The number of colleges entering formal intervention rose by two-thirds on the previous year, mostly due to historical “weak decision-making,” according to the FE Commissioner’s 2018/19 annual report.
In total, 13 colleges entered intervention – 12 for financial reasons and one which escalated from diagnostic assessment – five more than the previous year. None were the result of an ‘inadequate’ Ofsted grade.
However, the report states that 17 colleges moved out of intervention last year, meaning the overall number of colleges in FE Commissioner intervention has dropped from 27 in 2017/18 to 23.
FE Commissioner Richard Atkins said intervention cases are “frequently” the result of “poor governance and leadership over a number of years, resulting in weak decision-making”.
But “we are making progress”, he insisted, as many of those moving out of intervention were “the most challenging cases – where the restructuring facility has resolved problems that were previously very entrenched”.
The report only covers August 2018 to July 2019. Since then a number of high-profile colleges have moved into formal intervention; these include Highbury, Gateshead, Richmond-upon-Thames and East Sussex College Group.
Following the end of the post-16 area reviews, Atkins’ focus has shifted more towards diagnostic assessments: the commissioner’s team conducted 33 diagnostic assessments in 2018/19, four more than 2017/18.
These assessments include members of the FE Commissioner team visiting a college before major problems arise to “help strengthen improvement plans and then work with the college to ensure it is on the path to a strong and sustainable future”.
The increases in interventions and assessments has been met by a rise in the number of national leaders of further education and national leaders of governance under his command.
It was announced last month the commissioner had almost doubled the number of principals and governors serving on the two teams by recruiting leaders and governors from colleges such as London South East Colleges, Luminate Education Group, and Education Partnership North East.
One area where commissioner activity has decreased is structural reviews, which reduced from 20 to 13, with Atkins attributing it to the government’s restructuring fund no longer being available.
The report also details how 74 per cent of eligible colleges had applied to the £15 million Strategic College Improvement Fund and 91 per cent of applicants have secured grants ranging from £60,000 to almost half a million pounds.
In his introduction to the 2018/19 report, Atkins said: “There is a much more positive perception of further education colleges today than was the case some time ago.
“The increases in funding announced in August 2019, together with the success of the ‘Love our Colleges’ campaign have increased awareness of the sector and helped to create a more optimistic climate within institutions.”
The inspectorate for the quality of apprenticeships is concerned young people “aiming to step onto the career ladder are discovering that the vital bottom rungs simply do not exist”, explains Ofsted’s deputy director for further education and skills, Paul Joyce
The snap general election called late last year resulted in a delayed publication of our annual report, subsequently delivered a fortnight ago on 21 January 2020.
A perhaps serendipitous upshot is that the report was published just before the UK’s departure from the EU, and just before National Apprenticeship week, which began 3 February.
The critical 16-19 age-group needs to be better catered for
In our report we urged the government to identify where current skills shortages lie and to set out plans for how the country can best meet this demand.
It is not just the government but also the further education and skills sector who must play a part by offering courses and apprenticeships that give students relevant qualifications in new and expanding industries, both in their locality and across England.
Since the funding reforms of 2017 and the introduction of the apprenticeship levy, there has been a sharp increase in the number of apprenticeship providers, but questions remain over the quality of some courses provided to learners.
Further, despite the increase in providers, the number of apprentices continues to fall.
In 2019 there were about 1,900 further education & skills providers, an increase of 63 per cent since 2017. Within this total, the number of independent learning providers (ILPs) – who offer the majority of apprenticeships in England – has grown from about 500 to more than 1,200.
However, the proportion of ILPs judged good or outstanding declined during this period and for the third year in succession. Furthermore, one in five of new apprenticeship providers that received monitoring visits in 2018/19 were making insufficient progress in one or more areas.
Worryingly we have found too many training providers unclear on the purpose of an apprenticeship. In some cases, apprentices did not receive adequate off-the-job training, which resulted in many making slow progress on their apprenticeship and not developing the substantial new knowledge and skills that they and their employers needed.
