This week we reveal that an Institute for Apprenticeships sub-committee (that includes four board members) refused to approve the first PhD level 8 apprenticeship.
Instead, they asked the full board to rule whether a PhD level is even “in the spirit of apprenticeship policy”.
Four months on and the board is still in discussions with the DfE about an agreed level 8 policy, despite employers working on plans for a year, and the DfE is “looking carefully at what the priorities of the programme should be from 2020 onwards”.
The IfA hasn’t always given employers what they want, often quoting rules originating from the DfE when rejecting demands.
But there does appear to be far more concern over value for money and a weakening of the employer-ownership mantra, given it was only last May that their chief executive, Sir Gerry Berragan, told the education select committee: “The institute is completely agnostic about the level of apprenticeships” and “from my perspective, this is an employer-led process, and that is who we reflect.”
And at the same sub-committee meeting in December the IfA called for their board to consider if the “increasing number of degree apprenticeships, particularly at level 7, may put pressure on funding for delivery of apprenticeships at the lower levels, while cross-subsiding higher education from the apprenticeship budget”.
Despite this the IfA told FE Week this was not discussed at the following board meeting, so it remains unclear what the board think.
And as for the IfA chief executive, it seems if he does have a view he is not keen to share it, given ahead of our last interview it was a “condition that he wouldn’t answer questions relating to the levy and apprenticeships budget because that’s DfE responsibility”.
The truth is, as eloquently articulated by the DfE permanent secretary, the apprenticeship budget is on track to be overspent and hard choices will need to be made.
Now more than ever before we can be honest and say the employer ownership experiment has proved unaffordable.
The young people that would benefit most from the public funding should be in the driving seat, and the IfA could have an important role in helping define the priorities to make that happen.
Auditors were unable to properly scrutinise the finances of a failed University Technical College because important data was missing, but the government chose not to investigate this issue.
Accounts for the Greater Manchester UTC for 2016-17, finally published last month and over a year late, reveal that auditors gave a rare “disclaimer of opinion” on the state of the UTC’s finances.
This was because auditors couldn’t get their hands on data on income and expenditure, the school’s balance sheet or a statement of cashflow.
The UTC, set up by venture capitalist and Bright Tribe founder Michael Dwan, closed in September 2017, just three years after it opened. It had failed to attract enough pupils to be financially sustainable.
In the accounts, the auditors say they were “unable to obtain all of the information and explanations requested” following the departure of trustees and leaders during the 2016-17 year.
The documents also show the UTC closed with a £526,000 deficit, which had to be paid off by the government.
A “disclaimer of opinion” is one of four types of report issued by external auditors when looking at company accounts. It means a firm’s financial status cannot be determined. Such reports are rare in the academies sector; just three were issued in 2015-16 and 2016-17.
However, despite the rarity of such an audit outcome, and despite the fact the ESFA has previously investigated academy trusts and schools on the basis of internal financial information or concerns about potential financial irregularities, the DfE told FE Week no investigation was carried out in this case.
Lucy Powell, MP for Greater Manchester and a member of the parliamentary education committee, told FE Week: “The failure to supply adequate accounting information to the auditors is really concerning and is a further indictment on the management and oversight of this school.
“It beggars belief that the DfE has failed to undertake an investigation into this situation, which yet again calls into question the oversight and accountability of all these new fledgling schools. Large sums of public money were at stake and the DfE and EFSA need much better systems to account for its expenditure.”
She added a “catalogue of errors from the DfE, the ESFA and the school leadership” had contributed to the UTC’s downfall.
FE Week understands the ESFA must take into account the cost of investigations into academies, and may have chosen not to do so in this case because it was already due to close.
The UTC opened in September 2014, but was already showing signs of struggling less than two years later.
A flurry of directors resigned from the UTC in 2016. Michael Dwan and his brother Andrew left in November, but North Consulting Limited, a company owned by Michael Dwan, remained as the UTC’s company secretary until January 20, 2017.
Michael Dwan also remained as a controlling member of the trust until that date, along with the Bright Tribe Trust and University of Bolton.
A spokesperson for Dwan claimed he had resigned in July 2016, but continued to offer “some support to facilitate the transition”, which was given “at the request of the Department for Education”.
