The buyer of apprenticeship giant Aspire Achieve Advance will have to pay £500,000 in “deal fees” by the end of 2018.

FE Week revealed last week that the crisis-hit training provider, commonly known as 3aaa, has put itself up for sale in the midst of a government investigation into the company.

A sales document, seen by this newspaper, shows that the purchaser will however receive a bill of £100,000 in October, £300,000 in November, and £100,000 in December.

It is unclear at this stage what the hefty “deal fees” will cover or who they will be paid to, but it is likely to go to 3aaa’s lenders, Beechbrook Capital, who gave company a cash loan of £5.5 million in April.

According to a 3aaa cash statement, the training provider paid its lender £516,837 in deal fees as of July 31.

FE Week understands that one of the reasons the sale is going ahead is because the terms of the Beechbrook loan have been broken and the lender wants to claim back their money.

It is also understood that the government is supportive of the 3aaa sale on the basis that its co-founders, Peter Marples and Di McEvoy-Robinson, will not benefit from it financially.

A condition of the sale is that it must be an apprenticeship provider that buys the business – meaning the £500,000 will be yet more public funds going into the hands of a private company if it is claimed by Beechbrook.

Beechbrook declined to comment on the transaction fees.

FE Week also asked Beechbrook and the Department for Education what assurances have been made that the business will not be wound up as soon as the training provider is paid its standard monthly funding of more than £2 million on October 12.

A DfE spokesperson would only say: “We do not comment on ongoing investigations.”

Beechbrook again declined to comment.

The deadline for indicative offers for 3aaa was October 4. BDO is the accountancy firm heading up the sale. When asked about the transaction fees, a spokesperson said: “It is BDO policy not to comment on specific companies, engagements or market speculation.”

In an “overview information” document about the sale, 3aaa claims the training provider achieved an ‘outstanding’ rating in all areas from Ofsted in May 2018.

This is despite the education watchdog declaring its inspection of the company “incomplete” in July following the launch of an ESFA investigation into its achievement rates.

3aaa is currently suspended from recruiting apprentices while the probe is being carried out.

This is the second time 3aaa has been investigated by the government. In 2016, auditing firm KPMG was called in to investigate claims by a whistleblower and found dozens of funding and success rate “overclaims”.

BDO’s investment opportunity document states: “The ESFA has placed a temporary block on new learners whilst an investigation is undertaken in to achievement rates, prompting the shareholders to seek an exit.

“Alphabet [3aaa] is in pro-active dialogue with the ESFA with a view to lifting the learner block in the shortest period possible.”

Since the launch of the investigation, 3aaa’s co-founders have resigned.

Following its suspension on recruiting apprentices, the training provider “instructed” senior employees to tell its staff to not date any paperwork for “planned enrolments”.

3aaa had the largest allocation for non-levy apprenticeships last year at nearly £22 million. Its overall ESFA allocations totalled more than £31 million.

The boss of Aspire Achieve Advance has contacted the apprenticeship giant’s clients to “reassure” them that he’s taking the business forward as “new management”, even though he’s held a top leadership role there for over two years.

Richard Irons (pictured), who joined the company known as 3aaa in mid-2016 as its chief operating officer, was made managing director when its co-founders Peter Marples and Di McEvoy-Robinson resigned following the launch of a second government investigation into the crisis-hit company.

He emailed “valued partners” of the business yesterday to “clarify the true status of our position”.

“Myself as managing director along with the senior management team will be taking the business forward as ‘New Management’,” he wrote, even though there’ve been no new senior managers brought into the company for over a year.

Mr Irons continued to claim that the current ESFA investigation into 3aaa concerns are “entirely data focused rather than on quality”. This is despite the agency’s probe being focussed on claims that achievement rates have been inflated, just as they were found to be doing in 2016.

“The business has validated quality provision at its heart and all stakeholders aligned to preserving this into the future,” the new managing director added.

