The government body responsible for funding assurance appears to have lost confidence in itself.

The Education and Skills Funding Agency is requiring all external auditors to conduct a funding audit this year, before signing off on the annual college financial statements.

News of the significant change came buried in the Post-16 Audit Code of Practice for 2020 to 2021, published by the ESFA this week.

One of 19 “changes” stated the ESFA year-end funding statement “does not constitute assurance over the funds earned by the college”.

In previous years, external auditors signed off college accounts without checking the accuracy of income claims received from the main funding grants generated through the Individualised Learner Record (ILR) returns, because the ESFA provided the assurance.

Julian Gravatt, deputy chief executive at the Association of Colleges and former college finance director, told FE Week the change “risks creating a last-minute scramble by colleges and auditors to carry out extra work in summer 2021.

“Colleges aim to comply with high audit standards but we don’t agree with the ESFA decision to introduce this change two-thirds of the way through the year.”

And in an email to all AoC members seen by FE Week, Gravatt says: “The implication of this change is that external auditors will now carry out more work this summer and early autumn to ensure compliance with funding rules.

“In effect this extends the funding audit to all colleges this year – at their own expense.”

According to several college accountants who spoke to FE Week, the responsibility for funding audit being passed from the ESFA to colleges presents a number of challenges.

Many accountancy firms that currently undertake external audit for colleges have never conducted a “funding assurance review”.

This is likely to present resourcing challenges announced so late in the year and raises the prospect of additional costs for colleges.

‘This extends the funding audit to all colleges this year’

However, Gravatt said he hoped external audit firms would “handle any extra work within agreed and fixed budgets”.

It also remains uncertain whether other funding bodies reliant on the ILR returns, such as mayoral combined authorities, will make similar demands.

And despite the move from the ESFA to require the extra assurance work, there has been no suggestion they will scale back the number of audits they conduct themselves.

Gravatt was also keen to point out that this late change appeared to go against broader government plans to reduce bureaucracy.

“The FE white paper promises simplification but, for colleges, the current audit code is a uniquely complicated custom-built framework involving internal, external, regularity and multi-year funding audits,” he said.

The former chief executive of Hull College Group received £219,000 last year, despite only being in post for 67 days. 

Payments to Michelle Swithenbank are revealed in the published accounts alongside external auditor findings that a £300,000 three-year deal she signed with a local rugby club breached the college’s financial regulations. 

External auditors reveal in the published 2019/20 accounts that the stadium naming rights and shirt sponsorship deal was “only signed by one authorised signatory who was the corporation’s accounting officer in office during the year [Swithenbank], and neither were the agreements approved by the corporation”. 

The college chair at the time, Dafydd Williams, confirmed to FE Week that the “contract [with Hull Kingston Rovers] was never brought to the board for discussion or approval and was signed off by individual executives without our knowledge”. 

The auditors also found the college “failed to discharge its duty of care with regard to the novel nature of these transactions” as they ignored legal advice and no evidence was found for any business case or value for money analysis. 

Swithenbank led Hull College Group until taking a leave of absence on October 7, 2019 when Williams commissioned an unrelated investigation into financial misconduct. 

Two months later, on December 20, Williams emailed all staff to announce that the investigation had found “no impropriety on the part of Michelle […] nevertheless, Michelle has informed us that she wishes to move on, and feels this is a good time to do so”. 

The true cost of the deal with Hull KR only came to light earlier this year following an FE Week freedom of information request and subsequent intervention from the Information Commissioner’s Office. 

After reporting the deal in FE Week, interim chief executive, Lowell Williams, then launched his own investigation with internal auditors, which is due to report later this month. 

Williams, who departs later this month when the first permanent chief executive since Swithenbank’s departure takes over, said “enquiries are ongoing” concerning the “irregular transaction” and he was “confident that the corporation will take appropriate action” – not ruling out the college could seek to recover some or all of the payoff.

The college accounts detail a total of £390,000 spent on the chief executive post in the 12 months from August 1, 2019 until July 31, 2020, compared to £140,000 in the previous financial year. 