“He did not at any stage have any day-to-day operational responsibilities and was never made aware of any issues with the accounts or a lack of information. He was never approached for any documentation.”
A DfE spokesperson insisted the accounts “were signed off by the trust and the auditors”, but acknowledged the disclaimer of opinion judgment.
“New trustees were appointed in February 2017 to oversee the closure of Greater Manchester Sustainable Engineering UTC. The parent trust is still in place, pending all actions being completed.”
An investigation initiated by the Hadlow Group’s board into their former deputy principal has been taken over by the Education and Skills Funding Agency.
A spokesperson for the embattled group said the board is “co-operating with the ESFA” and “working closely with the agency to ensure the outcome is fair, proportionate and holds individuals to account”.
Amid a separate investigation by the FE Commissioner into financial irregularities at the group’s colleges – Hadlow College and West Kent & Ashford College – the principal of both, Paul Hannan, Hadlow’s deputy principal Mark Lumsdon-Taylor, two board chairs and several governors left their roles earlier this year.
It has been alleged Lumsdon-Taylor doctored emails from the ESFA to prove to the agency that he was entitled to claim extra funding, which he said had been agreed when Hadlow College adopted West Kent & Ashford colleges from K College.
The ESFA queried the claims following an audit of West Kent & Ashford College last year, and when it found it had not sent the emails Lumsdon-Taylor had presented them with, the agency demanded a significant sum of funding be returned.
Lumsdon-Taylor left his role on March 1 and received “no financial enhancement to his salary or payment after this date,” according to the group.
He has scheduled a press conference for June, entitled “MARK LUMSDON-TAYLOR talks about then…. now… and the future,” where it is understood he will respond to the FE Commissioner’s report, which is due to be published next month.
In the meantime, the college is evicting him from a flat he has on campus, with a spokesperson saying the college has served notice “regarding the inaction of his tenancy”.
It is understood that Lumsdon-Taylor is currently completing a Master of Science degree in Finance and Accounting at Manchester Metropolitan University, which the college agreed in 2018 to pay for.
The college would not give more exact details on when paying for the course was agreed and whether the decision was made by one of its committees.
A spokesperson said the college “does not expect to be paying any fees for any future years”.
A spokesperson for Mark Lumsdon-Taylor said he could not be reached for comment.
He became one of the leading figures at Hadlow College after starting work there in 2002, overseeing the creation of the Hadlow Group in 2014.
He was both a finalist in the 2018 Institute of Directors director of the year awards, and the winner of the UK financial director of the year (public sector and voluntary) award at the Business Finance Awards in 2014.
The regeneration of Betteshanger Colliery, which Hadlow College acquired in 2013, into Betteshanger Sustainable Parks was described as a “personal” project of his.
However, the college had to spend £1.2 million changing plans for the foundations of a park visitor centre and it lost out on £4 million when the sale of a business park at Betteshanger fell through.
This, combined with a failed application for £20 million from the ESFA transactions unit and the ESFA’s demands for funding to be returned, has left the colleges reliant on government bailouts for survival.
An independent provider that is part of the country’s largest college group has had its first Ofsted monitoring report published since receiving a grade three last year, and it returned stinging criticism.
The Intraining Group Limited, a division of NCG that currently trains nearly 2,500 apprentices, received three ‘insufficient progress’ ratings from the four areas judged. Both the provider and college group refused defend itself when asked for comment.
The focus of the divisional board is predominately on the financial performance
Inspectors found that the “focus” of the divisional board of Intraining “is predominately on the financial performance of the division” and members “do not focus sufficiently on the improvements needed to the quality of training for apprentices”.
“They do not demand information, from leaders and managers, in enough detail about the rate of improvements,” today’s report said.
Governors and leaders were criticised for being “slow to rectify the weaknesses identified at the previous inspection”.
A delay in “making decisions” means that the “lack of progress of too many apprentices remains a significant concern”.
As revealed by FE Week last month, Intraining was hit with a recent Education and Skills Funding Agency mystery audit that found major data manipulation.
It is understood the agency is not only demanding a significant clawback from the NCG division after finding evidence of achievement rate fiddling, but contract termination is also likely.
Today’s Ofsted report highlighted some data issues.
