Providers that flout rules on revealing how much they topslice when subcontracting have been given a November 23 deadline to comply — or face having their funding suspended.

The Skills Funding Agency (SFA) has threated to suspend public money for lead providers that fail to publish their management fee details on their websites.

It comes around nine months after an FE Week investigation uncovered providers were ignoring rules that they must publish what they charge subcontractors. And while there was compliance with rules on listing the range of fees, these were as high as 40 per cent in some instances.

However, the SFA has now warned providers that “we will suspend your payments” if information is not made public by the deadline.

An SFA spokesperson said: “All colleges and other training organisations that subcontract must publish the actual funding paid and retained for each of their subcontractors in the [provider] funding years 2013 to 2014 and 2014 to 2015.”

The information should be made available on websites, and include current supply chain fees and charges policy. The SFA also wants the relevant weblinks provided on 2015 to 2016 subcontractor declaration forms.

The rule requiring colleges and independent learning providers (ILPS) to specify the management fees they charged each of their subcontractors over the previous academic year was introduced by the SFA in August last year.

But FE Week found four months later that rules were being ignored by a number of providers — including the country’s biggest SFA contractor at the time Learndirect (see right).

A Learndirect spokesperson said it published figures showing how much the company had paid and retained from each of its 73 subcontractors in 2013/14, out of its total £136.9m SFA allocation, on its website before Christmas.

But the Sheffield-based provider had not published the information for 2014/15 as FE Week went to press.

The company’s ‘supply chain fee policy’ webpage showed on Thursday (September 10) that it is was charging management fees up to 40 per cent of contract values — which was unchanged from when FE Week reported on the issue in early December.

A spokesperson for Learndirect, which was allocated £117.9m for 2015/16 by the SFA as of last month, said: “The business intends to publish its 2014/15 charges in advance of the November 23 deadline.”

Stewart Segal, chief executive of the Association of Employment and Learning Providers (AELP), said that “any withholding of funds should be done as a last resort”.

“Some of the data is complex and the SFA needs to ensure that providers are very clear about how a breach has occurred,” he added.

Julian Gravatt, assistant chief executive at the Association of Colleges, said: “Colleges find themselves on both sides of the contracting relationship, as main and subcontractors, in a range of areas including both apprenticeships and higher education.

“It is right for everyone to look at subcontracting to ensure the maximum amount is spent on education and training, but you can’t really judge a price without knowing the service it’s buying.”

Editor’s comment

Looking for big top-slicers

The issue of top-slicing, of withholding public funding from the front line of education and training in the form of a ‘management fee’ to subcontractors, has featured in these pages before.

And FE Week has always been supportive of Skills Funding Agency (SFA) efforts to bring some transparency and accountability to this practice.

But, up until this point, and thankfully no further than November 23, these efforts have had no teeth.

It is for this reason that once again FE Week is supportive of the SFA in putting forward the very serious threat of a suspension of funding for non-compliance.

Ultimately, all this will mean is that lead providers are far more likely to comply, to reveal how much they top-slice on each contract — it does not mean they must adopt fair management fee levels.

However, what the SFA’s threat will allow, is for FE Week to watch closely the practices of those who think it’s reasonable to cream off 40 per cent of SFA cash before handing on a contract.

To those providers I would say we’ll be looking for you, and we’ll be looking at you.

Chris Henwood

chris.henwood@feweek.co.uk

Almost 90 per cent of principals affected by new area reviews are unhappy with government guidance outlining how the process will work, an exclusive FE Week survey has suggested.

Huge unease with the Department for Business, Innovation and Skills (BIS) and Department for Education (DfE) guidance was revealed in a survey of the 38 principals of colleges whose future has been put in question by the post-16 education and training reviews.

An overwhelming 89 per cent of the respondents, who all chose to remain anonymous, indicated disquiet with the terms of the reviews, which had been leaked to FE Week, answering simply whether they were happy or not with the guidance.

Underlying the reviews, covering Birmingham and Solihull, Greater Manchester and Sheffield city region, is the “need” to move towards “fewer, often larger, more resilient and efficient providers,” according to the government.

However, one principal answered: “The most significant issue is the exclusion of school sixth forms, university technical colleges (UTCs), free schools and [independent] training providers from the reviews.

“This is not a review of the post-16 sector, but a partial review. It would appear that ‘wasteful duplication’ is [only] acceptable for A-levels and provision for the most able young people, even to the detriment of quality.”

The government published its guidance, introduced by Skills Minister Nick Boles, on the reviews on September 8, and separately identified 22 general FE colleges and 16 sixth form colleges (SFCs) that will be directly involved — but no schools, UTCs, free schools, or independent learning providers (ILPs).

