The FE Commissioner, Richard Atkins, was due to visit West Kent and Ashford College following their Ofsted grade three late last year.

In the week before the scheduled visit, he was tipped off by another principal that Hadlow College had run out of cash and the finance director was about to quit.

They had approached the other college for help, but instead, the principal alerted Atkins to what “sounds really serious”. 

Here, in Atkins’ own words, tells FE Week editor Nick Linford what he found when he arrived at Hadlow College in early February.

Four of us went into the college four times in early February, including former principals and chartered accountants, and we were genuinely shocked by what we found.

After the tip-off, they were about to run out of money, I knew when we arrived things were going to be difficult.

When we walked through the door the vice principal, Mark Lumsden-Taylor, had already resigned and was on gardening leave.

He still lived on the premises but had already left his employment by the first day we arrived. 

The principal, Paul Hannan, was in the college on the day we arrived.

He was not well and he left the college at midday to see a doctor and he did not return, and I do not think he ever came back from that moment.

I was also told the vice-principal was suffering from ill-health.

So when I arrived, I was confronted with both the vice principal and principal saying they were suffering from ill health. 

But I was able to meet with key governors and other senior leaders, and it became really obvious to us very quickly – the governors had been failing in their fiduciary duty.

Hadlow was completely running out of money and would not be able to make the payroll in February without exceptional financial support.

There was a real determination not to receive difficult feedback

There had been very poor communication and lack of transparency and we had serious concerns about clerking and about audits.

We could see mission drift, very overly complex subsidiary company arrangements, over-complex relations between the two colleges and governance.

There were also irregularities in additional learning support funding which we had first begun to identify at the end of area review.

Then there were what I would describe as inaccurate self-assessments, with Hadlow still self-assessing as “outstanding” for overall effectiveness and for leadership.

And something I see in a number of colleges that fail – there was a real determination not to receive difficult feedback.

They were still celebrating their Ofsted “outstanding” from nine years previously, and they found any form of difficult feedback during area review, or during our intervention,
very difficult to deal with.

They couldn’t recognise it.

We found things like Betteshanger, which we struggled at first to understand – the vineyard, the cookery school.

Neither seemed to be financially successful, nor core business.

Hadlow would not be able to make the payroll in February

Given the combination of running out of money and the very poor governance and leadership at the college in previous years, it was inevitable this college would end up in
administration.

I’m saddened that has happened, but I think it was absolutely appropriate.

The education administrator has a legal responsibility to take forward investigations into the various concerns we have about what we found when we went there in February, in terms of mismanagement, poor financial info and potential irregularities, of which there are several.

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Are you tough enough? FE Commissioner on the hunt for deputy and advisers

The Department for Education is on the hunt for a new deputy FE Commissioner and four advisers for the commissioner’s office.

According to an advert posted on the Cabinet Office website, the deputy commissioner role can earn up to £140,000 a year for a maximum of 200 days’ work and would involve supporting the commissioner, Richard Atkins, in diagnostic assessments, interventions, local provision reviews, and structure and prospects appraisals.

Colleges that are at risk from a quality or financial issue can receive a diagnostic assessment from the commissioner, where their approach to managing risks is appraised.

The much more serious formal interventions involve the commissioner assessing the capacity of the existing governance and leadership at a single, troubled institution, and recommending changes to help its outlook, and that of its learners.

Formal interventions have previously taken place at Hadlow College (see above), West Kent and Ashford College and North Warwickshire and South Leicestershire College to name a few.

Local provision reviews were announced in April, and involve looking at an area, rather than an isolated institution.

The DfE was criticised by the Association of Colleges at the time for not including small “non-viable” school sixth forms, which it said are too costly and compromise too much on quality.

A structure and prospects appraisal is currently being carried out at Hadlow, and involves reviewing options for changing an institution’s structure.

Deputy commissioners also lead the FE advisers, who can earn up to £120,000 a year for the same maximum number of days, and who help determine the best way in which further education can be delivered in any given area.

Anyone interested in either role has until midday on 5 June to submit their applications, with final interviews scheduled for between 28 June and 3 July. 

The government has unveiled its new branding for T-levels, in what has been described as the “first step” toward raising awareness ahead of their rollout in September 2020.

The ‘NexT Level’ brand logo (pictured), designed by marketing firm Havas Worldwide London Ltd, to the tune of £250,000, has been shared exclusively with FE Week as a sneak peek to a full branding toolkit, which will include leaflets and “social assets” and be released in “due course”.