In the worst cases, employees did not even know they were on an apprenticeship programme.
An additional concern is that the number of apprentices aged 16 to 18 at levels 2 and 3 is decreasing.
In 2016/17 most apprenticeships were at level 2. Since then there has been a decline in the number of these apprenticeships each year. At the same time the number of higher-level apprenticeships has doubled in the past two years.
These higher-level apprenticeships are overwhelmingly in business administration and are often a substitute for a degree. Very few are in areas such as construction, engineering and manufacturing.
There is much to celebrate in a system that values higher-level vocational and occupational achievement, where apprentices can progress from one level to the next and where apprenticeships are a key part of economic regeneration and skills development.
Apprenticeships can be transformational for young people.
However, we find little evidence apprentices are actually moving up the levels.
The trend towards higher level apprenticeships limits the options available for young people who leave school without a full level 2 qualification. There is a real danger that young people aiming to step onto the career ladder are discovering that the vital bottom rungs simply do not exist.
The mismatch in provision and demand urgently needs to be dealt with while discussions about future national productivity continue. And the apprenticeship funding system needs to target levy money more directly at skills shortage areas.
The government and providers must look at what can be done to redress the balance across apprenticeships.
The critical 16-19 age-group needs to be better catered for and action must be taken to reverse the decline in school leavers taking up apprenticeships.
Employers play a vital role and apprenticeship reforms have put employers in the driving seat in terms of developing the new standards. It’s time to see if the reforms are doing what the policy intended.
If apprentices are not doing the right courses, we need to look again at the role employers are playing and ask what else we can do to align the system better to the needs of the economy.
Over 500 people working in technical roles are to be enticed into training to be further education lecturers as part of a £24 million support package.
The Department for Education has fleshed out the details of the investment, after it was previously revealed when chancellor Sajid Javid announced a £400 million boost for the sector in August 2019.
Education secretary Gavin Williamson has said ambitions for a world-beating technical education system “can only be achieved if we have outstanding teachers who will inspire the next generation”.
Delivered by the Education and Training Foundation and first launched in 2018, the scheme has so far supported around 100 people to work in FE.
Taking Teaching Further is aimed at supporting recruitment to priority sectors ahead of the introduction of T-levels later this year, such as in education and childcare, digital, and construction, as well as engineering, manufacturing and other STEM subjects.
David Russell, chief executive of the ETF, said: “I encourage all colleges and FE providers to register and apply to take part in this important programme.”
The £24 million also includes £11 million to provide bursaries and grants worth up to £26,000 to attract people to train as FE lecturers.
There will also be a £3 million mentor training programmes, delivered by the ETF to FE lectures in the early years of their career.
Williamson has used the opportunity to pay tribute to the FE lecturers doing “fantastic jobs and changing lives,” while saying the investment is a “clear signal” of the government’s commitment to helping the sector recruit and retain staff.
News of the funding boost has been welcomed by sector organisations, with the deputy chief executive of the Association of Colleges Kirsti Lord saying they are “delighted” with the new investment, as “supporting FE providers to recruit and retain the best possible teachers must be a top priority for the government”.
“We believe this marks an important step in giving FE teaching the recognition and support it rightly deserves,” she added.
College principals have previously spoken with FE Week about their struggles with recruiting lecturers in specialist subjects, with one saying they are often “constrained by affordability”.
And the Augar Review, released last May, recommended investment in the FE workforce should be a “priority,” and there ought to be clear progression routes and development opportunities put together by the Association of Colleges and government.
The Department for Education has today also revealed plans for mandatory data collection on the workforce of every directly-funded FE provider.
The government is to force all colleges and training providers to submit workforce and pay data to “ensure” they can “benchmark themselves against one another”.
