in line with their actual and forecasted activity.”

At the college that approached FE Week, the deputy principal highlighted that this deferral has come on top of a delay to its 16-18 growth request, a funding hold up that has caused widespread frustration. (See pages 16-17).

“There will be impacts to our and our subcontractor’s reputation if we do not get the £31,500 we have asked for,”
he said.

The number of notices of concern issued to FE providers by the Skills Funding Agency (SFA) has more than doubled in the last year, FE Week can reveal.

A total of 75 notices have been issued since 2010, with 53 per cent of these being given out in 2015 alone. Only 24 per cent were issued in 2014, and 12 per cent in 2013.

The notices set out the problems that providers must resolve, a timescale and the conditions under which the notice will be lifted.

Finances have been the main reason for the notices, with 55 per cent issued for concerns about financial health, according to data published for the first time by the SFA on 5 February. A further 8 per cent were delivered for a lack of financial control.

Ofsted inspection reports triggered 23 per cent of notices, while a failure to meet minimum standards prompted 15 per cent.

The majority of notices have also gone to FE colleges, which made up 47 of the 62 institutions to receive notices since 2010 — about 20 per cent of all colleges in England. Nine of the institutions receiving a notice were local authorities, and five were independent training providers.

One notice went to special designated institution The Marine Society College of the Sea in Lambeth on 20 January 2015, for dropping from a ‘good’ to an ‘inadequate’ Ofsted rating in November 2014.

Commenting on the findings, a spokesperson for the Association of Colleges, said: “Some colleges are experiencing financial difficulties following significant funding reductions since 2010.

“The spending review will make it slightly easier for colleges to plan for the future, but there will only be a dramatic improvement in finances with longer-term funding agreements and higher rates.”

Malcolm Trobe, the interim general secretary of the Association of School and College Leaders, added: “Colleges don’t need these notices to point out the challenges they’ve got in delivering provision under these circumstances.”

Two providers, Focus Training and Development and Start Training, received a notice of serious breach according to the data.

A step up from a notice of concern, this sets the conditions necessary to continue receiving public funds. Failure to meet its requirements can lead to contract termination.

Private training provider The Training Brokers took over Start Training in December 2015, a month after the notice was issued.

Esu Hill, the managing director, said: “We have since replaced the management team and will be addressing this area of the business as one of our primary concerns.

“Our chief aim is to turn Start Training in to a leading provider of apprenticeships in the north west. We have not been notified of a potential visit by the FE commissioner and have every confidence we will get through the re-audit in March.”

It comes after the AELP chief executive, Stewart Segal, said in a webinar on 26 January that “various reports suggest up to 90 colleges may fall into the [serious financial difficulties] category”.

He added that he hoped “we can save much of that £100m going into the sector to make sure it can continue” through the Government’s post-16 area reviews.

FE Week asked the SFA about the 90 colleges and £100m fund on the same day, but its response said that the figures were “out of date” and would be reassessed later in the year. The list of notices of concern and serious breach was published the following day (see illustration from edition 163).

Click the image to enlarge.

Notice of concern

One of the largest providers of apprenticeships has asked the Skills Funding Agency for permission to give cashback to employers, prompting the agency to say it would have “grave concerns” about any such arrangement.

In an email about Trailblazer funding, dated 22 December and released to FE Week following an FoI request, JTL Training asked the funding agency if it could offer “free training vouchers, tools or bank credit” to certain employers.

The payments from the provider, which has an SFA allocation of £17.3m for 2015/16, would be “completion grants from its charitable reserves” to employers that it said would be “treated adversely under the new funding arrangements”, the email from JTL chief executive Jon Graham said.

In a reply dated 14 January, the SFA said: “It is a core principle of the apprenticeship programme that it is co-funded between government and employers.

“We would have grave concerns about any grants not going with the grain of government policy.”

However, the email suggested that the agency’s powers to enforce this principle were limited. The information given was intended to “clarify the position on the funding rules”, it said. “We will not offer advice on what are clearly your commercial decisions,” it continued.

Under funding rules for the new Trailblazer apprenticeships, each standard is allocated one of five government funding caps (six from 2016/17).

The government will pay two thirds of the cost of delivering the standard up to the cap, with employers expected to contribute the remaining third. Employers can claim one or more incentive payments on offer from the government: a 16 to 18 apprentice payment, a small employer incentive and a completion incentive.

JTL Training, which was rated good across the board at its last Ofsted inspection in December 2012, runs apprenticeships and traineeships in the electrical, plumbing, heating and ventilating, and electrical maintenance sectors.

Its SFA allocation of £13.7m for 16-18 apprenticeships and traineeships in 2015/16 is the largest such allocation of any training provider. According to its most recent accounts, the provider had 4,764 apprentices in training at the end of July 2014.

Mr Graham told FE Week that they had been exploring ways to make the transition from apprenticeship frameworks to new Trailblazer standards “as a simple as possible” for their employers, many of whom are “very small, micro-businesses”.

For most of these employers the SFA’s incentive payments would cover their contributions, Mr Graham said, but for “about 10 or 15 per cent” of their employers “when we did the calculations, depending on the size, of the age, of an employer, that wasn’t always the case”.

The SFA has confirmed that JTL has not finalised any Trailblazer funding arrangements with employers, and does not have any apprentices on Trailblazer standards.

A spokesperson for JTL described the email exchange as a “purely conceptual discussion”.

“The SFA provided guidance and direction to JTL in the absence of current practice, and of course as soon as they advised of concerns, we immediately discontinued this idea,” the spokesperson said.

A spokesperson for the SFA said: “If providers are found to have broken the co-funding principles set out in the funding rules we will issue them with a notice of breach.”

Penalties for a breach include contract termination, in the case of a serious breach.

“We are currently reviewing the impact of other funding sources on the co-funding model, and will update the 2016 to 2017 funding rules if we consider that further clarification is needed,” the spokesperson added.