Merging with a college that was “struggling for financial survival” and required a £30 million bailout from the government was the “right thing to do”, says the principal of Trafford College Group.

Stockport College was rated ‘inadequate’ three times in five years and required a rescue package of £30 million from the government’s restructuring facility to help with its merger to Trafford College in April 2018, the latest financial accounts reveal.

Despite the financial assistance, Stockport College’s merger still resulted in a loss of £31 million for the newly formed Trafford College Group and ongoing merger plans are based on “assumptions” that could “adversely impact” financial performance if they are not met.

The college said the £30 million received so far was only part of the overall agreed financial support package it secured from the government.

Speaking to FE Week, Lesley Davies, principal of the Trafford College Group said: “Merging with a college that unfortunately struggled for financial survival for many years and received more than one ‘inadequate’ judgement from Ofsted was always going to be a challenge, but we knew, on behalf of learners and the wider Stockport community, it was the right thing to do.”

 “We are committed to transforming the College’s education provision, and to dramatically improve the learning environment to ensure our learners are ready for the next steps in their career, and we are already making significant strides in a number of areas.

“I’m delighted that at the end of the academic year 2017/18 and within four months of merger we have successfully raised achievement rates.”

The accounts said the money was needed to “repay an outstanding loan held by Stockport College, create a stable property base at the Stockport campus and lay the foundations to enable the Trafford College Group to move forward with confidence”.

 Key areas of spend listed in the accounts including £15.3 million in loan repayments and £9.7 million repayment of exceptional financial support from the ESFA.

The Trafford College Group has also received a £16 million skills capital grant from the Greater Manchester Combined Authority (GMCA), earmarked for “upgrading the poor condition of the current campus in Stockport” and creating “high-quality facilities”.

GMCA is shouldering more than two thirds of the costs of the redevelopment, which is expected to cost £23.3 million in total, with the college contributing the remaining third.

According to the accounts, the group “recognised a loss of £31,120,000 in respect of the liabilities transferred from Stockport College upon the merger”.

 “The merger plan includes a number of assumptions regarding savings and efficiencies which, if not achieved, could adversely impact on the Trafford College Group financial performance,” the accounts stated, adding that a “turnaround specialist” was assisting with the merging process.

Trafford College Group also has a debt to Barclays Bank, after Trafford College was loaned £8 million in 2008/09. The accounts say it still owed £6.72 million as of July 31, 2018 and expects to repay £671,000 annually until 2036.

Stockport College received its first grade four rating in September 2013, followed by ‘requires improvement’ in December 2014.

However, it slipped back to ‘inadequate’ in October 2016, and received the same damning grade in a report published in March last year, just one month before the merger.

The college has also had a notice of concern for financial health since December 2010, longer than any other college. It was placed in administered status by former FE commissioner David Collins in 2013.

Trafford College, which was rated ‘good’ by Ofsted, said in its 2016/17 accounts that the merger was dependent on a “successful outcome to the application for restructuring funds” to “address Stockport College’s significant legacy liabilities”.

A Department for Education spokesperson said: “The Trafford College Group was given funding after applying to the restructuring facility fund, to deliver a significant financial and quality turnaround.

“All funding is delivered with strict oversight, including terms and conditions on the funding that is linked to the college’s improvement.”

Sector leaders have hit out at the “ridiculous variability” in approved external quality assurance charges, ranging from a free service to a whopping £179 per apprentice.

There are currently 18 approved external quality assurance (EQA) bodies that monitor end-point assessment organisations, to ensure the process is “fair, consistent and robust”.

The EQA bodies are allowed to apply a charge as long as it is on a “cost-recovery basis” – the amount of which is taken directly from the government funding given to training providers to deliver the apprenticeship.

These practices run the risk of bringing the entire reforms into disrepute

When shown the FE Week analysis of costs published by the Institute for Apprenticeships and Technical Education, Graham Hasting-Evans (pictured), group managing director of NOCN, an end-point assessment organisation, said he was “very concerned” about the high level of EQA charges, which are “up to 10 per cent of the EPA cost in some cases” as well as the “considerable inconsistency”.

“This will just add another unnecessary administration cost circulating money around the system for no real benefit,” he told FE Week.

Tom Bewick, chief executive of the Federation of Awarding Bodies, representing many of the 199 currently approved EPAOs, said in the absence of a “single quality assurance framework for apprenticeship, including proper regulation of the charging rates of EQA providers”, it is “no wonder we have ended up with such ridiculous variability”.

