AELP asks the government to listen to providers before withholding completion payments

The AELP is urging the government to give “flexibility” to providers who make “reasonable efforts” to claim apprenticeship employer contributions, after plans to withhold completion payments for non-compliance were revealed.

The Education and Skills Funding Agency announced a clampdown on employers who fail to pay the 10 per cent co-investment fee last month.

A change to a calculation in the agency’s funding software will enforce a new rule from this month, which will see nearly 20 per cent of the total apprenticeship cash held back until employer payments are up to date.

We hope common sense will reign in the end

It means that up to £4,860 of ESFA funding, 90 per cent of £5,400, would be withheld if the apprenticeship price is at the highest upper funding band of £27,000, for example.

Mark Dawe (pictured), the chief executive of the AELP, said his association “fully supports the policy but there needs to be flexibility where the provider makes reasonable efforts to collect the contribution and a small proportion of employers still don’t pay”.

“We do find it rather incredible that even if the employer doesn’t pay the contribution, the ESFA still pays the employer the incentive payment (which can’t be netted against any outstanding contribution),” he added.

“We hope common sense will reign in the end.”

The way the agency funds providers for delivering apprenticeships training is by paying monthly payments for 80 per cent of the negotiated price up to the funding band, but where the employer has no levy funding or it is insufficient, then co-investment must be paid, currently set at 10 per cent.

The ESFA in future will only pay the provider for the final 90 per cent of the total remaining 20 per cent, once the framework has finished or the end-point assessment has taken place and the employer has paid their 10 per cent.

Chancellor Philip Hammond announced last month that the co-investment fee will be halved to 5 per cent, but a start date for this change has still not been revealed.

The return deadline for providers to get their co-investment payments was December 6.

However, the completion payment is only being withheld until the financial fields in the ILR show the employer has fully paid their share. Once that happens, the completion payment would be released in the next monthly funding cycle.

In a little-known monthly update for “MI managers, software writers and suppliers” published last Friday, the ESFA said: “We plan to update the apprenticeship funding calculation at R04 [Individualised Learner Record data return deadline 6 December] to withhold any completion payments that do not meet the criteria in the funding rules.

“The rules state that co-investment due to be paid by the employer must be collected and recorded in the ILR for the completion payment to be paid.”

Additionally, the agency plans to claw back cash from providers who have not claimed the fee from employers.

“This change will also apply to any completion payments already made in the 2018 to 2019 funding year and where necessary payments will be recovered,” the ESFA said.

“We will also identify and recover any completion payments paid to providers in 2017 to 2018 funding year that were not compliant with funding rules. All adjusted payments will be made as part of the December payment run.

“Providers must ensure all co-investment is collected and recorded on the ILR in a timely manner as stated in the funding rules.”

Thousands of apprenticeships hang in the balance as Interserve rescue plan prompts share collapse

The survival of another outsourcing giant that trains “around 14,000 apprentices each year” appears to hang in the balance, after its shares plummeted amid its attempts to secure a second rescue deal.

Interserve, an international support services and construction group which runs a large UK training provider called Interserve Learning and Employment Ltd, is desperately trying to avoid a Carillion-style collapse after falling into severe financial trouble.

The company, which has around 75,000 staff worldwide, saw its shares crash by 75 per cent to just 6p today. The shares were worth 100p a year ago.

Our learning and skills business  had a busy year following the introduction of the UK apprenticeship levy

It follows a report in the Financial Times on Friday which revealed it is in rescue refinancing talks that could mean substantial losses for shareholders.

The deal, which is expected to be finalised early next year, would see Interserve’s creditors who have lent the company more than £600 million take control of the company.

According to reports, debts at the group have grown since its first rescue deal, which was agreed with banks in March.

The crisis surrounding Interserve has sparked fears that it could be heading for the same fate as its former rival Carillion, which collapsed in January.

