The government has today agreed a partial u-turn on ESOL cuts after an impact assessment ordered by FE and Skills Minister John Hayes revealed that at least 58,000 women would lose all entitlement to fee remission under the new system.

But initiatives being drawn up jointly by the departments for Business, Innovation and Skills (BIS) and Communities and Local Government (CLG) fall well short of what colleges and campaigners were demanding and will have no impact on learner recruitment this autumn or on the numbers of lecturers facing redundancy.

Funding to pay for extra classes will come entirely from the CLG following a deal struck last week between the departmental secretaries Vince Cable and Eric Pickles. The size of the pot is unlikely to be announced before late August or September but it is understood that a condition of the initiative will be that money is targeted at local community groups rather than colleges.

will have no impact on learner recruitment this autumn or on the numbers of lecturers facing redundancy.”

The impact assessment confirms what organisations including Lsect and the Association of Colleges reported, that the planned cuts will have the biggest impact on women with families who are unable to work full time and are on inactive benefits. Surveys through the spring estimated that the number of learners to lose out was closer to 100,000.

John Hayes’ pronouncement this week following the Equality Impact Assessment (EIA) will be seen as a double whammy for many colleges and providers already facing swingeing cuts. He says that in addition to retaining the new criteria and giving full fee exemption only to those on active benefits such as Job Seekers Allowance (JSA), he will be imposing new “tough performance measures” for providers of ESOL in consultation with Ofsted.

it is understood that a condition of the initiative will be that money is targeted at local community groups rather than colleges.”

This point is further emphasised in the BIS EIA report, which says while providers should be responsible for delivering high quality, they must be “pro-actively” improving their offer. “Poor providers must make rapid improvements, or lose funding.”   Mr Hayes added: “By targeting public funding on those in greatest need, and setting higher standards for providers, our reforms will make ESOL provision work better for learners, employers, and taxpayers.”

Responding to accusations that BIS had failed to do a proper EIA when it should have last autumn, a BIS spokesman said an assessment was done but this covered the whole skills strategy, not just ESOL. Hayes had called for a more focused analysis following angry responses to the cuts. In addition to the BIS-CLG initiative, Hayes had asked the AoC to explore more effective methods for targeting funds where they were most needed in “settled communities” and to involve Lord Boswell and Baroness Sharp – who are leading inquiries on Adult Literacy and Colleges in Communities – in the work.

But the reforms – announced a day before Parliament went into recess – have failed to impress most providers. Alastair Thomson, Principal Policy Office for Niace, told FE Week: “We welcome the fact that the government has listened to the concerns that we have expressed and the fact that there will be a joined-up government approach. But – and it’s a big but – there is no doubt ESOL provision will be considerably worse from September. Our concern is that the most vulnerable adults will still be unduly hit.”

His comments were echoed in many similar statements to FE Week from organisations including the UCU, Action for ESOL campaign and the Refugee Council. The response from colleges was summed up by one North London principal who said: “These measures don’t go anywhere near meeting the needs of our learners.”

Our concern is that the most vulnerable adults will still be unduly hit.”

The Association of Colleges said it was happy to work with government but had a long shopping list of demands including measures to ensure those who would unduly lose out are reclassified as Employment Support Allowance recipients (and therefore eligible for fee remission). The Chief Executive Martin Doel said: “We would also want parents of children aged seven or under to continue to use ESOL as a means through which they play an active part in their children’s education and as a springboard to the labour market.”

Click here to download a copy of the ESOL Impact Assessment

A Labour MP is urging the government to provide apprenticeships for jobless youngsters with small businesses – by using bankers’ bonuses.

Introducing a bill under the ten minute rule,  the MP for Selly Oak, Steve McCabe, wants training and employment schemes for young people, better careers guidance and help for companies offering on-the-job experience.

He wants:” A mechanism through which banks and other providers of financial services are required to allocate part of their bonus payment budget to support these measures,” he said.

