A college in financial crisis requested a multi-million pound government bailout just 48 hours before it would have run out of cash, FE Week understands.

West Nottinghamshire College, whose principal Dame Asha Khemka is one of the highest paid college bosses in England, received a £2.1 million exceptional financial support loan from the Education and Skills Funding Agency in July.

The ESFA published a financial health notice to improve this week, which triggers a formal review from the intervention team and the FE Commissioner.

FE Week can now reveal that the last-minute loan was requested after the “partial” sale of its software company was pulled at the eleventh hour.

Part of the college’s plan for financial recovery was the partial sale of bksb

A spokesperson for WNC told FE Week: “Part of the college’s plan for financial recovery was the partial sale of its highly successful and profitable subsidiary company bksb.

“Until late June/early July, the college understood this sale was proceeding well and would address the short-term cash flow issues at the end of 2017/18.

“However, as the terms of that deal became apparent, it was clear that it did not represent good value for the college or bksb and as a result the board took the decision not to proceed.

“Consequently, the college found itself in the position of needing to approach the ESFA for exceptional financial support at short notice.”

Bksb, which is wholly owned by WNC and claims to be the UK’s “most popular eLearning solution for functional skills and GCSE”, has a turnover of £3.4 million and made £1.5 million pre-tax profits for the college in 2016/17.

WNC’s former deputy principal and finance director Alastair Thomson told FE Week that he took on the sale of an unnamed “asset” when he joined in April this year and negotiated a value “well in excess of the amount the college had initially sought” before leaving for an overseas holiday.

When he returned the principal and governing body “without consulting me decided not to pursue the plan”, he claimed.

“I asked to meet with governors on several occasions following my return from leave to discuss a range of issues and they have steadfastly refused to meet with me and explain the basis for their decisions in this and a number of other matters,” he said.

Mr Thomson left the college on July 20, four months after his arrival. The terms of his departure are unknown.

Board minutes from April say the college was running low on reserves which were below the £9 million set in its banking covenants. The college has a £15 million loan outstanding with Lloyds Bank, which was negotiated in 2012 to pay for redevelopment and has another 20 years to run.

The minutes also reveal the college’s worryingly low cash days – the number of days an organisation can continue to pay its operating expenses given the amount of cash available.

For colleges these are benchmarked by the FE Commissioner at 25.

“The current position is 11 days and therefore the margin for error on cash is incredibly tight and will present some challenges,” the minutes say.

The financial crisis is said to have been brewing for years because of decisions made by the principal and governing body, according to Mr Thomson.

“What I can say is that the college’s current financial challenges had very little to do with the sort of cash management issues that I, or any other finance director, would have been able to manage as they were the natural consequences of a number of strategic decisions made by the principal and governing body,” he claimed.

The college’s 2015/16 accounts make reference to investing £6.5 million along with cash from the Local Enterprise Partnership to build a higher skills centre.

And board minutes from as long ago as July 2016 note that “one member of the board challenged the senior team and asked whether the college generally has an over-optimistic view of its ability to take on new projects”.

The college’s accounts for 2016/17 have yet to be published.

The financial challenges were the natural consequences of strategic decisions made by the principal and governing body

A spokesperson said the aim was to publish them in October, 10 months late. Dame Asha’s £262,000 remuneration package has meanwhile been confirmed.

Earlier this year WNC blamed changes in apprenticeship subcontracting rules, which reduced their income from management fees, for having to cut more than 100 jobs in an effort to make £2.7 million in savings.

The 2015/16 accounts also describe the college missing its adult skills budget target by £700,000 and board minutes from April 2018 suggest under-delivery continues to be a problem.

Leigh Powell, UNISON’s national officer for FE, claims the college has repeatedly refused to heed financial warnings.

“It’s a disgrace that financial troubles have escalated to this level,” she said.

“Senior managers at the college have played fast and loose with public money to the detriment of students’ education and the future of the dedicated staff who work there.

“Staff are now left wondering who will be leading the financial recovery plan and how future changes will affect them.”

