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.