Funding figures expose boom in colleges’ apprenticeship deals.

The amount that colleges spend on apprenticeship subcontractors has more than trebled in a year to £66.7m, FE Week can reveal.

Figures from the Skills Funding Agency also show a boom in the number of deals. In the 2010/11 academic year they averaged 2.4 for each college, compared with 4.2 in the first nine months of last year.

The growth comes despite an agency warning, in its annual reports and accounts document for 2011/12, that subcontracting was “exposing the agency to higher levels of operational and financial risk”.

It added: “Recent changes to policy, for example implementing a minimum contract level, have increased the need for subcontracting throughout the sector.

As a result of changes directed from the centre, colleges have necessarily had to undertake extra subcontracting”

“However, the prime driver has been the requirement to maintain the proportion of the adult skills budget earmarked for apprenticeships.”

Association of Colleges policy manager Teresa Frith defended the use of subcontractors. She said it made “sound financial and educational sense to ask focused niche experts to provide a service for the college rather than to establish departments from scratch”.

She added: “As a result of changes directed from the centre, colleges have necessarily had to undertake extra subcontracting.

“This does not mean they have had to increase the workload, or divested responsibility — it simply means the delivery arrangements for certain courses have changed.”

Just under £22m of agency cash filtered through 85 colleges to subcontractors last year, according to figures released under the Freedom of Information Act.

But this year, more than £66m went to subcontractors from 146 colleges. And the number of deals has grown from 208 last year to 607 – an increase of 192 per cent.

The figures come amid an ongoing Serious Fraud Office (SFO) investigation into subcontractor Luis Michael Training (LMT). Three men, aged 29, 51 and 52, were arrested, questioned and bailed earlier this year. They remain on bail.

Subcontracting for eight FE colleges, LMT did apprenticeships at football clubs including Leeds, Millwall and Nottingham Forest.

Allegations against the now-defunct firm, which was based in Newport and run by former Welsh international footballer Mark Aizlewood, related to work between 2009 and 2011.

An SFO spokesperson said at the time of the arrests: “It is believed LMT fraudulently overstated the number of students and apprenticeships that they had placed. The suspected offences include fraudulent trading, false accounting and forgery.”

But the threat of similar accusations against other subcontractors has not stopped colleges using their services.

West Nottinghamshire College, for example, last year made eight deals at £524,700. That grew to 27 subcontractors and £3.2m this year.

However, vice principal Graham Howe said safeguards were in place.

“Partnerships are a strategic theme of our college and have been part of our long-standing approach to employer-responsive provision,” he said.

“We recognise the major contribution independent training providers make within FE and, as a college, we play an important role as a conduit of funding and in providing the critical support that allows these providers to function, develop and grow.”

He insisted that heavy investment in supply chain management meant the college was exposed to “less risk, not more”.

He added: “We constantly develop our systems and processes to manage risk within a disbursed delivery model. This ensures that our provision, wherever it is delivered, is of the highest quality.”

At Hull College, three apprenticeship subcontractors last year cost £376,000. Now there are 24 — at a cost of £2.77m.

Principal Dr Elaine McMahon said: “We have worked with a range of partners as part of our contribution to delivering government policy and to secure apprenticeship growth.

“Alongside our own direct delivery we select partners who bring complementary capabilities in regeneration, upskilling, reskilling and supporting employment.”

Editor’s comment : Subcontracting explosion

Thanks to our freedom of information request we know that in the first nine months of 2011/12 subcontracting more than tripled.

This is not surprising, as numerous policies introduced by the current government made this inevitable. I predicted this outcome in The Guardian last year.

However, subcontracting is recognised as high risk and what is unexpected and concerning is that it is being taken on mainly, not by training providers, but by FE colleges.

Why are large colleges taking these unnecessary risks, which in the not too distant past led to the closure of Bilston College?

The reason is typically a belief that using partners presents the only way to quickly respond to changing government priorities.

This is a lazy and short-term attitude which is already damanging the reputation of the sector (see the case of Luis Michael Training).

Behind closed doors, the government recognises this is a problem, and the Skills Funding Agency has introduced new policies to measure the genie, but it may be too late to put it back in the bottle.

If I were a college principal or governor, I would quickly take back ownership, as previous subcontracting explosions have ended in tears.

