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Skills minister will ‘look at whether it is right to continue to fund all apprenticeships’

The skills minister has said she will “look at whether it is right” for the government to “continue to fund all apprenticeships”.

Anne Milton made the remarks as part of a wide-ranging video interview with Association of Colleges’ boss David Hughes this afternoon, after she was unable to stay for questions at the association’s annual conference last month.

“We will need to look ahead, when the system is really running well – and I think we’re nearly at that stage – when we need to look at do we continue to fund apprenticeships for people who are already in work, people doing second degrees,” she said.

We now need to look at whether it is right to continue to fund all apprenticeships

“We now need to look at whether it is right to continue to fund all apprenticeships, particularly at the sort of levels that we’re talking about,” she said.

Ms Milton’s comments come just a day after FE Week exclusively revealed that the apprenticeships budget could be overspent by £0.5 billion this year alone – in large part because of the surge in people doing expensive management apprenticeships.

And Ofsted chief inspector Amanda Spielman raised concerns about levy funds being spent on higher level apprenticeships at the expense of young people on lower levels, during today’s annual report launch.

“Levy funding is, in many cases, falling far short of the intended spirit of the policy. In some cases we’re seeing levy funding subsidising repackaged graduate schemes and MBAs that just don’t need it,” she said.

Ms Milton was responding to a question from Mr Hughes specifically about the points raised by Ms Spielman on “degree apprenticeships, apprenticeship for people who are already in work, people who are in decent jobs, doing an MBA”.

She acknowledged that such courses “cost a lot of money”.

We are now starting to look at the future of the apprenticeship levy

“We are now starting to look at the future of the apprenticeship levy. I think business might see that as a signal that we’re going to change it, and I think that’s extremely unlikely,” she said.

“I think in the first stages it was not unreasonable to have a very open system, taking money off business, as long as it’s an apprenticeship, 20 per cent off the job, lasts for more than a year, ticks all our boxes, you can do it,” she said.

The apprenticeships system “should be about that second, third, fourth chance” and “it’s also got to be about progression” – particularly in sectors where “people do a level two and stop there”.

“We want to increase their aspiration, that they could do a level three and critically a level four where we have traditionally been weak on in this country

“We’re looking at it all at the moment. I don’t want to set any hares running,” Ms Milton said.

Photo caption: Skills minister Anne Milton being interviewed by AoC chief executive David Hughes. The exchange above starts at 10 minutes into the video.

Revealed: The 30 apprenticeship standards included in IfA’s new funding band review

The funding bands for a further 30 apprenticeship standards have gone up for review today.

The new list (see table below), revealed by the Institute for Apprenticeships on its website, includes two standards currently set at £27,000 – the maximum upper limit, meaning their rates can only fall.

The institute expects the full review to be completed by “summer 2019”.

It follows the launch of the institute’s first funding band review in May which saw 31 apprenticeships, including many of the most popular again, revised at the request of the Department for Education.

The IfA said today that the reviews will “ensure value-for-money for employers and taxpayers; and consistency in the way older and newer standards are funded”.

“Our aim is to make sufficient funding for apprenticeships available to as many companies as possible,” he added.

“We understand the review might be a concern to employers which is why we are working collaboratively to ensure the review is carried out in an open and fair way, and as quickly as possible.”

The first funding band review is still ongoing and has proved controversial so far. Many employer groups are opposing large cuts that would render the apprenticeships “financially non-viable”.

The two apprenticeships in the new review with current funding rates of £27,000 are the level 3 gas engineering standard and the level 3 engineering design and draughtsperson standard.

Both band reviews come at a time when the IfA is warning of imminent apprenticeship over-spend.

Rate reviews got underway after the institute moved to having 30 funding bands – the maximum rate paid for from the levy – to choose from, up from the previous 15.

The new structure gives the institute more choice regarding the rate it applies to each standard.

Ofsted figures reveal it is the new private providers letting the sector down

The drop in the percentage of training providers rate good by Ofsted is a direct consequence of the government’s sloppy approach to approving new providers, says Mark Dawe

Now that the cat is out of the bag on the true state of levy funding, it is very useful to have Ofsted’s input on where the apprenticeship reforms should go from here.

