An embattled college is in merger talks with two neighbouring college groups after a surprise £6 million deficit crippled its finances.

Gateshead College is currently undergoing a structure and prospects appraisal with the FE Commissioner, following an independent investigation into the college’s “inaccurate” budget forecast.

Now, FE Week understands the college is in merger talks with Tyne Coast College and the Education Partnership North East.

A spokesperson for Gateshead College would not be drawn on the merger talks, but said: “We can confirm the college is engaged in a strategic prospects appraisal process which has yet to conclude.

“This will assess the options for the best future constitutional structure for the college, including consideration of both remaining standalone and merger.”

When approached for comment, Tyne Coast College, which was created from a merger of South Tyneside College and Tyne Metropolitan College in 2017, said it was aware of Gateshead’s appraisal, but had no further comment to make at this time.

EPNE, which incorporates Sunderland College, Northumberland College and Hartlepool Sixth Form College, declined to comment.

There remains a high degree of secrecy around the events surrounding Gateshead College’s deficit.

Gateshead’s accounts for 2018/19, covering the period when the shortfall was uncovered, have yet to be published. A spokesperson told FE Week in March they were expected to be finalised by April.

And FE Commissioner Richard Atkins’ intervention report into Gateshead, expected to cover how the deficit came about, is also yet to see the light of day.

The Department for Education has said the publication of the commissioner’s reports were paused due to the Covid-19 pandemic, though they have now been shared with the colleges concerned.

A departmental spokesperson said publication would resume “in due course”.

FE Week first reported last December that Gateshead’s governors had called in independent investigators to explain why the deficit had come about.

The ensuing forensic audit found the income position had been overstated and the expenditure substantially understated.

However, the college has repeatedly stressed that investigation “did not determine that there has been any misappropriation of college funds”.

The discovery of the deficit precipitated an upheaval at the college: principal Judith Doyle, once the highest-paid principal in the country with a salary of up to £350,000 in 2017/18, retired with immediate effect the same month.

The chair John McCabe, who had only been in post for six months, was replaced by former deputy FE Commissioner John Hogg in January. Gateshead was also handed a financial health notice to improve by the Education and Skills Funding Agency that month after it entered formal intervention.

The college announced a redundancy process as well, with 26 jobs at risk, to address what it called “short-term financial pressures”.

Ofsted then busted the college down from a grade one to a grade three following an inspection in January.

A report published in February said the “information leaders have provided to governors about the college’s finances over recent months has not been sufficiently accurate”.

Former Kensington and Chelsea College boss Andy Cole was appointed to replace Doyle on an interim basis in February, after deputy principal Andy Toon filled in for her.

A new three-year financial plan has also been agreed at the college, and it is hoped that will return it to surplus by 2020/2021, after achieving one of £748,000 in 2017-18.

More than two-thirds of colleges in England chose not to run any traineeship programmes in 2018/19, FE Week can reveal.

The news comes as some of the largest college groups say they have no intention to deliver the pre-employment scheme despite a significant funding rate increase and an extra £111 million to triple starts this year to over 40,000.

Part of the government’s strategy to combat a rise in youth unemployment is to increase traineeship starts but the Department for Education recognises that the current provider base alone will not be sufficient.

A freedom of information request for the latest provider-level data shows that 113, or 68 per cent of all 167 general FE colleges, recruited no traineeships in 2018/19.

The vast majority of traineeships are delivered by around 150 private training providers and Skills Training UK topped the table in 2018/19 with 950 starts.

Of the 54 colleges that did deliver the programme in that year, 21 delivered fewer than 20 starts.

Some colleges subcontract to private training providers and with 330 starts, Eastleigh College saw the most collegefunded traineeships in 2018/19.

A tender to bring on board more providers, such as from the apprenticeship sector, was announced in July but has yet to be launched after suffering from delays.

Traineeships are funded for 16 to 18-yearolds from the study programme budget and for 19 to 24-year-olds from the adult education budget.