Local enterprise partnerships (LEPs) are failing to take advantage of the “fantastic” education resources offered by colleges, the Association of Colleges (AoC) has claimed.

An association report has revealed “patchy” engagement between the two, with a lack of college representation on the 39 partnership boards and a lack of understanding of the role FE plays in economic growth – particularly in terms of engagement with employers and community.

The report, Local Enterprise Partnerships and Colleges, says: “The research identifies that the level and extent of engagement is still very patchy.”

The partnership model was formed in 2011 by the Department for Business, Innovation and Skills to help to determine local economic priorities, and lead economic growth.

Julian Gravatt, AoC assistant chief executive, said: “Successful partnerships understand the importance of skills and the role of colleges but, disappointingly, the majority still have work to do to tap into this fantastic resource.”

The report highlighted the Gloucestershire partnership, GFirst, as an example of good practice. Established in June last year, it is supported by nine industry sector groups, each with skills sections in their business plans.

It also said that Tees Valley Unlimited and a partnership in Hertfordshire had a strategic commitment to skills.

Sue Hannan, employment, learning and skills manager at Tees Valley Unlimited, said: “We work closely at a strategic level with local colleges, both directly and through the AoC.

“Our team meet regularly with representatives of our local colleges, as well as other training providers who we consider to be key stakeholders in delivering our ambitions.

“We promote apprenticeships to learners and employers alike, and are involved in a number of initiatives to create new starts”

A Hertfordshire partnership spokesperson said: “We will play an influential role with businesses, colleges, universities and private providers to improve the skills of the existing workforce and those of young people entering the workforce.

“In particular, we want to better match skills to business needs.”

Mr Gravatt said most colleges were focused on local economic development and could make a great contribution to the work of partnerships.”More often than not colleges play a central role in their local community beyond education and skills,” he said.

“To get the best results the relationship between partnerships and colleges needs to be a two-way street.”

Ofsted has hit back at fears that its new Trip Adviser-style website for rating colleges could be open to abuse.

“There are always going to be concerns that there might be a campaign against a provider, but our security system means individual learners have to register,” said Ofsted’s national director for learning and skills, Matthew Coffey, who spoke to FE Week at the site’s official launch.

But he did admit that a student could set up 10 different email accounts  — “there’s nothing to stop anyone doing that” — and register on the website with negative comments.

“But they would have to be intent on doing that. Where we see peaks like that come in, we would investigate them. We have invested heavily in security, have a digital communications team and are actively monitoring the site.”

Learner View, which cost £65,000 to develop and went live in time for Ofsted’s 2012/13 inspections, draws together the opinions of students about their courses and comes up with provider ratings.

It is easy for one person to have more than one email address and submit multiple messages”

Students are faced with statements such as ‘my course/programme meets my needs’ and ‘I receive the support I need to help me progress’. It then offers responses ranging from ‘strongly agree’ to ‘strongly disagree’.

The public can see the results, which are updated after every ten responses, and it was this live element of the website, previewed by FE Week, that sparked fears of abuse.

The Association of Colleges’ director of policy, Joy Mercer, said that most colleges already had robust systems in place to capture the student experience and invested a lot of time in ensuring the student voice was heard.

“We hope Ofsted have thought through how to communicate its new system and this opportunity to students in a clear and sensible way that does not create any misuse.

“We are sure they have systems in place for dealing with potential problems such as the possibility of one student lodging multiple complaints.

“It is easy for one person to have more than one email address and submit multiple messages, which would escalate a complaint even if there is no real issue.

“We would very much like to be convinced Ofsted are able to monitor this system closely to avoid any abuses.”

But Mr Coffey further defended the website and its security. “The NUS and our learner panel quite liked the immediacy of Learner View; that what they think can be seen by people who can do something about it immediately.

“It gives an overview of what the student body is saying about their provider.

“But what is really important is that it doesn’t replace the interaction inspectors have with individual learners on individual courses.”

The apprentice minimum wage remains “shockingly low” despite an increase that kicks in on Monday, the National Union of Students said.

The figure is going up 5p to £2.65 an-hour for apprentices under 19, and for those aged 19 and over in the first year of their apprenticeship.