As the 3 million starts target disappears into the ether, we should be asking – in the context of the somewhat phoney “quality over quantity” debate – to what extent the quality of provision is being enhanced by the reforms.

There is general agreement that the introduction of standards has been a very positive development – with the proviso that they are appropriately funded at all levels, especially in key sectors post-Brexit. So in her annual report, the chief inspector is right to air concerns over the fall in apprenticeship opportunities for 16- to 18-year-olds and at level 2, because the funding changes have made it extremely challenging to deliver high quality apprenticeships for those groups of learners.

The fact that nearly four out of five independent training providers (ITPs) are still delivering good or outstanding provision, is testament to how hard they have worked to meet the higher expectations required by the standards, and how well they have responded to the individual demands of employers, many of whom are new to the apprenticeship programme.

The percentage (78%) of grade 1 and 2 ITPs has slipped a little this year, but this is a direct result of dogma being given priority over common sense in taking forward the reforms.

This led to the government being far too loose in its approach

Previous DfE ministers were very keen to open up the apprenticeship market to new providers and this led to the government being far too loose in its approach to establishing the register of apprenticeship training providers. We have ended up with a third of those on the register still not delivering a single apprenticeship after 12 months, and the Ofsted annual report now reveals that of the 42 providers found to be requiring improvement or inadequate this year, 30 were new ITPs. It’s easy then, if still disappointing, to explain the slippage overall.

The register’s refresh, which starts on 12 December, offers the opportunity to sort things out. AELP understands that providers and employers will now have to prove they have actively traded for 12 months, are financially stable, skilled and are able to deliver quality apprenticeship training, before they apply, rather than when they begin delivery.

At the same time, we expect that providers with an outstanding or good grade from Ofsted will be exempt from certain questions on the leadership and management of their delivery.

The end result should be that as well as no more opportunistic new entrants, we will say goodbye to those providers who are still not delivering apprenticeships and have never shown any intention of doing so. The hope is that we will then have an approved list of good quality providers ready for all employers to confidently choose from.

This is obviously very important for when the non-levy employers start joining the digital apprenticeship service from next August. Knowing that any provider on the register is of officially recognised quality should give all employers some assurance, which in turn should allow the ESFA to essentially run an employer demand-driven system, rather than act as queen bee over how much contract growth each provider gets.

Ofsted is pleased that the amount of subcontracting throughout the sector is decreasing, but continues to find poor practice as well as good. Successful arrangements rest mostly on good management on the part of the lead contractor, and this results from having a good governance structure in place, such as the one set out in our best practice code published with support from FETL earlier this year.

The chief inspector has expressed her doubts about the wisdom of the government continuing with its compulsory GCSE resits policy for English and maths. With the aid of an initial assessment, young people should have the choice to do functional skills instead, but ministers can’t expect good provision, often undertaken one-to-one in the workplace, to continue at half the classroom funding rate.

Major apprenticeship provider to Santander goes bust after Ofsted mauling

A major new apprenticeship provider has gone bust following a scathing Ofsted monitoring report which found its directors were claiming funding for delivering little to no training.

FE Week understands the company, AMS Nationwide Ltd, had its contracts terminated by the Education and Skills Funding Agency when the findings were revealed to officials.

The private provider has now called in administrators David Rubin and Partners, and gone into voluntary liquidation.

Apprentices have been on programme for three quarters or more of their planned timeframe and completed very little work

AMS was delivering over 400 apprenticeships at the time of Ofsted’s visit, including for some levy-paying employers such as the high-street bank Santander.

Inspectors were blunt in their criticism of the training on offer: “Leaders and managers do not ensure that programmes meet the requirements of levy and non-levy-funded apprenticeships,” they said.

“Most apprentices are unaware of the components of their programme and many are unsure of the planned timeframe for their apprenticeship.”

Inspectors added that in “many cases”, apprentices have been on programme for “three quarters or more of their planned timeframe and have completed very little work”.

Learners “do not know what they need to do to meet the requirements of the programme or the end-point assessment”.