The WNC spokesperson said he was “unable to provide any further comment on matters relating to the FE Commissioner’s recommendations but would be willing to do so on their publication.”

An independent learning provider has been given a grade three rating across the board in its first Ofsted inspection as the results for five more early monitoring visits of apprenticeship providers have been published. 

The only full Ofsted inspection published this week saw Encompass Consultancy gaining a ‘requires improvement’ judgement in every possible category. 

The Hull-based provider, which has delivered apprenticeships as a subcontractor since 2013 but secured its own contract to deliver non-levy funded apprenticeships in the last academic year, was criticised by inspectors for being “slow” to make improvements. 

The report said that managers were “not sufficiently self-critical” in assessing the quality of the provision provided, and found the current self-assessment plan to be “overgenerous” and not paying enough attention to the delivery of the two subcontractors it works with. 

However, the report did note that directors had “recently” recognised the issues and appointed a new management team to implement improvements, and said “sensible steps” had been taken to focus the curriculum on management apprenticeships and employability training. 

Inspectors also found that “too many” adult learners on courses funded through advanced learner loans “make slow progress”, with just over half completing their courses and achieving their qualifications within the planned timescales in 2016/17.

They also warned of “significant gaps” in the progress of different groups of adult learners, including between men and women and between Asian and white British learners. 

When assessing apprenticeships at the provider, Ofsted warned that the quality of teaching, learning and assessment was currently “not good enough” to allow apprentices to make the progress expected of them. 

Five more early monitoring visit reports were also published this week as part of the inspectorate’s scrutiny on new apprenticeship providers. 

Securitas Security Services (UK) was found to be making ‘insufficient’ progress in two of the three themes looked at by inspectors, who warned that the provider did not have enough assessors to meet the needs of its 650 apprentices. 

“Most apprentices do not have a choice about enrolling for the apprenticeship training programme. As a result of this compulsory training, apprentices do not enjoy their learning or understand its nature,” the report said. 

The Mitre Group also received two ‘insufficient’ ratings from Ofsted this week, and was particularly criticised for its lack of off-the-job training and the quality of apprenticeship provision. 

Under new rules from the Education and Skills Funding Agency, any provider with an ‘insufficient’ rating in at least one theme will be banned from taking on any new apprentices – either directly or through subcontracting agreements – until the grade improves.

However, there was better news for the three other providers to have monitoring visits published this week. Darwin Training, ABM Training (UK) and icount Training were all found to be making ‘reasonable’ progress in the themes looked at by inspectors, and Darwin Training was commended for making ‘significant’ progress in ensuring safeguarding is effective. 

 

Independent Learning Providers	Inspected	Published	Grade
icount Training	14/08/2018	17/09/2018	M
Encompass Consultancy	07/08/2018	17/09/2018	3
Mitre Group	09/08/2018	18/09/2018	M
ABM Training (UK)	23/08/2018	19/09/2018	M
Darwin Training	22/08/2018	21/09/2018	M

 

Employer providers	Inspected	Published	Grade
Securitas UK	16/08/2018	19/09/2018	M

 

The government has coughed up the full £5.4 million Ofsted requested to visit all new apprenticeship providers as its crackdown on poor provision continues.

In an exclusive interview with FE Week, Paul Joyce (pictured), the inspectorate’s deputy director for FE and skills, said the amount was nothing less than what was requested and will be provided from now until the end of March 2020.

However, he could not say how many more inspections or inspectors the money was likely to fund to carry out the mammoth task.

Potentially as many as 1,200 providers could now be in scope for a two-day monitoring visit. The Education and Skills Funding Agency confirmed last month that any apprenticeship provider which Ofsted deems to have made insufficient progress in one or more themes under review would be stopped from taking on new apprentices.

These restrictions will stay in place until the provider has received a full inspection and been awarded at  least a grade three for its apprenticeship provision. Full inspections for providers which receive an “insufficient” rating will now take place within six to 12 months.

