Funding bands for ten of the 30 apprenticeship standards which have been under review by the Institute for Apprenticeships & Technical Education since last December were approved by education secretary Damian Hinds this week.

Changes for those that have had their funding reduced will come into effect for apprenticeship starts from August 5, 2019, while those that have increased will have their new funding band implemented for starts from May 7, 2019.

FE Week has explored what kind of impact the changes might have…

Hopes that rate rise will stimulate demand

The trailblazer group responsible for designing the aviation operations manager standard is flying high, as the sole beneficiary from this week’s announcement on revised  funding bands.

The rate for the level 4 standard, which has a typical duration of 24 months, will be increased from £5,000 to £7,000.

The Aviation Industry Skills Board, an apprenticeship board made up of the same companies that developed the standard, has welcomed the increase, saying it “now reflects the true cost involved to deliver the standard”.

The board does not anticipate that the number of providers that offer the apprenticeship will grow significantly as a consequence of this change, due to it being such a specialist field.

However, a spokesperson said they were “hopeful” the increase would enable a greater number of employers to offer the apprenticeship. 

The standard, which was approved for delivery in August 2016 , has had six starts so far in 2018-19, up to March.

FE Week reported in July 2018 that the standard had been available for over a year but had had zero starts – one of three aviation industry standards that were in that position.

A spokesperson for Heathrow Airport explained it was a “very complex” standard, which could only be taught by industry experts with knowledge of specific airport procedures.

There are six specialist functions an apprentice on this standard must select, including aircraft-handling manager and flight-operations manager in an air-traffic control setting.

Disappointment after rate reductions

Three popular apprenticeship standards have borne the brunt of the cuts.

The level 3 engineering design and draughtperson had its rate cut from £27,000 to £24,000.

The funding band for the level 2 financial services customer adviser standard will drop from £4,000 to £3,500, and the level 3 motor vehicle service and maintenance technician (light vehicle) standard has been cut from £18,000 to £15,000.

The latter has been under review since May and was the last course from the IfA’s first review to have its new funding band approved; the other two have been under review ince December.

The motor vehicle and maintenance technician (light vehicle) standard has had 4,823 starts since it was approved for delivery in October 2015.

A spokesperson for a provider of the standard, Calex UK, said it was “disappointed” and that this was an outcome “it did not support”.

There have been 298 starts on the engineering design and draughtperson course since it was approved for delivery in April 2016.

Philip Davies of engineering firm Wood, who serves as chair of the trailblazer group for the standard, said: “Industry is working with providers and EPAOs to support the ongoing delivery of this apprenticeship within the new funding band.”

There have been 2,675 starts on the financial services customer adviser standard since it was approved for delivery in August 2015.

A spokesperson for high-street bank Santander, lead employer for the standard, said: “Any funding reduction is clearly a disappointment but the trailblazer group is not planning to challenge this.”

The future of a small land-based college attempting to avoid a merger is again in question after a second shock grade four.

In 2018 Moulton College was found to be delivering “unsafe” training by Ofsted and hit with its first grade four. It was also subject to FE Commissioner intervention over their finances, which resulted in a recommendation to merge.

But with a new chair of governors and an interim principal making improvements to the finances, the college was permitted to follow a standalone strategy and recruit a full-time principal.

The Moulton board will consider the findings and take the necessary actions once this is received

The college also received an Ofsted monitoring visit in November, which reported the college was making “reasonable progress” in most areas, but “insufficient” in one field.

“The new leadership team has strengthened governance arrangements significantly since the previous inspection,” the report said.

Meanwhile, minutes from a board meeting this February show that the college’s “self-assessment report” predicted its overall Ofsted rating this time round would be a grade three.

But FE Week has learnt the education watchdog has in recent days returned for a full inspection and will slap the specialist college with the lowest possible rating.

Moulton has been in FE Commissioner intervention since February 2017 due to its poor financial health. In April 2018 a report by Richard Atkins’ (pictured top right) team found a “high level of commercial loans” and that “whilst cash balances at February 28, 2018 are healthy, they are anticipated to fall back by year-end”.

“A range of initiatives are already under way, though the scale of the task may warrant the need for additional short-term support,” it added.

One of the cost-saving decisions was to close the college’s garden centre, which is expected to be sold. The college has also received cash from the government’s strategic college improvement fund.