An extra £3 million will now be handed to Havas for the implementation of a campaign in 2019/20 to help recruit the first wave of students for the new technical qualifications.

Raising awareness of T-levels among parents and employers is proving to be a huge challenge for the Department for Education. In September, a survey of over 1,000 parents of children aged 11 to 18 commissioned by the Chartered Management Institute found that two-thirds had never heard of the qualifications.

The department is also struggling to convince enough employers to offer the lengthy industry placement component of T-levels, which must last a minimum of 315 hours. Up to 100,000 industry placements will be taken each year when the full rollout commences.

“T-levels will be the biggest change to technical education in a generation,” said skills minister Anne Milton. “Right from the start we have worked with employers, young people, their parents and education providers. I want more and more people to understand that T-levels are a high-quality, advanced and desirable qualification, with employers at the heart of their design.

“I can’t wait for more people to learn about what T-levels have to offer and how they can open up a world of exciting options.”

The DfE said the branding has been designed in consultation with employer panel members, FE providers, young people and parents.

A procurement for a firm to lead on the work was put out by the department earlier this year and won by Havas in February. The contract is expected to run for 26 months.

Tender documents show that for the development of a “T-level brand and campaign strategy development and some initial implementation” the successful bidder would receive £250,000.

There has been a slight delay to the launch, as the documents also state that the DfE would “like the T-level brand to be ready in regional marketing activity by March-April”.

The budget for 2019-20, for T-level brand and campaign implementation, is “anticipated to be up to £3 million, subject to DfE financial approval and Cabinet Office professional assurance”, the tender documents added.

“The budget for 2020-21 is subject to allocation of resources at the next comprehensive spending review.”

The first three T-levels – in digital, construction, and education and childcare – will be taught from September 2020.

Qualifications in health, healthcare science, science, onsite construction, building services engineering, digital support and services, and digital business services will then be taught from 2021.

By 2022, the government will introduce the final wave of T-levels – 15 in total.

A damning FE Commissioner report has revealed how Hadlow Group’s leaders concealed the truth of its financial position until the college needed bailing out, in a “corporate failure of leadership”.

Richard Atkins’ reports on Hadlow and West Kent and Ashford College were published on Thursday, the day after the High Court put Hadlow into education administration – the first time that has ever happened to a college.

The report reveals how a clique of leaders and governors ran the college on their own, having cut out executive team members and left board members and the government completely unaware of the “extremely serious financial situation” at the college.

Deputy principal Mark Lumsdon-Taylor declined to comment after the commissioner report said he and principal Paul Hannan made decisions themselves and reacted “strongly” when challenged by others.

Entwined government arrangements, where the college shared an audit, finance and governance committee, led to a few individuals having “significant sway” over all the organisations in the group, the report said.

In his report, the commissioner argues the board failed in its fiduciary duty and put the sustainability of the two colleges and its learners “at risk”.

“Loans” were the key evidence behind the commissioner’s team’s claim that there were “significant and long-standing” concerns about the reliability of data at the college.

This extended to the college’s grade one Ofsted rating from 2010, as the emerging issues with leadership, governance and management brings into question the board’s self-assessed grade of “outstanding” for the past three years.

Achievements in its 16-19 study programmes fell by 2.7 per cent between 2015-16 and 2017-18, from 86.1 per cent to 83.4 per cent.

An Ofsted spokesperson said the regulator was “aware” of the achievement rates for 16-19 provision at Hadlow College and would continue to keep the situation under review.

A spokesperson said Hadlow College and WKAC have already begun implementing the FE Commissioner’s recommendations, including those to recruit an interim chief financial officer and increase the financial expertise on the board, and the college is working on addressing its clerking, governance and auditing.

The two colleges have also separated their boards, each of which has a new chair, and a buyer for its £40 million subsidiary Betteshanger Park site is being sought, with the intention of finding one by July 31. 

This is after the commissioner challenged the college to justify the educational rationale for the college’s involvement in the business.

The commissioner did take the opportunity to refer to the dedication and commitment of the college’s staff, in what the spokesperson said “continues to be a challenging time for them”.

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ESFA failed to check accounts

The Hadlow Group’s financial crisis could have been caught sooner, had the ESFA checked the college’s self-assessed financial health score of “good” against its accounts and realised that the college had not included borrowings, such as a £3 million loan.

