Funding rates for 16 to 19-year-olds will remain unchanged next year, the government has confirmed – prompting disappointment from the Sixth Form Colleges’ Association, which has been fighting for extra cash.
A letter from Peter Mucklow, FE director at the Education and Skills Funding Agency, published today, said that “the national base rates of £4,000 per full time student aged 16 to 17 and £3,300 for 18 year olds are being maintained for academic year 2019 to 2020, as are the part-time funding rates”.
The announcement is not unexpected, given that the government has already signalled that it won’t shake up 16 to 19 funding until next year’s spending review.
“Although base funding rates have not been increased, government will continue in 2019 to 2020 to make new investment in 16 to 19 education to improve choices for students, quality and skills training,” he said.
James Kewin, the SFCA’s deputy director, said that confirmation that the funding will stay the same “for the seventh year in a row” was “disappointing but not surprising”.
“Since 2013, costs have rocketed, the government has demanded more of schools and colleges and the needs of students have become increasingly complex,” he said – leading to courses being cut, a reduction in student support services and the disappearance of extra-curricular activities.
“Attempting to defend the indefensible by pointing to small pots of cash attached to technical education or maths is something that colleges and schools find deeply frustrating,” he said.
Funding for 16 and 17-year-olds has been frozen at £4,000 per student since 2013, while per-student funding for 18-year-olds was cut to £3,300 in 2014.
The Raise the Rate campaign, launched in October and led by the SFCA, called on the government to eventually increase funding for all 16 to 19-year-olds to £4,760 in the next spending review.
A report from the Institute of Fiscal Studies in September found government funding for 16-to 18-year-olds has been cut “much more sharply” than funding for pupils in pre-school, primary, secondary or higher education.
Almost a third of providers on the government’s register did not deliver any apprenticeships last year, FE Week analysis has revealed – the day before the redesigned register re-opens for applications.
All providers will be asked to reapply, but Mr Smith said the agency would segment them into groups – with those deemed “high risk” being asked to re-apply first.
“We want to focus the re-application process on those providers that are potentially not delivering, and on those that we think will struggle to pass our new requirements,” he told the Association of Employment and Learning Providers autumn conference on October 30.
Other changes to the register include greater scrutiny of providers, who must have traded for at least 12 months and provide a full set of accounts before applying.
The DfE’s latest statistics include starts broken down by provider for the first time.
Colleges were hit hardest by the move to apprenticeship levy funding, FE Week analysis of new figures published by the Department for Education have revealed.
The statistics, which included the number of starts per provider for the first time, showed that colleges’ share of the market dropped from 31 to 26 per cent from 2016/17 to 2017/18, while their starts plummeted 35 per cent.
At the same time, ‘other public funded’ providers – which includes universities and employers – saw their share go up from eight per cent to 12 per cent as starts jumped 17 per cent.
Meanwhile independent providers’ share of the market remained at 61 per cent over the two years, while starts fell by 24 per cent – the same as the sector average.
Colleges were responsible for 99,220 starts last year, down 35 per cent – or 52,740 – on the previous year’s total of 151,960.
Some of this fall in starts will have been the result in changes to rules around subcontracting, which hit colleges that had previously subcontracted much of their provision.
West Nottinghamshire College, which previously subcontracted the overwhelming majority of its provision, had just 1,440 starts last year – down a massive 79 per cent on the previous year’s total of 6,830.
Meanwhile, there were 45,450 starts in ‘other public funded’ providers last year – an increase of 17 per cent on the previous year’s figure of 38,910.
Much of this growth was at providers new to the apprenticeship market, including universities delivering degree-level apprenticeships for the first time.
They made up six of the 10 ‘other public funded providers’ with the most starts in 2017/18 that had zero or fewer than five starts the year before.
The remaining four were NHS trusts – reflecting the fact that the country’s largest employer has a £200 million levy pot to spend.
Independent providers delivered 228,090 starts in 2017/18, down from 300,170 the year before.
That’s a drop of 24 per cent, the same proportion by which starts fell across the board last year, according to final full year figures published last week.
A freedom of information request by the Association of Employment and Learning Providers revealed that 74 per cent of all apprenticeship starts in 2015/16 were with independent providers, while colleges were responsible for just 21 per cent.