This consisted of £162,000 contractual and £57,000 non-contractual payments for Swithenbank, with the remaining £171,000 spent on three interim chief executives. 

Hull College Group hit the headlines several years ago after requiring a £50 million bailout from the government as part of a ‘Fresh Start’ process that preceded several hundred staff being made redundant. 

And in recent weeks staff were informed the college would be disposing of their campus in Goole in July 2021, leaving the group with just their main campus at Queens Gardens in the city centre, a motor vehicle centre on Cannon Street (close to the city centre) and a construction centre in East Hull.

‘What is now revealed is unacceptable and inexcusable’

On hearing of the payoff and auditor findings, the University and College Union’s head of further education Andrew Harden told FE Week: “We can’t undo the events of the past but what is now revealed is completely unacceptable and inexcusable. 

“The levels of mismanagement and poor governance that have occurred leading up to and since the financial crisis at the college should not impact on students or staff in the way they have. Staff have worked extraordinarily hard for their students and are completely committed to restoring the reputation of the college. 

“It is unacceptable that further wrongdoing has continued since the ‘Fresh Start’ approved by the FE Commissioner and monitored and scrutinised by his teams. 

“Given the college acknowledges financial and audit regulations have not been followed, it is only right and proper that the leaders who have overseen these issues should be held to account.” 

Swithenbank was approached for comment.

The government has failed to boost radically the number of traineeships in the first half of the year – but providers tasked with tripling the number of starts insist they are up for the challenge.

FE Week analysis of the latest Department for Education data shows there were 8,800 starts between August 2020 and January 2021 – just 400 more than were achieved in the same period the previous year. 

It means that more than 35,000 starts are needed between February and July to hit chancellor Rishi Sunak’s goal of tripling their number this year to combat youth unemployment following Covid-19. 

In the same period last year, 6,500 starts were recorded and took the final 2019/20 year-end figure to 14,900. 

This year’s continued sluggish take-up comes despite the government reforming the funding rules for the pre-employment programme in September, which included increasing the funding rate for 19-to- 24 traineeships by 54 per cent, from £970 to £1,500, and opening them up to people who already hold a level 3 qualification.

Employer cash incentives of £1,000 for each traineeship learner they take on were also introduced.

A big chunk of the starts needed in the last half of 2020/21 – around 20,000 – are hoped to come from a £65 million tender for 19-to-24 traineeships. 

The procurement was originally planned to get under way last summer but was beset with delays – an issue that FE Week understands personally annoyed Sunak, as it hindered his expansion plans. 

Despite only having a brief window to recruit, training providers that won big in the tender are optimistic about spending their full allocations. 

Let Me Play Ltd, a provider that did not previously hold a traineeship contract but won the largest allocation, just shy of the £3 million cap, told FE Week it is “profiled to spend the majority of the contract”. 

The firm’s co-founder and director Matthew Lord said: “We mobilised swiftly – so far no challenges. We have lots of young people who are keen for an opportunity and many employers who are very committed to support with placements.”

Corndel Limited is another provider new to traineeships but which received a contract of just below £3 million. Its founder and chief executive Sean Williams agreed it is a “significant task” to increase traineeship numbers to the level required but that trainees will, “unfortunately, not be difficult, given the disproportionate impact this economic crisis is having on young people”. 

He explained that the biggest challenge is that most of Corndel’s employer partners are still working exclusively remotely, which means “we have to find meaningful, impactful work experience placements that can be delivered connected-by-technology rather than physically co-located. 

“We need to do this in a way that is compliant with the funding rule guidance whilst meeting the needs of employers and trainees in the new reality we find ourselves in,” he added. 

Williams said his provider had originally planned 880 starts in the six-month timeframe given, and he is still “confident” of hitting that number. 

Elsewhere, another new traineeships provider, Professional Training Solutions, told FE Week it expects to exceed its allocation of £1.6 million. Managing director Jackie Denyer said that early engagement has been “strong” but listed several challenges that may dampen the national effort to increase starts. 

