Ministers are being urged to bring forward a policy change allowing adults to take level 3 qualifications for free even if they already hold one, as leaders predict a “massive underspend” due to lack of demand.

It comes as most mayoral combined authorities confirm they will also roll out the extension of the policy, funded through the national skills fund, from April 2022.

Since April 2021, any adult aged 19 and over who does not already have a level 3 qualification or higher has been allowed to access hundreds of fully funded level 3 courses. It is backed with an initial £95 million and is part of the prime minister’s flagship lifetime skills guarantee.

Education secretary Nadhim Zahawi last month announced an extension to the scheme: from April 2022, anyone who earns below the national living wage or is unemployed will be able to access the courses for free “regardless of any prior qualifications”.

It means low earners and the unemployed can take a level 3 qualification for free even they already hold A-levels.

Sector leaders have lobbied for this change all year and say it will be critical to tackle skills shortages. But they question why it can’t be rolled out sooner.

Jane Hickie, chief executive of the Association of Employment and Learning Providers, said: “We would like to see the policy implemented as soon as possible. There is no good reason to wait until April 2022.”

Shadow FE and skills minister Toby Perkins added: “Britain faces skills shortages now, not from April next year, and it’s extraordinary that having delayed so long already, the government only plan to change course months into the future.”

The Department for Education defended the delay, insisting it is “right” that the sector is given time to prepare for this “important eligibility expansion”.

Sector leaders have claimed victory over the policy change. They want government to go further and allow all adults access to the free courses whatever their prior achievement level, as many will need to retrain to find new jobs post-Covid-19.

FE Week understands there has been lower-than-expected take-up of the current scheme, which could have partly been the government’s motivation behind the removal of the first-ness element.

Board minutes for the Greater London Authority have already warned that a number of colleges and training providers in the capital London have rejected the opportunity to receive funding for the government’s new level 3 adult offer, as reported by FE Week in July.

David Hughes, chief executive of the Association of Colleges, also said he was “worried” earlier this year that there would be a slow start to the new flagship level 3 adult offer owing to the restrictive eligibility rules.

Hughes welcomed the widening of the policy but warned employers are “crying out for people with level 3 skills, and yet too many adults are unable to access free training because they already have a level 3 which does not match the job needs”.

The DfE has refused to share figures showing the number of people signing up to the level 3 adult offer, despite repeated requests from FE Week.

Tom Bewick, chief executive of the Federation of Awarding Bodies, told FE Week he anticipates a “massive underspend of the national skills fund this year” because of its “inflexibility”.

However, he welcomed the DfE’s move to only allow repeat level 3s to low earners and the unemployed as this will help avoid “deadweight costs”.

“The fact this flexibility is only being granted to the lower paid and those in receipt of unemployment benefits should help mitigate the obvious risks of this turning into yet another publicly funded skills initiative for the sharp-elbowed middle class who are already well endowed with skills and qualifications,” he said.

Former DfE director of FE funding Sue Pember, who now leads adult education network HOLEX, said she “cautiously welcomes this new initiative”, warning there is a risk it could now be “gamed”.

“For many adults whose previous qualification is now not relevant, it will be very helpful in getting them a new job in a new vocational area. However, with no new funding there is a risk that this new client group displaces the adults who do not have a qualification,” she added.

“There is also a risk that the initiative will be gamed by providers who will go for low-hanging fruit and mass recruitment of those who already have a job and already have a level 3 or higher qualification. It will need careful management to ensure this does not become a deadweight programme.”

Funding for the level 3 adult offer is distributed nationally by the Education and Skills Funding Agency but a chunk is handed to the ten mayoral combined authorities with devolved adult education budgets to distribute in their areas.

London said it already has this policy extension in place, and four of the other authorities – West Yorkshire, Liverpool, Greater Manchester, and Cambridgeshire and Peterborough – confirmed they will follow the ESFA’s lead in introducing it in April 2022.

Two others – Tees Valley and the West Midlands – said they were considering the change and will make a decision in due course. The remaining three areas – Sheffield City Region, North of Tyne and the West of England – did not respond at the time of going to press.

The Education and Skills Funding Agency, which distributes £62 billion of education funding, has published its annual accounts for the year end March 31, 2021.

Here’s your FE Week guide to the key findings …

Funding overclaims from ITPs contribute heavily to £9.5m cash losses

The ESFA recorded 48 cases of “cash losses” totalling £9.5 million in 2020-21.

The largest sums lost related to unrecoverable overpayments to independent training providers that went bust.

The debts arise mainly where providers have overstated funding claims for delivery during a contract, for example where a learner started but did not complete.

In such circumstances, the ESFA seeks to recover the overpayments from providers in cash or from deductions against future payments. But in a number of cases, funds are unable to be recovered due to the provider closing down. If, after a prolonged period of time, insufficient funds from the provider’s receiver or liquidator are received or the provider is dissolved, the ESFA simply abandons the claim.

Un-recoverable grant overpayments above £300,000 in 2020-21 include:

Accent On Training Ltd = £2,466,000

Positive Outcomes Ltd = £2,073,000

Provident Training Ltd = £1,352,000

Education & Youth Services Ltd = £532,000

AMS Nationwide Ltd = £608,000

Bankrupt college makes up biggest proportion of £33m waived funding claims

In 2020-21, there were 24 claims waived or abandoned by the ESFA totalling £33 million.

