The government has accepted that it did not have proper oversight of Learndirect, and has agreed to take action on all of the recommendations made by a public accounts committee inquiry held on it.

Members of the committee grilled the organisations which have been closest to the debacle surrounding the nation’s biggest FE provider at a hearing in January, which was followed by a report in March.

Learndirect was sensationally hit with an ‘inadequate’ rating from Ofsted in August.

The giant provider was then found to have received special treatment from the DfE, which allowed it to retain its contracts for almost a year – much longer than the usual three-month termination period.

Five recommendations were made by the PAC to ensure history doesn’t repeat; they have all now been accepted in the Treasury’s response.

These recommendations and the government’s responses are set out below:

 

1. Do not hand so much power to private giants

“The government recognises the need to better understand its contractual relationship with suppliers, and is taking a number of steps to improve this information,” the response said.

This work is being led by a cross-government network of commercial professionals, called the government commercial function.

The GCF is “developing a tool which will provide departments with spend and contract data on suppliers across central government”.

Officials are also introducing commercial contract management for “high-risk arrangements directly under professional commercial governance”, as well as a commercial assurance questionnaire.

All of these have a target implementation date of April 2020.

 

2. Develop a new framework for identifying providers who are too big to fail

The government claims to have already taken steps to “identify and monitor large and essential suppliers”.

“The Cabinet Office is working with central government departments to improve capability in the management of critical and strategic suppliers,” today’s report said.

“It has developed, with departments and a number of industry experts, a best practice guide and toolkit for departmental strategic supplier relationship management.

“The Cabinet Office recognises the need to develop a comprehensive risk framework for large and essential suppliers and will report on progress by December 2018.”

The government is now “developing the necessary tools to identify and manage supplier performance”.

This includes a “pipeline of procurement activity, a central data repository of all contracts and grants held with third parties, forming a commercial assurance team and an SSRM programme to target strategic suppliers”.

A target date of September 2019 has been set.

 

3. The ESFA should publish its expectations on management fees

“The funding agency will work with providers to determine the services that should be offered to subcontractors and the corresponding fees that it is reasonable for providers to retain,” the response said.

“It will publish these expectations in advance of the next academic year and providers will be required to comply with them as a requirement of maintaining their funding agreement with ESFA.”

The ESFA will finally publish subcontracting fees for providers across the country in June.

Previous rules dictated that providers publish this information on their own websites every year, but many did not obey. Some, like Learndirect, had charged “unusually high” top-slices of 40 per cent to its subcontractors for years.

New rules now require individual providers to inform the ESFA of their management fee figures, which should then be published centrally.

 

4. Ofsted must urgently review its plans for assessing risks of private provider failures

Ofsted is “ensuring” that it takes full account of the size of a provider in terms of its learner’s numbers and complexity of provision in the case of very large providers during risk assessment by “actively putting greater emphasis on these factors”. This was implemented in April 2018.

While Ofsted already plans “well in advance” for inspections, it is now taking “special steps” to do this for particularly large providers.

 

5. A new inspection deferral policy is required for commercial providers

Work is already underway and Ofsted is “reviewing the current deferral policy and will give specific consideration to its approach to commercial providers”.

An updated policy is expected to be published this month.

Where there are “imminent” plans for closure or major change at a provider, Ofsted is “dependent on receiving clear and regularly updated information from other parties”.

“To this end, Ofsted is working closely with ESFA to progressively improve the accuracy and reliability of the information which it receives to inform deferral decisions.”

The funding rate for the controversial management degree apprenticeship is set to fall, following a review of the most popular standards.

The Institute for Apprenticeships announced today that it will look at 31 standards (see table below), at request from the Department for Education.

The IfA will now have 30 funding bands to choose from – the maximum rate paid for from the levy – up from the current 15.

We will work collaboratively with trailblazers to carry out the review in an open and fair way

FE Week analysis shows that 21 of the 30 standards with the most starts this academic year are among those being reviewed by the IfA.

The 31 involved represents 64 per cent of all starts on standards in the first half of 2017/18 (45,900 out of 71,720).

The chartered management degree apprenticeship is one. Its funding band is already £27,000 – the maximum upper limit, meaning its rate can only fall, which is likely to infuriate the many universities offering the standard.