Over 1,100 apprentice bricklayers, carpenters and builders were left jobless in the wake of the collapse, but the government stepped in and continued paying their wages until they found new work with the help of the Construction Industry Training Board.

But this deal ended in August and saw nearly 350 former Carillion apprentices have their wage support cut off as they were finally made redundant.

The collapse of Interserve would however have a much bigger impact in the apprenticeships market, as FE Week reported in January.

Its training provider, Interserve Learning and Employment, was formerly called ESG and was bought from finance firm Ares Capital in a cash deal worth £25 million in December 2014.

The provider is rated ‘good’ by Ofsted and claims on its website to train around 14,000 apprentices each year.

It had £20.8 million ESFA allocations in 2017/18, and has current skills contracts totalling £10.6 million – but this doesn’t factor in its levy contracts.

Interserve’s annual report, published in April 2018, said its learning and skills business had a “busy year following the introduction of the UK apprenticeship levy and we further invested in this area to maximise the significant opportunities presented by this reform”.

It added: “Our capability in designing, delivering and evaluating apprenticeship training within this business is now playing an increasingly valuable role as higher employment costs and regulatory requirements drive employers to invest more in training and skills, either to defray their apprenticeship levy or to upskill and gain additional productivity from an increasingly costly workforce.

“During the year we won new contracts with DHL, Countrywide, BT Group, Stagecoach Group, Grafton and Unilever.”

READ MORE: Almost 350 Carillon apprentices to lose wage support

 

Interserve Learning and Employment has more than 900 employees, according to its website, and boasts that it is one of the ESFA’s “leading providers”.

Latest ESFA data, for 2016/17, shows that Interserve trained 6,980 apprentices and scored a 70.2 per cent achievement rate.

The company also provides vocational training in three FE colleges in Saudi Arabia under the UK’s Colleges of Excellence programme and claims it supports over 65,000 people a year into work or training.

Interserve told FE Week that it is currently in a strong enough position to not need a contingency plan which would protect their apprentices in case the firm collapsed.

A Cabinet Office spokesperson said: “We monitor the financial health of all of our strategic suppliers, including Interserve, and have regular discussions with the company’s management. The company successfully raised new debt facilities earlier this year, and we fully support them in their long term recovery plan.

“We do not believe that any of our strategic suppliers are in a comparable position to Carillion.”

Commenting on the company’s second rescue plan, Debbie White, chief executive of Interserve, said: “Our lenders are supportive of the deleveraging plan which will underpin the long term future of Interserve.

“The Cabinet Office has also expressed full support for the work we are doing to implement our long term recovery plan.”

She added: “The fundamentals of our business remain strong. The deleveraging plan will give Interserve a strong long term capital structure and provide a solid foundation on which to build the future success of the group.”

Interserve topped the list of the government’s strategic suppliers in 2017, according to data provider Tussell, winning £938 million of work across a range of areas including health, education and defence.

But in September last year, the FTSE 250 contractor admitted that its annual profits were likely to halve after a £195 million loss from a number of energy to-waste contracts.

Ofsted watch: Three providers improve to ‘good’

Three providers – including two colleges – have boosted their grades from three to two this week, while one provider went the other way.

Elsewhere it’s been a busy week for monitoring visits, with nine reports published – six for new apprenticeship visits, and three for grade three providers.

MidKent College and Northampton College were both rated ‘good’ – up from their previous ‘requires improvement’ grades – in reports published on December 6.

Leaders, managers and governors at MidKent College were praised for having “developed a highly student-centred ethos” which “permeates the college”, in a report based on an inspection in mid-November.

Staff were found to be “proud to work” at the college and, thanks to their willingness to “engage fully in a strong programme of professional development” teaching, learning and assessment had “substantially improved” since the last inspection in January 2017.

Learners made “good progress” in their studies, and standards of work for apprentices in their workplaces was also good.

But apprentice achievement was “too low” and “not enough” of the “large number” of learners resitting GCSE English and maths got high grades.

