College VAT victory brings hope of multi-million pound windfall

Colleges could be in line for a multi-million pound VAT windfall with a tribunal judge having ruled against Her Majesty’s Revenue and Customs (HMRC) over a Hampshire training restaurant.

Brockenhurst College was awarded around £55,000 after it was found the supplies for its on-site training restaurant, MJ’s, were integral to educating students — and so should have been exempt from VAT.

The figure represents a refund of four years’ worth of tax paid to HMRC on supplies to the 50-seater training restaurant, which is staffed by students and open to the public.

it will be interesting to see if other FE colleges also investigate.”

And with more than 160 colleges in England operating similar facilities, plus other training enterprises such as hair salons, spas and theatres, successful payback campaigns in the vein of Brockenhurst’s could therefore net the college sector tens of millions of pounds.

Principal Di Roberts said the money would be pumped back into the college, although a HMRC spokesperson told FE Week the ruling was being considered “carefully, before deciding whether to appeal further”.

Among England’s colleges with a training restaurant is West Nottinghamshire College. Its restaurant, called Refined, is the most highly-rated in Mansfield on TripAdvsor.com.
A spokesperson for the college said: “We are aware of the Brockenhurst case.

“We are reviewing any potential impact for the college with our professional VAT advisors as there is significant complexity in the recoverability of output taxes — that is on food and drink served — charged for ‘spin-off’ services whereby the liability of these types of activity will depend on the category of student who delivers the service.”

A spokesperson for Westminster Kingsway College, which runs award-winning Vincent Rooms restaurant, said: “It’s something that we will be looking into, but we’re waiting for legal advice.”

A Middlesbrough College spokesperson said it would also investigate claiming back on its Waterside Brasserie.

And the Association of Accounting Technicians (AAT) encouraged other colleges to investigate.

Brian Palmer, AAT tax policy adviser, said: “While we are not surprised as the argument the college put forward makes perfect sense, it is pleasing to see the college put its case forward and other FE colleges may be incentivised to do the same.

“It would serve FE colleges in their best interest to relook at their supply chains.

“In the current economic climate where funds are tight, receiving a rebate could make all the difference to a college… it will be interesting to see if other FE colleges also investigate.”
He added: “Brockenhurst College argued the restaurant supplies were exempt by virtue of being part of the education and vocational training for the hospitality students — quite rightly, in much the same way as we argue that concerts and performances given by students as part of their educational course are also exempt.

“The absence of a profit element (to the supplies) demonstrated an intention to supply education, rather than commercial catering or entertainment provision.”

Julian Gravatt, assistant chief executive at the Association of Colleges, said VAT law was “very complicated”.
“This case revolves around the way in which VAT exemptions apply in cases where students are providing services as part of their education,” he said.

“Any savings in VAT that colleges make are reinvested for the benefit of students, so the latest tribunal decision seems to be a positive step forward.”

—–editorial—-

After weeks and months of talk of cuts it’s great to get news of some money heading the college sector’s way thanks to a training restaurant VAT victory.

The possibility of HMRC rebates running into the tens of millions of pounds may amount to relatively little at the individual college level, especially in comparison to the amounts that will be lost when 18-year-olds are funded at 17.5 per cent less than their 16 and 17-year-old classmates, but even the smallest of graces should be welcomed.

To what extent this rebate applies to other college training enterprises will determine the size of any potential repayments, but hopefully they can go some way to helping alleviate funding concerns in these straitened financial times.

Congratulations should go to the Brockenhurst College accountant who spotted the issue.

It seems a fair bet that they’re the toast of the college, not to mention the sector, right now.

Chris Henwood, editor

 

Ofsted considers watching new FE teachers

Newly-qualified teachers in FE colleges could have their lessons observed by Ofsted as part of its inspection of teacher training organisations.

Ofsted has launched a consultation on plans to change the way it inspects teacher training programmes so inspectors also watch former trainees teach near the start of their employment.

Ofsted is consulting on its proposals and we will be contributing a full response into it.”