“At the time of the previous inspection and of this monitoring visit, leaders were overseeing a very lengthy transfer of performance data from one system to another,” it said.
“They have not completed this process. This means that they cannot identify the apprentices who are behind in their learning or those who are not developing the skills that they require to do their job well. In addition, leaders cannot ascertain if apprentices receive their entitlement to off-the-job training.”
Ofsted also found that until recently, leaders have not used quality assurance arrangements well enough to evaluate the performance of apprentices, and the “large majority” of apprentices do not achieve their qualification within planned timescales.
Around three quarters of apprentices who receive training from subcontractors remain on their programme beyond the planned date of completion, inspectors said.
They added that leaders have “carefully analysed” the reasons for the underperformance of subcontracted provision and have reduced the number of subcontractors they work with, “based on an analysis of potential risk”.
In terms of teaching and learning, leaders at Intraining have continued to make ‘insufficient progress’.
“During individual reviews with apprentices, tutors do not challenge apprentices to achieve beyond the minimum requirements of the qualification or achieve their qualification on time,” inspectors said.
“They do not use assessment information effectively to track all aspects of apprentices’ progress. Apprentices do not aim for, or gain, the knowledge, skills and behaviours of which they are capable.”
Ofsted found that most apprentices develop and improve their skills and knowledge “through the training that employers provide”, instead of Intraining.
The provider was, however, praised for “very recently” implementing a ‘Great Place to Teach’ initiative which “provides clear guidance for staff on the expected standards for the apprenticeship provision and on the professional values required from tutors”.
Leaders are also changing the staffing structure at Intraining and “developing further the system for data collection”, while the NCG board has “strengthened the governance arrangements at the group board level”.
Both NCG and Intraining declined to comment on the report.
Up to 300 jobs are currently on the line at NCG after it announced plans to close Intraining’s centres across the country, as well as the centres at the college group’s other private provider, Rathbone Training.
The providers currently train 4,500 learners between them, of which two-thirds are apprentices. Some could be forced to find alternative providers if the centres do end up shutting.
The Federation of Small Businesses has raised “serious concerns” about the apprenticeship budget and claims “over a quarter of apprentice employers say reforms have had a negative impact”.
In a report published today called ‘Fit for the future: making the apprenticeship system work for small business’, the membership body seeks to influence the forthcoming spending review with a series of recommendations.
The FSB said the government should ensure that small businesses are not excluded from the apprenticeship system, putting them in control of non-levy apprenticeship funding through the Apprenticeship Service after their migration to the service, which is expected next year.
It recommended the government should develop a “matching service” to support levy-paying employers to pass on unused funds to non-levy-paying employers and extend the current £1,000 incentive to those businesses with less than 50 employees who take on apprentices aged 19 to 24 from “selected labour market disadvantaged groups”.
The federation found only 40 per cent of eligible SMEs have received the £1000 incentive for hiring 16 to 18-year-olds, while a third said they were not aware of it.
Moreover, the government should “consider the feasibility of an incentive for start-ups who have never taken on an apprentice” and make training-related travel free for all young apprentices working for employers with less than 50 staff to ensure SMEs, “particularly those located in rural areas”.
The recommendations follow a survey by the FSB of 1,665 small businesses that found 42 per cent of SMEs see recruiting an apprentice the biggest challenge when engaging with apprenticeships, followed by management time this involves (29 per cent) and the 20 per cent off-the-job training (24 percent).
It also found 41 per cent of the businesses surveyed reported an increase in costs related to recruiting and training apprentices since the reforms.
Apprenticeships and skills minister Anne Milton said: “Large businesses can now transfer up to 25 per cent of their levy funds to small employers which will be a fantastic opportunity for smaller business. We are very aware of the support smaller business needs and will continue to work with them so they can take advantage of the fantastic opportunity an apprentice brings to their business.
“We want an apprenticeship system that works for all employers – big and small. Our reforms were designed and driven by businesses of all sizes to make sure apprentices learn the skills employers need. Apprenticeships are now longer, higher-quality, with more off-the-job training and provide for a proper assessment at the end.”
But Mike Cherry, FSB National Chairman, said many small firms are turning away from apprenticeships with some of the 2017 reforms being the cause.