These include the “ringfencing of the regional allocations, which makes it difficult to engage national employers”; ensuring the government’s Kickstart scheme “doesn’t reduce demand for traineeships”; and the recovery time of sectors hit hardest by the pandemic, such as hospitality. 

Steffan Edwards, managing director of Skillcert – a new traineeships provider which won a £1.2 million contract – echoed Denyer’s concern that Kickstart could push recruitment for traineeships down. However, he is “really optimistic” about hitting his target of 300 starts as “we have such high employer demand”. 

Other longstanding traineeship providers that were unsuccessful in the tender are not as confident.

Analysis by Babington, shared with FE Week, shows that more than three-quarters of providers with 19-to-24 traineeship allocations in 2019/20 do not have a contract in 2020/21. 

Babington’s chief executive, David Marsh, said he was “very disappointed” to have his bid in the recent “frustrating” tender rejected as they have been “one of a few providers to have kept the programme alive and have invested significantly in it” since its launch in 2013. 

“The fact that such a large number of existing and successful providers have not been successful while others completely new to the programme have received such large allocations, and smaller providers getting growth of nearly 3,000 per cent, is incredibly concerning and certainly points towards a process that is not fit for purpose,” he told FE Week. 

“Surely the ESFA should be building on the areas of success and expanding, rather than handing the majority of the money to providers who are new and inexperienced.”

A mayoral authority has set a 68 per cent clawback threshold for its devolved adult education budget, in a split from central government.

The decision from Liverpool City Region comes after the Education and Skills Funding Agency was widely criticised for setting a 90 per cent threshold for the national AEB.

Liverpool’s move was revealed in a letter from the Association of Colleges to its members today.

Latest AoC projections indicate that the “collective forecast” for average AEB delivery now is 77 per cent, so the total clawback under the national AEB “will be £59 million” with no concessions after the ESFA ruled out business cases.

The ESFA, which itself set a 68 per cent threshold for 2019/20 allocations, has defended the 90 per cent threshold by saying it is a “fair representation of grant funded providers’ average delivery” in 2020/21.

FE Week exclusively revealed last week it was the Treasury which insisted on the 90 per cent figure, as officials argued colleges have had enough time to reorientate themselves for coronavirus.

There are eight mayoral combined authorities in England with devolved AEB which decide their own funding rules.

The Greater London Authority previously announced it would apply a 90 per cent threshold this year, the same as the ESFA. FE Week has asked if this position has changed at all, but the authority could not say at this stage owing to local elections and purdah rules.

Liverpool City Region has been approached for comment.

An ethnic minority representative group has slammed a prime ministerial commission’s proposal for an apprentice recruitment campaign “highly targeted” at diverse communities. 

The Commission on Race and Ethnic Disparities claimed this week that “prejudice and ignorance” within ethnic minority families led to a low take-up of apprenticeship starts in their communities. 

FE Week analysis of government data shows that 42,100 (13 per cent) of the 332,500 apprenticeship starts in 2019/20 were by black, Asian and ethnic minority (BAME) learners. 

This is slightly out of kilter with the 15 per cent of England’s population who are BAME, according to NHS England data collated by the Nuffield Trust in 2020. 

Commission proposals ‘fundamentally avoids tackling unfair practices’

The key proposal of the commission to tackle this issue was a “highly targeted” apprenticeship recruitment campaign, designed by the Department for Education and the Department for Work and Pensions, and delivered by FE colleges and school career hubs. 

“Our view,” the report states, “is that such a campaign could be of particular benefit to young people who face discrimination or disadvantage and currently lack access to in-depth information about the full range of career pathways”. 

However, the commission’s proposal has been criticised by the Black Training and Enterprise Group, which said the recommendation “fundamentally avoids tackling unfair and discriminatory employer recruitment practices”. 

This, the group says, has affected sectors including construction, engineering and technology, where BAME people “continue to be under-represented in jobs and apprenticeships. Far too much recruitment in the UK relies on word-of-mouth recruitment, informal methods, attending the right schools and universities, and looking like the recruiters and having similar sounding names,” the group explained. 