The AELP is urging the government to give “flexibility” to providers who make “reasonable efforts” to claim apprenticeship employer contributions, after plans to withhold completion payments for non-compliance were revealed.
A change to a calculation in the agency’s funding software will enforce a new rule from this month, which will see nearly 20 per cent of the total apprenticeship cash held back until employer payments are up to date.
We hope common sense will reign in the end
It means that up to £4,860 of ESFA funding, 90 per cent of £5,400, would be withheld if the apprenticeship price is at the highest upper funding band of £27,000, for example.
Mark Dawe (pictured), the chief executive of the AELP, said his association “fully supports the policy but there needs to be flexibility where the provider makes reasonable efforts to collect the contribution and a small proportion of employers still don’t pay”.
“We do find it rather incredible that even if the employer doesn’t pay the contribution, the ESFA still pays the employer the incentive payment (which can’t be netted against any outstanding contribution),” he added.
“We hope common sense will reign in the end.”
The way the agency funds providers for delivering apprenticeships training is by paying monthly payments for 80 per cent of the negotiated price up to the funding band, but where the employer has no levy funding or it is insufficient, then co-investment must be paid, currently set at 10 per cent.
The ESFA in future will only pay the provider for the final 90 per cent of the total remaining 20 per cent, once the framework has finished or the end-point assessment has taken place and the employer has paid their 10 per cent.
Chancellor Philip Hammond announced last month that the co-investment fee will be halved to 5 per cent, but a start date for this change has still not been revealed.
The return deadline for providers to get their co-investment payments was December 6.
However, the completion payment is only being withheld until the financial fields in the ILR show the employer has fully paid their share. Once that happens, the completion payment would be released in the next monthly funding cycle.
In a little-known monthly update for “MI managers, software writers and suppliers” published last Friday, the ESFA said: “We plan to update the apprenticeship funding calculation at R04 [Individualised Learner Record data return deadline 6 December] to withhold any completion payments that do not meet the criteria in the funding rules.
“The rules state that co-investment due to be paid by the employer must be collected and recorded in the ILR for the completion payment to be paid.”
Additionally, the agency plans to claw back cash from providers who have not claimed the fee from employers.
“This change will also apply to any completion payments already made in the 2018 to 2019 funding year and where necessary payments will be recovered,” the ESFA said.
“We will also identify and recover any completion payments paid to providers in 2017 to 2018 funding year that were not compliant with funding rules. All adjusted payments will be made as part of the December payment run.
“Providers must ensure all co-investment is collected and recorded on the ILR in a timely manner as stated in the funding rules.”
The survival of another outsourcing giant that trains “around 14,000 apprentices each year” appears to hang in the balance, after its shares plummeted amid its attempts to secure a second rescue deal.
Interserve, an international support services and construction group which runs a large UK training provider called Interserve Learning and Employment Ltd, is desperately trying to avoid a Carillion-style collapse after falling into severe financial trouble.
The company, which has around 75,000 staff worldwide, saw its shares crash by 75 per cent to just 6p today. The shares were worth 100p a year ago.
Our learning and skills business had a busy year following the introduction of the UK apprenticeship levy
It follows a report in the Financial Timeson Friday which revealed it is in rescue refinancing talks that could mean substantial losses for shareholders.
The deal, which is expected to be finalised early next year, would see Interserve’s creditors who have lent the company more than £600 million take control of the company.
According to reports, debts at the group have grown since its first rescue deal, which was agreed with banks in March.
The crisis surrounding Interserve has sparked fears that it could be heading for the same fate as its former rival Carillion, which collapsed in January.
Over 1,100 apprentice bricklayers, carpenters and builders were left jobless in the wake of the collapse, but the government stepped in and continued paying their wages until they found new work with the help of the Construction Industry Training Board.
But this deal ended in August and saw nearly 350 former Carillion apprentices have their wage support cut off as they were finally made redundant.
The collapse of Interserve would however have a much bigger impact in the apprenticeships market, as FE Week reported in January.
Its training provider, Interserve Learning and Employment, was formerly called ESG and was bought from finance firm Ares Capital in a cash deal worth £25 million in December 2014.