Gripes about their omission featured heavily in the survey responses and mirrored the views already expressed by sector leaders who said that only including general FE colleges and SFCs would paint an incomplete picture of post-16 provision.

James Kewin, deputy chief executive of the SFCs’ Association, warned that the process was “fundamentally flawed” while Martin Doel, chief executive of the Association of Colleges, said “all provision in an area” should be considered.

And Stewart Segal, chief executive of the Association of Employment and Learning Providers, said the reviews should recognise the “very significant” role of ILPs.

A joint BIS and DfE statement released on Tuesday (September 8) stressed that the reviews will focus on the current structure of FE colleges and SFCs, although there will be opportunities for other institutions including schools and independent providers to “opt in”.

Regional school commissioners will also “consider the implications” for school sixth form provision, it said.

A BIS and DfE spokesperson also told FE Week that the government was separately “reviewing the criteria for the opening of new school sixth forms, because of the risk of oversupply”.

The government guidance on the reviews stated that it “will expect colleges, LEPs and local authorities with relevant devolved skills budgets to provide funding and support to implement changes, particularly as we expect change to deliver significant net savings in the longer term.”

The area reviews for Birmingham and Solihull, Greater Manchester, and Sheffield city region will start on September 18, 21 and 28, respectively.

Click here to read for an expert piece on how a similar merger process affected the Scottish college scene

OFFICIAL COLLEGE RESPONSES SHOW WIDESPREAD CAUTION

Official responses from colleges involved with  area reviews indicated widespread caution over how they will be run.

A spokesperson for Bournville College, one of four FE colleges that will be involved with the Birmingham and Solihull area review, along with three sixth form colleges, said: “All post-16 provision should be included in the area review as all post-16 education is funded from the same source.”

She added: “We are working in collaboration with other colleges and organisations to collectively review our curriculum and areas of expertise.

“The college is very pleased with current enrolment figures for 2015/16 for both 16-18 and adult students, demonstrating that there’s big demand for FE in south-West Birmingham.

“Bournville College, working with its local community, plays a major role in addressing the skills needs of the area.”

In a joint statement, the eight general FE colleges and two SFCs that will be involved with the Sheffield city region area review said: “We would also welcome the opportunity for all post-16 provision to be included in the review including school sixth forms, free schools, private training providers, and UTCs in order to ensure that a full review is undertaken.”

It added that all of the colleges “will work with all of the stakeholders to achieve the best possible outcome for FE provision in the region”.

“There is an opportunity to increase our contribution to employers by addressing skills gaps and supporting regional economic growth which, in turn, will help to create jobs and careers for our students, and support our local communities,” the colleges said.

However, a spokesperson for Birmingham Metropolitan College, which will also be involved with the Birmingham and Solihull area review, was broadly supportive of the process.

It said: “We are working closely with the FE Commissioner, the SFA, the Education Funding Agency, local colleges and other key local stakeholders to ensure a successful outcome of the review so that the FE sector continues to provide a high quality, flexible response to current and future skills challenges.”

None of the 10 FE colleges and 11 SFCs that will be taking part in the Greater Manchester area review responded ahead of publication.

Click here for a list of all the colleges involved in the reviews.

Comments

A selection of the comments made by college principals, who wanted to remain anonymous, to the FE Week survey are included below. They were simply asked whether they were happy with the review guidance.

The most significant issue is the exclusion of school sixth forms, UTCs, Free Schools and training providers from the reviews.
This is not a review of the post-16 sector, but a partial review. It would appear that ‘wasteful duplication’ is acceptable for A-Levels and provision for the most able young people, even to the detriment of quality.
The timescales are unrealistic. There is a fundamental tension between the independent status of colleges requiring governing bodies to agree to recommendations and the drive to cut costs.
It is also unrealistic that Colleges and local authorities are required to meet the costs of any proposed structural changes.
There are recent examples of the extraordinary cost of college closures (e.g. Totton).

The exclusion of school sixth forms, unless volunteering for inclusion, means the basis is inherently flawed.

Undue haste leading to inconsistency of approach. The fact that a large number of SFA funded organisations are left out so it isn’t an area review in any proper sense.

All post-16 providers (school sixth forms, 16-19 free schools, UTCs, etc.) should be included if this is to be a proper review of the sector.

Amongst other things, the exclusion of post 16 providers (eg school sixth forms, UTCs, ..) from a review of post 16 education!