Following a consultation last year, which attracted 40 responses, the Department for Education said today the ESFA will gather workforce records for 2020/21, before making compliance mandatory for 2021/22.
Sanctions will be imposed if providers fail to submit the data, which the DfE has said could include a letter from ministers and being publicly named and shamed.
The new data collection will involve the thousands of FE providers in receipt of ESFA funding. Minister Michelle Donelan claimed it will “ensure transparency of workforce data and will seek to ensure that providers can benchmark themselves against one another”.
Thousands of subcontractors will, however, not be involved in the collection for 2020/21 as “data from subcontractors with multi-provider contracts could cause confusion” – so the results would still show a very partial picture.
Data likely to be collected includes staff pay, age, gender, what qualifications they hold, and their contract type (see table).
And it will encompass the whole workforce such as back office support staff, not just lecturers.
Association of Employment and Learning Providers boss Mark Dawe said: “Until we see the detail of what is being collected, it’s very hard to comment.
“But the last thing the sector needs is more bureaucratic burden, so the new system should be designed to limit the administrative impact on all providers.”
The Education and Training Foundation already conducts an annual FE workforce survey, but it is not mandatory and does not usually attract a high number of responses.
Its latest survey, for 2017/18, reflected 90,792 records submitted by just 193 providers, of which 118 were colleges.
University and College Union head of further education, Andrew Harden, said the optional approach to workforce data collection has “failed and we welcome this move to compulsory collection”.
“Good quality data is essential if are to paint an accurate picture of how staff are being treated by employers across the sector,” he added.
In her ministerial forward to the department’s consultation response, Donelan said FE providers “make a real difference to the prospects of learners and local communities” and to support them with policy intervention, government “needs an evidence base that is comprehensive and complete”.
“We will not be designing an FE workforce data collection from scratch,” she added.
“We will draw lessons from practice in existing collections. These changes will give FE workforce data the same status as that of schools and higher education, where we have near full coverage across our workforce datasets.”
The single DfE-led data collection will “sit alongside and complement the other collections that the ESFA is responsible for, such as submissions of learner data, and the functionality will be co-designed with the sector to offer coherence to those inputting data”.
The consultation said officials recognise that collecting information on the entire FE workforce from all providers is a “complex ask”, so it will lead an “extensive programme of user testing with the sector in the lead up to launch, to make sure the collection avoids duplication”.
“We will continue to consider how this approach might be applied to the same providers that are funded by Mayoral Combined Authorities or the Greater London Authority and do not also receive funding from the ESFA,” it added.
The timing of the collection period has not yet been decided, however. The consultation said there was “no clear consensus” on this, so the ESFA will “consult further”.
Views are being sought by the Education and Skills Funding Agency on proposed changes to their subcontracting rules – as officials bid to cap deals and “eliminate” poor arrangements.
A consultation went live today and responses to 10 recommendations will need to be submitted by 17 March.
One key proposal is to strengthen controls on the volume and value of provision that can be subcontracted by a prime provider.
A percentage cap is proposed on subcontracted provision of 25 per cent of ESFA post-16 income in 2021/22, and further reducing that percentage to 17.5 per cent in 2022/23 and to 10 per cent in 2023/24.
The ESFA also wants to “exercise greater oversight of the volume and value of provision that can be delivered by a single subcontractor”.
Its consultation said where the aggregate value of a subcontractor’s delivery exceeds more than £3 million of ESFA funded provision, the agency proposes to make a referral to Ofsted for the subcontractor to be subject to a direct inspection.
Another key recommendation is to introduce “stronger criteria for subcontracted provision delivered at a distance”.
The ESFA said that as a “broad rule of thumb”, it believes that subcontracting partners should be no more than one hour away from the prime contractor by car.
Prior to entering into any distance arrangements, the agency proposes that providers “will be required to submit a case to ESFA for approval within a specified period, and must obtain the agreement of ESFA before delivery can commence”.