The provider is rated ‘good’ by Ofsted and claims on its website to train around 14,000 apprentices each year.
It had £20.8 million ESFA allocations in 2017/18, and has current skills contracts totalling £10.6 million – but this doesn’t factor in its levy contracts.
Interserve’s annual report, published in April 2018, said its learning and skills business had a “busy year following the introduction of the UK apprenticeship levy and we further invested in this area to maximise the significant opportunities presented by this reform”.
It added: “Our capability in designing, delivering and evaluating apprenticeship training within this business is now playing an increasingly valuable role as higher employment costs and regulatory requirements drive employers to invest more in training and skills, either to defray their apprenticeship levy or to upskill and gain additional productivity from an increasingly costly workforce.
“During the year we won new contracts with DHL, Countrywide, BT Group, Stagecoach Group, Grafton and Unilever.”
Interserve Learning and Employment has more than 900 employees, according to its website, and boasts that it is one of the ESFA’s “leading providers”.
Latest ESFA data, for 2016/17, shows that Interserve trained 6,980 apprentices and scored a 70.2 per cent achievement rate.
The company also provides vocational training in three FE colleges in Saudi Arabia under the UK’s Colleges of Excellence programme and claims it supports over 65,000 people a year into work or training.
Interserve told FE Week that it is currently in a strong enough position to not need a contingency plan which would protect their apprentices in case the firm collapsed.
A Cabinet Office spokesperson said: “We monitor the financial health of all of our strategic suppliers, including Interserve, and have regular discussions with the company’s management. The company successfully raised new debt facilities earlier this year, and we fully support them in their long term recovery plan.
“We do not believe that any of our strategic suppliers are in a comparable position to Carillion.”
Commenting on the company’s second rescue plan, Debbie White, chief executive of Interserve, said: “Our lenders are supportive of the deleveraging plan which will underpin the long term future of Interserve.
“The Cabinet Office has also expressed full support for the work we are doing to implement our long term recovery plan.”
She added: “The fundamentals of our business remain strong. The deleveraging plan will give Interserve a strong long term capital structure and provide a solid foundation on which to build the future success of the group.”
Interserve topped the list of the government’s strategic suppliers in 2017, according to data provider Tussell, winning £938 million of work across a range of areas including health, education and defence.
But in September last year, the FTSE 250 contractor admitted that its annual profits were likely to halve after a £195 million loss from a number of energy to-waste contracts.
Three providers – including two colleges – have boosted their grades from three to two this week, while one provider went the other way.
Elsewhere it’s been a busy week for monitoring visits, with nine reports published – six for new apprenticeship visits, and three for grade three providers.
MidKent College and Northampton College were both rated ‘good’ – up from their previous ‘requires improvement’ grades – in reports published on December 6.
Leaders, managers and governors at MidKent College were praised for having “developed a highly student-centred ethos” which “permeates the college”, in a report based on an inspection in mid-November.
Staff were found to be “proud to work” at the college and, thanks to their willingness to “engage fully in a strong programme of professional development” teaching, learning and assessment had “substantially improved” since the last inspection in January 2017.
Learners made “good progress” in their studies, and standards of work for apprentices in their workplaces was also good.
But apprentice achievement was “too low” and “not enough” of the “large number” of learners resitting GCSE English and maths got high grades.
Northampton College was rated ‘good’ for overall effectiveness and in six headline fields in a report based on an inspection in late October.
Its apprenticeship provision was rated grade three – but its provision for learners with high needs was deemed ‘outstanding’.
“These students make exceptional progress with their independent living skills and with their achievement of qualifications,” the report said.
“Most teaching” at the college enables apprentices and learners to “develop good standards of practical skills rapidly”.
However, leaders’ and managers’ “actions to improve the quality of apprenticeship provision have not yet had sufficient impact”.
The Growth Company Limited, an independent learning provider based in Manchester, was also rated ‘good’ – up from its previous grade three – in a report published December 7 and based on an inspection in late October.
Governors and leaders at the provider, which offers study programmes, adult learning and apprenticeships, “promote a highly inclusive ethos”, according to inspectors.
