The identities of six new Ofsted regional directors have been announced following a shake-up aimed at driving up provider standards.

Each regional director will report directly to Ofsted boss Sir Michael Wilshaw and will be responsible for quality of inspection in their region along with the improvement of standards in childcare, schools, and learning and skills.

The announcements came the same month as Ofsted boss Sir Michael Wilshaw told MPs on the Education Select Committee that schools were improving, but there was a “real problem in learning and skills”.

“The regional directors will be my voice in the regions with the necessary autonomy and authority to support providers and challenge underperformance,” he said on the new appointments.

Sir Michael’s comments to the select committee saw him clash with the Association of Colleges (AoC).

Flanked by Mr Coffey, he said the system for failing schools was different to that faced by colleges.

‘They need to start worrying more about what’s happening in Deptford rather than Delhi’”

“I think one of the reasons why schools are improving their performance but colleges aren’t, is that there are very clear consequences to failure and underperformance in the schools sector,” said Sir Michael.

“If a school becomes inadequate and remains so, the head usually goes, something usually happens to the governing board … etc.

“We don’t sense there’s that same sense of clear consequence for failure in the FE sector.”

Sir Michael’s claim drew a swift rebuttal from Joy Mercer, AoC’s director of policy.

“The consequences for failure in a college, for instance, are comparable to schools — governing bodies regularly hold senior management teams to account for performance,” she said

But Sir Michael won Ms Mercer’s approval with plans to bring school careers guidance under the inspection remit, but reiterated fears that college principals had lost focus on the quality of teaching.

“Getting principals of colleges to focus on what’s important is absolutely critical. They lost their way a bit and focussed on capital investment, extending their reach, building programmes, going abroad to attract students and so on,” he said.

“All those things are important, but equally, if not more important is what’s happening in the workshop or the classroom — as an eminent ex-principle said to me ‘they need to start worrying more about what’s happening in Deptford rather than Delhi’.”

Meanwhile, with a government announcement on the funding of Local Enterprise Partnerships (LEPs) next month expected to include a single pot of cash taking in the adult skills budget, Mr Coffey said he wanted to see FE representation on LEP boards.

He also expressed fears the FE sector was not ready for the raising of the participation age (RPA), and that funding problems had been “at the heart” of many college problems.

“Funding has been at the heart of many problems we’ve identified and the report does pose the question ‘is the system fit for purpose?’ Its main reference point is the financial incentives have all been wrong; they’ve led to very low level qualifications being delivered across the board to a wide number of students” said Mr Coffey.

Ofsted’s new regional post-holders are Sally Rowe for the North West; Nick Hudson for the North East, Yorkshire and Humber; Louise Soden for the Midlands; Sean Harford for east of England and London; Mr Coffey for the South East, in addition to his role as current national director’s role; and Lorna Fitzjohn for the South West.

See page 6 for 157 Group executive director Lynne Sedgmore’s take on Sir Michael’s FE views

Providers are to be protected from potentially huge drops in funding when a new payments regime is introduced from August.

The Skills Funding Agency exclusively told FE Week that “transitional protection” would be in place for the new adult funding system after research showed the value of many qualification would fall by more than 20 per cent.

However, the agency’s protection measure could also be used to limit the amount it pays out with the research having shown that the value of some qualifications could rocket. One such qualification, uncovered by FE Week, will soar 271 per cent.

This change in the value of qualifications, between the current ‘demand-led funding formula’ and the new ‘streamlined funding system for adults,’ is called turbulence.

The agency said it was acting to limit the effect of turbulence on providers — and the qualifications watchdog Ofqual said it was “alert” to the possibility that some qualifications could become more attractive to providers.

An agency spokesperson said: “We accept that the simplified funding system will shift rates of individual qualifications, but our initial assessments suggest that turbulence at provider level will be low in most cases.

“Transitional protection will be put in place to limit this turbulence even further.”

An Ofqual spokesperson said: “The way qualifications are funded can have an impact on the market, and create particular incentives. As a regulator, we are alert to this.”

When the current funding system was introduced in 2008/09, transitional protection was also put in place for the same reason and on that occasion funding variations in both directions were limited to a maximum of 2.1 per cent.

We welcome the provision of pragmatic and sensible transitional support as a means of managing change most effectively.”

However, no further details were available from the agency on the new “transitional protection”.

Nevertheless, its announcement was welcomed within the sector.

“It is undoubtedly a period of persistent transition in the sector and curriculum planners are facing constantly shifting priorities as they respond to policy changes and prepare for new initiatives such as the Study Programme and Traineeships,” said David Grailey, chief executive of the awarding body NCFE.

“At a time of such turbulence, the latest funding developments are an added pressure for colleges and training providers.

“We welcome transitional protection for providers, and hope it adequately addresses the issue of turbulence,” he said.