And from 2021/22 the ESFA proposes to introduce stricter controls on the circumstances in which the whole of a learner’s programme can be subcontracted.
Whole programme subcontracting “divorces the learner from the provider with which they are enrolled and raises questions about the extent to which they can be properly considered to be learners of the directly funded provider,” according to the consultation.
In future, providers that wish to subcontract the whole of a learner’s programme will be required to make a case to ESFA and must obtain agreement to such arrangements before delivery can commence.
The ESFA said it is “particularly concerned” about the delivery of subcontracted sport related provision.
“Problems have arisen as there is generally also a sports club involved as a third party in the programme which may provide specialist coaching, and the boundaries between the funded education programme and the associated coaching activities become blurred,” the consultation document said.
The ESFA proposes to “make it a requirement that the lead provider must have a direct contractual arrangement with both the subcontractor and the sports club”.
There would be no financial transactions between a subcontractor and the sports club – all financial arrangements would be directly with the lead provider.
The ESFA is also looking to introduce a new “rationale for subcontracting” requirement as part of provider subcontracting declarations. They will need to “state the educational intent for entering into subcontracting arrangements and that governors and boards have agreed this”.
The consultation states that “entering into subcontracting arrangements for financial gain” will not be considered as an acceptable reason for doing so.
FE Week analysis of ESFA data shows that subcontracting accounted for £650 million in government funding for adults in 2018/19, and the practice fully or partially funded 25,230 students aged 16 to 19 at 587 subcontractors.
The agency has, however, not updated its list of declared subcontractors since 5 November 2018. It has also not published actual subcontracting fees and charges for all providers for 2017/18 as it promised to do.
The review aims to “ensure public funds are properly spent, maximising the benefit for learners” and “improve oversight of subcontracted activity”.
It will also “eliminate subcontracting that is undertaken for purely financial reasons” but “retain subcontracting that meets niche or specialised needs, improves access and provides opportunities for disadvantaged learners”.
Eileen Milner, the chief executive of the ESFA, said: “Where subcontracting is done well and for the right reasons, it can fill gaps in niche or expert provision, provide greater access to training facilities or offer an entry point for disadvantaged groups.
“However, as highlighted in my letter to the sector in October which announced ESFA’s subcontracting review, despite tightening arrangements, there is still room to improve.
“We continue to receive information and investigate cases where subcontracted provision is not appropriately controlled, overseen or managed by the lead provider, this is a concern.
“We expect consistently high quality provision of education and training in the post-16 space.”
The ESFA plans to start implementing rule changes at the start of 2020-21.
The first 16 to 19 funding rate increase since 2013 fails to even pay for inflation, a minister has admitted.
As announced by chancellor Sajid Javid last year, every college and sixth form will receive at least £4,188 per student in this age group from August 2020.
This is a 4.7 per cent increase on current funding levels, which have been stuck at £4,000 since they were introduced in 2013.
But by using the most recent gross domestic product (GDP) deflators to calculate the value of the 2013 rate at 2019-20 prices, it “produces a figure of £4,435”, according to interim FE minister Michelle Donelan (pictured).
She disclosed the figure in an answer to a parliamentary question tabled by shadow education secretary Angela Rayner, who has hit out at the government’s “utterly meaningless” promises to reverse FE funding rate cuts.
“The Tories have delivered devastating cuts to further education, and if they will not provide the funding needed then their promises to provide additional funding are utterly meaningless,” she told FE Week.
“Despite promising an end to austerity, it is clear that it will continue in colleges across the country, with the vast majority of Conservative cuts left in place in the years ahead.
“A refusal to reverse their cuts in full proves the Tories are not serious about investing in further education. They only ever give with one hand after taking far more with the other.”
The 4.7 per cent base rate rise forms part of a £400 million package set aside for 16 to 19 education in 2020/21.
In her answer to Rayner’s parliamentary question, Donelan said this funding will be used to “ensure we are building the skills that our country needs”.