Introduced in 2013, the funding pays for an unpaid work placement for up to six months and this year the funding rate for 19 to 24-year-olds has risen from £970 to £1,500.

Employers are now entitled to receive up to £10,000, at a rate of £1,000 per trainee that they take on.

There has also been a change to the eligibility criteria for trainees this year, allowing people with level 3 qualifications, such as A levels, to participate.

Additional flexibilities have also been introduced to encourage take-up, with the minimum work placement hours reduced from 100 to 70 and allowing placements to be split across two employers.

FE Week asked the 10 colleges with the largest cohorts of young people in England that did not offer any traineeships if they planned to change this following chancellor Rishi Runak’s funding boost. Six said they had no intention of offering the scheme, three declined to comment and just one had plans to start delivering them.

Why are colleges continuing to turn their backs on traineeships?

Capital City College Group, the largest college group in London, said they are not planning to deliver traineeships in 2020/2021 because they have not found the programme to be “beneficial to our students” and it is “too restrictive to support the needs of the individual” even with the new flexibilities.

The group created a number of alternative pre-apprenticeship programmes some years ago which “utilise study programme and adult education budget funding streams appropriately” and will continue to offer those instead.

Sunderland College said they are “unable to secure employer commitment to traineeships as a model in the north east generally”, which has been exacerbated by the impact of Covid-19.

A spokesperson added that they have also decided not to offer traineeships because there are now multiple government initiatives, such as the Kickstart scheme, which “run the risk of confusing employers and asking too much of them, particularly at this challenging time”.

West Herts College in Hertfordshire, Chichester College Group in West Sussex and South Thames College in London all said they would not be expanding into the traineeships market this year owing to a lack of demand from employers and potential students.

And Activate Learning, which has seven colleges spread mainly across Oxford, said they would not be applying to the government’s tender at this time as “we feel there are other priorities of much greater scale and need”.

Nottingham College, EKC Group in Kent and New City College in London all refused to comment.

The one large college that said they would start offering traineeships this year was Harrow College & Uxbridge College.

A spokesperson told FE Week: “We currently have a cohort of high-quality apprenticeship candidates, particularly in the areas of accountancy and construction, where the impact of the coronavirus has resulted in a reduction of paid apprenticeship opportunities in these industries.

“We are therefore looking at traineeships in these areas as a substitute route to increase the chances of the trainees securing an apprenticeship in the future.”

HCUC’s spokesperson added that the “increased flexibility” in access to traineeships, particularly with entry now being allowed up to level 3 as compared to level 2 previously, will “enable broader uptake for both employers and students”.

Traineeship starts have been on a rapid decline, from a high of 24,100 in 2015/16 down to just 14,900 in 2018/19.

Data for 2019/20 only currently covers the first three quarters of the year and shows 11,000 starts.

Colleges have historically struggled to offer the programme.

Asked if the Association of Colleges is now actively encouraging its members to get more involved in traineeships this year, senior policy manager Teresa Frith said: “We remain optimistic about the funding for traineeships and hope that an expanded and more flexible traineeship branded programme to provide a re- or pre-employment offer will go hand in hand with a renewed effort to offer more apprenticeships, which have been hit hard due to the pandemic.

“AoC continues to work with EFSA to ensure colleges are aware of the procurement opportunities, employer incentives and how the delivery framework will help providers.”

A DfE spokesperson said the National Careers Service and Jobcentre Plus are “making sure as many young people as possible are made aware of fantastic opportunities traineeships offer, including how they can help them to get ahead in a
range of exciting industries”.

She added that the DfE is also working “at pace” on the procurement for traineeships for 19 to 24-year-olds and options for new providers to access 16 to 19 traineeship funding.

The spokesperson insisted the tender has not been delayed but is being run at an “accelerated timetable”, explaining that a
procurement process of this type requires a “significant amount of due diligence”.

However, she admitted that the procurement was expected to run over the summer, with the aim of having contracts in place as “early as possible in the academic year”.