Northampton College was rated ‘good’ for overall effectiveness and in six headline fields in a report based on an inspection in late October.

Its apprenticeship provision was rated grade three – but its provision for learners with high needs was deemed ‘outstanding’.

“These students make exceptional progress with their independent living skills and with their achievement of qualifications,” the report said.

“Most teaching” at the college enables apprentices and learners to “develop good standards of practical skills rapidly”.

However, leaders’ and managers’ “actions to improve the quality of apprenticeship provision have not yet had sufficient impact”.

The Growth Company Limited, an independent learning provider based in Manchester, was also rated ‘good’ – up from its previous grade three – in a report published December 7 and based on an inspection in late October.

Governors and leaders at the provider, which offers study programmes, adult learning and apprenticeships, “promote a highly inclusive ethos”, according to inspectors.

“Programmes successfully engage apprentices and learners who face barriers to learning and employment,” it said.

Apprentices and learners were found to “develop good practical skills and produce work of a high standard”.

A “high proportion” of adults achieve “useful qualifications that help them to gain employment or progress to higher education”.

North East Lincolnshire Council saw its grade fall to ‘inadequate’, down from its previous ‘requires improvement’ rating, in a report published December 5 and based on an inspection in early November.

As previously reported by FE Week, its rating was dragged down by “over-optimistic” leadership and management.

Six new apprenticeship providers had early monitoring visit reports published this week.

As previously reported by FE Week, two of these resulted in ‘insufficient progress’ verdicts on two out of three themes under review: Premier Nursing Agency Limited, and AMS Nationwide.

The remaining four were all found to be making reasonable progress in all three areas: System People Limited, Dutton Fisher Associates Limited, Intelligencia Training Limited and BIS Henderson Limited.

A further three providers had reports published as part of Ofsted’s monitoring of providers rated ‘requires improvement’. These were St Helens College, Stoke on Trent College, and independent provider MI ComputSolutions Incorporated.

GFE colleges Inspected Published  Grade Previous grade
St Helens College 17/10/2018 30/11/2018 M M
MidKent College 13/11/2018 06/12/2018 2 3
Northampton College 30/10/2018 06/12/2018 2 3
Stoke on Trent College 12/11/2018 02/12/2018 M M

 

Independent learning providers Inspected Published  Grade Previous grade
System People Limited 24/10/2018 04/12/2018 M M
Dutton Fisher Associates Limited 31/10/2018 05/12/2018 M M
Intelligencia Training Limited 23/10/2018 03/12/2018 M M
BIS Henderson Limited 30/10/2018 03/12/2018 M M
AMS Nationwide 24/10/2018 04/12/2018 M M
Premier Nursing Agency Limited 23/10/2018 03/12/2018 M M
The Growth Company Limited 30/10/2108 07/12/2018 2 3
MI ComputSolutions Incorporated 31/10/2018 05/12/2018 M M

 

Adult and community learning providers Inspected Published  Grade Previous grade
North East Lincolnshire Council 06/11/2018 05/12/2018 4 3

IfA appoints Dame Asha replacement as chair of subcommittee

The Institute for Apprenticeships has replaced Dame Asha Khemka as chair of the quality assurance committee, almost two months after she resigned from its board.

However, the IfA has still not replaced her vacant position on the board. 

Dame Asha stepped down on October 19, three weeks after she resigned from West Nottinghamshire College amid a financial crisis.

The IfA has now confirmed that Paul Cadman, a human resources director for Walter Smith Fine Foods and chief executive of Crosby Management Training, will take over her position as chair of the quality assurance committee.

Anthony Jenkins, chair of the IfA, said: “I am delighted to confirm Paul as the new chair.

“He has previously served in the role in an interim capacity and has a wealth of experience of apprenticeships.

“This will be invaluable to the committee and the key role it plays in upholding quality assurance.”

The IfA has also confirmed that Dame Fiona Kendrick will remain on the board, and is joining the audit and risk assurance committee, despite announcing that she will step down as chair of Nestle UK and Ireland at the end of the year.