“Changes like the explicit requirement for a minimum of 20 per cent off-the-job training, are causing real headaches,” he said.
While recognising the halving of the co-investment requirement to 5 per cent was a “major step forward” to reduce the cost of apprenticeships, there is a “real concern around the funding black hole” that is likely to hit with a significant overspend expected on the apprenticeship programme by 2021.
“Unless urgent action is taken we are in serious danger of making apprenticeships unaffordable for many of our small firms,” Cherry added.
“If apprenticeships become a privilege only for those that can afford them, we will worsen persistent skills shortages and gaps that are damaging growth and productivity.”
The FSB’s findings follow a National Audit Office report that warned the apprenticeship programme is not financially sustainable after the average cost of training an apprentice hit £9,000, approximately double of what the government predicted in 2015.
Union officials at two London colleges have written to the FE Commissioner requesting that he urgently investigates whether they should de-merge from the country’s largest college group.
Members of the University and College Union at Lewisham and Southwark colleges have been contesting their pay and conditions for years but claim matters have deteriorated even further since their controversial merger with NCG in August 2017. NCG’s headquarters are 300 miles away in Newcastle-upon-Tyne.
After allegedly failing to reach amicable solutions with their paymasters in the north, staff in London are now seeking investigations by the government.
NCG’s managerial and financial problems will result in the two colleges being left devastated
In a letter to FE Commissioner Richard Atkins expressing their “grave concern”, seen by FE Week, the local UCU branch at Lewisham and Southwark colleges said NCG’s management has had a “deleterious effect on the colleges’ provision and thus on students, staff and the wider communities that they serve”.
The letter explains that staff at Lewisham and Southwark colleges have “had to endure years of constant change, restructure, reapplying for their jobs, merger and de-merger, whilst watching a procession of very well-paid principals and senior managers come and go”.
It adds: “It is our fear that NCG’s managerial and financial problems will result in the two colleges being left devastated and unable to serve the communities of Southwark and Lewisham boroughs.
“We are, therefore, formally requesting that the FE Commissioner urgently investigates NCG’s management of Southwark College and Lewisham College to determine its fitness to operate the two institutions and whether their future could lie elsewhere.”
The college group announced plans last month to slash up to 300 jobs across its two training providers – Intraining and Rathbone Training – which came off the back of a damming Ofsted inspection as well as an Education and Skills Funding Agency mystery audit that found major data manipulation, as revealed by FE Week.
The group ran itself into financial trouble in 2017/18, generating a deficit of £7 million, according to its latest accounts.
A spokesperson for NCG said it was “disappointed to see this letter from the local branch of UCU”, particularly as NCG has been “working collaboratively with them for more than 18 months to develop a positive working partnership and successfully resolve some long-term issues”.
Lewisham and Southwark colleges were one entity when they joined NCG. In 2015 NCG suffered the dubious honour of being the first FE and skills provider in the UK to receive two grade fours in a row from Ofsted.
NCG announced the college was to become two separate colleges in September 2018.
The letter from the local UCU branch at Lewisham and Southwark colleges told the FE Commissioner this move had been announced “with a complete lack of transparency and without consultation with staff”.
“As part of this separation of the two Colleges, NCG has put forward a new management structure that makes little sense when contrasted against the reality of the two colleges,” the letter claimed, adding that current managers “who have run the different departments very successfully for many years now find their jobs are at risk”.
The spokesperson for NCG said the claims are “wholly inaccurate and we have responded to these previously in full”.
Asfa Sohail, the new principal of Lewisham College, said: “I’m surprised to see the comments from UCU, particularly as we have been in positive talks regarding the management structure moving forward – the most recent of these being only last Tuesday. The letter suggests that this management structure has been imposed on the colleges by NCG, however I would like to confirm that this is not the case.”
A loans-only provider has been rated ‘inadequate’ after Ofsted found it was using banned subcontracting.
The watchdog gave Be A Better You Training Limited a grade four rating as its freelance teachers were found to teach much of the provision, who then “delegate this work to others”.
Ofsted said managers failed to recognise these arrangements were subcontractors and secondary subcontractors, which is “prohibited under funding rules”.