Some colleges have been able to buck the trend when it comes to offering traineeships in recent years, and told FE Week that they will continue to increase their delivery this year.

How to deliver traineeships successfully as a college

London South East Colleges delivered 100 traineeships in 2018/19 and said it was working hard with employers to use the government’s new incentive payments.

Neil Coates, vice principal for adults, apprenticeships and partnerships at the group, explained that their success in the pre-employment programme can mostly be attributed to the college’s “strong employer engagement strategy – employer advantage – which takes a membership approach” and “ensures that we develop strategic relationships rather than transactional ones”.

He said the college group’s traineeships have also been positively impacted by the decision to put all of their employer-focused teams into one department, which has “ensured that the teams work collaboratively with curriculum colleagues to ensure any student at risk of dropping out is identified quickly”.

In addition, LSEC’s programme of traineeship starts are profiled across the year – which links directly to their drive on
apprenticeship recruitment. “Therefore, when a candidate applies for an apprenticeship vacancy, but is not quite ready for a full apprenticeship, we support them onto a traineeship programme,” Coates said.

Weston College in Somerset delivered 150 traineeships in 2018/19 and is “definitely” planning on delivering more this year.

A spokesperson said their traineeship model is delivered in-house by a specialist team, with “extensive experience” working with learners at a “crossroads in their educational journey”.

Weston’s traineeship delivery is “regularly reviewed using Labour Market Intelligence, in the concept of ‘career creation’ with bespoke traineeships pathways created around sector, employer and regional need, to ensure recruitment levels are sustainable in sectors with potential for high growth”.

The parent company of a recently-purchased apprenticeship training provider is disputing a £2.6 million clawback and remains suspended from recruiting apprentices, FE Week can reveal.

Prospects Training International, which trades as Geason Training and was bought by the Speedy group in December 2018, is challenging an Education and Skills Funding Agency investigation over alleged overpayments.

Following Speedy’s buyout, Geason was found to have made ‘insufficient progress’ in two areas of an early monitoring visit by Ofsted, conducted in April 2019.

Receiving an ‘insufficient progress’ rating means apprenticeship providers like Geason, which at the time had 1,017 apprentices, are banned from taking on new starts until they score a grade three at a full Ofsted inspection.

Geason passed this threshold this year, when an inspection report published in May graded it as ‘requires improvement’.

The Speedy group is in discussions with the funding agency to resolve the matter

Inspectors credited a newly-appointed leadership team with overhauling the “not fit for purpose” curriculum, and reported employers could see apprentices were now “swiftly improving and developing their skills”.

However, at the time of going to press Geason was still listed as “not currently starting new apprentices” on the government’s Find Apprenticeship Training website and register of apprenticeship training providers.

When asked why Geason was still suspended from new starts, the ESFA said it does not comment on “individual cases”.

Speedy would not be drawn on why their subsidiary company was still suspended.

However, it comes after Speedy’s accounts for 2019-20 reported that they were notified in April that the ESFA was suspending payments and seeking to claw back £2.6 million from Geason.

This was after an analysis of a small sample of learner documents over a three-year period brought up errors.

At the time the accounts were published, Speedy said it was “not possible to make an accurate estimate of the timing or amount that may be repayable from this, or other potential claims we may receive”.

Speedy engaged lawyers to respond to the agency and set aside £3 million for costs associated with the investigation, including legal fees.

Geason had performed below expectations that year, due to lower-than-expected learner enrolments and the set-up of a number of regional training centres “which have yet to reach critical mass”, the accounts also said.

When asked for comment on the investigation, the company pointed FE Week to an investors’ update from earlier this month, which said Geason: “Received a claim from a funding agency in late April 2020 alleging poor financial controls and overpayments of up to £2.6 million for the three-year period commencing August 2017.

“The Speedy group is in discussions with the funding agency to resolve the matter.”

The ESFA said it would not comment on individual investigations.