“This is the biggest injection of new money into 16 to 19 education in a single year since 2010, with funding increasing faster for 16 to 19 education than in five to 16 schooling,” she added.
“This includes a 4.7 per cent increase in the base rate to £4,188. With other funding announced, such as an additional £120 million of funding for high cost and high value subjects and £35 million to support students with Maths and English GCSE retakes, this represents an increase of around 7 per cent in overall 16 to 19 funding.”
Funding for future years beyond 2020-21 will be “considered as part of the next spending review”.
The government is set to launch its consultation on a radical overhaul of subcontracting rules this week – and it is expected to include a proposal to limit out-of-area deals.
Eileen Milner, the chief executive of the Education and Skills Funding Agency, sent a sector-wide letter in October warning of rule changes and that she will take strong action against any provider that abuses the system.
She said there were 11 live investigations into subcontracting at the time, with issues underpinning them ranging in seriousness from “complacency and mismanagement”, through to matters of “deliberate and systematic fraud”.
As per Milner’s letter, areas expected to be under consideration in the consultation include “placing limits on the permitted geographical distance between a directly funded institution and the location where subcontracted provision is delivered”.
This year, the GLA provides around £14 million of AEB grant funding to providers located further than what is considered to be a “reasonable travel-to-learn distances for London learners”.
Officials say the majority of this funding is subcontracted to training providers based in London who are then charged a “substantial” management fee.
Mayor Sadiq Khan has now announced plans to stop funding for providers based outside the capital’s fringe – typically more than 30 miles away from central London.
Aside from out-of-area subcontracting, the ESFA’s consultation is expected to cover how much funding can be subcontracted by a single provider, actions to prevent non-compliance, failure and fraud, and potentially precluding the use of some subcontractors.
It is not expected that the ESFA will suggest imposing a cap on management fees under subcontracting arrangements, as called for by sector bodies such as the Association of Employment and Learning Providers.
Milner said at the time of the October letter that where “poor subcontracting practice is evident to us we will act decisively”.
The review will be concluded this academic year and the ESFA plans to start implementing the changes at the start of 2020-21.
There have been a number of high-profile subcontracting scandals in recent years, including the Luis Michael Training case where its owners, which included two former professional footballers, created “ghost learners” and were jailed for over 25 years combined.
The most recent subcontracting scandal, exposed by FE Week, involved Brooklands College and resulted in the ESFA demanding a £20 million clawback.
Milner has said the ESFA will, in future, be “more forensic in our examination of the data and information available to us to hold individuals and organisations to account”.
“We will recover public money where appropriate,” she added in her letter from October.
The ESFA isn’t the only body taking a closer look at subcontracting: Ofsted announced in November that it was launching research into the practice.
Providers are being invited to a series of roadshows to find out more about non-levy paying businesses transitioning to the apprenticeship service and the withdrawal of frameworks.
The Education and Skills Funding Agency is running events across the country in February and March for employers on the register of apprenticeship training providers.
According to this week’s ESFA update, the six roadshows “will focus on the transition of smaller employers that do not pay the apprenticeships levy to the apprenticeship service”.
The ESFA announced earlier this month that small employers would be invited to use the digital apprenticeship service, which had previously been reserved for levy-paying employers only.
Small employers will be capped at reserving apprenticeship funding for just three apprentices to start off with, to allow the agency to manage the transition and help keep the apprenticeship programme affordable.
The move has been seen as an attempt by the government to help small-to-medium enterprises access apprenticeships, after it was found that two-fifths of providers are having to reject up to 40,000 of those firms looking to recruit apprentices.
The need for affordability comes after the Institute of Apprenticeships and Technical Education (IfATE) warned that the apprenticeship budget would be overspent, and the National Audit Office sounded the alarm over the financial sustainability of the programme.
Employers on the digital service will also be restricted to reserving funding for apprenticeships standards, instead of frameworks.