“These practices run the risk of bringing the entire reforms into disrepute,” he added.

“Training providers are not charged by Ofsted for inspection visits so it is nonsensical for EPAOs to be charged for a check of their activities.”

Mr Bewick suggested the “sensible thing to do” would be for IfATE to “see quality assurance as a national infrastructure cost, by top-slicing the levy to fund it, and therefore offering EQA consistently free at the point of delivery for all standards”.

A spokesperson for the IfATE said external quality assurance needs to “respond to the specific nature of the apprenticeship standards involved”.

“Therefore, what constitutes cost recovery will vary for different EQA providers depending on a variety of factors such as the mix of standards they work on, volumes on those standards and the cost of expertise in the sector,” he added.

“We will keep these charges under review going forward.”

The ESFA sets a funding band for each apprenticeship standard, which is usually the value given to providers to deliver the training.

Of the total funding, up to 20 per cent is available to fund the end-point assessment. The EQA cost is paid by the end-point assessment organisation and is factored into the EPA price.

The EQA provider that charges the most is the Institute of Groundsmanship, at a cost of £179 per apprentice.

A “letter of recognition” on the IfATE’s website recognises that this is a “relatively high amount but reflects the anticipated low volume of apprentices”.

“Therefore, if volumes do increase we would expect costs to decrease,” it adds.

Tim Gray, the director of membership and business development at the Institute of Groundsmanship, said his company is not for profit and provides the EQA for the level two sports turf operatives standard “purely on a cost-recovery basis”.

Lantra, an awarding organisation that delivers the EPA for the sports and turf operatives standard, which has a funding band of £5,000, will charge £1,000 per apprentice for its service.

Marcus Potter, Lantra’s chief executive, told FE Week his organisation does “face some challenges in delivering the assessment within the available funding – this is partly because of the additional EQA cost”.

The second highest charge from an EQA provider is CILEx Regulation, which charges £87 per apprentice it monitors on the level six chartered legal executives standard.

Vicky Purtill, director of authorisation and supervision at CILEx Regulation, said: “We are not publicly funded and the cost of acting as EQA is therefore the minimum necessary to cover administrative costs. As the number of apprentices increases, costs should reduce proportionately.”

The Institution of Railway Operators contested the £60 per apprentice charge stated in its letter of recognition.

It said its proposed EQA methodology was: “Stage one, annual charge of £2,750 (+VAT) per EPAO; stage two, charge per visit of £1,850 (+VAT), per EPAO.”

The institution added that it “can’t imagine getting to the equivalent of £60 per head”.

The national finalists of the AAC Apprenticeship Awards 2019 have been unveiled.

More than 350 entries were submitted from colleges, training providers and employers for the awards, which are in their second year and run by FE Week and the Association of Education and Learning Providers.

Following the success of last year’s inaugural awards organisers introduced several new categories for 2019. There are now two types of awards: Route Apprenticeship Provider of the Year and National Awards.

The former will celebrate excellence in 13 individual apprenticeship routes, and winners will be named ‘apprenticeship provider of the year’.

Organisers have also introduced an award to recognise employers and providers work with SEND apprentices and increasing diversity.

Winners of all awards will be announced at a glittering ceremony during the Annual Apprenticeship Conference Gala Dinner on March 28 at the ICC in Birmingham.

Those shortlisted will also be invited to attend special reception at the Houses of Parliament, hosted by Commons education select committee chair Robert Halfon, on March 4.

Managing director of FE Week publisher Lsect, and chair of the judging panel, Shane Mann, said: “These awards are a brilliant opportunity to demonstrate and celebrate the importance of apprenticeships in England and the incredible hard work that employers, providers and individuals put into them.

“The volume of entries we’ve received in our second year has been overwhelming and showcases just how much talent there is in the sector.

“We’d like to thank everyone who submitted a nomination and our judges for their time and consideration. I look forward to kicking off the celebrations at our parliamentary reception at the start of National Apprenticeship Week in March.”

AELP chief executive Mark Dawe said: “The second year’s entry nominations for these awards underline why it was totally right for FE Week and AELP to team up and shine a spotlight on the work that employers and providers are doing to promote apprenticeships.