Chief executive Jeremy Crook (pictured top) said the report overall “failed to grasp the considerable evidence of institutional and structural racism in the UK,” and BTEG was calling on the government to “rethink its approach”. 

In response to the report, chair of the government’s Apprenticeship Diversity Champions Network Lia Nici admitted: “There is still a lot of work to do to ensure our apprenticeships, and the careers that develop from them, fully represent the diverse mixture of people in the UK.” 

She said the report “highlights a wide range of issues with regard to diversity and race in the UK,” not just in terms of ethnicity. 

“We also know that there are fewer apprentices who have disabilities, as well as females working in science, engineering, technology or maths-based roles. We want to encourage apprentices from a broader range of backgrounds.” 

Nici said the champions network, a group of employers formed in 2017, was already discussing “a range of targeted activities” to encourage apprenticeships in communities that have not seen strong take-up. 

Apprenticeships ‘not seen as enabling aspiration’

Under-representation of BAME people in apprenticeships is by no means a new revelation, nor is the claim that ethnic minority families do not place a high value on apprenticeships. 

Crook reported in a 2018 essay for the Learning and Work Institute on a group of mostly-BAME foundation year degree students who told them “more academic qualifications will give them a better chance of success in the labour market”. 

However, he wrote, “the reality is that BAME graduates have higher rates of unemployment than white graduates”. 

A 2018 report, Apprenticeships and Diversity in Context in Greater Manchester by the Greater Manchester Combined Authority, found BAME young people “aspire to and are encouraged towards high educational attainment”, with family and community expectations being “especially significant [whereas] apprenticeships are not seen as enabling aspiration to the same degree”. 

The Department for Education’s public attempts to redress low ethnic minority take-up goes back to when Justine Greening was education secretary under Theresa May. Greening was accused of being “all talk” after telling the education select committee that the government had a “big focus” on encouraging “a higher proportion of BAME young people going into apprenticeships”.

This was after FE Week found at the time that just eight per cent of England’s young apprentices were BAME. 

Since then, the DfE says it has “ensured that young BAME role models are visible in campaigns such as ‘Fire It Up’, and that we are hearing the voices of young apprentices (including BAME) through apprentice networks, such as the Young Apprentice Ambassador Network and the Apprentice Panel”.

The Department for Education and the Government Equalities Office, which is leading on the commission’s report, were approached for comment.

A struggling college has announced plans to merge with one of the biggest college groups in the country next year.

Greater Brighton Metropolitan College (GB MET) hopes to join Chichester College Group (CCG) in August 2022 following a “robust” selection process overseen by the FE Commissioner’s team.

Sue Berelowitz, GB Met’s chair of governors, said the board “unanimously approved” the plans which she says are in the “best interests of current and future learners”.

The FE Commissioner’s team intervened at GB Met last year following a request for emergency funding and a Notice to Improve from the Department for Education.

It has since gone through a leadership change and management clearout.

Chichester College Group’s executive principal Andy Green was seconded to GB Met on an interim basis last July when principal Nick Juba resigned.

Berelowitz became GB Met’s chair in April 2020. She said she was “confident” that becoming part of a large “outstanding” college group is the “right course of action to ensure we are providing an exciting and relevant curriculum delivered to the highest standards and which reflects the vibrancy and energy of our city and coastal strip”.

CCG’s current chief executive Shelagh Legrave, who has today been named as the new FE Commissioner, said this merger will create a “dynamic organisation to serve the education and training needs of Brighton & Hove, West Sussex and the wider region”.

“We are committed to maintaining and enhancing the local identities of Brighton MET and Northbrook MET and ensuring local leadership of the campuses,” she added. “We will work with local stakeholders from the public, private and third sectors to ensure that we meet the needs of the local communities.”

A statutory consultation is set to take place later this year. The colleges said their priority will be to “minimise disruption to staff and students and to ensure a seamless transition period”.

The merger will create one of the largest further education groups in the country – consisting of colleges in Brighton, Shoreham, Chichester, Brinsbury, Crawley, Worthing and Haywards Heath. 

It would have 36,000 students and 2,200 staff.