Balances owed by academies and colleges may in some circumstances be waived to facilitate the re-brokerage of the academy or college to a more sustainable academy trust or college, or support closure.

West Kent and Ashford College, which is one of the first two colleges to be going through the education administration process, saw £20.6 million waived in 2020-21. The ESFA estimated that the total cost of putting West Kent and Ashford College, and its sister Hadlow College, through administration will probably run to over £60 million.

Another notable waiver for FE was Watford UTC, which had £463,000 abandoned.

£500k lost on Erasmus plans

The ESFA posted “fruitless payments” of £520,000 relating to work staff did on evaluating the feasibility of a successor to the Erasmus+ grant scheme in the run-up to Brexit.

However the agency was not chosen as the “preferred delivery partner” so stopped the work. A fruitless payment is one which “cannot be legally avoided because the recipient is entitled to it even though nothing of use to ESFA will be received in return”.

Only half of planned risk meetings with FE providers conducted

As part of the ESFA’s move to identify vulnerable colleges and providers early, the agency conducts meetings with those who are identified to be “high risk”, with the aim of identifying financial and/or quality issues before they become real problems.

A total of 438 of these meetings were carried out in 2020-21. This was, however, around half of the planned target.

Post-16 provider relief totalled £11m

The ESFA launched five different provider relief schemes, such as for apprenticeship and adult funding, to give “lifeline” financial support to providers during the pandemic.

Today’s report shows these schemes totalled £11 million, which in turn “protected provision and supported 32,800 learners and apprentices”.

No colleges enter formal intervention

The agency conducted 23 assessments of further education colleges in 2020-21. None resulted in formal intervention. Five of them led to the colleges’ plans being endorsed and the rest continue to work with ESFA to improve their plans.

There are 68 live investigations into FE providers

At 31 March 2021, the ESFA had a total of 80 live investigations and allegations in triage to carry forward into 2021-22.

This comprised 12 ongoing academy trust cases at “various stages” of the investigation cycle and 68 live cases relating to colleges and independent training providers.

The agency said the cases carried forward from both sectors “continue to reflect the complex nature and longevity of investigation casework”.

“ESFA investment in counter fraud and investigations, and the enforcement team, has ensured an appropriate response to increasing demand whilst also championing continuing improvements to mitigate and prevent future issues arising,” the report added.

Top ESFA staff bag bonuses totalling £60k

Eight of the 13 officials who held executive roles during the past year got a bonus. Matthew Atkinson, director of provider oversight, was handed a bonus between £15,000 to £20,000, while three others got bonuses between £10,000 to £15,000.

Former chief executive Eileen Milner was the ESFA’s highest-paid on £150,000 to £155,000.

Her replacement, former regional schools commissioner John Edwards, is paid £125,000 to £130,000 a year.

Bridget Phillipson has been appointed as the new shadow education secretary.

The news was announced last night as part of a reshuffle of Labour leader Sir Keir Starmer’s top team. The reshuffle resulted in Kate Green being moved out of the job.

Here’s what we know about the new shadow education secretary.

She was born in Gateshead in 1983. However, even at 37, she is still not the youngest person ever appointed to the role. That record is still held by Angela Rayner, who was 36 when she took it on in 2016.

Phillipson has been an MP since 2010. She was elected to represent Houghton and Sunderland South. She is the first MP representing a north east constituency to be shadow education secretary since Pat Glass, who held the role for just two days in 2016. She is also the fourth MP elected in 2010 to hold the role.

This is her second shadow ministerial brief. Phillipson served on the back benches and as an opposition whip for her first 10 years in Parliament, before being promoted to the shadow cabinet by Labour leader Sir Keir Starmer in April 2020 as shadow chief secretary to the treasury.

She attended state schools. Phillipson pointed out on Twitter last night that she had attended state schools. This is not unusual among more recent shadow education secretaries. Her predecessor Kate Green attended state school, as did recent postholders Angela Rayner and Rebecca Long-Bailey.

She is Oxbridge-educated. Phillipson read modern history at Hertford College, Oxford, graduating in 2005. Attending an Oxbridge university is also not unusual among shadow education secretaries. Lucy Powell attended Oxford (albeit only for a year), as did Stephen Twigg. Tristram Hunt went to Cambridge.

Politics is in her blood. Phillipson has spoken about how she attended Labour meetings as a child with her mother, Claire, a party official. After graduation, she went on to work in local government and then for the charity Wearside Women in Need, which her mother founded.

Phillipson has criticised the government’s apprenticeship reforms. In May 2019, she warned that access to apprenticeships is “getting worse”, including in her area, following a report by the public accounts committee that she sat on. She pledged to “keep pressing ministers to ensure there are more available in our area”.

She has also argued for greater certainty for school budgets. In June, she urged the government not to wait for the spending review to allocate more catch-up funding, and said that schools needed to be able to make decisions “over not just a few months, but many years”. She added that “long-term outcomes are better delivered when they can be planned on a longer-term basis—more than one financial year at a time”.