Every year, colleges have to send the ESFA financial data to calculate a financial health score.

The college sent ESFA data in which they claimed to have a “borrowing as a percentage of income” of 24.41 per cent.

This would have been given an automatic financial health score of 80 out of 100 by the ESFA, according to the college financial planning handbook.

But analysis by FE Week of the Hadlow College accounts found the borrowing percentage was in fact 45.35 per cent.

This would have scored 40 out of 100 and would explain a shift in the score from “good” to “inadequate”.

The commissioner’s report found “material differences”, particularly in relation to loans, between Hadlow’s annual accounts and its self-generated score of “good” in 2016-17.

The 2016-17 Hadlow College accounts show that, for example, in addition to long-term college bank loans, one of their subsidiary businesses, Grove Farm Park Limited, took out a substantial £3.3 million eight-year loan in 2015.

FE Week spoke to a financial adviser who works with many FE colleges, and who criticised the ESFA’s assurance role on this occasion.

“Accountants don’t audit the financial record. There is an expectation the ESFA will check the financial record they receive from the college against the statutory accounts.

“Clearly with Hadlow College, this did not happen, which brings into question what, if anything, the EFSA does to check the reliability of the data they receive.”

Skills minister Anne Milton has promised an independent review into processes for monitoring college finances, saying: “The DfE will be undertaking an independent review to check whether there is anything more we should do to make sure we know if things like this are going on at a much earlier stage.

“I have also asked officials to check whether we have proper procedures in place for whistleblowers.”

This comes after the FE Commissioner’s report made reference to concerns that had been raised during their visit about whistleblowing. 

Milton added that the government’s immediate focus is on minimising disruption to staff and learners.

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Who runs Hadlow College now?

A High Court judge has approved the appointment of three administrators – all of whom are from the same firm, BDO – to take over the running of Hadlow College.

The administrators’ objectives are to protect provision for existing learners, then seek the best outcome for creditors.

Education administrators do not have to have direct experience of the FE sector, but they can consult sector experts for advice.

The FE Commissioner has already said he will be making recommendations to them about the college’s future.

They are not obliged to consult any specific person about redundancies, though the college has stressed it envisages no changes to staffing as a result of the appointment of administrators.

The directors of a provider that had its government funding contracts terminated following an FE Week exposé only have to pay back £200,000 following its liquidation, despite owing nearly £3 million to creditors.

Furthermore, the amount, which is likely to go straight into the pockets of the insolvency practitioners to cover their fees, has been arrived at even though the directors’ new business is producing millions in profit.

In 2016, Paul and Joe Alekna switched the ownership of a successful provider they ran from one parent company – eResponse – to another, before transferring out £6 million, liquidating it and leaving learners and creditors on the hook for millions of pounds.

Meanwhile, the brothers continued to run another provider called Options 2 Workplace. But when FE Week exposed the situation, the Education and Skills Funding Agency cancelled its contract and eResponse – which changed its name to ER Training & Development Limited after the revelation – went insolvent in August that year.

A liquidator’s statement published in October 2018 shows the company owes £2,783,953 to creditors. The HMRC alone is owed £614,861.

FE Week has now learnt that a “settlement agreement” has been reached, which will see the directors pay £200,000 to the liquidation.

In January 2017 it was agreed that the liquidators would be paid a “set fee” of £125,743 for their work, according to the statement published in October.

It goes on to state that these fees have now been “exceeded”, and that the liquidator will “review the position as regards fees when the prospects of realising the remaining assets becomes clearer”.

The total fees being claimed by the insolvency practitioners are not known, but they are likely to be close to the £200,000 settlement – meaning there won’t be much left for creditors.

The insolvency practitioners and the directors were approached for comment but none provided a response at the time of going to press.

Since the insolvency of eResponse, the Aleknas have launched a recruitment firm called Workforce Solutions Group Ltd.

Its latest accounts show its turnover grew from £9.5 million in the five months from April 2016 to September 2016, to £26.75 million in the 2016-17 financial year.

The company made a gross profit that was just shy of £5 million in that year.

Workforce Solutions Group Ltd hasn’t gone without controversy since opening. In November FE Week revealed its links with a mysterious training provider called SCL Security Ltd, which has taken £16.5 million from Brooklands College over the past three years to deliver hundreds of level 3 IT apprenticeships, for mostly 16-to-18-year-olds, despite having fewer than 10 staff.