School sixth forms not required to take part – yet the reviews are supposed to be about efficiency and they are amongst the least efficient deliverers post-16

It is singling out FE cOlleges when we are not the only post 16 providers.
It is determined to not impact on UTCs or National Colleges which doesn’t make sense.
They return with merger and rationalisation as their key outcomes but history shows that larger merged institutions do not necessarily bring efficiency (Lewisham and Southwark, K College).
There are norms proposed such as that Shared Services saves money and that mergers save money.
They are not looking at Colleges in the context of their communities.
They talk about financial stability when they are unable to provide guaranteed funding for three years (and have even struggled to do 1 this year with late cuts announced).
The review of FE Costs they are pointing to is very limited in what it has looked at and clearly doesn’t understand FE.
The comparison with NHS Admin costs as a percentage of income is a nonsense – doctors and consultants earn similar amounts to Principals and there are lots of them so of course their admin costs will look lower as a percentage.
We are supposed to be opting in but there is a threat of no funding if we don’t. Why is FE being targetted and yet the agenda is to increase the number of schools?

Sixth Form Colleges are included however newly designated 16-19 free schools are not included despite having very low student numbers and poor efficiency.
In a similar way school sixth forms with low class sizes and poor efficiency at 16-19 are not included.
Sixth form colleges offer high quality and a high level of efficiency per £ therefore they should be excluded from this review unless in financial / performance difficulties.

TeamUK’s outstanding WorldSkills competitors received a rapturous welcome home with a celebration event in the heart of London.

Skills Minister Nick Boles and Prime Minister David Cameron’s apprenticeship adviser Richard Harrington, MP for Watford, were among the guests as most of the TeamUK’s 40 competitors were honoured on Tuesday, September 8, at Dean’s Yard, near Westminster.

The UK’s official delegate and funding agencies chief executive Peter Lauener and Edge Foundation acting chief executive David Harbourne were also in attendance to see the team’s 21 medallions for excellence handed out.

The medals came in addition to the three gold, four silver, and two bronze, which gave TeamUK 46 points in total to place it seventh in the overall medals table — up three places on WorldSkills Leipzig two years ago.

An extra two awards were also presented at the event — the Woodbine Parish Award for highest scoring competitors who did not win a medal at WorldSkills was given to Martin Mclaughlin, aged 19 and from Northern Ireland’s North West Regional College, for wall and floor tiling and Hayley Edwards, 19 and from Middlesbrough College, for health and social care.

The John Barnes Award for contributing most to TeamUK morale went to Jasmine Field, 20 and from the Fashion Retail Academy, for visual merchandising and window dressing.

Mr Harrington said: “If I may begin with a ‘shout out’ to my constituent Danny Hoang [chef competitor], who won a Medallion for Excellence — Watford is proud
of you, Danny!

“The achievements of TeamUK are nothing short of incredible and each and every one of you deserves special recognition.”

Beauty therapist Rianne Chester, 22 and from Warrington Collegiate, who made TeamUK history by being awarded the Albert Vidal award for highest overall competitor’s score on top of a gold medal, said: “The support I’ve had is amazing and the whole experience has given me so much more confidence and it has completely changed my life.”

Click here for more FE Week coverage of WorldSkills 2015 from Sao Paulo, meanwhile a new Edexcel level four qualification was unveiled at the homecoming. It was designed to recognise individuals at competitions who have gone beyond the competence of a skill and recognise those skills such as planning, leadership, motivation, problem-solving and psychology of performance and it was awarded to 62 members of the squad from which TeamUK was drawn.

Mr Lauener said: “What we now really need is all of that experience, understanding and all of that knowledge working its way to the home system so that many more young people get the best skills on offer.”

Christine Doubleday, director of education and development at Find a Future, which manages the UK’s entry into the WorldSkills competition, said: “This has been the best ever UK performance in UK WorldSkills international history.”

Main image: TeamUK competitor Jasmine Field unable to hide her delight at winning the John Barnes award

Peter Lauener, Rianne Chester with her Albert Vidal award and Find A Future chair Carole Stott

TeamUK competitors Ben Pritchard, Danny Hoang, Sam Turner, Jonathan Gill and Matthew Beesley

Richard Harrington MP

Competitors perform the TeamUK chant

Skills Minister Nick Boles is shown some pictures from Sao Paulo by Matthew Beesley

The FE sector is a “fragile” state, Education Secretary Nicky Morgan (pictured),  has conceded.

She made the comments during a meeting of the House of Commons Education SelectCcommittee on Wednesday (September 9), during which she faced a grilling from MPs over her department’s policies.

The issue of funding in the FE sector was first mentioned by Gateshead Labour MP Ian Mearns, who said there was a “looming concern” about a funding crisis in FE, with “possibly 10 to 15 per cent of the sector facing significant deficit budgets within the next 18 to 24 months”.