And Association of Colleges chief executive Martin Doel said: “We have appreciated the consultative approach that has been taken to simplifying the agency funding regime and think this collaboration will have resulted in a more effective funding methodology.

“But the introduction of any new system has the potential to generate unforeseen consequences and a degree of unwanted instability.

“We therefore welcome the provision of pragmatic and sensible transitional support as a means of managing change most effectively.”

A spokesperson for the Association of Employment and Learning Providers added: “With apprenticeship rates being held, this is less of a big issue than it might have been, but we support the principle of not causing too much short-term disruption.”

The agency spokesperson said it was still accepting feedback on the proposed new funding system.

“As we stated when we published the Funding Rules 2013/2014, we continue to welcome feedback on specific funding rules that are not clear or any area where a rule is missing,” she said.

“We will address these clarifications and update the document, with a final version of the document to be published by the end of March 2013.

“Between now and March rates are being reviewed as part of this process.”

Email FundingSystemsTeam@skillsfundingagency.bis.gov.uk to give the agency feedback on its new funding system proposals by Friday, March 15.

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Editorial: Protect or postpone?

The promise of transitional protection from the Skills Funding Agency has unsurprisingly been welcomed within the sector.

After all, it should smooth out the turbulent times ahead as qualification rate variations between the old and new funding systems hit double, sometimes triple digit percentage points.

The way the system puts qualifications of hugely varying credit values into cumbersome bands is the problem and could lead to further issues.

There will naturally be temptation for providers to favour the delivery of more cost-effective qualifications that are nearer the lower credit end of each funding band.

So given this, and that transitional protection can only be temporary, I would question whether the funding system change is a wise move at all?

Despite developing the system for more than two years, too much at this late stage remains unclear.

And is our current system so bad? Even if it is, can’t it be tweaked rather than thrown out with the bathwater?

The agency has already delayed introduction of the new regime in 2012/13, and they should do so again for 2013/14.

I would favour a permanent delay.

Nick Linford, editor of FE Week

The boss of a firm set to lose thousands of pounds after a provider went into administration branded it “unjust” that another company could operate with the same board of directors, based in the same offices — having also taken over the same training contract.

M2 Training, that was responsible for 4,000 learners, had a Skills Funding Agency contract last year of £5.175m, but went into administration in December, owing creditors around £1.1m.

Among those owed money by the firm, which carried out training in the automobile and IT sectors, were HMRC at £637,000 and Edexcel at £93,000.

However, the agency had allowed the firm’s business to switch to Work Skills Limited — which had the same six directors as M2 and was based at the same Gloucestershire address as M2, according to Companies House documents.

The directors, FE Week understands, raised £150,000 to buy M2 from administrators Janes Insolvency Practitioners.

That money would go towards paying off M2 creditors, said administrator David Hughes.

The two parts of the company — engines and training — were not compatible anymore”

But Swindon-based car dealership Fish Brothers was owed more than £3,000 by M2 and its finance director Keith Butler said he was unhappy.

He claimed administrators told him it was “anticipated” he would receive up to just 15 per cent of what he was owed.

Mr Butler said it was “unjust to have been left out of pocket while a new company started, carrying on as before”.

He said: “No creditor is happy about getting back 10 to 15 pence in the pound. It will have a negative effect on our business.”

However, Work Skills director John Henry, formerly also a director of M2, insisted that creditors of the old company “would not be left out of pocket”.

He defended their decision to put M2 Training into administration. Mr Henry said M2 had started out training drivers but grew to include professional qualifications before getting involved in research with fuel efficiencies and engine management research.

This expansion, he said, had led “M2 to administration”.

“The two parts of the company — engines and training — were not compatible anymore,” he told FE Week.

“Rather than having an amalgamation of businesses we want to focus on training. I personally am confident that this is going to be a high-quality training provider.”

Administrator Mr Hughes said the switch to Work Skills was the “better alternative” for learners as well as the 100 employees whose jobs had shifted from M2.

“All the people owed money by M2 have been written to and told about the process,” he said.

“They will get a good percentage of their money back. The price that Work Skills paid for the business will fund a dividend for M2 creditors.

“We will know in about two weeks’ time how much money the creditors will be paid.”

The agency declined to comment on why it allowed the contract to shift from the company that went into administration, to another firm with the same board of directors.

A spokesperson for the agency said M2 requested to shift its contract to Work Skills in May 2012. The request was approved through the agency’s “standard processes” and took place in November 2012, she said.

“Following the novation [shift] Work Skills Limited took on all the responsibilities of the contract previously held by M2 Training Limited, including those that had accrued prior to the novation,” she said.

Further education Minister Matthew Hancock has written to all governors and principals with a warning on mergers just weeks after his staff launched a probe into the plans of two Midland colleges to join forces.

He “would expect accountability” to local communities to be the main reason behind any major changes,  and said: “The starting point, therefore, should be an assessment of need and how different delivery models might fulfil it.”