“As this year’s array of finalists demonstrates, the fantastic training being delivered to young people and to existing employees who need to enhance their skills in the face of current economic uncertainty never ceases to amaze me.

“Providers, employers and the apprentices themselves never fail to rise to fresh challenges, and I can’t wait for the awards night in Birmingham,.”

Mr Halfon, who received last year’s Lifetime Achievement Award and will host a parliamentary reception for those shortlisted said: “After last year’s success, it’s fantastic that the AAC Awards are continuing to highlight the incredible work and achievements of colleges and training providers.

“As my committee’s work over the last year has shown, apprenticeships can play a crucial role in fighting injustices in our society, and I would like to congratulate all those nominated who do so much to deliver excellent training and provide a ladder of opportunity for so many people.”

The awards are part of the Annual Apprenticeship Conference, which is run in partnership with the Department for Education and will take place from 27 to 28 March at Birmingham’s ICC.

More than 1,250 delegates will attend the flagship national apprenticeship conference for employers and providers, with over 60 workshops plus keynote speeches from Ofsted chief inspector Amanda Spielman and the chief executive of the Institute for Apprenticeships and Technical Education Sir Gerry Berragan.

Organisers will be announcing further keynote speakers in February.

 

 

AAC Apprenticeship Awards shortlist 2019 (click here to enlarge)

A college was placed in administered status at the end of January after the FE Commissioner found it was facing a “financial crisis” that “threatens” its future, following historical “corporate failure”.

FE Week revealed last week that North Hertfordshire College recorded a £5 million deficit in 2017/18 and received a recent £2.5 million bailout from the government.

An FE Commissioner visit, which was triggered by the college’s request for exceptional financial support, took place over two days in September – the report of which was published today.

There is reasonable confidence that the senior team can deliver recovery

It warned that the new “chair and chief executive are facing a financial crisis that threatens the future of the college”.

In addition to the £2.5 million exceptional financial support North Herts received at the end of 2018, the college was given a £1.485 million medium-term bailout in February 2016 to “support its cashflow” – the funds of which were repaid to the government in July that year.

The FE Commissioner’s report stated that management accounting and its reporting are “not fit for purpose” and the “operating deficit has had a significant adverse effect on the college cashflow and it is assumed that this will not recover allowing the college to repay loans and EFS from the proceeds of land sales”.

The report states that the “previous chief executive” as “accounting officer must take responsibility for the setting of the 17/18 budget”.

It adds the former principal did “greatly improve the management information in the college and corrected issues of accuracy and led the college to a very successful outcome in its last Ofsted inspection”.

However, the report notes that Ofsted “did not explore the financial stewardship skills” of the board at the time.

North Herts’ former principal, Matt Hamnett, resigned with immediate effect in November 2017.

His £294,000 salary made him the highest-paid principal in 2016/17, and he received a £74,000 payment in lieu of notice in 2017/18, according to the college’s accounts.

Commenting on the FE Commissioner report, Mr Hamnett told FE Week: “The college’s performance and underlying position improved markedly whilst I was chief executive.

“It’s now 14 months since I left. I can’t comment on how the college has performed or managed its position in that time.

“I am sure that my former colleagues are working hard to address the college’s current issues in what is an incredibly challenging sector context.”

Kit Davies was appointed as chief executive of North Herts in April 2018.

The FE Commissioner reported that despite its financial trouble, the college is starting to turn itself around.

“The staff interviewed at the time of the FEC assessment had noticed positive leadership changes since the current chief executive was appointed,” the report said.

“They described him as highly visible, giving clear direction, providing stability, and at the same time being rigorous in holding them to account.

“There is reasonable confidence that the senior team including the chair and chief executive can deliver recovery.”

Describing how North Herts got into financial trouble, the report said: “The ESFA has serious concerns with the college’s forecasting accuracy and the college often made, what was seen as, over-optimistic projections and often circumvented local and regional ESFA officers in requesting additional funding.

“The curriculum planning for 2017/18 lacked cohesion. The projected forecast for new apprentice starts for 2017/18 was over-estimated and unachievable.”

It added that its 2017/18 management accounts “did not comply with best practice in a number of important aspects”.

The accounts “did not go to the board, an extract was included in the principal’s update” and “governors therefore did not have information on which to fulfil their fiduciary duty to the college”.