Ofsted found that managers were recruiting apprentices on “inappropriate programmes”.

Learners who have senior management roles, for example, were being put on customer service apprenticeships at level 2, and as a result, “fail to develop new knowledge, skills or behaviours”.

“Many apprentices have been in their job roles for significant periods of time and are merely accrediting the skills that they already have rather than learning new skills,” inspectors said.

AMS’ directors were slammed for chasing profit while ignoring the poor delivery.

“The board of directors has met twice since AMS became a levy and non-levy-funded provider,” inspectors said. “Directors focus on sales targets and finance during board meetings.

“Directors are unaware of the progress that apprentices make or the quality of the training that they receive.”

Critically, they did not hold leaders to account for not having “sufficient oversight of apprentices’ progress” and being “unaware of apprentices who may be at risk of not completing their programme”.

Issues with off-the-job training were also raised by Ofsted.

“Where off-the-job training is recorded, the records show that the quality of the training is not high enough and is not personalised to ensure that it meets apprentices’ individual needs or job roles,” the report stated.

“Training advisers often complete off-the-job training records for apprentices, and they do not record the time taken to complete the training. As a result of the weaknesses in off-the-job training, apprentices fail to develop their knowledge, skills and behaviours sufficiently.”

Directors focus on sales targets and finance during board meetings

Training advisers were also criticised for not developing apprentices’ English and math skills “well enough”.

In a “few cases”, training advisers have “poor English skills, and they mark spelling, grammar and punctuation incorrectly in apprentices’ work”.

Ofsted’s report said AMS’ managing director left in June following a “staffing restructure” in April this year, and leaders made “improvements to the planning and development of apprenticeship programmes”.

The company was established in 2012 but was only accepted onto the Register of Approved Training Providers in September 2017.

Santander confirmed that AMS has gone into liquidation.

The bank told FE Week it had 32 apprentices at the time of the company going bust, but the vast majority of them had completed their training and were due to take their end-point assessments.

It added that AMS informed the bank of its decision to go into voluntary liquidation and has been cooperative and supportive to ensure apprentices complete their final qualifications.

AMS and the liquidators, David Rubin and Partners, did not respond to repeated requests for comment.

A Department for Education spokesperson said: “Our priority now is to support those employers and apprentices affected to ensure they are moved to alternative high quality provision so they can successfully complete their programmes with the minimum of disruption.”

AMS’ damning Ofsted report was published on the same day of Ofsted’s annual report for 2017/18, in which chief inspector Amanda Spielman said: “Whenever any significant new funding is injected into a sector, some unscrupulous providers will see an opportunity to make a quick profit.”

Ofsted annual report warns apprenticeship levy being spent on graduate scheme rebadging

Amanda Spielman has amplified Ofsted’s concern that too much apprenticeship levy funding is being spent on higher levels, which is squeezing out the recruitment of young people onto lower level programmes.

The chief inspector (pictured) raised the issue in her second annual report, published this morning.

“We are concerned that in many cases, levy money is not being spent in the intended way,” she wrote.

This might meet the rules of the levy policy, but it falls well short of its spirit

“We have seen examples where existing graduate schemes are in essence being rebadged as apprenticeships. This might meet the rules of the levy policy, but it falls well short of its spirit.

“We hope the government will give greater thought as to how levy money can be better directed at addressing skills shortages.”

It follows yesterday’s FE Week exclusive which revealed the Institute for Apprenticeships is expecting an imminent levy over-spend, understood to be the result of higher per-start funding than first predicted, largely driven by the sharp rise in management apprenticeships with high prices.

Ms Spielman said today that along with the “sudden expansion in the number of providers offering apprenticeships”, the inspectorates “continues to be concerned about access to apprenticeships for the third of students who leave school without a full level 2”.

The number of under 19s starting an apprenticeship has been in decline for the last two years, falling from 78,500 last year to 62,000 this year alone.

“In contrast, the number of learners starting a higher apprenticeship has been growing year-on-year since 2011/12, increasing by around 10,000 apprentices a year for the past four years,” the chief inspector said.