The team leader/supervisor apprenticeship has been the most popular standard this year with 6,680 starts from August 2017 to February 2018, yet its funding band is also under review.

The move to a 30-band structure gives the IfA more choice regarding the rate it applies to each standard.

Under the 15 structure, if the institute wanted to reduce a £9,000 band it had to drop it to £6,000, for example. But for starts from August it will have the option of setting this to to either £8,000 or £7,000.

Similarly, standards on £27,000 can now drop to £26,000 or £25,000 instead of falling all the way to the previous £24,000.

The IfA admitted in its release about the review that some of the standards involved are among the most popular, and said that others have a low number of starts and “employer feedback suggests” that take up may be restricted by their current funding band.

These are likely to include the infrastructure technician and bespoke tailor and cutter standards which have had no starts so far this year.

The IfA said it will work “collaboratively with trailblazers to carry out the review in an open and fair way”.

The review will “help make sure that employers can access high quality apprenticeships, and that funding bands represent good value for money for employers and government”.

Reviewed funding band recommendations will be made to the DfE, who “take the final decision on all funding bands”.

The DfE announced in February that it would review the funding-band structure, because employers did not “feel able” to negotiate with providers on price.

Ofsted has taken a highly unusual decision to extend its inspection of NCG, suggesting that not all is well at the nation’s largest college group.

Two teams of inspectors were sent in last Monday owing to achievement rate concerns, and they had been due to wrap up their investigations by the end of last week.

However, inspectors are controversially going back in for one last day today.

It is understood that the visit has not gone well, and that NCG’s current grade two is in danger of being downgraded. Its apprenticeship provision is understood to be of most concern.

This is the largest and most complex FE inspection Ofsted has had to undertake

The group, which is currently consulting on significant redundancies, will be desperate to avoid a disastrous ‘inadequate’ rating in this area, which would see it booted off of the government’s register of apprenticeship training providers and banned from offering the courses.

Intraining, NCG’s troubled private training provider arm, also had a visit from Ofsted last week. This inspection ended on schedule and it is understood to have resulted in a likely grade three for apprenticeships.

If the worst happens and NCG is taken off of RoATP, it will be down to the Department for Education to decide whether to stop the group from using Intraining as the sole provider of the group’s apprenticeship provision, as happened similarly at Learndirect Ltd.

Just before this body, the largest overall FE provider in the country, received a grade four of its own last year, it set up a separate company – Learndirect Apprenticeships Ltd – to deliver apprenticeships regardless of whether Learndirect Ltd could or not.

Last week’s visits to NCG and Intraining were both full inspections, which suggests Ofsted’s alarm bells are ringing.

In more usual times, it would only be expected to carry out a short inspection, especially if there were no concerns.

The group was rated ‘good’ in September 2016, following a five-month standoff during which it successfully overturned a lower grade. Intraining was also given a grade two that June.

However, overall achievement rates at NCG are well below the national average.In 2016/17, the combined overall apprenticeship achievement rate for NCG’s colleges was just 55.6 per cent, while Intraining’s was 58 per cent.

Both are around 10 points lower than the national average of 67.7 per cent, and lower than the minimum threshold of 62 per cent, according to the latest government data.

And for the all-important 16-to-18 study programmes, NCG was 4.4 points below the national average of 81.5 per cent.

It is understood that Ofsted wanted to reinspect NCG last year, but was unable to analyse the group’s achievement rates because “data glitches” absented it from the 2015/16 tables.

“This is the largest and most complex FE inspection Ofsted has had to undertake, involving six colleges and a training organisation,” said an NCG spokesperson.

“Given the volume of information, it’s not surprising it has taken longer than a standard inspection and a request from Ofsted to extend by one day was agreed amicably.”

She said the group would not “pre-empt” the results of an inspection report “by commenting on what it might say”.

At the same time as dealing with these inspections, NCG is cutting staff numbers by up to a fifth at Intraining and its other private provider Rathbone Training in an effort to save £3 million, as revealed by FE Week two weeks ago.

The group was further shaken last month when staff at Lewisham Southwark College, a long-distance merger partner, voted to strike over pay.

Staff are due to walk out tomorrow and Wednesday.