His letter, dated February 13, goes on to outline the processes that should be followed in proposed mergers and has also gone to the Skills Funding Agency’s chief executive, Kim Thorneywork, and Association of Colleges chief executive Martin Doel.

It follows an investigation by the Department for Business, Innovation and Skills (BIS) into a proposed merger between Birmingham Metropolitan College and Stourbridge College.

A six-week formal consultation on the proposals launched on January 18, but BIS is looking into it over concerns the colleges may not have followed correct procedure.

A BIS spokesperson said the investigation was ongoing.

And, without referring to any specific colleges, Mr Hancock covers the issue of merger procedure in his letter, mentioning first the need to carry out a college structure and prospects appraisal.

“You need to consult widely and transparently on … proposals, taking explicit account of the views of … communities … and of other interested parties including the LEP [Local Enterprise Partnership], Local Authority and the funding agencies,” he added.

“This consultation should be done at an early stage and should not be confused with the formal consultation stage that is required should the final proposal involve dissolution of the college.

“Finally, any actions you take to secure new partners or change your delivery model should be through open and competitive processes which will allow the best possible solution to be identified to meet local needs.

“This is especially important should one of the options involve dissolution of the college.

“In these cases, transparency and openness on the options that have been considered, and a clear rationale for the final proposal are both critical, and need to be in place well before the final, formal consultation.”

The Midland colleges’ merger proposals would see the 12,500-student Stourbridge College dissolve on May 31 with its property, rights and liabilities then transferring to Birmingham Metropolitan, which had more than 26,000 learners two years ago.

A statement on the Birmingham college’s website said they were planning to merge “to become one of the largest and most significant further education providers in the country.”

The consultation report is due out by March 20 — the day before governors were expected to rule on the proposals.

The consultation document says a draft order for the dissolution of Stourbridge College would come out the same day as the governors’ decision, with merger taking place on June 1.

A joint statement from the colleges said: “We reject any suggestion due process has not been followed in taking forward the merger process. The processes required by law have been, and are being, strictly observed.

“Views expressed in the consultation will be fully considered in due course and those views and the corporations’ response published.”

The Birmingham college achieved a good grading from Ofsted in March 2011 while Stourbridge got the same grade last month.

The Skills Funding Agency “risks destabilising the system” with plans to stop paying out for more than 1,000 qualifications, it has been claimed.

The Federation of Awarding Bodies (FAB) hit out at the agency over its moves to “rationalise the publicly funded offer for adults for 2013/14”.

It could result in the end of agency funding for more than 1,000 qualifications that have seen fewer than 100 enrolments from 2011 to last November.

A further 1,440 qualifications that had no enrolments at all in the same period are also at risk of losing agency funding from August.

A spokesperson for FAB, whose members include the likes of City & Guilds, NCFE, Edexcel and Prince’s Trust, said: “The intention of the agency to withdraw funding from a significant number of qualifications with low enrolments risks destabilising the system and cuts across the free functioning of the market for qualifications.”

Among the qualifications at risk for having had little uptake are ones in touch typing, getting on at work, scalp massage and eyelash perming.

Meanwhile, those at risk for no enrolment include cover supervision of pupils in schools, top person for high-risk confined spaces, estimating and felling and processing trees over 380mm.

Ofqual director of regulation Fiona Pethick has already written to awarding bodies asking them to withdraw their least popular qualifications, “rather than to introduce a new condition requiring this [withdrawal of qualification]”.

An agency spokesperson said: “We are working with the sector to ensure public funding is focussed on qualifications that deliver the highest standards and respond to the needs of learners and employers.”

Nevertheless, the FAB spokesperson said there were “serious concerns” about the agency’s plans.

We have notified the agency of our serious concerns about the impact of their actions”

“We recognise that this action has been taken in the context of the simplification of the adult funding system and general concern about the large number of qualifications that there are currently in the QCF [Qualifications and Credit Framework].

“However, we point out that the QCF was populated in 2010 – 2011 with qualifications that were required and approved by the Sector Skills Councils [SSCs] as part of the UK Vocational Qualifications Reform programme [UKVRP].

“At that time awarding bodies could not develop qualifications for the QCF unless they had the support of the SSCs as representative of the employers in their sector.”

They added: “We have notified the agency of our serious concerns about the impact of their actions, particularly in relation to qualifications with low enrolments.

“We shall be interested in whether our concerns turn out to be justified and shall be monitoring the position closely over the coming weeks.”

However, funding for the qualifications could yet remain in place with the agency having launched a consultation on its plans.

“We recognise there may be a need to continue funding new starts for some qualifications with limited demand,” it says on the agency website, along with an invite for awarding organisations, colleges and training providers to put the case for continued funding for the at-risk qualifications.

The consultation ends at noon on Wednesday, March 6. Visit the agency’s QCF, funding and then implementation webpage for more details.