According to the government’s Find Apprenticeship Training site, Geason delivers apprenticeships for such standards as professional accounting/taxation technician, digital marketer and property maintenance operative.

Handing Ofsted powers to inspect degree apprenticeships is “worrying and unnecessary”, a university membership organisation has said.

MillionPlus, which represents 24 “modern” universities, has expressed concern at the watchdog’s expertise to inspect the provision and called for inspectors to have mandatory HE academic employment experience in order to review university-based provision.

It comes after FE Week revealed government plans for Ofsted to take on responsibility for overseeing all apprenticeships, including those at the degree levels of 6 and 7 from the Office for Students, for the first time.

Writing for FE Week, chief executive Greg Walker said that degree apprenticeships, which launched in 2015, have “such exciting potential” but it is “extremely disappointing to see the government clipping the wings of this policy before it has a chance to really fly”.

He said that while Ofsted has a “great deal” of experience in its field of school and college inspections, that “does not mean it is suitable to regulate the complex, diverse educational provision in higher education”.

Walker claims his members have “already seen some issues with Ofsted oversight of university provision” at levels 4 and 5.

He said: “A tricky compromise between Ofsted and the OfS meant the former reviews some elements of level 4 and 5 apprenticeships offered by universities. This has been a challenging experience for universities, dealing with a significant lack of understanding and a desire by Ofsted to simply overlay a wider inspection framework on to university learning.

“This has led to worrying assumptions that did not match reality – including seeing drastically different judgements about teaching excellence from the OfS’s TEF [Teaching Excellence and Student Outcomes Framework] evaluation and from Ofsted inspectors, despite both organisations reviewing the same provision.”

Walker recommends that if the proposal for Ofsted to inspect all apprenticeships becomes policy, the watchdog’s criteria to become an inspector for degree apprenticeships should be amended so that it is “obligatory to have had HE academic employment experience in order to review university-based provision”.

Adrian Anderson, chief executive of the University Vocational Awards Council, has also questioned Ofsted’s HE experience, saying the inspectorate should urgently outline “what plans it has to recruit senior managers with higher education experience and expertise”.

Ofsted declined to comment.

Last week, the Russell Group, which represents the 24 “leading” universities in the UK including Cambridge, did not pour cold water over the plan for Ofsted to inspect their members.

A spokesperson said the group will continue to work with government on delivery and expansion of the apprenticeship route, including how to avoid “overburdensome or disproportionate regulation”.

The Department for Education said it will “provide further updates in due course” about the future regulation of level 6 and 7 apprenticeships.

Making Ofsted the sole regulator for all apprenticeships was a recommendation in Philip Augar’s review of post-18 education.

Colleges and independent FE providers have been flocking to support the government’s new Kickstart initiative by helping employers who could otherwise not take part get onto the placement scheme.

FE Week spoke with the leaders of colleges and training providers to find out how they have got involved, and what benefits it holds for the further education and skill sector

The Kickstart scheme, announced by chancellor of the exchequer Rishi Sunak in his summer statement in July, offers 16 to 24-year-olds on Universal Credit who are at risk of long-term unemployment a six-month work placement – with the government picking up their wage bill.

Employers must be able to offer a minimum of 30 placements to be allowed to apply for the scheme, which is being run by the Department for Work and Pensions, otherwise they have to apply to join through a gateway provider.

Gateway providers are where FE and skills providers come in: they club employers together so the group, as a whole, can apply with 30 placements on offer.

For each placement, gateway providers receive £300 to support administrative costs, while employers receive £1,500 per placement for help with setup costs.

According to the DWP, gateway providers must have experience of managing partnership agreements with third parties, and have “robust” financial and governance processes to manage applications – those processes are due to be set out in coming weeks.

Minister for employment Mims Davies MP told FE Week gateway providers are “crucial” in helping smaller businesses take advantage of Kickstart.

She said the response from organisations to becoming gateway providers has been “hugely encouraging” with more than 500 organisations stepping up.