In its consultation document, the education watchdog explains plans to introduce a two-stage approach to inspections of initial teacher education (ITE) partnerships from May.

Under the proposals, the first inspection would take place in the summer term, and the second would happen “relatively soon” after the end of training and focus on observations on former trainees and newly-qualified teachers.

“We believe that this will allow a sharper focus on trainees’ outcomes and how well they are prepared for teaching and the rigours of the classroom. We would then publish the inspection report,” said an Ofsted spokesperson.

The proposal has been welcomed by the Association of Colleges (AoC) and Institute for Learning (IfL), and both organisations have called for a focus on the importance of training and recruitment.
Joy Mercer, policy director at the AoC, said: “The issue we are keen to encourage Ofsted to look at is the benefit of training on the job.

“We know it has been focusing on the training of teachers in its inspections from September to December last year and we will be encouraging Ofsted to note the important role colleges play in training teachers who have come from strong vocational backgrounds to become dual professionals.

“Ofsted is consulting on its proposals and we will be contributing a full response into it.”

Toni Fazaeli (pictured), IfL chief executive, said: “There has been a finding from inspections so far that often the workplace and subject mentoring for newly-trained teachers is lacking in quantity and quality. Ofsted’s attention may help eradicate this gap.

“It is striking that Ofsted is focusing on newly-qualified teachers being properly prepared for the ‘rigour of the classroom’. Clearly, it is doing so because initial training and qualification and support are so important.”

The consultation runs until May 6, and documents and an online questionnaire can be found on the Ofsted website.

Government to launch destination data talks

The government is to launch a consultation on “outcome-based measures of performance for all post-19 FE and skills” as it looks to tie funding with destination data.

The recently-released Skills Funding Statement (SFS) made several references to linking learner outcomes — such as progression into a job — and funding, and the Department for Business, Innovation and Skills (BIS) confirmed it was exploring the issue.

The SFS said the government had been working on three “core” measures that could determine funding — destination (into further learning or “into/within” employment), progression (through learning) and earnings changes (following completion of learning).

A BIS spokesperson told FE Week: “We will be looking at the extent to which linking funding to outcomes may have a stronger role to play in ensuring the quality of provision within the pre-employment offer.

“We are also developing and will consult on outcome-based measures of performance for all post-19 FE and skills, including qualifications using matched administrative data.”
The only funding linked to learner destination at the moment is the Skills Funding Agency’s ‘job outcome payment’, offering a compensation payment that can only be paid to providers when learners either fail their qualifications or walk away early — providing they’ve won employment.

The job outcome payment is half the value of the achievement payment, so in effect it can be seen as operating as a reduced fine.

joy-mercer

Nevertheless, the move towards destination data has been welcomed by the Association of Colleges (AoC) whose policy director, Joy Mercer (pictured), said: “The SFS shows there is strong interest from government in using destination data to measure outcomes and in distributing funding.

“We have always supported the use of several measures to judge performance and warned against an excessive focus on success rates.

“Better destination data could be a useful corrective and BIS has done some experimental work in matching student, tax and benefit data, which is yet to be published

“In using destination data to set funding, it is also worth building on the existing arrangements for unemployed adults, but care needs to be taken to ensure the government understands that economic conditions and student choice play an enormous part in employment outcomes.”

The SFS was the strongest indication yet of the government’s willingness to move towards the use of destination data, which the Information Authority has said is to be renamed “life outcomes”.
It said in the SFS: “Qualifications are an important recognition of achievement. However, we recognise that they do not reflect the full range of policy outcomes we are looking for.

“We have put in place measures to capture learner destinations on the Individualised Learner Record (ILR) as we consider how funding can be more strongly linked to outcomes in future.”
The Association of Employment and Learning Providers welcomed the mention of destination data measures in the SFS. A spokesperson said: “Although some of these measures may be complex to track we believe we do need a broad measure of success for some of the programmes.”

It was not clear when the BIS consultation would be launched, but the spokesperson added: “Government funding for the sector is linked to performance. Part of the payment to providers already depends on successful completion of qualifications.