She added that while Ofsted does “welcome” more apprenticeships at higher levels, “particularly when there is clear progression in an occupation from level 2 to degree level”, it will not address skills shortages in England if they are done at the expense of getting young people onto the programmes.

Ms Spielman’s fresh criticism follows her annual report from last year which first raised the issue.

“Most apprenticeships being delivered in 2016/17 were at levels 2 and 3, yet over a third of the standards ready for delivery were at level 4 and above,” it said.

“If this trend continues, there will not be enough approved standards at levels 2 and 3. This could have a detrimental impact on the recruitment of 16- to 18-year-olds into apprenticeships.”

FE Week was first to warn of the ‘unstoppable rise’ of management apprenticeships in 2016, and last month reported that just 10 management standards were responsible for a fifth of all apprenticeship starts on standards, according to provisional data for 2017/18.

The proportion has grown over the years, from nine per cent in 2015/16 and 15 per cent in 2016/17.

It looks like as a result, the apprenticeships budget for England is set to be overspent by £0.5 billion this year, rising to £1.5 billion during 2021/22, according to figures from the IfA.

Speaking to FE Week at this morning’s annual report launch, the chief executive of the Association of Colleges, echoed Ms Spielman’s concerns.

“There’s some really interesting stuff about apprenticeships and how the levy seems to be being used a lot for people who are already in work, in management positions, for higher level and degree apprenticeships,” he said.

“I’m really worried about that – as Ofsted is – because we really must make sure apprenticeships are particularly for young people entering the labour market.

“That’s what the spirit is all about, rather than giving people who are already privileged in the system more skills that probably would have been funded differently by employers in the past.”

And Mark Dawe, chief executive of the Association of Employment and Learning Providers, said he’s a “big supporter” of apprenticeships at all levels but “the level 2 and 3s are the most important and that is where government money should be focused”.

FE Week asked the Department for Education if it shared the same concerns as the chief inspector, Mr Dawe and Mr Hughes, but it would not comment directly on this.

Instead, a spokesperson said: “Our apprenticeship reforms, the largest government has ever made, have put control back into the hands of employers so they will gain the skilled workforce they need to compete globally.

“By working with employers to develop new, higher quality standards we can ensure that young people are getting the training they need to get a great job while businesses can be confident they are getting the skilled employees they want.”

Ofsted annual report 2017/18: Nine key findings for FE

Amanda Spielman presented her second annual report as Ofsted’s chief inspector this morning.

She used it to highlight improvement in overall FE outcomes in the face of funding pressures, as well as concerns that the apprenticeship levy isn’t being used as intended.

FE Week has the nine key findings for FE and skills providers.

Full inspections are down but overall outcomes are up

Ofsted carried out 329 full and short inspections of FE and skills providers this year – down from 392 in 2016/17.

Of these, four per cent resulted in an ‘outstanding’ rating, 66 per cent ‘good’, 24 per cent ‘requires improvement’ and six per cent ‘inadequate’.

That means that 70 per cent of providers inspected this year were rated at least grade two – an increase of one per cent on last year’s outcomes.

FE Week revealed last month that full inspections carried out by Ofsted in 2017/18 plunged by a third.

Fewer, larger colleges are improving – and it’s not just because of mergers

A higher proportion of general FE colleges are now rated ‘good’ or ‘outstanding’ than last year – from 67 per cent to 76 per cent, as revealed by FE Week last month.

But there are also fewer colleges than in previous years – 178 at the end of 2017/18, compared with 189 in 2016/17 and 207 the year before.

According to today’s report since September 2015 a total of 94 colleges, sixth form colleges and other providers have been involved in mergers.

While this may in part explain colleges’ overall improvement, today’s report notes the increase in the number of colleges boosting their grades from three to two – 18 out of 26 inspected in 2017/18, compared with eight out of 20 in 2016/17.

Many merged colleges have yet to be inspected

Of the 178 general FE colleges at the end of 2017/18, just 140 had been inspected.

The vast majority of those yet to be inspected – 37 out of 38 – were newly merged colleges.

Ofsted policy is to treat merged colleges as new providers, meaning they’re given up to three years before they receive a full inspection – a rule that has prompted criticism for allowing mergers to be an excuse for turning a blind eye to failure.