That’s £1.03 less than the rate for 16 and 17-year-old workers, and £2.33 less than what 18 to 20-year-olds get.

Meanwhile, the main rate — for workers aged 21 and over — has gone up 11p to £6.19.

Toni Pearce, NUS vice president with responsibility for FE, said “The disparity in the existing minimum wage on the basis of the employee’s age bracket is discriminatory and based on the questionable claim that younger workers are less productive than older ones,” she said.

Nearly half of the hairdressing group earned less than the minimum wage they should have received”

“This is particularly odd when the evidence of the Low Pay Commission suggests the national minimum wage can be viewed as an efficiency wage, motivating workers, and provides a yet another argument in favour of equalisation.

“The £2.65 minimum is shockingly low, particularly given that many apprentices work full-time without taking days off for college.

“If the government is serious about apprenticeships, it should recognise that forcing young people to choose between this paltry wage and the prospect of full-time employment at the minimum wage is bound to put people off.

“Ministers should be promoting the good practice of the many employers who pay well above this rate.”

She added: “Enforcement of the minimum wage for apprentices is also a serious problem. Five per cent of respondents to BIS’s own 2011 pay survey said they didn’t receive any pay at all, and nearly half of the hairdressing group earned less than the minimum wage they should have received.”

However, John Longworth, director general of the British Chambers of Commerce, had attacked the rise in March.

“While the pressures of inflation are hurting many people, especially the lowest-paid, this decision adds significantly to the cost of doing business, and feeds wage inflation at higher levels,” he said.

Fred Grindrod, apprenticeships policy and campaigns officer at the TUC’s learning and skills, unionlearn, said: “The apprentice rate has now been established without generating any detrimental side-effects.

“The number of apprentices has continued to increase. Given the strong growth in this sector and the value that apprentices generate for employers, we believe that there is room for more significant increases in this rate.”

Unrealistic self-assessments with little or no critical insight, plus unexpected job cuts, show up time and again among poorly performing colleges, according to a new Ofsted report.

How Colleges Improve also warned colleges about the dangers of paying too much attention to building projects and mergers.

The report, which was released last week, also highlighted inconsistent tracking of learner progress, financial instability and defensive, inward-looking colleges being slow to accept change or to act when data showed decline.

Weaker colleges, the report added, often had a high proportion of temporary staff who were not properly managed.

In outstanding and improving colleges, staff were more willing to accept change and could easily describe what their college stood for”

And, mirroring the “Deptford not Delhi” fears of chief inspector Sir Michael Wilshaw that featured in FE Week a fortnight ago, there were also question marks over colleges’ “quest for new and fresh business, especially, abroad…to the detriment of current learners”.

But the report, commissioned by the Learning and Skills Improvement Service (LSIS) and Ofsted, also listed where colleges had got it right.

Successful colleges, it said, had strong governance and management as well as a clear vision and direction. And good and outstanding colleges were not afraid of the self-assessment process — even if it was self-critical.

Ofsted’s national director for learning and skills, Matthew Coffey, said: “Successful colleges always had strong leadership and management and the importance of this cannot be underestimated.

“All the elements of this report are inextricably linked to the actions and behaviours of leaders and managers and the example they set.

“In outstanding and improving colleges, staff were more willing to accept change and could easily describe what their college stood for. As a result, leadership teams were better placed to act decisively to tackle underperformance and secure improvement.”

Rob Wye, LSIS chief executive, said: “This report confirms that the importance of outstanding leadership and management, underpinned by informed governance, cannot be underestimated.

“It is also clear that robust and honest self-review and reflection is a vital ingredient of any provider’s improvement journey. The evidence in this report confirms what many will have thought for a long time — that the best colleges are those where the teaching, learning and assessment delivers excellent results that match the needs of learners, employers and the local community.”

The report was welcomed by the Association of School and College Leaders. Its colleges spokesperson, Stephan Jungnitz, said: “I’m pleased the report recognises the pivotal role of college leaders in driving forward institutional success, as well as the complex and demanding range of areas they have to deal with, from buildings and finance to teaching and learning.

“As we well know, each college is unique and the road to success will be different for each — there is no magic formula. Having said that, the insights in the report will be useful to college leaders.

“For many, it will reinforce what they instinctively already know about improving their institutions.”