Moulton’s accounts for 2017-18 show a £19 million long-term loan from Santander, and a £3.5 million revolving credit facility with the bank, of which £3.1 million was drawn down at July 31, 2018.

Under the going-concern section of the financial statements, it said that seeking a merger partner “will secure the medium to longer term financial security required for the college to be successful”.

“A structure and prospects appraisal, led by the FE Commissioner, was concluded in July 2018, with the outcome that the college would work with a merger partner to secure its long-term future,” they added.

Despite the clear financial and quality-of-provision concerns, FE Week understands that Moulton, under the leadership of its new chair David McVean (pictured top left), who started in February 2019, is pursuing a standalone strategy.

McVean is a former civil servant of 30 years, with his final role being “regional director for the ESFA, ensuring compliance for academies in the Midlands and south-west of England”.

The board also recently appointed a permanent principal, who is due to start in September. She will take over from Ann Turner, who has been interim principal since May last year.

The college had been pursuing a merger with Abingdon & Witney College following previous recommendations by the FE Commissioner, but this has now collapsed.

“We can confirm that all merger activity between Moulton College and Abingdon & Witney College ceased in December 2018,” an Abingdon & Witney College spokesperson told FE Week.

Minutes from a Moulton board meeting this February stated that the “corporation had agreed that the college would remain as an independent, standalone, specialist college”.

Asked about its second “inadequate” rating and the reasons why it wanted to pursue a standalone strategy, Turner told FE Week: “The Ofsted report has not yet been received and therefore the college cannot comment.

“The Moulton board will consider the findings and take the necessary actions once this is received.”

She added: “The board has agreed a strategy with the FE Commissioner that we will continue to build our capacity, whilst not ruling out partnerships and mergers that ensure Moulton students get the very best experience.”

The permanent principal starting at Moulton in September is Corrie Harris, the current vice-principal at the Bedford College Group. She joined the group when Tresham College, which was rated “inadequate” in 2016, merged with it in August 2017.

Harris was vice-principal at Tresham at the time of its grade four, and took on the interim principal role there for a time after its then-principal, Stuart Wesselby, resigned.

A leading manufacturer of heavy trucks and buses has warned that cutting the funding band by £3,000 for an apprenticeship that it helped to develop threatens its industry’s longterm skills strategy.

Scania (Great Britain) Limited, which has nearly 50,000 employees globally and produces heavy commercial vehicles, has addressed an open letter to Damian Hinds, as well as skills minister Anne Milton and education select committee chair Robert Halfon.

In the letter, sent to FE Week, the employer claims that reducing the £18,000 funding band for the level 3 heavy vehicle service and maintenance technician standard to £15,000 threatens the healthy flow of apprentices which “our industry’s long-term skills strategy relies upon”.

The funding band for the standard, which has had 1,171 starts since it was approved in 2016 to March 2019, has been under review by the Institute for Apprenticeships & Technical Education since December.

Although new funding bands were announced this week for ten of the 30 standards that have been under review since December, the funding for the heavy vehicle service and maintenance technician standard is one of 20 that has yet to be confirmed.

Scania, which has employed around 450 apprentices in the UK over the past three years, says they have been told by the IfA that there is an intention to cut the funding band by £3,000.

This, it says, “will have serious consequences for UK industry, society and the economy, as it will most certainly lead to fewer apprentices being taken on, thereby adding to the burden of the nation’s already considerable skills shortage”.

The letter also warns that any cut in funding is likely to cause, in many instances, a “reduction in the quality of training that apprentices receive. We therefore request your support by ensuring the funding decision is reconsidered, so that there is no reduction in funding.”

A DfE spokesperson said the reviews “identify the most appropriate funding band to support high quality delivery, and provide value for money for employers and government”.

A spokesperson for the IfA added: “The heavy vehicle service and maintenance technician standard funding band is included in the review, and a final decision has not yet been
reached.

“The employers on the trailblazer group have been consulted and are being kept fully informed on the progress.”

Anne Milton originally asked the institute to review the funding bands for 31 standards in May last year, while a further 30 were put under review in December.

The first review led to a number of popular standards, including the controversial level 6 chartered manager apprenticeship, having their funding cut by thousands of pounds.

The cuts have proven deeply unpopular with trailblazer groups of employers, which developed the standards.

This manifested itself in a surge in the number of appeals against the reviews: there were eight appeals from trailblazer groups in 2017; but in January 2018, there were more than
five times that many, at 42.