At the time of going to print the inspectorate had so far published 59 early monitoring visit reports of apprenticeship providers and deemed 12 of them – 20 per cent – to be making insufficient progress in one or more themes. Two of these – Key 6 Group and Training Solutions – have been rated as insufficient in every category. 

Half of the insufficient-rated providers are currently barred from taking on new apprentices, according to the register of apprenticeship training providers, but the fate of the other six is not yet known.

Of the providers which have been inspected so far, 42 have either previously been a subcontractor or are still subcontracting alongside delivering their own provision. Seven of the subcontractors, 16 per cent, have been deemed insufficient. However, almost a third of those who have not subcontracted have been deemed insufficient, with five falling foul of the inspectors.

September has also seen a surge in the number of reports, including “insufficient” reports, being published.

So far this month 14 early monitoring visit reports have been published, of which five had an insufficient rating. In comparison, just 17 reports were published across the whole of August and just two of these were deemed insufficient.

Mr Joyce said that Ofsted would be analysing the results of the reports, but added that “no specific pattern” was currently emerging.

“I think it’s the nature of the new providers that we’ve got out there,” he said. “In many cases we know very little about them in terms of their previous history, so we send inspectors out and their job is really to report as they find. The reports that have been published reflect what we have seen.”

Mr Joyce would not be drawn on whether the Education and Skill Funding Agency could do more to crack down on rogue apprenticeship providers, including by limiting how quickly new providers can grow.

“That’s a question and a matter for the ESFA to deal with,” he said. “I would hope, and I’m sure, that our monitoring visits will be useful to them and help inform their processes.

“But again – their policies, their decisions.”

What does insufficient progress look like? 

The “insufficient” reports have thrown up several common issues between the providers, including poor governance, low quality teaching and a lack of off-the-job training.

Apprentices at Care Training Solutions, which was rated insufficient across the board by inspectors, were said to be not making enough progress, with inspectors warning that “too many apprentices are behind in every element of their apprenticeship”.

Leaders at Unique Training Solutions were criticised for not holding employers “sufficiently to account when they do not play their part in helping meet the expected requirements of the apprenticeships programmes,” meaning that “too many” apprentices did not receive enough off-the-job training within working hours. 

Not enough off-the-job training was also said to be an issue at the Education and Skills Partnership, and at the Mitre Group where inspectors found that “most of the training [apprentices] complete in their own time and not during their working hours”. Quality of provision and improvements were said to be “too slow” at Mears Learning. 

At Peacocks, senior management were described as being “too slow to respond to significant weaknesses that exist in the apprentices’ programmes and the quality of the education and training that apprentices receive”, while apprentices at Mooreskills complained to inspectors that “they are not developing new skills or enhancing their existing knowledge”. 

Watertrain was criticised for “using the apprenticeship programme to enable employees to gain qualifications in existing skills and knowledge”, and inspectors noted that some apprentices “reported that they did not want to be an apprentice and did not see how they are gaining anything from the programme”. 

Safeguarding was criticised at N-Gaged Training and Recruitment, and the report said no safeguarding arrangements existed for their few apprentices aged under 18 when they attended residential training. At Entrust, governance and oversight of the apprenticeship programme was described as “insufficiently thorough”. 

Key 6 Group’s apprenticeship provision was described as “not fit for purpose” and its governance called “poor” in a report that saw it rated “insufficient” across the board.

“The board of directors do not hold the managing director and the director of education to account for the poor teaching, learning and assessment and weak progress that apprentices make,” inspectors reported.

Leaders at Securitas were also slammed by inspectors, who said their “self-evaluation of the quality of provision lacks realism and reflective analysis” and noted that most apprentices “do not have a choice about enrolling for the apprenticeship training programme. 

“As a result of this compulsory training, apprentices do not enjoy their learning or understand its nature,” the report said.

Principals have welcomed new guidance from the Association of Colleges for setting senior pay in colleges, but unions have warned the voluntary code will not be enough to tackle excessive rewards.