The process of withdrawing standards has been running since March 2016, but has been rocked by criticism.
Sector leaders have called for a replacement standard for the Level 2 business administration framework, but proposals have been rejected by IfATE due to concerns it would overlap with a Level 3 business administrator standard.
The institute and ministers were also worried that the standard would not meet the 20 per cent off-the-job training requirement.
But the government’s case was not helped by the Department for Education launching a recruitment drive for Level 2 business administration apprentices on frameworks in May.
The ESFA update says the roadshows “will provide you with opportunities to network with other providers, and to feedback around key themes, so we all have a chance to share good practice and learn from experiences of others”.
Main providers were previously invited to a set of roadshows which ran last September and also covered the transition of small employers to the apprenticeship service.
This latest series “builds on your feedback from our last events,” the ESFA said, adding: “The insight and information we collected has informed our planning to help make sure we bring you – our providers – on this change journey with us and we want to share this with you.”
More details about the agenda will be sent to providers next month.
One of England’s largest college groups spent close to £4 million on ‘Project Apple’ to shut two training arms which contributed to an £11 million deficit last year.
The shortfall at NCG isn’t the group’s only financial concern: it is also expecting the Education and Skills Funding Agency to recoup funding that goes back “a number of years” following an investigation that found “significant data anomalies” relating to achievement rates.
Its chair Peter Lauener, a former chief executive of the ESFA, was tight-lipped on the potential clawback, but insisted the closure exercise, code named Project Apple, “will contribute to a material improvement in the group’s operating performance and cash position in 2019/20 and beyond”.
We could not see a credible way of rebuilding a successful operation
NCG, which runs seven colleges across the country, shut its two training providers Rathbone and Intraining in 2019. Lauener (pictured) said the decision was made because their quality was “poor”, and they were making losses of around £250,000 per month.
“We could not see a credible way of rebuilding a successful operation”, he added. The group began a managed wind-down at the start of last year. Around 300 jobs were lost by the end of October.
The group hired former North Hertfordshire College principal and now consultant Matt Hamnett following a competitive tender to lead on Project Apple.
In March, NCG estimated that the total cost of the closure project, including redundancy payments, consultancy fees and dilapidations, would come to £1.7 million.
Minutes from a meeting that month show that a governor had questioned the robustness of the prediction. He was “assured” by the managing director of Intraining and Rathbone that the numbers were based on “detailed planning and as a result were felt to be reliable”.
But minutes from a meeting in October 2019 show costs “have been £2.5 million higher than budgeted”.
This was “largely due to higher than budgeted costs in dilapidations, consultancy fees, redundancy costs and ongoing training”.
Lauener told FE Week the cost of closure hit £3.8 million in total – including the costs of withdrawing from training centres around the country, staff, legal and other one-off costs.
He noted that this is more than the first projection – but claimed it was “materially less than the estimate prepared by the closure project team once work had been fully scoped”.
The chair would not say how much Matt Hamnett and Associate’s consultancy fees were, but did say that Project Apple was “an incredibly complex programme of work” which they did “with great diligence – providing leadership, commercial, communications, people, property and MIS support”.
Hamnett said: “Our clients are best placed to comment on the work we do with them.”
Project Apple has had a significant impact on the group’s finances.
Its deficit has risen from £7.1 million in 2017/18 to £10.9 million in 2018/19, according to unpublished new accounts seen by FE Week.
They fail to mention Project Apple, but do state that financial performance has “been extremely challenging”. They also cited the freeze on funding rates within the sector, despite inflationary cost pressures (see box out).
Lauener would not go into more detail about the deficit when asked by FE Week.
He did add, however, that the group’s 2018/19 EBITDA (earnings before interest, tax, depreciation and amortization) – which they consider to be the most telling measure of NCG’s financial performance – was £0.8 million.
“That figure would have been much stronger without Intraining and Rathbone operating losses and closure costs, and that is why we are confident that our finances will be much better from our new basis,” Lauener said.