The funding band cuts, specifically the £4,000 reduction to £3,000 change for the level 2 retailer standard, have also been blamed for major retailer and employer provider Halfords scrapping its entire level 2 provision last month.

Halfords’ decision, and Scania’s letter, shines an uncomfortable spotlight on the government’s policy of putting employers in the driving seat of the apprenticeships system.

A research paper published in March by the Association of Employment and Learning Providers and the Further Education Trust for Leadership urged the government to move away from this “unhelpful” mantra after finding it was “more rhetoric than reality”.

The National Audit Office said in its apprenticeships review in the same month that lowering funding bands was one measure to control the apprenticeship budget, which the IfA
warned in December was in danger of being overspent.

However, the NAO warned such measures were “likely to be unpopular and could damage confidence in the programme”. 

A college has come under heavy criticism for significantly enhancing the employment conditions of its senior staff ahead of entering a merger consultation.

After a whistleblower approached FE Week with concerns, the chair of Stephenson College confirmed that the board approved pay rises and notice period extensions to 12 months in 2015 for all executives, including the long-serving principal and Association of Colleges board member Nigel Leigh.

The college denied that this had anything to do with the plans to merge with a larger college which were being explored “at the time”.

It could be argued the improved employment terms was an appropriate way to maintain stability

A spokesperson for the UCU described the enhancements as “a tone-deaf move which flies in the face of widespread calls for senior pay restraint in colleges and shows that, when it comes to pay and conditions, it’s one rule for those at the top and another for the rest of the staff”.

She added that there had been a “concerning” lack of transparency around the pay rise.

According to the college’s accounts, Leigh’s pay has risen 15 per cent in the past three years, from £125,653 to £145,000, during which time the post-16 area review recommended that Stephenson College be taken over by North Warwickshire and South Leicestershire College.

The plans for merger were progressed to an advanced stage, but it is understood that by March 2018 discussions had ended and according to NWSLC’s audit committee minutes the college had agreed to collaborate with Stephenson, but Stephenson had not accepted the offer that had been made.

The chair of governors for Stephenson College, Chris Brown, became chair in December 2018 and was on the college remuneration committee at the time the enhancements were approved for senior staff.

He defended the decision, telling FE Week: “In 2015, the board at Stephenson College took the decision to secure the retention of a high-performing senior management team, to safeguard student outcomes through increasingly turbulent times for the sector.

“This had nothing to do with merger explorations happening at the time. 

“The number one priority was, and is always, ensuring a thriving further education offer for our local community.

“Since the board took that decision, the college has maintained a ‘good’ Ofsted grade and is in outstanding financial health.”

FE Week spoke to a consultant with experience of mergers, who didn’t want to be named but said extending the notice period could be seen as “a cynical move from the college to look after their own”.

They also said they had not come across this situation before, and theorised the board may have concluded that asking the senior team to implement a merger in which they may be made redundant was “like asking turkeys to vote for Christmas”. 

“So, it could be argued the improved employment terms was an appropriate way to maintain stability,” the consultant said.

Stephenson began exploring a merger with Loughborough last year, and a £100,000 transition grant that had been made available was used by Loughborough to carry out due diligence.

A spokesperson for Loughborough College said the merger is currently paused while the two colleges explore unrelated matters.

“There has never, at any time, been a discussion between Loughborough College and Stephenson College regarding the executive contracts of either organisation,” the spokesperson continued.

“Further, as all HR matters are part of the due diligence process, they are, and will remain, subject to a non-disclosure agreement.”

It is understood that Stephenson College has since begun merger talks with Brooksby Melton College, which did not provide a comment for this story.

NWSLC also did not provide a comment.

The criticism of the senior pay decision at Stephenson College comes shortly after the Association of Colleges said it wanted to make the process of deciding senior pay at colleges fairer and more transparent.

Last September it published a senior pay code, which “draws on the good practice in colleges and from other sectors and will help colleges show that they are acting responsibly, fairly and openly”.

The guidance states that senior staff shouldn’t get a pay rise unless all staff do, principals cannot be involved in deciding their own pay, and colleges should publish principal salaries publicly and separately.

Although the move appears to be rare, FE Week reported in April 2017 (following contact from a whistle blower) that the principal of City of Liverpool College, Elaine Bowker, had her employment notice period extended to 12 months at the same time as FE Commissioner intervention.