FE Week revealed last week that refreshed remuneration guidance was being developed by the association as top level pay across the education sector continues to come under heavy scrutiny.

The government has clamped down on chief executive salaries in multi-academy trusts and vice-chancellor wages in universities which often exceed £150,000, but left colleges untouched despite many bosses receiving more than £200,000.

The code sets out good practice that I’m sure is already largely followed

A consultation for the AoC’s new code, which encompasses “three core principles: fairness, independence and transparency” and is an amendment to existing guidance created in 2015, was launched to tackle this.

The main proposals include only giving seniors a pay rise if all staff also receive one, removing top college bosses from remuneration committees, separate publication of principal salaries and a requirement to justify any income seniors receive from outside organisations.

Ian Pryce, principal of Bedford College, told FE Week the AoC should be “applauded for being ahead of the curve”.

“We don’t have an issue with senior pay in colleges,” he claimed. “Governors behave very responsibility. The code sets out good practice that I’m sure is already largely followed.”

NCG, the country’s biggest college group, agreed with Mr Pryce.

“NCG welcomes the senior pay code for colleges,” a spokesperson said. “As a leading further education group invested in its staff we already operate by these principles.”

But unions expressed concern that the code is not statutory.

“Whilst UNISON welcomes the AoC’s admission that more checks and balances are needed in relation to senior staff pay in colleges, a voluntary code will not be enough to tackle excessive pay awards,” said Leigh Powell, the union’s FE lead officer.

“This code has been in existence for three years and yet we continue to see principals being awarded pay rises other staff in colleges can only dream about.

“It is difficult to see exactly how adding a few words to a document that has been proven to have little effect to date is going to lead to the necessary changes in practice.”

University and College Union head of further education Andrew Harden agreed.

We hope that the final version will have real teeth

“Whilst we agree that principals shouldn’t be on remunerations committees, we have concerns that the proposed code is only voluntary,” he said.

“We hope that the final version will have real teeth and not allow colleges to get out of proper transparency when it comes to leaders’ pay, especially at a time when staff have suffered pay cuts of 25 per cent over the last decade.”

Mr Pryce pointed out that colleges are independent charities so the code “should be guidance”.

He added: “Senior pay is a low multiple of median salaries. The multiples are higher in the civil service and NHS because median pay is lower, so the code might lead to or justify higher CEO pay.

“Colleges might also concentrate good rises on those staff around the median, rather than the low paid.”

The refreshed senior pay code has been developed at a frustrating time for college staff, after the DfE decided to fund a 3.5 per cent pay rise for school teachers while ignoring FE lecturers. UCU has since launched a ballot for strike action to take place later this year.

“This shouldn’t really need saying but the increasing differentials between senior level pay and that of lecturers and other FE staff is simply inexcusable,” said Kevin Courtney, joint general secretary of the National Education Union.

“The NEU firmly supports the effort by AoC to encourage colleges to sign up to and honour a code of conduct that could potentially bring greater fairness into pay settlements.”

Education secretary Damian Hinds this week followed in the footsteps of many a government minister before him and jetted off for a fact-finding mission to our neighbours on the continent.

His visit to Germany and the Netherlands was intended to “discover how they educate their young people to have the practical and technical skills needed for a highly productive economy”, according to an article in the Times newspaper on Monday.

A similar trip by former skills minister Nick Boles to Norway in August 2015 (pictured) came just months before the launch of the Sainsbury review, which resulted in proposals to develop T-level qualifications.

Those plans bear a certain resemblance to Norway’s post-16 education system, so what new developments can we expect to see as a result of Mr Hinds’ visit this week?

Speaking to FE Week from Dresden Airport on the third day of his trip, where he was about to catch a plane to Amsterdam, the education secretary was either unwilling or unable to say.

“I’ve been here 72 hours and I’m going to assimilate what I’ve heard here with other points of learning,” he said.

However, he indicated this was unlikely to be involve importing systems wholesale or cherry-picking individual elements.