Mr Cadman has been a government apprentice ambassador since 2012 and is chair of two trailblazer groups, which had developed standards in butchery, learning and development and human resources.

Paul Cadman

Dame Asha, who led West Notts from 2006, stepped down from the top job on October 1 following a “special meeting of the board of governors” held “in light of the current challenges faced by the college”.

It was forced to go to the Education and Skills Funding Agency in July for a £2.1 million bailout, just 48 hours before it would have run out of cash, as revealed by FE Week.

A damning FE commissioner report, published on Friday, criticised “serious corporate failure”, lack of oversight and a “financial crisis” at the college.

Dame Asha was one of the most highly-paid principals in the FE sector, with a remuneration package worth £262,000 in 2016/17.

Two weeks before she resigned from her post on the IfA board, the institute insisted she remained a “valued member” .

The apprenticeship levy is public money that needs priorities – before it runs out

The Institute for Apprenticeships is forecasting a £500 million overspend on the levy budget by July 2019, rising to £1.5 billion for the year ending July 2021.

It is clear that forecasting models for expenditure, before the Levy’s introduction in May 2017, significantly underestimated the reality, in terms of starts on high value apprenticeships with prices set at their cap.

In addition, the monthly funding methodology means payments quickly accumulate for on programme apprentices and new starts.

As a result, in the wacky world of FE funding, we have the majority of employer levy pots currently going unspent at the same time as plausibly the IfA forecasting a huge overspend in the overall budget.

The Department for Education contacted FE Week to say the IfA figures are “out of context”, yet the IfA stands by them (although refuses to share the whole presentation) and the education secretary, Damian Hinds, is not disputing the figures.

Hopefully the IfA and DfE will have an agreed position before the National Audit Office publish the outcome of their second enquiry into the apprenticeship reforms early next year.

Either way, if the IfA figures are even close to reality, reducing funding rates following their review process won’t be enough.

The first priority, as recommended by Ofsted’s chief inspection, Amanda Spielman, should be to focus on using the funding where it is needed most.

So, more funding for training young people entering the job market.

Less funding for training adults already in a job, particularly on management degrees that employers should not be subsidised for.

The skills minister, Anne Milton, understands this. In March, she told the education select committee that “fears of a middle-class grab on apprenticeships are valid”.

In October, she said at a Conservative Party Conference fringe event: “We need to be careful we don’t crowd out levels 2, 3, 4 and 5.”

And when asked this week about the growth of management apprenticeships by David Hughes, the chief executive of the Association of Colleges, she said: “We need to look at do we continue to fund apprenticeships for people who are already in work, people doing second degrees.”

The fact is, levy funded employers are first in the queue to invest in apprenticeship training, but it is public money.

The government must now quickly and decisively step in and prioritise what that training is and who it is for.

MOVERS AND SHAKERS: EDITION 264

Your weekly guide to who’s new and who’s leaving

Rachel Nicholls, acting principal, Peterborough Regional College

Start date: December 5, 2018

Previous job: Deputy principal, New College Stamford (she is on secondment from this role)

Interesting fact: Rachel used to be captain of Halifax Ladies rugby team and in a previous life played rugby for Yorkshire and Humberside 

Suzanne Slater, assistant principal, Gateshead College

Start date: November 2018

Previous job: regional manager, Northern Skills Group

Interesting fact: At the age of 41, Suzanne took up horse riding having never been on a horse before in her life and now she goes every week 

Deni Chambers, assistant principal, Gateshead College

Start date: October 2018 

Previous job: Director of school – creative & digital industries, Newcastle College 

Interesting fact: After 10 years of dreaming, Deni eventually bought a Vespa Scooter aged 28 – but then fell pregnant and swapped it for a cot

Roger Guy, senior business development manager, One Awards

Start date: November 2018 

Previous job: Head of operations, Finchale College

Interesting fact: Roger once scored a goal on Match of the Day, during a filmed training session with the Italian team at Euro 96

Apprenticeship quality remains a ‘mixed picture’, says Ofsted’s Paul Joyce

In July the prime minister claimed that apprenticeship quality had risen since the introduction of the levy and standards – even though Ofsted had found the reverse.