He continued to say that as a “precautionary measure and to do all we can to protect learners and staff against any residual risk” 3aaa is “having very early stage and initial conversations with other reputable providers”.

This follows FE Week exclusively revealing last week that the company has put itself up for sale, with the deadline for final offers being tomorrow (October 10).

In the sales pitch to potential bidders, 3aaa is claiming that it was rated ‘outstanding’ in all fields judged by Ofsted in an inspection in May 2018. This is despite the inspectorate declaring the inspection “incomplete” following the launch of the ESFA’s new investigation.

The apprenticeship giant, which was given over £31 million in government funding last year, is currently suspended from recruiting apprentices.

Mr Irons said in his email that by working in “partnership with the ESFA, we are continuing to generate and advertise new vacancies and engage with candidates to be able to complete their enrolment and start new apprenticeships in November”.

FE Week revealed in September, just after the temporary ban was put in place, that 3aaa seniors were “instructed” to tell other staff to not date any paperwork for “planned enrolments”.

Mr Irons expects the ESFA investigation to be concluded “within the next two weeks”.

3aaa currently trains 4,500 learners and employs 500 staff.

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Update: An Ofsted spokesperson told FE Week: “We wish to make clear that we are not and have never been in dialogue with this provider about any solution relating to the future of their business.

“Any engagement we have with the provider has been limited to queries about the possible timing of their inspection, which we clearly would not reveal.”

Allowing employers and apprentices to give “smiley faces” as reviews of training providers is a better indicator of quality than “tick box” inspections, according to the skills minister.

Anne Milton was speaking in favour of the Education and Skills Funding Agency’s new service, which will allow employers to score training providers in an online review tool similar to Trip Advisor.

The service, which is due to begin running “very soon”, will also be rolled out to apprentices, allowing them to give feedback on their experiences of training providers too.

Speaking at a fringe event at the Conservative party conference on Tuesday, Ms Milton suggested the new tool would give a better sense of a training provider than a traditional Ofsted inspection.

“You can do all sorts of inspections but you often miss the point,” she said. “You tick your boxes, but overall what did it feel like? Did it feel good? You miss that.

“So one of the best correlators is smiley faces, interestingly. You know, they did some research in care homes and smiley faces or not smiley faces correlated best with what was actually going on.

“If everyone has to do live reporting of their training provision we will get better and earlier indication as to which providers are not up to scratch.

“There is always, and there will always be, in any system a strain of people defrauding the system, not giving the quality that we expect. What we have to try and do is find the best means, the least bureaucratic means – because the bureaucracy is a shame when people are good – but the most immediate means of identifying where there are problems so we can take action.”

Ms Milton was quizzed on the government’s upcoming refreshed register of apprenticeship training providers during the session as well, but she refused to be drawn on details of its development.

The only comment she offered was: “A good proportion of people on the register of training providers aren’t delivering any training. They’re sitting there dormant, if you like, and I don’t think that’s helpful.”

The minister also used the session to say she was “open to” raising the apprenticeship levy transfer facility above 25 per cent, but admitted that “fraud has been an issue” within the current system.

“All that matters to me is that the levy is spent on the purpose for which it was intended,” she said. “We have to have rules, and they’re irritating and bureaucratic, but fraud has been an issue. Fraud is always an issue in any system you set up.”

FE Week understands that there is a concern there may be a rise in fraudulent inducement associated with transfer funding.

On Monday, the chancellor Philip Hammond announced the transfer facility would rise from 10 per cent to 25 per cent by April 2019, allowing large levy-paying employers to share more of their annual funds with smaller organisations. Ms Milton said the “hope” was that raising the level allowed to be transferred to 25 per cent would encourage more businesses to use the system.

Ms Milton also used the event to criticise the National Education Union, and said she has had a “big go” at the unions for focusing on schools at the expense of FE.

“If you always go on about schools, then you crowd out the argument about post-16,” she said. “I can only do so much as one person, as the minister of state who is passing through government, for however long it is.