Ms Morgan said: “We are aware that the FE sector is, I think fragile is probably the way to put it, and that’s why we have started a process of these area-based reviews, looking at provision in local areas and making sure that we can help colleges to be robust, in the best of financial health.

“But [we also want] to make sure there is no over-lapping provision, that people are working together, that actually if colleges need to get bigger in order to be stable, that’s the sort of thing that we want the colleges and the areas, as I say, to be thinking about together.”

Asked if she agreed the area reviews were “flawed” because they only compelled general FE and sixth form colleges to be involved and not school sixth forms, Ms Morgan said she would encourage “all post-16 providers” to take part, but that a “particular issue” with FE institutions had been brought to her department’s attention.

Ms Morgan said she would “strongly urge” colleges and schools to “work together” as part of the reviews, and said both she and Skills Minister Nick Boles were “in the market” for hearing proposals from areas.

The education secretary was also pressed on whether funding for 16 to 19-year-olds could be brought in line with funding for the 14 to 16 stage, but said funding was currently being reviewed as part of the government’s spending review, the findings of which are due this autumn.

A review of the costs of running FE institutions has been branded a “waste of time” and in need of “further work”.

The Department for Business, Innovation and Skills, Department for Education and The Treasury have published a 17-slide presentation on their joint review of FE costs, which was commissioned in February and was carried out over six weeks from March.

In February 2015, the Treasury, BIS and DfE commissioned a ‘Joint review of Further Education (FE) cost drivers’ to understand the funding, cost drivers and outcomes of the FE system in England, with a particular focus on teaching costs, E&M provision and financial management.

The study analysed financial health metrics for 1,232 FE institutions and cost breakdowns for 341 colleges, using Association of Colleges information and carried out 20 “deep dive visits”.

The review found, among other things, that there was a “significant difference” in profitability of individual providers and that providers with the best financial management drew their senior managers from the private sector and education sector.

It also found that the overall FE system operates at a 1 per cent profit, meaning any future reduction in funding “would need to be offset across the system by a reduction in costs, additional income generation or reduction in outputs”.

But the review has been criticised by Steve Hewitt, a college funding manager and expert, who took to Twitter to complain.

He said: “Anyone else asked for the Joint Review of FE Costs thing…? I have and it is a laugh riot!

“Apparently there is no link between spend and outcome, so the whole thing is a waste of time. Key point is they claim Academies spend 11 per cent on ‘admin’ whereas FE spends 17 per cent. Clearly we know why that is and that it’s all the government’s fault but it’s the sort of stat that doesn’t go away.”

Mr Hewitt also told FE Week: “You can’t compare a general FE college admin spend to an academy’s admin spend, academies don’t have to put up with 90 per cent of what we do.”

A spokesperson for the Association of Colleges said: “The ‘joint review of FE costs’ was carried out in March and focused on English and maths.

“The slides have only just been published and while some of the analysis is helpful, some conclusions need further work.”

The chief executive of one of the country’s leading awarding organisations has resigned, it was announced today.

Mark Dawe, chief executive of OCR, will leave the company at the end of the month after successfully overseeing the completion of marking in this year’s summer exams.

Mr Dawe, a former principal and chief executive at Hertfordshire’s Oaklands College, is known for his strong commitment for doing what is required for the FE sector, sources have said.

He will be succeeded by William Burton, who joins from the Construction Industry Training Board in an interim role.

It is not yet known if Mr Dawe, who is yet to comment, has a new position lined up.

Simon Lebus, group chief executive at Cambridge Assessment, said: “Mark has been at OCR for five years and has been responsible for stewarding the organisation through a period of major change in both its general and vocational business.

“I would like to thank Mark for this good work and wish him every success for the future.”

The departure follows an eventful year for Mr Dawe who was involved in a war of words with the Department for Education (DfE) over claims of an examiner staffing shortage.

He raised concerns that his board may have to find another 5,000 examiners to meet a rise in demand, which he attributed to the government’s subject reforms.

But his words triggered an angry response from Whitehall. A senior DfE source said: “Perhaps Mr Dawe wants to stop making excuses for his organisation’s lamentable failure to deliver in recent years and focus on delivering their exams this year.”

The comments relate to OCR coming close to missing the publishing deadlines for last summer’s A-levels.

A subsequent investigation by Ofqual, published last month, confirmed the company will not face a fine or any other action, despite stating that “catastrophic” consequences almost occurred.

He also gained significant media attention earlier this year after suggesting pupils should be allowed to use search engines like Google in their exams.

Mr Dawe, a former chartered accountant, also worked as a deputy director for FE strategy at the Department for Education and Skills.