Inspectors said managers have “not established any processes for managing subcontracts effectively”.
The Education and Skills Funding Agency previously recognised that it had problems overseeing loans-funded provision, particularly where much of it was subcontracted.
In August 2016 it banned new subcontracting contracts for advanced learner loans, with a complete ban coming into force the following year.
Be A Better You Training Limited, however, claims to have spoken directly with the ESFA who said “those individuals who are working under the direction and control of a provider, in the same way as their own employees are unlikely to be considered to be subcontractors”.
General manager Damian Foster told FE Week: “All of our freelancers work under our direction in the same way as our own employees, therefore are not considered as subcontractors.”
This isn’t the first time a loans provider has been found using banned subcontracting by Ofsted. In January 2017, Tyne and Wear-based Expedient Training received an ‘inadequate’ rating after inspectors reported that the “vast majority” of the provider’s personal training learners were “provided by an associate partner”.
The provider subsequently had its ESFA contracts terminated.
Be A Better You Training Limited was training just over 100 learners funded by advanced learner loans in fitness and personal training, as well as business and management, at the time of Ofsted’s visit.
The inspectorate gave the provider a grade four in every category judged, except for personal development, behaviour and welfare, which was rated ‘requires improvement’.
Aside from using banned subcontracting, Ofsted found that managers have designed a curriculum that “does not meet the needs of learners and, as a result, learners do not develop the skills, knowledge and understanding that they require for their next steps”.
Leaders have “not made appropriate arrangements for governance, and leaders and managers have not had impartial support or challenge to be effective in their roles”.
“Many” personal training learners “find it very difficult to secure employment, because they lack fundamental skills”, but managers “are not aware of this”.
Moreover, the quality of learners’ written work often “barely meets the requirements” of programmes and “too few” learners complete their qualifications within the expected timescales.
Quality assurance processes are “insufficient” to secure improvements in provision, according to the report, and tutors’ assessment of learners’ work “lacks rigour and too many staff accept substandard work”.
Inspectors also found the arrangements for safeguarding to be “ineffective”, as managers “do not follow their own procedures for selecting and vetting staff” by, for example, carrying out Disclosure and Barring Service checks.
Foster said the provider was “very disappointed” with the report and disagreed with the outcome.
The ESFA typically gives providers a three month termination warning notice following a grade four.
Asked how this would impact the provider, Foster said: “We will not be ceasing operations.
“As always we are 100 per cent committed to offering our students the best possible service and believe that on the majority our customers are happy with our service.”
Ofsted did point out in the report that most learners at the provider enjoy the training they receive and speak positively about their experiences and learners on personal training programmes benefit from interactive lessons that take place in high-quality gyms. They also develop their oral communication skills well.
Employers used 22 per cent of their apprenticeship levy funds in the 12 months to the end of January 2019 – a huge fourfold increase from the 5 per cent drawn down in the first nine months of the policy.
The skills minister Anne Milton revealed in a parliamentary answer yesterday that between May 2017 and the end of January 2019, levy-paying employers “utilised £601 million of the funds available to them to pay for apprenticeship training in England”.
This amounts to 15 per cent of the £3.9 billion total funds entering employers’ accounts in the same period.
In a separate parliamentary answer from last week, Milton revealed that in the 12 months from February 2018 to January 2019, £523 million, or 22 per cent, of the £2.36 billion received into employers’ apprenticeship service accounts had been drawn down.
FE Week analysis of the figures used by the minister shows that in the first nine months of the levy, from May 2017 to January 2018, £78 million of the £1.54 billion (5 per cent) paid into employers’ accounts was used to cover training costs (see table below).
Levy funds usage has therefore increased fourfold, but apprenticeship starts have only increased by one fifth (21 per cent).
Funding is automatically drawn down every month for the duration of the apprenticeship so as new starts are taken on the monthly usage, percentage rises much faster than the starts as it is includes some of the cost of the starts in previous months.
Milton explains in the parliamentary answers that the figures do not include other costs that the levy pays for, such as funding apprenticeships for small, non-levy paying employers, for English and maths qualifications and for extra support for apprentices who are care leavers or have special needs.
