Owners of a new apprenticeship provider that quickly raked in £6 million have had their contract terminated after hundreds of apprentices were found to be unemployed.

Personal Track Safety Ltd, which trades as PTS Training Academy, began recruiting in May 2018 and within two years had started more than 2,500 apprentices in sectors such as food, care, rail, management, accounting, engineering, sport and prison services.

But the firm was forced to stop starts in July last year by the Education and Skills Funding Agency following allegations that some of its apprentices did not have jobs and were therefore ineligible for an apprenticeship.

The agency stopped all payments from July 2020 and has since issued a termination notice, which comes into effect on July 10, 2021.

PTS Training Academy has cut its staff numbers over the past year from around 125 to 35. The remaining staff are now all at risk of redundancy as the company is on the brink of collapse.

PTS owner Matthew Joyce told FE Week the firm grew too rapidly but places the blame for the unemployed apprentices with an apprenticeship training agency (ATA) it partnered with.

ATAs launched in 2009 to hire apprentices and then place them with various host companies that would pay the agency to cover the salaries and administration costs.

PTS claims that when they partnered with the ATA in question the apprentices had signed employer agreements, but later found out the jobs were gone when the Covid-19 pandemic struck.

Joyce said the firm had received around £2 million for the unemployed apprentices, which the ESFA then deducted from future payments.

The ESFA declined to comment on its investigation into PTS and the ATA.

PTS Training Academy, based in Northampton but with offices in London, Doncaster and Somerset, set up in 2012 and was a subcontractor until 2017. It was visited by Ofsted in January 2019 and was found making ‘reasonable progress’ in all areas of an early monitoring report.

Joyce took over the firm in 2015 and his business partner Charlie Smith, with whom he runs multiple other companies, joined in 2019.

The pair are also directors of an awarding body called AoFA Qualifications, which was subject to an Ofqual investigation in 2018 and told to stop issuing certificates after failing to comply with the regulator’s conditions.

It rebranded as EQ Qualifications but took the business decision to surrender its status as an Ofqual-recognised awarding organisation in October 2020. Joyce claims this was unrelated to the ESFA’s investigation into PTS Training Academy.

It was around the time of Ofqual’s first investigation that Joyce and Smith ramped up their apprenticeship start numbers.

Despite having 20 years’ experience in only the rail sector, their first apprenticeships were on the level 3 custody and detention officer apprenticeship after it landed a partnership with Sodexo Justice Service.

Even though Sodexo was itself an employer provider on the government’s apprenticeship register, it chose to act as a subcontractor to PTS and deliver the training itself, using PTS for functional skills training.

Sodexo told FE Week that it partnered with PTS because it was, at the time, the only provider registered to deliver the plan apprenticeship standard.

A spokesperson said the subcontracting partnership was seen as a “low-risk stepping-stone to allow them time to gather knowledge and a fundamental understanding of the standard, ESFA processes and quality assurance requirements in readiness for direct delivery under the Sodexo Ltd employer provider status”. Its contract with PTS was terminated for new starters in September 2019.

It wasn’t until November 2019 that PTS delivered its first rail apprenticeships.

Joyce told FE Week his provider entered into a relationship with an ATA a month later which led to its exponential growth.

“These guys were going to guarantee apprentices work on the railway – that’s the difficult part because normally it’s quite a transient workforce. So this is exactly what we were looking for,” he said.

“We weren’t concerned back in December time ̶ we weren’t expecting the apprentices to be out working yet. By around February-March time, we had concerns and we were sort of really pushing to say, ‘Where’s the new jobs coming in? Where are these guys going out to work?’ And obviously, we got hit with Covid. The ATA furloughed its workers and said apprentices cannot go out to work.”

Joyce says he complied fully with the ESFA when its officials started asking questions, but they swiftly suspended starts and then cut off funding.

“The ESFA found that the learners weren’t eligible because the ATA didn’t actually have any work for them. They had no employer engagement,” he explained.

“I admit, we grew too quick. We thought we’d hit the solution to the railway sector’s problems because we found an ATA that had fantastic links to the railway.

“The mistake we made is we put lots of people on very quickly.”

Joyce says that while he has to respect the ESFA’s decision and “move on”, he wants to keep his firm running in some form because “we don’t want to give up on helping people into work, especially now”.

The provider still has around 120 apprentices on programme and promised to support them to complete their training.

London colleges are struggling to spend chunks of their adult education budget – leading to fears that the Greater London Authority’s future allocation from central government could be slashed. 

Agenda papers for an AEB mayoral board meeting this week revealed that £110.6 million (60.7 per cent) of the £182 million dished out to grant-funded providers this year had been spent by the end of April 2021. 

In comparison, independent training providers with procured GLA contracts spent £21.4 million (87.2 per cent) of their £24.5 million AEB allocations. 

The agenda document warns that the underspend “may result in a reduction of the GLA’s future AEB allocation from central government”, which currently sits at £360 million. 

A number of colleges and training providers in London have also rejected the opportunity to receive funding for the government’s new level 3 adult offer, as part of the prime minister’s lifetime skills guarantee. 

Of the nine independent training providers for which mayor Sadiq Khan approved National Skills Funding allocations for the 2020/21 academic year, only four presented business cases to be funded. 

It means that of the £1,408,367 total ITP allocation for 2020/21, only £300,735 was allocated. 

A “number” of AEB grant providers also declined National Skills Fund allocations, according to the agenda papers. Of the total £4,123,694 offered, so far only £3,171,809 has been allocated. 

With the GLA struggling to spend its funding, it has introduced a ten per cent increase to the funding rates for all adult education budget qualifications up to and including level 2. 