SCL Security, which has since been suspended from recruiting apprentices following the launch of an ESFA investigation into its operations, claims on the government’s Find Apprenticeship Training website to “operate training centres nationwide”, but its own website makes no reference to any training venues – the only address is for a head office in Kent.

However, a Google Maps search locates one of their training sites as “9 Church Road, Redditch” – the same building that Workforce Solutions Group operates out of.

Paul Alekna previously told FE Week that Workforce “specialises in temporary and permanent staffing, focusing in the manufacturing, logistics and transport, food manufacturing and office appointments sectors”, and insisted “that’s all we do”.

But he refused to deny that Workforce and SCL Security have a working relationship.

The investigation into SCL Security is ongoing. The principal and chief executive of Brooklands College, Gail Walker, has since resigned.

A significant apprenticeship provider plans to stop recruiting in the care sector after the government rejected calls to increase funding rates.

The “devastating” decision is being taken by Surrey-based Professional Training Solutions (PTS) Limited, which offers hundreds of apprenticeships every year, mostly in health and social care.

It was desperate for the Department for Education to double the funding bands for the level 2 adult care-worker and level 3 lead adult care-worker standards, which have recently been reviewed by the Institute for Apprenticeships, to £6,000.

As a business I cannot sustain these poorly funded standards

The provider’s managing director Jackie Denyer told FE Week she is working at a 9 per cent loss upon achievement, and a 30 per cent loss if an apprentice doesn’t achieve, at the current band of £3,000.

But despite a robust plea from the trailblazer group which developed the standards, the government decided to keep the rates as they are.

Officials have now been accused of undervaluing the care sector, with one other provider branding the decision a “disgrace”.

“As a business I cannot sustain these poorly funded standards,” Denyer said.

“I’m devastated because it is something I feel really passionate about. The care sector is low paid and made up predominantly of women, and I’m devastated that the government undervalues the people who underpin the whole economy.”

It comes at an awkward time for the IfA, which announced last week it will soon start evaluating the impact of its controversial funding band reviews, and promised to “take action” where reductions have made delivering apprentice training non-viable.

In recent months, major retailer Halfords has scrapped all of its level 2 provision and blamed the move on the IfA’s decision to cut the funding for the standards it delivered. Meanwhile, Scania, a leading manufacturer of heavy trucks and buses, has warned that its industry’s long-term skills strategy is threatened by the proposal to slash funding for the apprenticeships it delivers.

Jill Whittaker, the managing director of HIT Training, offers around 1,500 apprenticeships every year on the care standards that didn’t see their rate increased.

She told FE Week her provider will continue to deliver them despite also working at a loss as “we believe strongly in the value of the care sector to our society”. However, they will need to “reduce the amount of face to face time that our staff spend with apprentices to minimise losses on these programmes”.

“It says something shocking about the society we live in that its government places little value on the skills of people who care for our most vulnerable citizens,” Whittaker said.

“Only this week Matthew Hancock, now health minister but previously minister for skills, was talking about investing in skills in the care sector to ensure carers and healthcare staff are properly trained.

“If this investment is skimped on as part of the IfA’s driving down of costs then we will have apprenticeships based on the lowest common denominator, driven by price not quality. It’s a disgrace.”

Our dear loved ones need support but are denied decent funding for the sector that trains the staff needed

Home Counties Carers is one employer that currently works with PTS to offer care apprenticeships. Its head of care, Ingrid Clift, said the company will “really struggle to provide these” following the decision of the provider to stop delivering the training.

“We are working in a sector where there is never enough staff due to an ageing UK, low wages, bad working conditions, long hours and more,” she said.

“Yet the expectation is that good-quality, caring, effective, responsive, safe and well-led care is provided 24/7.

“Our dear loved ones need care and support but are denied decent funding for the sector that trains and develops the staff needed to care for these precious people.”

A spokesperson for the IfA insisted the government is “fully committed to supporting apprenticeships at all levels and across all industry routes”.

“The aim with all standards that go through the funding review process is to ensure the funding band we recommend provides for quality apprenticeship training and assessment,” he added.

“Each standard is considered on its own merits following the same rigorous processes. This was the case with the care standards.”

PTS will continue to deliver some apprenticeships in health and social care, including the early-years educator and the nursery assistant standards, as well as in other sectors, such as business administration, customer service and leadership and management.