In the report’s recommendations it said: “Historically, the board has displayed an unacceptable appetite for risk, resulting in corporate failure, and this approach must cease. The use of public money demands measured responses from the board based on accurate and well-analysed officer information.”

The board should “also review the senior management team’s role in the recent corporate failure which resulted in the need for EFS”.

Skills minister Anne Milton accepted the FE Commissioner’s findings and placed the college in administered status with “immediate effect”.

The ESFA now has its own observers on the college’s finances. The funding agency and FE Commissioner will “monitor key decisions”.

A North Herts spokesperson said: “We have a robust recovery plan in place and have taken a number of actions to strengthen our financial position including making substantial cost savings and exiting from non-core activities.

“Despite the financial challenges we have an immensely positive, supportive culture at North Hertfordshire College with everyone from the governors and leadership team down doing their very best for our students, the communities we serve and the businesses we work with.”

Three struggling colleges have had FE Commissioner intervention reports published today.

Among them was one for North Hertfordshire College, which recorded a £5 million deficit last year and received a £2.5 million government bailout, as revealed by FE Week last week.

Easton and Otley College also had its commissioner report published this afternoon after being rated ‘inadequate’ by Ofsted for the second time in a row last year.

A letter from skills minister Anne Milton following the reports on North Herts and Easton and Otley stated that she has now placed both colleges into “administered status”.

Ahead of its report, Easton and Otley this morning reiterated its “determination” to secure its long-term future.

John Ruskin College also had an FE Commissioner report published today. The college had been in early intervention by the Education and Skills Funding Agency following “assessment of the college’s financial plan which indicated a decline in financial health from ‘outstanding’ in 2015/16 to ‘satisfactory’ in 2017/18”.

It saw 16-19 classroom-based student numbers “decline by 12 per cent since 2016/17 with a further decline in 2017/18”.

“The scale of decline in core 16-19 and apprenticeship income has contributed to increasing operating deficits which will steadily erode the college’s cash reserves,” the FE Commissioner’s report said.

John Ruskin has also been “heavily reliant on apprenticeships funding with high levels of sub-contracting and was not successful in securing a non-levy allocation for new starts post-March 2018”, according to its report.

FE Week previously revealed that John Ruskin charged 39 per cent management fees in its subcontracting deals on average in 2016/17.

Richard Atkins (pictured), the FE Commissioner, was called in to visit each of the three colleges following concerns about their finances.

For more analysis of the reports see the next edition of FE Week which will be published tomorrow.

A scheme to provide free functional skills courses online is being launched by The Open University in partnership with three FE colleges.

The scheme is expected to allow tens of thousands of learners to develop level one skills in English and maths, and receive a functional skills qualification from a local college partner.

A pilot, which is being funded by the Department for Education’s flexible learning fund, is being supported by the Bedford College Group, Middlesborough College and West Herts College.

Andrew Law, (pictured), head of propositions at The Open University, said the scheme is hoping to reach up to 30,000 learners a year via the university’s OpenLearn platform, which he said is specifically designed to cater for people with “low confidence or barriers preventing them from getting into education”.

“This is a flexible, low-risk way for people to develop their basic skills, gaining confidence and even a qualification. It could transform their career prospects,” he told FE Week.

“Working in partnership to combine our digital learning expertise with course design and practical, local support from FE colleges is a great offer for anyone that wants to gain functional skills.”

Last month the Education and Skills Funding Agency U-turned on plans to bar 16- to 19-year-olds who have passed GCSE maths and English from following level one study programmes. The planned rule change, originally announced in December, was scrapped after feedback from a “small but significant number of providers”.

The government announced last March that 32 projects will share £11.7 million from its flexible learning fund to help more adults back into the classroom.

Under The Open University scheme, learners will be able to access course materials for free online, and can learn at home or receive support and careers guidance from their local college.

There is an open license on the materials so that others – including colleges and other providers – can copy and re-use the content for their own teaching and learning, and Mr Law said the university was “keen” for others to use them.

The scheme is initially offering two courses, Everyday Maths and Everyday English, and each will take 48 hours study to complete. Learners are being recruited this month and the pilot will run until July 2019, at which point it will be reviewed before being made accessible “for the foreseeable future”.

Mr Law said The Open University intended to roll out level two versions of the courses in the spring, before introducing sector specific functional skills courses tailored towards health and social care and science, technology, engineering, and mathematics.