Large employers have been made to pay the apprenticeship levy since it was launched in April 2017. After a deduction for non-English employees and a 10 per cent top-up the monthly levy value appears in the employer apprenticeship system account, which they have two years to use.
In March, Keith Smith, the Education and Skills Funding Agency’s director of Apprenticeships, told the public accounts committee that employers are expected to lose around £12 million in May, or 9 per cent of what they paid in April 2017, when the first ‘sunset period’ arrives.
And in a webinar with FE Week during the Easter break, the government admitted for the first time the vast majority of the £400 million underspend from the Department for Education’s apprenticeship budget was taken back by the Treasury.
Asked how much cash the Treasury clawed back in the financial year to April 2018, Milton replied she “can’t give exact figures”, and referred the question to Smith, who said it was “just over £300 million”.
There’ve been many concerns raised that employers are not spending their funds quickly enough. The NHS, for example, told FE Week in March that it expects to lose a fortune when unspent apprenticeship levy funds begin to expire from May.
Recent policy changes have aimed to increase levy spending. From this month, levy-paying employers will be able to share more of their annual funds with smaller organisations, when the levy transfer facility rises from 10 to 25 per cent.
The 10 per cent fee small businesses have to pay when they take on apprentices has also been halved this month.
The government had hoped the apprenticeship levy would encourage more employers to invest in training and help it hit its manifesto target of three million apprenticeship starts by 2020. However, starts have fallen dramatically since its launch.
The latest figures, released on March 28, revealed that apprenticeship starts for January were down 21 per cent on the same month in 2017 before the levy was introduced.
FE Week analysis shows that an average of 85,246 starts are needed every month over the next 15 months to reach the three million starts target. Since May 2015, the average has been 38,251.
A college in financial crisis has announced plans to shed another 55 jobs in a move that is expected to save it £2.2 million annually.
West Nottinghamshire College has undergone a major restructure over recent years to try and find savings, with its staffing numbers falling from a high of 967 in 2013 to 744 last year – a 23 per cent drop.
At the end of February the college axed a further 75 jobs, and it told staff yesterday of a new consultation to make a further 55 redundant.
Crucially, it will ensure that we are sustainable moving forwards
“Unfortunately, 72 colleagues have been placed at risk of redundancy as part of proposals to lose 55 staff,” a spokesperson said.
“These are mainly in management and support roles, with very few direct teaching posts affected.
“This final phase has been informed by the curriculum-planning process for the 2019/20 academic year and will see the current breadth of provision retained at our campuses in Mansfield and Ashfield.”
However, the spokesperson added that the plans include the closure of the West Nottinghamshire College’s construction and employability training centre in Sheffield, which is “under-utilised and no longer viable”.
The college is in dire financial constraints. As FE Week revealed in March, the college’s government bailouts rocketed to more than £10 million in just six months.
Its main monetary issue was related to subcontracting rule changes that meant it had to drastically scale back on this provision and lose out on millions in management fees.
The financial strain surfaced in July 2018 when the college received an initial £2.1 million in exceptional financial support from the Education and Skills Funding Agency following the failed sale of its eLearning business bksb, which FE Week later revealed was requested just 48 hours before it was due to run out of cash.
West Notts’ 2017/18 accounts show that the college generated a £9.54 million deficit before gains and losses, up from £2.57 million the year before.
The turbulent year at West Notts has led to major leadership and governor changes. This included 14 new appointments to its board including a new chair, and a new interim principal after its former high-profile leader, Dame Asha Khemka, resigned in October.
We have worked hard to minimise the impact on students
The college ended the use of corporate credit cards for senior staff earlier this year, after FE Week revealed Asha had claimed more than £40,000 in expenses over five years.
The West Notts spokesperson said the proposed job losses are designed to bring “financial stability and ensure we are the right size to serve our communities”.
“In developing these proposals we have worked hard to minimise the impact on students, in particular on their teaching and learning, although some non-essential student-facing services will be delivered slightly differently,” he added.
“These changes are no reflection on our hard-working and dedicated staff, who have remained extremely professional during this difficult time. We are committed to supporting all those affected and will seek to place people into other roles wherever possible or help them find employment elsewhere.
“Although highly regrettable, the measures are expected to save £2.2m on our annual pay bill and are another crucial step towards our financial recovery.”