“You can’t copy en masse a system from one country into any other, given that the traditions are different, the industrial structures are different, the ways of working are different,” he said.

“They rely on years, decades, sometimes even centuries of development.”

At the same time: “I don’t think you can take individual little elements and say I have learned that one thing, and copy that across,” he said.

Mr Hinds’ research mission came at a critical time for the reform programme in this country’s technical education system – 16 months after the introduction of the apprenticeship levy and the associated changes to the system, and 24 months before the first T-level courses will be taught.

It was “right as we go on our ambitious reform programme we also seek to learn from systems like Germany and others”, he said.

Germany, where Hinds spent the first three days of his trip, is “world famous” for its technical education system and “has a very high reputation,” he said.

The policy, established for nearly 50 years, is known as the ‘dual system’ in reference to the two training locations – vocational school and the workplace.

An apprenticeship in this ‘dual system’ is considered to be the main route into employment for young Germans. It is well-recognised and highly valued by employers, and by the young people themselves.

The “parity of esteem” between technical and academic education, which the government is aiming to achieve through its reforms, “comes across very clearly here,” he said.

“The technical system, the apprenticeships, the professions that people are learning in, that’s a very well-established system which has great respect across society and is very well-entrenched,” Mr Hinds said.

He spoke about the central role that employers had in making the ‘dual system’ work.

Businesses in Germany had a “deep commitment” to “every side and at every level to apprenticeships”, he said.

This was driven “partly from their own interest to bring on talent, and to identify who’s going to bring them further on and help them grow”.

But it was also because “it’s part of what people do, what businesses do in society”, he said.

The Netherlands, where Mr Hinds was due to spend the rest of his fact-finding trip, is “another system that is useful to look at”, he said.

One of the key features of its education system, which is perhaps less well-known than that of its neighbour, is that children can choose a vocational route from the age of 12.

Employer involvement in the Dutch system is less well-established than in Germany, and only became formalised in 1996.

The system is “in terms of industrial structures, in some ways more similar to our own,” Mr Hinds said.

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German technical education explained

Germany’s long-established system of technical education is the envy of many countries, linked as it is with high productivity and low unemployment.

Just over half of young people in Germany go through the ‘dual system’ – a proportion that has fallen in recent years.

For the majority this is likely to be an apprenticeship lasting two or three years, beginning at the age of 16. A transition year is an option for those who can’t find a company to train with or need further education or training before they can start an apprenticeship.

Apprentices spend one or two days a week or several weeks at once in vocational school, called Berufsschule, with the remainder of their time spent learning on the job.

The German apprenticeship system is strictly regulated and any company taking on an apprentice must ensure they are trained up to specific standards – and there are around 350 of them.

These are set by the relevant Chambers of Commerce, which play a central role in the ‘dual system’ – in effect managing the system on behalf of the national government.

All German companies must belong to a Chamber of Commerce, and must pay a levy that goes towards the cost of running the training system.

Costs for the vocational school element of apprenticeship training are paid for by the state, while the employer pays for on-the-job training.

Around 20 per cent of German companies are involved in the apprenticeship system, according to the Bundesinstitut für Berufsbildung.

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Education in the Netherlands

Vocational education can begin as early as 12 in the Netherlands.

Dutch children are split into three different types of secondary school, with only one of them giving direct access to an academic university.

The other two types are more vocationally focused. Of these the ‘pre-vocational education’ route, called VMBO, is the most popular and chosen by more than half of Dutch children.

It involves a mix of vocational training and general education, and runs from the age of 12 to 16.

After the VMBO young people can then move onto the MBO, or middle-level applied education. This can last between one and four years, and can be either classroom-based or an apprenticeship – although both options include some time spent learning on the job.

Graduates of the four-year middle-level training can progress onto higher professional education in the equivalent of what had once been polytechnics in this country.

Employer involvement in the Dutch vocational system is much less well-developed than in Germany, and was only formalised in the 1990s.

The 1996 Educational and Vocational Training Act gave businesses more influence on the content of vocational and skills programmes.