The scheme will also involve collaborations with organisations and community groups to encourage potential learners to take the “first step” in education. These groups are set to include Local Enterprise Partnerships, the Workers’ Educational Association, Unison and health and welfare charity Leonard Cheshire Disability.

A land-based college that was rated ‘inadequate’ by Ofsted for the second time in a row last year has reiterated its “determination” to secure its long-term future, ahead of an incoming FE Commissioner report.

Easton and Otley College, which has nearly 550 staff and around 5,000 students, was handed a financial health notice and breach of minimum standards warning by the ESFA last June and was told to stop recruiting learners in some areas.

It was also told to not enter into any new subcontracting arrangements until its performance had improved.

The college, based in the east of England, was then rated ‘inadequate’ for the second time since 2017 in November.

The FE Commissioner’s report, which is set to be published in the next 24 hours, will state that a full structural review is to take place at the college over the coming months.

Jane Townsend, Easton and Otley College principal, said: “We are wholly committed to achieving a positive outcome.

“The support from  our students, parents and staff, together with the wider business community, has been nothing short of exceptional, and we are all working together to secure the college’s long-term future for the benefit of current and future students.

“The latest assessment of the college was completed over three months ago, since when we have been very pleased to see a turnaround in a number of areas. We are focusing on maintaining this momentum in everything we do.”

Over the last 12 months the college has recruited a new principal and senior leadership team, as well as making “significant” changes to its board.

It has also reduced staff costs by £3 million.

The proportion of leavers below the minimum standard threshold for Easton and Otley’s adult education was 49.2 per cent last year.

In June the ESFA said the college should “suspend the recruitment of learners” from a small subset of their adult provision.

Easton and Otley was told to also “withdraw from all 19+ education and training subcontracting arrangements that have reported provision below the ESFA minimum standard” and to not enter into any new subcontracting partnerships.

The suspensions are still in place.

The college’s chair, Mark Pendlington, said: “We are putting every effort into making Easton and Otley a regional and national champion for teaching, and for inspiring those who will serve the employers and fast-developing new technologies on which the future of the food, drink and agriculture sector depends.

“Since taking on the tough challenge of turning things around, we have recruited a new principal and senior team; got a grip of our finances; developed an exciting and innovative business plan; and have won the support of those who depend on us for success.”

He added: “We now need to take a close look at how best to build on these strong foundations, and with an open mind, look at all available options.”

The government is to scrap FE teacher bursaries, in a move that has been described as a “slap in the face” for the sector.

The Department for Education said today that the current FE teacher bursaries, including both subject knowledge enhancement funding and initial teacher education bursaries, will not continue after this academic year.

James Noble-Rogers, executive director of the Universities Council for the Education of Teachers, said: “This is a slap in the face for the FE sector and its students. At a time when the DfE has, quite rightly, developed an ambitious new teacher recruitment and retention strategy for schools, the FE sector is again being left in the cold.  

“Many of the 1,900 graduates that have received bursaries in the past would not have been able to train without them. This will lead to fewer teachers entering the profession. That can only impact negatively on learners.”

Currently, maths trainees can receive a £25,000 initial teacher education bursary if they have a 2:2 degree or above, and English trainees can receive £15,000 if they have a 2:1 or above.

All bursaries that have already been approved for this academic year will be paid out, but no more will be offered.

In a statement, skills minister Anne Milton said the government would be investing up to £20 million in “new programmes designed to recruit and develop FE teachers”.

However, the DfE confirmed that no more money would be going towards bursaries in any subject.

The department said the bursaries were always intended to be time-limited programmes to support growth in subjects with a shortage of FE teachers and that it had now achieved this goal.

When including the 300 graduates who received bursaries to train in teaching learners with additional needs (which were scrapped in 2015/16), the DfE said it invested £28 million to support 2,200 graduates.

Future investment includes £5 million in the Taking Teacher Further programme, to attract industry professionals into the FE sector, and £8 million through T-level Professional Development to make sure providers are ready for T-levels.

Ms Milton said: “We are also exploring new approaches to supporting the recruitment and retention of teachers in FE – in both technical and academic subject areas – to reflect the sector’s changing needs as our transformation of technical education gathers pace.”

Initial teacher education bursaries for FE teachers were first introduced in 2012. At the time, then-skills minister John Hayes said: “Recruiting the best talent is central to making the sector as good as it can be. Further education is at the heart of economic revival; at the core of social renewal.”