“Over the past year we have been talking with the sector about the pre-employment offer and how to ensure high quality delivery.

“Part of this has focussed on identifying and defining what positive outcomes are, including employment and progression.”

Corruption warning on funding proposals

The boss of a leading independent training provider has hit out at the government’s apprenticeship funding reform proposals warning they could lead to large scale “corruption”.

John Hyde (pictured), executive chair of HIT Training, laid out his opposition at the Association of Employment and Learning Providers-organised Apprenticeship Debate with a scathing attack in which he also described Skills Minister Matthew Hancock as “weak” for changing the system.

I think there’s a serious danger of corruption,”

The system of apprenticeship funding looks likely to be restructured following recommendations in the Richard Review of Apprenticeships in England, published in 2012 and led by former BBC Dragon’s Den investor Doug Richard.

In a speech that drew spontaneous applause and laughter from the crowd, Mr Hyde described the reforms, which would see funding given directly to employers rather than training providers, as “throwing the baby out with the bath water”.

Referring to Mr Richard, My Hyde said: “We’re putting something untried, untested into place and for no reason other than the whim of an American entrepreneur and a weak minister.”
He added the changes would “decimate” apprenticeship numbers.

He warned that the reforms, which would fund apprenticeships through the tax system by offering employers a reduction in their PAYE liabilities, would be exploited to help multinational companies avoid tax.

“I think there’s a serious danger of corruption,” he said at the event in Central London on Thursday (February 20).

“Under this system, any employer can take on a learner and in 6 months’ time, remove them from the programme, but take a break from their PAYE — it’s open to enormous fraud.”
Mr Hyde also objected to the move towards assessment at the end of a course, rather than continuous assessment.

The deputy director of the Department for Business, Innovation and Skills’ (BIS) Apprenticeship Unit, Jennifer Coupland, defended the government’s reform plans.

She insisted that end point assessment “does not preclude assessment along the way” and rejected My Hyde’s description of the new system as “untried and untested”, pointing to the trailblazer development groups set up to model and pilot the new system.

She said: “We want an open policy-making process which is collaborative with you, so that where things look like they’re going to be particularly problematic, we can adapt and grow and change the policy.”

She also conceded that including apprenticeships in the 24+ loan system was “the wrong policy for this type of programme”.

Loans were introduced for all learners aged 24 and over studying level three courses in June 2013, but it was announced in December that apprenticeships would be removed from the scheme after the number of applications plummeted.

The date for the removal of apprenticeships from loans has been announced as March 7.

A government consultation on the PAYE reforms, which proposed funding apprenticeships through the tax system alongside other options, closed in October.

The results have not yet been published, but Mr Hancock announced in November that apprenticeships would be funded through PAYE, and a technical consultation is due to be launched in the next few weeks, according to Ms Coupland.

A BIS spokesperson told FE Week: “The technical consultation will also include a summary of responses to the initial consultation which closed in October.”

End in sight for K College sale saga

The sale of troubled K College looks to be over with the announcement of two “preferred providers”.

Land-based Hadlow College and East Kent College, in Thanet, are expected to take on campuses in Tonbridge, Tunbridge Wells and Ashford; and Dover and Folkestone, respectively.

We now have six months’ work before the new and enlarged Hadlow Group is launched on August 1.

It brings an end to the year-long saga over the break-up and sale of the 15,000-learner K College, which was slapped with an inadequate grading by Ofsted in December. It said continuing uncertainty over the college’s future was damaging learners’ progress.

Paul Hannan, principal at the outstanding-rated Hadlow College, said: “Our ambition is to include the sites as part of the Hadlow College Group while building on the individual brand and status of each campus.”

He added: “We now have six months’ work before the new and enlarged Hadlow Group is launched on August 1.

“Intensive work will now start — in cooperation with the Skills Funding Agency [SFA] and the Education Funding Agency — to arrive at a financial solution that will help us to deliver outstanding teaching and learning across the new Hadlow College Group in entirety.”