Concerns about the impact of funding on FE remain

Amanda Spielman’s commentary on today’s report continued her previously-raised concerns about the impact of funding pressures on FE, which she said “has borne the brunt of austerity when it comes to education”.

“We are concerned about the financial sustainability of the college sector, and the clear impact that real-term cuts to FE funding can have on provision,” she said.

Ofsted’s published reports, inspection evidence and insights indicated that colleges were having to make cutbacks in a number of areas including the “number of teachers, trainers and/ or support staff; teaching hours allocated to some courses; and the range of courses and enrichment activities offered to students”.

She reiterated concerns over colleges that were recruiting learners, particularly at level two, for courses without good employment prospects.

However, she noted: “It is understandable that colleges are trying to recruit as many students as possible.”

Standards are falling at private providers, but numbers are rising – fast

The proportion of independent training providers to be rated ‘good’ or ‘outstanding’ at their most recent inspection fell – from 81 per cent in 2016/17, to 78 per cent in 2017/18.

Of the 115 inspections of ITPs – including employer providers – carried out during the year, 42 resulted in a grade three or four outcome.

Of those inspected for the first time, the proportion found to be ‘requires improvement’ or ‘inadequate’ was almost two-thirds – a similar proportion to last year.

While standards are slipping, the number of ITPs in scope for inspection has risen sharply – from 490 at the end of 2016/17 to 990 at the end of 2017/18.

The increase, which today’s report says is due to the introduction of the apprenticeship levy in 2017, means that 55 per cent of ITPS have yet to receive their first full inspection.

Most apprentices are at good or outstanding providers – despite concerns over quality

Two-thirds of apprentices were following courses at providers rated ‘good’ or ‘outstanding’ at the time of inspection, today’s report has shown.

“This was because the good and outstanding providers were generally training larger numbers of apprentices,” it said.

Ofsted inspected 110 apprenticeship providers this year, of which 58 per cent were found to be grade one or two for this type of provision – an increase of nine percentage points from 2016/17.

Despite this, today’s report highlighted some concerns about poor apprenticeship quality.

The inspectorate’s new early monitoring visits to new apprenticeship providers, of which 88 were carried out in 2017/18, had revealed “common issues around poor governance, low-quality teaching and not enough time for off-the-job training”.

“The people who suffer as a result are the apprentices themselves, who finish their programme without the knowledge and skills to succeed in the workplace,” the report warned.

It also highlighted a number of “high profile” cases of poor apprenticeship provision among big, established providers, including one “that had swiftly recruited apprentices over the past year was not providing apprenticeships that were fit for purpose”.

Subcontractor quality is mostly good

Ofsted’s increased reporting on subcontracting, introduced from February this year, has found most subcontracted provision was good.

Out of a sample of 30 inspection report, inspections found two thirds of providers were managing their subcontractors effectively – and a similar proportion were “delivering good quality provision”.

A further 25 inspection reports commented on the progress of learners with subcontractors: in three-quarters of cases learners with the subcontractor were progressing at the same pace, and achieved their qualifications at the same time, as learners with the main provider.

Standards at sixth form colleges and adult and community learning providers are up

The proportion of adult and community learning providers to be rated at least good at their most recent inspection has gone up five percentage points – from 83 per cent in 2016/17, to 88 per cent in 2017/18.

A total of 81 per cent of sixth-form colleges were rated ‘good’ or ‘outstanding’ at their most recent inspection by the end of 2017/18 – a one percentage point increase from the year before.

But there are now only 61 SFCs – down from 90 two years ago – as the remainder have either converted to become a 16 to 19 academy or merged with a college.

Apprenticeship levy is being spent on ‘rebadged’ graduate schemes

The chief inspector amplified Ofsted’s concern that too much apprenticeship levy funding is being spent on higher levels, and not enough on lower level programmes for young people.