However, she has called for more organisations to step forward to “support this national effort and get behind the career ambitions of the next generation”.

 Approved Kickstart gateway providers are listed on the DWP website and at the time of going to press 26 colleges were listed, along with around a dozen independent training providers.

Such is the enthusiasm for Kickstart that gateway provider Cornwall College Group says it already has 30 placements ready for the November start, having only been approved as a gateway provider this month.

Assistant principal for external engagement and business innovation Justin Olosunde said they were “really well placed” to be intermediaries: “Provision for us has always been about matching the right individual to their chosen career and supporting them into employment and working with our employer network of over 2,000 employers across the region.

“So it really, for me, is almost an extension of the day job.”

He said the gateway role “should be something that will come naturally to colleges”.

“The larger apprenticeship provider colleges like ourselves will always be better placed to do it, because they will have the employer engagement links which will be key to the placements, and they’ll have more experience of working with young people that want employment now as opposed to going into a fulltime college course, and a big bank of employers that they’ve worked with for a lot of years.”

It is not just colleges getting involved: independent providers have also signed up, with Association of Employment and Learning Providers managing director Jane Hickie saying it is “no surprise” considering their links to small and medium-sized enterprises.

Managing director of provider the Education and Skills Partnership Jason Hargreaves told FE Week he saw Kickstart as an opportunity to grow partnerships with employers, while improving their relationships with existing clients during the Covid-19 crisis: “If we can help young people to develop and to grow, from a commercial perspective, it’s helping businesses while also providing a nurturing environment” for learners.

But he warned: “We have got to be very clear learners are embarking on this for the right reasons, that we’re not just training for the sake of it: It’s got to be impactful, it’s got to add value, and it’s got to help learners reach their full potential, as well as linking into the businesses’ needs and requirements.”

Fellow independent training provider Catch22 has also pushed the importance of avoiding “meaningless” placements, with chief development officer Mat Ilic saying: “For Kickstart to benefit the employees, employers, and our society, these placements must have a real chance of career progression.”

Cornwall and ESP are two of a number of providers which, as well as helping other employers onto the scheme, have been looking at setting up their own work placements.

Hargreaves says ESP has to “lead by example”, and is looking at taking on two placements at this time, while Cornwall is looking at hosting six placements, filling roles such as campus support officer – ensuring students and visitors observe guidelines to guard against Covid-19.

Loughborough College principal Jo Maher told FE Week her college is looking to host 35 placements, in addition to those placements they will support as a gateway provider.

“One of the main benefits for employers,” Maher said, “is that our team will take the heavy lifting away from them by making funding applications on their behalf, guiding them through the process and by working with DWP to find the workforce”.

“Shaping the future careers and prospects for local people is at the core of Loughborough College,” she continued, “so we hope our involvement will create some amazing opportunities and potential new career paths for people.”

Chichester College Group’s managing director Julie Kapsalis said they have become a gateway provider as: “While large organisations which can support 30 job placements are able to apply directly to the scheme, we are very conscious that there are many smaller employers who need to use an intermediary to be able to participate.”

“That’s really where we come in,” she explained, saying Chichester’s gateway work will support small-to medium enterprises and micro-businesses onto the scheme.

Aside from the £300, an advantage of the scheme for providers is they can use it to funnel Kickstart participants onto their apprenticeship, study or other training programmes.

Weston College principal Paul Phillips, who has already seen 15 employers sign up with the college, highlighted how: “We can also offer further training to the candidates once the scheme has finished, through apprenticeships or other bespoke training.”

And as an employer, Weston is also looking at how it can offer its own placements, as Phillips says he saw the scheme “as a potential pipeline for the college’s own apprentices in 2021”.

Employers are choosing to go for the lower-cost option

Not all is well though: Hickie highlighted with approval how young people on Kickstart can move onto an apprenticeship at any time during their six-month placement, but said employers ought to be able to keep using the wage subsidies once a person moves off the scheme.