“It actually needs to have a tidal wave of opinion and voices talking about the importance of apprenticeships, talking about the importance of FE.”

Three providers have been criticised for making ‘insufficient progress’ in the latest series of monitoring reports from Ofsted, including a recently merged college.

But it was ‘good’ news for one independent specialist college, which retained a grade two.

Coventry College, which was formed in August last year out of a merger of the grade three providers City College Coventry and Henley College Coventry, was found to be making poor progress in implementing a strategy for improving the teaching of English and maths and in making use of information about learners’ prior attainment to help plan teaching.

The report, published on October 2 after an inspection on September 11, said student tracking systems have not been used “well enough” since the merger to help identify learners and apprentices who are “not making secure progress” in English and maths.

It warned that “too few learners and apprentices achieve in line with their identified potential” in the subjects, with low attendance and low GCSE results, but added that leaders were working to improve this. 

The college also came in for criticism for “inconsistencies in monitoring and tracking” of learners’ work records and progress, but was found to be making ‘reasonable progress’ in all other areas including setting challenging targets for the quality of teaching, learning and assessment, supporting teachers and assessors to improve their teaching and the quality of the curriculum.

Two independent learning providers also received ‘insufficient’ progress ratings in monitoring visits of new apprenticeship providers.

Wolverhampton-based GTG Training, which currently has 196 levy funded apprentices, was deemed ‘insufficient’ for meeting the requirements of “successful apprenticeship provision” and the quality of its training.

The report, published on October 4, noted weaknesses in assessment plans, careers guidance, workplace mentors and plans for off-the-job training, and found that apprentices do not receive “any formal training” in English and maths except for one day before their functional skills examination.

Inspectors found that leaders have “worked hard to achieve a successful curriculum, but they have failed to recognise key weaknesses in the provision which are hindering apprentices’ progress”.

Despite this, the report commended the “well qualified and experienced” trainers and “enthusiastic” apprentices at the provider, and said safeguarding arrangements are effective. 

Ensis Solutions, which trains 123 apprentices in Wigan, was found to be ‘insufficient’ in ensuring apprentices receive high quality training, and the report, published on October 1, warned apprentices are not being set “demanding enough targets to achieve high grades in their end-point assessments”.

However, it noted that there had been “many recent improvements”, and commended leaders for their “strong determination and ambition” and “decisive action” to move from being a subcontractor to a provider.

The Department for Education will now be deciding whether or not to ban the providers from recruiting new apprentices until their grade improves. 

Four more learning providers had monitoring visits published this week.

Penshaw View Training in Sunderland, Bright Direction Training in Bolton, Stevenage’s Sporting Futures Training (UK) and Stanford Management Processes in Leicestershire were all found to be making ‘reasonable progress’ across the board by inspectors.

The only full inspection published this week was for independent specialist college Dorton College in Bromley, east London, which retained its ‘good’ rating across the board.

Learners were found to make “good progress” and “gain confidence” during their time at the college, which is run by the Royal Society for Blind Children and provides education and specialist therapies for young people with visual impairments and other additional needs.

The report described the college as a “highly respectful and safe environment” which has a “positive impact on the development of students’ independence” and commended leaders for their “clear and ambitious vision for the future”, but noted that learners should receive better careers guidance and external work placements.

 

Independent specialist colleges	Inspected	Published	Grade	Previous grade
Dorton College	12/09/2018	02/10/2018	2	2

 

GFE Colleges	Inspected	Published	Grade
Coventry College	11/09/2018	02/10/2018	M

 

Independent learning providers	Inspected	Published	Grade
Penshaw View Training	18/09/2018	05/10/2018	M
Ensis Solutions	08/08/2018	01/10/2018	M
GTG Training	13/09/2018	04/10/2018	M
Bright Direction Training	11/09/2018	04/10/2018	M
Sporting Futures Training (UK)	11/09/2018	03/10/2018	M
Stanford Management Processes	29/09/2018	01/10/2018	M