Ofsted’s report shows community learning providers need more funding

The high quality of adult education provision highlighted in the inspectorate’s annual report is a strong argument for rebalancing funding in their favour, says Sue Pember

This year’s Ofsted chief inspector’s report highlights how successful our community learning and skills providers are. They are the hidden gems of the adult education system and are leading the FE sector, with 88% rated ‘good’ and ‘outstanding’ – up from 83% last year.

Redbridge Adult Education Institute is a great example of high-quality provision. This year, it received one of the best outstanding reports possible, with inspectors commenting that there were no areas requiring development, along with something you don’t often see in an Ofsted report: “the students were having fun”!

The annual report highlighted high-quality training in mentoring and counselling for learners recovering from drug and alcohol misuse; ESOL courses to help refugees and nurses recruited from overseas to improve their spoken English; family learning courses for parents so that they can better support their children at school; programmes that focus on developing employment skills for learners with learning disabilities; and work with the police service to help learners remove themselves from gang culture.

It’s great to see Ofsted recognising the amazing work done by the 200-plus community education providers. Annually they educate over 650,000 learners, concentrating on working with those furthest away from the workplace and/or at risk of being isolated from society. Their learners are very satisfied with their courses – in the recent national learner choices survey, 93% of adult and community learners said they were “likely” or “very likely” to recommend their learning provider, compared to 78% for rest of the sector.

While concentrating on their core mission, they provide a wide range of learner-led programmes and utilise all the Adult Education Budget funding streams, plus the apprenticeship levy and non-levy funding, ESF and FE loans. They also provide financial support to learners with a co-funding and full-cost approach to collection of fees.

Of the 17 providers that improved to good this year, inspectors found that the most common areas of improvement were quality of teaching, learning and assessment; strengthened governance arrangements; more effective management of subcontractors; and raised expectations and aspirations for learners.

What is perhaps most remarkable is that adult learning providers have maintained and even improved quality, while responding to a 40% decrease in funding over the last 10 years. Even in this uncomfortable funding environment, which has led to a decrease in participation, with 1.5 million learning places lost over the last seven years, community education services have proved their worth, their ability to provide quality provision and to remain in budget.

This funding imbalance needs to change

Adult learning providers are keen to grow their offer, but they have been stifled by the present funding system, which does not include a mechanism for substantial growth. They want to support their local learners and are hoping the post-18 review of funding will recognise that a static funding system based on historical allocation is no longer appropriate – and that most learners with skill levels below level 2 want to go to local neighbourhood provision.

The most inexcusable figures to come out from our work on post-18 funding is that only 1% of all post-18 spend is used to support adult learners who want to learn in their community, and only 7% is spent on those who didn’t do well at school. This funding imbalance needs to change, and our excellent adult education services should be allowed to grow and meet future need.

What is needed is a responsive funding system that recognises providers who perform well and deliver what learners want. As the inspectorate has highlighted, most of these community services are in local authorities and therefore find it easy to work in partnership with other services like housing and health.

They are ready to take up the challenge of supporting the one in five of the population who have literacy or numeracy issues and the many who need ESOL to support their full integration into the community and work. They are also keen to support the national retraining scheme and the digital agenda and are well placed to do this.

Their students often have the greatest life challenges and require concentrated effort to help them back into learning. They also support wider government policies on stronger families, digital skills, social mobility and mental health. Learning often takes place in community settings, such as primary schools, church halls, libraries and community centres and, because many of the services are not concentrated around one site, they are very agile and can quickly respond to specific community needs.

The chief inspector’s report highlights the effectiveness and ability of community education services and the time is now right for the post-18 funding review to recommend a rebalancing of the post-18 spend, and to invest in those adults most in need of upskilling.

ESFA handed over £250,000 AFTER disgraced training provider went bust

The Education and Skills Funding Agency has paid a further quarter of a million pounds to a firm that had its training contracts terminated following an undercover FE Week investigation.

Talent Training, which was based in South Tyneside and claimed to have £130 million of apprenticeship levy business, was caught offering banned inducements in the summer of 2017.

Following this newspaper’s exposé, the ESFA cancelled the company’s skills contracts and it went into administration with around 100 staff being made redundant.