It is not just London where colleges and providers are turning down the opportunity to gain funding to deliver the new level 3 adult offer. 

The West Midlands Combined Authority told FE Week that three of its providers rejected the funding. This money was, however, reallocated to other providers in the region and a spokesperson said their full National Skills Fund allocation will be spent. 

There are 387 courses available in the level 3 adult offer, which are fully funded for individuals yet to achieve their first full level 3 qualification – equivalent to two full A-levels.

The cost of managing and administering the Greater London Authority’s adult education budget may soon reach almost £6 million.

Mayor of London Sadiq Khan (pictured) was criticised by college principals in 2019 after he took control of the AEB for the capital but announced plans to top-slice £3 million of it annually to hire and pay the wages of over 50 new bureaucrats to dish out the fund.

New agenda papers for an AEB mayoral board meeting that was set to take place on July 8 have now revealed that expenditure for the job has hit £5.5 million.

The increase has in part been put down to “newly introduced corporate overhead charges”.

The breakdown also includes funding for staffing, the authority’s Learner Survey pilot and main rollout, AEB Roadmap work (including stakeholder consultation), legal services, provider audits, and research and evaluations.

Additionally, if endorsed by the board, an extra £302,500 will be used to outsource AEB procured compliance checks which will be funded from the unallocated funds, increasing the administration budget to £5,814,380.

The increased costs come despite the GLA dishing out less funding than anticipated as colleges and training providers struggle to spend their allocations (click here for full story).

FE Week asked the GLA for details of the new corporate overhead charges and the reason why they needed to outsource procured provider compliance checks, but the authority failed to respond at the time of going to press.

The GLA’s annual AEB allocation it receives from central government totals £360 million.

Its management and administration costs are controversial because it siphons funding from frontline learning to cover the wages of its own administrators, as well as external consultants.

At the time that the original administration cost was revealed by FE Week, London South East Colleges chief executive Sam Parrett said it was “shocking and hugely disappointing that this has been allowed to happen and divert £3 million from this underfunded sector to pay for administrative officers”.

Apprenticeship sector leaders have attacked a new funding rule concerning apprentices’ learning difficulties assessments, slamming it as “totally wrong”.

The new rule, due to take effect from August, would mean providers will not be able to assess apprentices for funding for any learning difficulties as a standard part of enrolment.

“Providers must not put apprentices through a generic needs assessment, where there is no prior assumption of need, to solely result in a need being found and payment requested,” the rules, published last Friday, state.

ESFA ‘should be focusing on treatment not prescription’

Independent provider Learning Innovations Training Team, based in Yorkshire, has hit out at the ESFA for “perhaps being cynical” by implying assessments were being used to claim unnecessary payments.

Director Jay Luke says the agency “fundamentally mistrust and suspect the sector”.

Until now, many providers ran the assessments as part of their enrolment process, to identify barriers to learning, for example, being disorganised.

Providers could apply for a monthly £150 for learners with additional needs from the Learner Support Fund, to cover costs such as extra tutor time or supportive software.

Association of Employment and Learning Providers chief executive Jane Hickie warned the ESFA has got it “totally wrong” with this rule change.

She says if it wants to ensure the £150 is being used correctly, “it needs to check there is robust supporting evidence at that point of the provision.

“From an auditing perspective, the agency should be focusing on the treatment, not the prescription. 

“The end result will be poorer outcomes and the disadvantaged being further disadvantaged.”

Chris Quickfall, chief executive of Cognassist, which provides digital assessments to identify learning needs, has criticised the rule change.

He was only diagnosed with dyslexia when he got to university and called the change “an attack on learners with hidden needs and an attack on social mobility”.

Sector groups have warned the rule could even go against their duty to identify needs and make reasonable adjustments for their learners under the Equality Act.

Providers are also concerned that not being allowed to run these assessments as a matter of course could conflict with Ofsted guidance providers must establish apprentice’s starting point.

An Ofsted spokesperson said initial assessment should “make sure a learner is on the right programme, can quickly acquire the knowledge, skills and behaviours they need to make progress, and has appropriate support”.

As such, “it is clearly best for learners if a specific learning difficulty or disability has been diagnosed at the outset.

“The ESFA guidance appears to be addressing situations where that has not happened, and a learning support need is identified during the course of the programme.”

Apprentices ‘highly value’ the assessment

Herefordshire-based Riverside Training, like Learning Innovations, has made its learners sit Cognassist’s test to identify any barriers to learning. Head of essential skills Lara Latcham says learners will come from school without additional needs having been diagnosed.

Luke says it “makes sense to screen all learners at the outset,” instead of identifying needs if they become clear, or relying on assessors who may not have the skills to do so.

Up to one-fifth of Learning Innovations’ learners and little under one-third of Riverside’s have additional needs identified through the Cognassist test.

Apprentices “highly value” the assessment, Luke argued, as tailoring delivery more accurately “improves the effectiveness of apprentices and thus their value to the employer”.

But without the assessment, Latcham believes it will increase their dropout rate because “we don’t know what we’re working with. We’re working blind.”

Learners will feel “discouraged” because “they feel they’re not getting the support” and may leave the programme.

Latcham would “understand” if the ESFA was phasing out the funding for post-16 and making all schools do the test instead, but worries: “A lot of the people we’re working with have been failed by the education system.

“They’ve come out with no maths, no English, and haven’t been able to go to further education, so they’ve taken the apprenticeship route. And now we’re making it difficult for them to achieve in even that route.”

A Department for Education spokesperson said the rules were still in draft “so we can receive comments/feedback from the sector prior to implementing version 1 of the rules in August.

“Over the next week we will continue to collate and take on board feedback around all the funding rules update, as well as speaking with provider representative bodies.”