Graham Razey, principal at East Kent College, which was rated as good by Ofsted, said: “We are very pleased as this announcement removes the uncertainty over the provision of FE for thousands of students in Dover and Shepway, and across East Kent as a whole.

“We will ensure high-quality, vocational and technical education programmes for students in this economically improving part of Kent through well-funded and well-managed centres of learning.”
The 800-worker K College, which was formed of a merger between West Kent College and South Kent College in 2010, is being dismantled after it ran up at least £15m in debt to the SFA.

It is unclear whether any of K College’s debts to the agency will be transferred, although interim K College principal Phil Frier told FE Week last month that commercial debt would move over.

He said: “We made a commitment to students from the outset that no matter what name was given to their college, their education would continue, and we are proud to have delivered that.”

The transfers are expected to be complete by the start of the next academic year and a public consultation on the dissolution of the K College corporation, in line with the transfer of its provision to new providers, is expected to launch soon.

The SFA declined to comment on whether it had offered financial incentives to take on the debt-ridden college.

An SFA spokesperson said: “All parties will be carrying out due diligence and working together to ensure the smooth transfer of provision ready for August 1, 2014.”

Unions divided by strikes over pay

Two teaching unions have been divided over plans for sixth form college strikes next month.

The National Association of Schoolmasters Union of Women Teachers (NASUWT) will not join National Union of Teachers (NUT) members in demonstrations over pay and pensions.

The NUT is due to strike on March 26, but the NASUWT executive voted on Friday (February 14) to keep its options open instead, saying Education Secretary Michael Gove had shown “goodwill” by agreeing to sit down for talks later this month.

Chris Keates, NASUWT general secretary, said: “Teachers will expect the Secretary of State to show that he is seriously committed to building trust and confidence with the profession by demonstrating in these meetings that he is prepared to listen to and address teachers’ deep concerns.”

She added: “We will expect the Secretary of State to recognise the enormous damage that has been inflicted on teachers as a result of the changes to teachers’ pay, pensions, conditions of service and job security since 2010.”

Strikes had been expected to hit sixth form colleges last week, but were put back to next month.

Graham Baird, HR director at the Sixth Form Colleges’ Association, said: “On behalf of sixth form colleges the SFCA has been monitoring the NUT position on the proposed strike action.
“The announcement that the proposed strike action is now planned March 26, rather than mid-February, at least provides additional time to allow for discussions to take place between the union and government to try to avert the proposed action.”

Christine Blower, NUT general secretary, said: “Mr Gove’s persistent refusals to address our ongoing dispute over pay, pensions and conditions of service, is unnecessary and deeply damaging.
“As a result, thousands of good, experienced teachers are leaving or considering leaving the job and a teacher shortage crisis is looming with two in five teachers leaving the profession in their first five years.”

A Department for Education spokesman said: “The unions called for talks to avoid industrial action, we agreed to their request, and those talks will begin shortly.
“It is disappointing that the NUT, unlike NASUWT, has decided to press ahead regardless with unnecessary strike action, which will only inconvenience parents and damage children’s education.”

McDonald’s education chief to become SFA’s apprenticeship boss

The UK head of education for fast food giant McDonald’s is set to become England’s new apprenticeship boss, FE Week can reveal.

sue husband
Sue Husband (Pic: Twitter – @susiesue257)

Sue Husband is to fill the shoes of David Way, who stepped down as director of the Skills Funding Agency’s apprenticeship division in August after 38 years in the employment and skills sector.

The agency put the director of apprenticeships and delivery services role out to advert in December with a £100,000 a-year salary.

Ms Husband is expected to have responsibility for the delivery of employer engagement and the National Apprenticeship Service with, according to the job advert “an outward-facing role with employers, colleges and training organisations, promoting the benefits of apprenticeships to employers and embedding the new relationship between the agency, employers and providers”.

She started at McDonald’s in 1987 when she was 16 years old and studying for her A-levels. She worked her way up through the company from serving customers and working in the kitchen to being appointed head of education in 2007.

davidway
David Way stepped down from his post as SFA apprenticeship boss last year

Ms Husband was in charge of training at McDonald’s when its apprenticeship scheme received a grade two rating from Ofsted, in November 2010, following the company’s only inspection to date. According to her LinkedIn profile, her McDonald’s job title is national education manager at McDonald’s Restaurants Ltd — UK.