Members drawings by David Harper were in excess of the distributable reserves and he has agreed a six figure offer to pay in full by 30 June 2019

But it has since come to light that Talent Training’s administrators, David Rubin and Partners, claimed a huge chunk of public cash – £258,000 – following the demise of the provider, of which almost £30,000 was handed over to the private provider’s managing director, David Harper (pictured).

The company, which owes over £1 million to its creditors, has also launched a legal challenge against the ESFA in an effort to claim more cash.

An “administrator’s progress report”, published on Companies House on April 5, reveals that the £258,000 was paid for training that the company claims to have carried out, but was not paid for by the ESFA.

“The final apprenticeship and adult education data return was submitted in the sum of £195,214.53 and the ESFA approved the release of caps on the provider’s contract for period 2016/2017 amounting to £78,797. The total amount therefore due to the company was £273,011.53,” it said (click here to read full document).

“After the ESFA conducted their reconciliations of the account, the sum of £7,500 was deducted in respect of grants that had not been passed to employers and £8,368.38 was also deducted in respect of unpaid invoices as a result of independent audits completed in May 2017.

“In view of the above, the net payment received from the ESFA was £258,143.15.”

The administrators added that they will claim nearly £250,000 in fees.

“In accordance with these resolutions, we have drawn down fees of £205,236 plus VAT and I would confirm that my fees estimate for the administration remains unchanged,” the report said.

It added that Mr Harper, a millionaire businessman who has operated in the training market for years, was “instructed” to assist with the collection of the ESFA payment and other debtors monies outstanding to the company “on the basis that he had an in depth knowledge of the debts”.

The “agreed basis” of his fees was “10 per cent of debtor recoveries plus expenses capped at £4,000”, all of which were “incurred”.

READ MORE: Terminated: Government bans major levy provider after FE Week exposé

“Therefore the sum of £29,814.31 has been paid to DH,” the report stated.

Additionally, £6,081.22 was paid to “three former employees” who assisted Mr Harper in “collating records and submission of the return to the ESFA”. None of these employees were named.

The document does however also show that Mr Harper owes the company up to £1 million, after taking out a director’s loan.

“Members drawings by David Harper were in excess of the distributable reserves and he has agreed a six figure offer to pay in full by 30 June 2019,” it said.

The document also reveals that Talent has opened a legal case against the ESFA for terminating its contracts and its administrators are pursuing more compensation as the company moves into liquidation.

It said the legal action has “a high potential recovery value”, and while the “claims are being robustly defended”, David Harper is “continuing to assist the joint administrators and WH [solicitors Ward Hadaway], and will continue to do so in the forthcoming liquidation”.

Talent has large creditors’ debts totalling more than £1.44 million, including over £150,000 owed to the HMRC, according to a document published on Companies House in September 2018.

In accordance with these resolutions, we have drawn down fees of £205,236 plus VAT

FE Week attempted to contact Mr Harper and David Rubin and Partners multiple times but neither responded to requests for comment.

The undercover FE Week investigation carried out in June last year caught a Talent employee offering as much as 20 per cent of its government funding per apprenticeship to a firm that was considering its training services.

The company insisted at the time that no inducement payments had actually been paid, but went into administration two months later when the ESFA pulled its contracts.

David Rubin and Partners is no stranger to working with Mr Harper.

Companies House shows the firm has handled the administration for a number of other companies that he was a director for.

These include hco-consult and Driving Careers Limited, which both went into voluntary liquidation in November 2017.

David Harper’s description of himself on the website of another company he runs, HaperCo

Levy budget bust: Government agency warns of imminent apprenticeship over-spend

The apprenticeships budget for England is set to be overspent by £0.5 billion this year, rising to £1.5 billion during 2021/22, according to the government agency for apprenticeships.

The warning from the Institutes for Apprenticeships follows a refusal from the Department for Education last month to answer FE Week’s questions concerning the full levy costs.

The problem – which comes despite the volume of starts dipping – is understood to be the result of higher per-start funding than first predicted, largely driven by the sharp rise in management apprenticeships with high prices.

As more and more people start on these expensive apprenticeships, the monthly on-programme costs quickly accumulate – see below for FE Week’s analysis.