The MP told the House of Commons: “How can we be optimistic about the future if we are prepared to subject our young people to a life of worklessness?”

With youth unemployment hovering around the 1 million mark, his bill would bring a “fresh initiative” to tackle the problem.

“I want us to create a training and employment programme for those aged 16 to 25, because I believe that that is the only realistic way to tackle a problem of that size. That kind of unemployment can have long-term damaging effects.”

The MP added: “We owe it to our young people to do everything we can to prevent the scar of unemployment.”

Youth unemployment costs more than £23 million in benefits every week. What was needed, he said, was an employment programme “that offers hope and opportunity, and we need training designed to address the structural gaps in our system.”

Read the debate by clicking here

Mr McCabe told his fellow MPs the public were ahead of them on this matter. “Because they know that we should fund such a programme from a levy on the money set aside for unearned bonuses for wealthy bankers, who are continuing to pay themselves money that they have not earned while the rest of the country suffers as a result.”

Labour MP for Hayes and Harlington, John McDonnell opposed the plan because it failed to address unsafe working conditions for apprentices.

But MPs voted 241 to 35 to allow Mr McCabe to bring in his Bill. It will be read a second time on November 25.

The Skills Funding Agency has promised a crackdown on fraud and misuse of public money in the FE and skills sector, which it admits is likely to get worse under the government’s new subcontracting arrangements. The extent of the concern is revealed in communications leaked to FE Week between Geoff Russell, chief executive of the agency and John Hayes, the FE and Skills Minister.

£11m was lost to fraud or misuse in 2010-11 of which only £3m is so far accounted for. Police are involved in nine investigations, says Mr Russell in a letter to the minister which reveals that the agency was pursuing 88 new allegations – “a record high” – with a further 17 being investigated by other agencies including the police.

The Government’s increased emphasis on subcontracting is certain to make things worse, he suggests. “Subcontracting is the area most prone to mismanagement and abuse, and is responsible for about 70 per cent of our current investigations.”

But there are question marks over the agency’s capacity to investigate. In his letter, Mr Russell says a dedicated Investigations Unit is “fully engaged”. However, there are only six people in that unit and, while he says he is “increasing the unit’s size within the current restructuring exercise”, only 18 of the 55 cases currently on the unit’s books were being fully investigated.

The letter makes clear the crackdown will involve “tighter procedures” including exclusion of providers where there are “reasonable grounds” for deciding they cannot be entrusted with public money. The agency will also interview learners to make sure outcomes are achieved, rather than “relying solely on paperwork and certificates.”

“Subcontracting is the area most prone to mismanagement and abuse, and is responsible for about 70 per cent of our current investigations.”

While the government promised providers greater flexibility and less red tape, Mr Russell insists this will not reduce the need for accountability. With less prescriptive use of public funds “we need to be even more vigilant about propriety”, he says, adding that “the risk is likely to increase in the context of the economy, funding challenges and greater levels of subcontracting”.

Lead contractors must ensure subcontractors have sufficient “capacity, capability, quality and business standing”. Nevertheless, he is concerned that “subcontracting increases risks because work will be done by organisations with which the Agency has no direct contractual relationship. Therefore, subcontracting directors and senior managers must provide guarantees so that in the event of fraud or gross negligence, we can pursue their personal assets in recovering money,” the letter says.

While neither the agency nor government would comment directly on the leaked letter, a spokesperson for the SFA said: “The Agency takes allegations of financial irregularity very seriously.   We rigorously investigate any allegations of wrong doing to the fullest extent to ensure public funds are protected.” Six staff were fully engaged in the agency and “contributing to a number of cross-Government counter fraud initiatives”.

A BIS spokesperson said: “Ensuring value for taxpayers’ money is upmost in the Government’s priorities. We treat allegations about the misuse of public money very seriously and we work with the Skills Funding Agency to ensure they are investigated thoroughly.”