An agency spokesperson said: “We can confirm that Sue Husband will be taking up the post of director of apprenticeships and delivery service later this year. She is currently education manager at McDonald’s UK.”

The agency paid McDonald’s £10.5m in 2010/11, £6.8m in 2011/12, and £5.1m in 2012/13. As of January this year, the firm was allocated £4.8m for 2013/14 from the adult skills budget and £5.3m for 16 to 18 apprenticeships. Learndirect is a subcontractor allocated, as of January 2014, £4m for delivering online English and maths functional skills training to its learners.

McDonald’s offers level two intermediate apprenticeship in hospitality and catering.

The firm’s website said its apprentices “learn about customer service, food preparation and the importance of keeping things clean. They also find out about the business and what we do for local communities and the environment”.

McDonald’s is yet to comment.

College chief reassures over vile assault

A Humberside college chief has spoken out to re-assure learners and parents after a former member of staff was jailed for sexually assaulting a young girl.

Ex-Hull College theater technician Andrew Clark, aged 36, was jailed for seven years and four months at Hull Crown Court after pleading guilty to a number of sex offences involving a girl under the age of 13.

Clark, of Pelham Road, Immingham, was arrested on June 11 last year in connection with sex offences committed in the Cottingham area between June 30 and October 3, 2012.
He was charged in September last year with seven counts of sexual assault and pleaded guilty to the offences in December.

Hull College, where Clark worked from April 2012, has sought to re-assure the public that none of the offences related to any of its students.

He was sacked after less than six months at the college after police raided his home and found indecent images of children on his computer, for which he was given a caution.

College chief operating officer Lee Probert said: “Andrew Clark was previously employed by Hull College as a theatre technician. He had been subject to an enhanced CRB check before being offered the post.

“Mr Clark was dismissed in October 2012 in connection to a separate matter to his conviction – these did not concern any current or past students of Hull College Group.”

According to the Hull Daily Mail, Clark had previously taught music at Sydney Smith School, Anlaby, but his conviction did not relate to his time there either. He was sentenced on Friday, February 14.

Humberside Police’s DC Teresa Colledge, who led the investigation, said: “Myself and the officers that worked on this investigation welcome the sentence handed by the Judge at Hull Crown Court.

“Andrew Clark is a man who caused significant distress to a vulnerable girl and, all along he knew that everything he was doing was wrong and what potential harm this was causing to her.

“I am pleased that this Paedophile has been locked away for a number of years and does not pose any further harm to his victim.

“I also hope that this sentence will help bring some closure to her. This has been a harrowing ordeal for both her and her family. I hope this means she is now able to move on with her life in the most positive way possible.”

Traineeships to escape DWP’s 16-hour rule from early next month

A Jobseeker’s Allowance (JSA) exemption for traineeships that was promised last year by Chancellor George Osborne is to come into force early next month, FE Week can reveal.

The government’s flagship youth unemployment scheme had fallen foul of a Department for Work and Pensions (DWP) rule that limits to 16 hours the amount of time JSA claimants can train every week and still get benefits.

But trainees aged 19 and above will be exempted from Monday, March 3, in a move that includes all new and existing enrolments, according to a Skills Funding Agency spokesperson. The hour limit has been almost doubled to 30 hours a-week.

An exemption from the 16-hour rule for traineeships had been promised in the Chancellor’s Autumn Statement in December, but delays in confirming when the exemption would be introduced had led to frustration in the sector.

The agency spokesperson said: “From Monday, March 3, the DWP is removing the ’16-hour rule’ for training that has applied to JSA claimants participating in traineeships in England.

“The removal of the ’16-hour rule’ applies only to the traineeship programme and includes all new and existing participants.

“It means JSA claimants aged 19+ will be able to participate in a traineeship programme for up to 30 hours a-week without affecting their JSA entitlement.”