NCG’s 2017/18 EBITDA came close to £3.5 million.
As revealed by FE Week in March 2019, NCG’s two training providers were subject to an ESFA audit before their closure was announced.
Board minutes from a meeting in May make reference to a PwC investigation on behalf of the agency, the “preliminary results” of which suggested “significant data anomalies”.
We have learnt important lessons from the work we have done to close the businesses
Minutes for June 2019 state that action was subsequently taken against Intraining and Rathbone staff, including suspensions: “The chair noted that following the passing of a special resolution any members of staff who were suspended from their role (whilst holding a director role within Rathbone or Intraining) would no longer be able to attend board meetings or participate in the running of the company.”
NCG would not reveal how many staff were suspended.
July 2019 minutes stated that there “is risk in relation to any potential clawback from the ESFA”, however, the issues “originally highlighted were not materially financial as they mostly relate to achievement rates.
“When the data is being cleansed, a robust and documented process will take place to assure ESFA that the process is credible, and the issues have been investigated effectively.”
Minutes for October said ESFA clawback “could go back a number of years”.
Lauener would not disclose whether the agency had since demanded the group repay any funding, but said: “Through the process, we did identify some issues which required formal investigation. We conducted that work in close consultation with the ESFA and took action as appropriate.
“We have learnt important lessons from the work we have done to close the businesses – and will apply these in our future work to fulfil our vision to support all our colleges in their communities and to get the best out of the synergy of seven colleges working in partnership and learning from each other.”
A spokesperson for the ESFA said: “We do not routinely comment on investigations, ongoing or otherwise.”
Former CEO received a £57k lump sum
NCG’s former chief executive was paid £57,000 when he quit in October 2018 after five years at the helm.
Joe Docherty’s “payment in lieu of notice” is listed in the college group’s latest set of accounts, which also show £1,800 was paid “towards legal fees”.
NCG would not reveal any more details about this case when approached by FE Week.
Joe Docherty
Docherty’s salary in his last full academic year as the group’s boss, in 2017/18, was £232,000. He received £109,000 for working between August and October 2018, but £57,000 of this was his “contractual entitlement” after leaving after the start of a new academic year.
Liz Bromley became NCG’s permanent chief executive in August 2019.
NCG’s £11 million deficit for 2018/19 sounds concerning, but their accounts hint to a stable financial position even though performance has “been extremely challenging”.
“In recent years, the main impact on income from the group’s core activities has been as a result of the freeze on funding rates within the sector despite inflationary cost pressures,” the accounts said.
“This has been exacerbated by falling numbers of apprenticeships starts across the sector following the introduction of the apprenticeship levy.”
Learner numbers have decreased slightly across the group, but only by 4 per cent, from 32,698 in 2017/18 to 31,354 in 2018/19.
NCG’s turnover has dropped from £158.2 million to £148.5 million, which the accounts say is “largely due to the initiation of the training provider wind-down”.
They add, however, that NCG ended 2019 in a “stable cash position with cash equivalent balances of £13,413,000 with a £5 million revolving credit facility also available”.
This year’s accounts state that the group has “cash forecasts that demonstrate cash reserves and facilities are in place and are sufficient to meet the immediate cash requirements of the business”.
NCG also has a “strong” asset backed balance sheet, which prior to pension liability stand at £175,241,000.
The accounts state that confirmation has been received from the ESFA that they agree with NCG’s assessment of financial health equal to ‘requires improvement’ for the expected outturn of 2018/19.
“They are also agreeing that the budget for 2019/20 is graded ‘good’. This is based on balance sheet strength, maintenance of low gearing and improved operational performance following the close down of the loss-making training provider businesses.”
Cash flow from operating activities amounted to a net outflow of £2,916,000 (2018: net inflow of £4,306,000). The outflow in 2018/19 was “linked to the closure of the training provider businesses”.