Five months on from Theresa May’s comments in parliament, FE Week editor Nick Linford asked Paul Joyce, Ofsted deputy director for FE and skills, if things have improved.

“There is certainly a distinction between experienced and existing providers and new providers entering the market,” Mr Joyce said.

In the case of existing providers he said the inspectorate was “seeing already” a “mixed picture, where some of those existing providers are changing, have changed their delivery model and approach and are adapting to the standards as opposed to frameworks” while “some still have a way to go”.

For other existing providers it was “a bit early for us to say” as some “who were ‘good’ or ‘outstanding’ would have been inspected under frameworks and older arrangements” – but he said Ofsted will “start to inspect those good or outstanding providers under the standards” in the “coming year or years”.

The picture for new providers was somewhat different, however.

The proportion of independent training providers to be rated ‘good’ or ‘outstanding’ fell by three percentage points this year, from 81 to 78 per cent, and Mr Joyce said “some of the decline” can be “attributed to relatively new providers being inspected for the first time”.

In May Mr Joyce raised concerns about a “Train to Gain-type programme being badged as an apprenticeship”, referring to the doomed training initiative from the 00s which gave money to highly profitable employers to train their staff when they were already willing pick up the bill.

He told FE Week that those fears remained.

The fact that “between a quarter and a fifth of providers” had been found to be making insufficient progress in apprenticeship early monitoring visits was a sign that the “fundamental basics aren’t in place” – whether that is “staff not in place, training plans not in place, apprentices not knowing they’re on an apprenticeship, sequencing of learning not in place”.

“That has got to be a worry for everybody,” he said.

But he wouldn’t be drawn on whether there should be a minimum size for providers to be allowed to deliver publicly-funded apprenticeships, given the requirements of the programme.

“My view is that if you’re going to go into the market you need to understand what you’re going in to and need to make sure you are going to put in place the requirements,” he said.

“Size and capacity” are factors in “some cases” and “you do need a certain infrastructure, a certain level of experience and expertise to be able to deliver a quality service”.

“That is what providers need to make sure they have in place” but “what that right size is will depend on individuals”, he said.

The Education and Skills Funding Agency is set to introduce a redesigned register of apprenticeship providers next week, which will require providers to give more evidence of experience.

FE Week asked if that area will be subject to a similar stronger focus under Ofsted’s new inspection framework, due to be launched next year.

Mr Joyce said he welcomed the “strengthening of the register”.

“Certainly in our new framework, as with the monitoring visits, we are going to be paying more attention to whether those building blocks and foundations for a good curriculum, training and apprenticeship offer are in place,” he said.

Trailblazer group alarm over funding band reviews

A trailblazer group chair has warned that its “years of hard work” in developing two apprenticeships standards could be undone, after they were included in the Institute for Apprenticeships’ second funding band review.

The level two supply chain warehouse operative and large goods vehicle driver standards were among 30 standards named on the list announced by the IfA on Tuesday.

Both were approved for delivery in 2016 and have had just over 3,000 starts between them.

“It has taken years of hard work to get employers to see the benefits of these standards and just as we start to get decent numbers they review the funding,” said Colin Snape, deputy director of policy at the Road Haulage Association.

He told FE Week the group had already been through a review for the LGV standard as they had requested the funding band – currently set at £5,000 – to be increased, but this was rejected.

“So why it is up for review is beyond me,” he said.

“With my experiences of the IfA and Education and Skills Funding Agency I do not believe we will come out of this review in a good way,” he added.

Between them the 30 standards in the second funding band review were responsible for 42,675 starts in 2017/18 – or 26 per cent of the overall number of starts on standards for the year, according to provisional statistics published by the Department for Education.