There has also been some concern from the FE and skills sector that Kickstart’s wage subsidy and £1,500 employer incentive will dampen down apprenticeship starts.

Labour’s shadow apprenticeships and lifelong learning minister Toby Perkins has told FE Week he still has concerns about the scheme, after hearing about employers pulling out of apprenticeships and opting to do Kickstart instead.

“Employers are choosing to go for the lower-cost option, and in terms of the difference between six months with the wages paid, or a £2,000 incentive at the end of the apprenticeship – there is not a huge amount of comparison.”

New restrictions on adult indoor sports and five-a-side football will not apply to colleges if the activity is part of “education or training provision”, the government has confirmed.

However, colleges have been told that indoor student-led sport during lunchtime, break or free periods “should be limited to groups of six or less”.

All adult indoor games with more than six players have been banned from today as the government steps up its efforts to combat the huge surge in coronavirus infections.

When announcing a new list of Covid-19 restrictions for England in the House of Commons on Tuesday, Johnson said: “We will also have to extend the rule of six to all adult indoor team sports.”

The Department for Education has today told FE Week that organised indoor college sport, for groups of more than six, is permitted in further education settings “where it is part of an education or training provision, or as part of college teams”.

This applies to all age groups. However, the DfE said that sport should take place outside where possible.

The DfE added that “indoor student-led sporting activity, where it is not in line with any education or training provision, should be limited to groups of six or less.

“This includes where students have free time such as lunch time, breaks and free periods.”

Colleges have also been reminded that at “all times, participants should comply with Covid-19 secure measures including the ‘system of controls’ for their setting and limit social interaction outside of the sporting activity”.

The government’s guidance for indoor sport that is not in an education setting states: “From 24 September, organised indoor sport and indoor exercise classes can continue to take place with larger numbers present, provided groups of more than six do not mix. If groups of six are likely to mix, these indoor activities must not go ahead.

“There is an exemption or organised indoor team sports for disabled people.”

Other restrictions announced this week includes an enforced 10pm closing time for pubs, restaurants and takeaways from today. All workers are also being told to again work from home if they can with immediate effect.

People who break the rules and meet for social gatherings in groups larger than six or do not wear face coverings on public transport face fines of £200.

The education sector is currently exempt from the measures, with Johnson insisting that “we will ensure that schools, colleges and universities stay open”.

Full Ofsted inspections shouldn’t restart until April 2021 at the earliest, the chief executive of the Association of Colleges has said.

David Hughes tweeted today that the respite period should possibly even extend to next September while the inspectorate and sector decides “what adaptations might be needed to take into account Covid disruptions”.

Ofsted’s normal inspection regime was paused in March when lockdown was enforced.

A period of “interim autumn visits”, which the education watchdog insists are not routine inspections, commenced this month and will run until the end of December.

The current goal is to resume the full inspection regime in January 2021, but Ofsted and the Department for Education has said this is being kept under constant review.

An extension to this timeline seems likely following yesterday’s raft of new restrictions announced by prime minister Boris Johnson, which could be in place for the next six months.

While education providers appear exempt from the measures currently, other workers have been told to again work from home if they can with immediate effect, which may impact Ofsted’s staff.

Geoff Barton, the Association of School and College Leaders, said earlier this month that he was “not convinced” about Ofsted’s “determination to resume routine inspections in January 2021”.

“This plan may quickly unravel in the event of local lockdowns over the next few weeks and months,” he added.

“We note that this date will be kept under review and we urge the inspectorate to be prepared to change its plans.”

The Association of Colleges called for Ofsted inspections to be delayed until January 2021 back in April, but Hughes’ tweet today appears to be the first time he has said he would be keen for an extension beyond the current timeframe.

Ah, ok. What should we be doing about it? Big Q about when inspections should re-start (I think no sooner than April 2021, possibly September?) & what adaptations might be needed to take into account COVID disruptions. You? https://t.co/MImfX2NB3R

— David Hughes (@AoCDavidH) September 23, 2020