“Programmes successfully engage apprentices and learners who face barriers to learning and employment,” it said.
Apprentices and learners were found to “develop good practical skills and produce work of a high standard”.
A “high proportion” of adults achieve “useful qualifications that help them to gain employment or progress to higher education”.
North East Lincolnshire Council saw its grade fall to ‘inadequate’, down from its previous ‘requires improvement’ rating, in a report published December 5 and based on an inspection in early November.
Six new apprenticeship providers had early monitoring visit reports published this week.
As previously reported by FE Week, two of these resulted in ‘insufficient progress’ verdicts on two out of three themes under review: Premier Nursing Agency Limited, and AMS Nationwide.
The remaining four were all found to be making reasonable progress in all three areas: System People Limited, Dutton Fisher Associates Limited, Intelligencia Training Limited and BIS Henderson Limited.
A further three providers had reports published as part of Ofsted’s monitoring of providers rated ‘requires improvement’. These were St Helens College, Stoke on Trent College, and independent provider MI ComputSolutions Incorporated.
The Institute for Apprenticeships has replaced Dame Asha Khemka as chair of the quality assurance committee, almost two months after she resigned from its board.
However, the IfA has still not replaced her vacant position on the board.
The IfA has now confirmed that Paul Cadman, a human resources director for Walter Smith Fine Foods and chief executive of Crosby Management Training, will take over her position as chair of the quality assurance committee.
Anthony Jenkins, chair of the IfA, said: “I am delighted to confirm Paul as the new chair.
“He has previously served in the role in an interim capacity and has a wealth of experience of apprenticeships.
“This will be invaluable to the committee and the key role it plays in upholding quality assurance.”
The IfA has also confirmed that Dame Fiona Kendrick will remain on the board, and is joining the audit and risk assurance committee, despite announcing that she will step down as chair of Nestle UK and Ireland at the end of the year.
Mr Cadman has been a government apprentice ambassador since 2012 and is chair of two trailblazer groups, which had developed standards in butchery, learning and development and human resources.
Paul Cadman
Dame Asha, who led West Notts from 2006, stepped down from the top job on October 1 following a “special meeting of the board of governors” held “in light of the current challenges faced by the college”.
A damning FE commissioner report, published on Friday, criticised “serious corporate failure”, lack of oversight and a “financial crisis” at the college.
Dame Asha was one of the most highly-paid principals in the FE sector, with a remuneration package worth £262,000 in 2016/17.
Two weeks before she resigned from her post on the IfA board, the institute insisted she remained a “valued member” .
It is clear that forecasting models for expenditure, before the Levy’s introduction in May 2017, significantly underestimated the reality, in terms of starts on high value apprenticeships with prices set at their cap.
In addition, the monthly funding methodology means payments quickly accumulate for on programme apprentices and new starts.
As a result, in the wacky world of FE funding, we have the majority of employer levy pots currently going unspent at the same time as plausibly the IfA forecasting a huge overspend in the overall budget.
The Department for Education contacted FE Week to say the IfA figures are “out of context”, yet the IfA stands by them (although refuses to share the whole presentation) and the education secretary, Damian Hinds, is not disputing the figures.
Hopefully the IfA and DfE will have an agreed position before the National Audit Office publish the outcome of their second enquiry into the apprenticeship reforms early next year.
Either way, if the IfA figures are even close to reality, reducing funding rates following their review process won’t be enough.
The first priority, as recommended by Ofsted’s chief inspection, Amanda Spielman, should be to focus on using the funding where it is needed most.
So, more funding for training young people entering the job market.
Less funding for training adults already in a job, particularly on management degrees that employers should not be subsidised for.
The skills minister, Anne Milton, understands this. In March, she told the education select committee that “fears of a middle-class grab on apprenticeships are valid”.
And when asked this week about the growth of management apprenticeships by David Hughes, the chief executive of the Association of Colleges, she said: “We need to look at do we continue to fund apprenticeships for people who are already in work, people doing second degrees.”
The fact is, levy funded employers are first in the queue to invest in apprenticeship training, but it is public money.
The government must now quickly and decisively step in and prioritise what that training is and who it is for.