Mark Dawe, the chief executive of the Association of Employment and Learning Providers, has demanded an “open debate on how the levy operates” following this revelation.

We are now heading to a situation where there will be no money left for SME employers

“At last it slips out into the open what we have been anticipating for months and what we predicted from the start: that more higher level expensive apprenticeships are consuming the bulk of the levy,” he told FE Week.

“We are now heading to a situation where there will be no money left for SME employers when the government is launching a £5 million promotion campaign to the very same group.”

Mr Dawe reiterated AELP’s call for a “separate £1 billion a year budget for non-levy employers” and “access to the £10 billion annual funding to HE”.

Mr Dawe’s Association of Colleges counterpart, David Hughes, praised the IfA for being “open and transparent” in sharing the projected spend against current budget.

But he added: “It confirms what we believe, that at some point there will need to be rationing by either number or price or both.”

He urged both the IfA and the DfE “to come forward quickly with the range of proposals that will be needed in order to remain within budget”.

Robert Nitsch, the IfA’s chief operating officer, presented the IfA figures during an event for employers held at Exeter College on Friday.

According to IfA slide (above), the yearly cost of starts this year will be £500 million higher than the £2.2 billion budget in 2018/19.

By 2020/21 the shortfall is set to rise to £1.5 billion, with costs rising to £4.1 billion against a budget of £2.6 billion.

The IfA told FE Week that the slide highlighted that there’s currently no unspent levy, and that – if apprenticeship numbers continue to rise – there could be a situation in the future where levy contributions may be insufficient to cover the full cost of apprenticeships.

It also said that both Sir Gerry Berragan, the IfA’s chief executive, and skills minister Anne Milton had referred to this over-spend before – although it’s not clear when. FE Week has been unable to find any references to it, and has asked the IfA for examples.

The DfE has been approached for a comment.

This is the first warning sign that levy funds are set to be over-spent, rather than under-spent.

It’s particularly significant as the system was designed on the basis that levy-paying employers wouldn’t use all their funds, and that any surplus would be used to fund apprenticeships with non-levy paying employers.

FE Week reported in November that employers had used just under 14 per cent of their levy funds to date, with £370 million out of a total £2.7 billion drawn down.

But this draw-down by employers is just one of a number of costs that levy funds need to cover.

Other expenses include funding apprenticeships for small, non-levy paying employers, English and maths qualifications, incentive payments for 16- to 18-year-old apprentices, and extra support for apprentices who are care leavers or have special needs.

FE Week asked the DfE last month how much of the levy pot has so far been used on these different areas, but it refused to say.

Starts have been consistently down since the levy was introduced, with the most recently published figures showing a 43 per cent drop in July compared with pre-levy numbers.

The number of starts on costly management apprenticeships has sky-rocketed

But at the same time the number of starts on costly management apprenticeships has sky-rocketed.

The proportion has grown over the years, from nine per cent in 2015/16 and 15 per cent in 2016/17.

Robert Nitsch’s slide from Friday’s employer engagement event

The IfA is in the process of carrying out funding band reviews of a number of early-approved standards – many of which have resulted in the band being slashed.

According to the IfA’s 2018/19 business plan, the review is to ensure “they support high quality delivery, and maximise value for money for employers and the taxpayer”.

It also said the IfA is “working with DfE to develop the best approach for pricing apprenticeships in the long term.”

The outcome for three management standards, including the chartered manager degree apprenticeships, is still unknown as the employer group behind them appealed against the recommendation.

Meanwhile, the IfA is set to announce the second batch of standards for which they will begin consulting on funding rate changes on Tuesday.

How costs can quickly add up

FE Week analysis of figures published by the DfE for the management degree apprenticeship shows the number of starts rose from 576 (up to £15.5 million) in the year to July 2017 to 2,259 (up to £61 million) in the year to July 2018.

Initially, the Education and Skills Funding Agency would only be paying a fraction of this £76 million because the monthly payments are spread over the full duration – typically 48 months for the level six standard.

But the costs quickly accumulate as each month the ESFA is paying the on-programme costs of the starts in previous months, until the course finishes and the final 20 percent is paid for completion – see analysis below.