They include the level two adult care worker standard, which had almost 11,000 starts in 2017/18, and the level three adult care worker standard, which had more than 8,700 starts.

Both are currently set at £3,000. FE Week asked the trailblazer group if it expected this rate to be reduced, and if it was concerned this would hit take-up as a result, but did not get a response.

A spokesperson for the IfA said the reviews will “ensure value for money for employers and taxpayers, and consistency in the way older and newer standards are funded”.

“Our aim is to make sufficient funding for apprenticeships available to as many companies as possible,” he added.

“We understand the review might be a concern to employers which is why we are working collaboratively to ensure the review is carried out in an open and fair way, and as quickly as possible.”

It comes as the outcomes for all 31 standards in the first wave of funding band reviews, announced in May, were revealed by the IfA.

The second batch of standards includes two currently set at £27,000, meaning there is a high chance the rate will be cut as this is the highest possible rate.

Of the seven standards with the same funding band in the first review, five had their rates reduced, one is still to be confirmed and only one stayed the same.

FE Week has approached the trailblazer leads for both the level three gas engineering standard and the level three engineering design and draughtsperson standard to ask if they were concerned that their funding will be slashed, but neither responded ahead of publication.

Terry Fennell, chief executive of FDQ and chair of the butchery trailblazer group, said he “wasn’t surprised” the level two standard had been included, given its £9,000 price tag and more than 500 starts so far.

The apprenticeship has “thus far attracted an even balance of non-levy and levy employers and we think there will be good evidence to back up costs of delivery, EPA and apprentice durations,” he said.

“I am confident the funding panels will take on board the evidence available in order to reach the right decision,” he said.

The latest funding band review comes at a time when the IfA is warning of imminent apprenticeship overspend (see page 5).

Rate reviews got underway after the institute moved to having 30 funding bands – which represent the maximum rate paid for from the levy – to choose from, up from the previous 15.

The new structure gives the institute more choice regarding the rate it applies to each standard.

AELP appoints a devolution director to represent independent training providers

The “real fear” that independent training providers wouldn’t get “representation around the table” in adult education budget devolution has prompted the Association of Employment and Learning Providers to appoint its first devolution director.

Harminder Matharu takes up her post on December 19, just two days before bids are due in the Greater London Authority’s tender process – the first of eight areas with devolution deals to launch its AEB tender.

AELP boss Mark Dawe said the organisation wanted someone who could “represent ITPs at the highest level” in talks with the different authorities.

As discussions around devolution developed there was a “real fear” that private providers wouldn’t get “representation around the table” and that a “strategy would be developed without thinking about what such an important group of providers can bring to the table”.

“It’s always automatic to turn to universities and colleges in the area, they’re physical buildings in the areas, whereas ITPs are very much more about working in the employers’ premises or in the community so they’re not so obvious as an entity,” Mr Dawe said.

From August 2019, more than £600 million of the £1.5 billion adult education budget will be devolved to six mayoral combined authorities and the GLA.

One of the challenges is that each of the different areas is taking a different approach to improving the skills of its local workforce and providing skills to unemployed people to help them secure sustainable employment.

Ms Matharu, who has previously worked for the Skills Funding Agency and the Open University, will initially focus on building relationships with the seven mayoral combined authorities and the GLA.

She will also work closely with AELP’s restructured four regional member networks covering over 40 local provider networks.

“With her sector experience and policy expertise, Harminder Matharu will spearhead our drive to build and develop relationships with the combined authorities so that high-quality skills providers of all types are given the opportunity to deliver on each mayor’s priorities,” Mr Dawe said.

Ms Matharu said was it was “really exciting to be the first to take senior responsibility within AELP for the devolution agenda”. 

“I have a real appreciation and understanding of the challenges that both the combined authority officials and providers face, so I look forward to finding much common ground in taking forward the mayoral priorities.”