The Department for Education appears to have given a cash-strapped college special treatment, after it endorsed subcontracting to meet short-term funding objectives.
Lambeth College, which is dependent on government bailouts, âembarked on a significant programme of subcontractingâ to make up for a recruitment shortfall last year, according to its recently published 2017/18 accounts.
The college itself has insisted that the set-up fitted with its âlong-term strategyâ and wasnât the result of âshort-term tacticsâ â a view the DfE has agreed with.
âWe work closely with the college, as we do all colleges, to make sure they are working in line with subcontracting rules,â a department spokesperson said.
But evidence from the collegeâs board minutes and accounts reveal a different story.
Tactical subcontracting is banned under the Education and Skills Funding Agencyâs funding rules, which state that providers âmust not subcontract to meet short-term funding objectivesâ.
An observer from the ESFA has been present at all Lambeth College board meetings since 2016, following intervention by the FE commissioner in the September of that year.
Itâs currently days away from a merger with London South Bank University which has been in the offing since December 2016.
According to Lambethâs accounts, the college âfailed to recruit sufficient adult students to study on college premises during the course of 2017/18â and âin order to reduce the loss of incomeâ it âembarked on a significant programme of subcontractingâ.

âTo partially compensate for the number of adult students being taught on campus falling below the budgeted numbers almost ÂŁ1 million more was spent with the collegeâs partners to educate adult students off-campus than had been planned,â the accounts said.
The college is ârestricted in its use of subcontractorsâ because of its financial situation, minutes from a November 2017 board meeting state.
The cap means it canât subcontract more than it did in 2016/17, nor can it work with new subcontractors.
After having âagreed initial levels of delivery with each contractorâ, the minutes showed there was the âpossibility for further sub-contracting within the total envelope availableâ if the college âmakes the strategic decision to sub-contract any underdelivery in 2017/18 once the financial impact of enrolment is quantifiedâ.

Minutes from a meeting in March revealed the college to be ÂŁ1.6 million below its AEB allocation for the year, which was ÂŁ10,912,170 according to ESFA figures.
The collegeâs published list of subcontractors showed that 12 providers delivered adult education provision worth almost ÂŁ3.7 million on the collegeâs behalf over the year.
Seven of these contracts, worth a combined total of ÂŁ1.3 million, started in 2018 â with one, worth ÂŁ620,000 with the Dhunay Corporation, lasting for just two weeks from July 16 to 31.
On seeing evidence of what appears to be special treatment, Mark Dawe, chief executive of the Association of Employment and Learning Providers, said: âThe new ESFA rules are there for good reason.
âIf they are abused, everyone will lose out, because the government might ban the practice altogether â including genuine examples of where subcontracting is obviously serving an employerâs interests.â
âThe agency must crack down on tactical subcontracting,â he urged.
A spokesperson for Lambeth College said its decision to increase the amount of provision it subcontracted âmeant that we maintained the level of subcontracting with the previous year rather than achieving a reductionâ.
âThis decision was compliant with our long-term strategy, whereby activity levels do not decline prior to merger, and was not the result of shortterm tactics.â
The ESFAâs ban on tactical subcontracting was introduced in 2015.
In a letter to the agency that year the former business secretary Vince Cable warned about âlevels of short-term tactical subcontracting that are causing concernâ despite efforts by the-then Skills Funding Agency to âenhance the controls on subcontracting in the last two yearsâ.
Lambeth College’s financial troubles – a potted history
Lambethâs troubles began in 2016, when a âsignificant deteriorationâ in its cashflow prompted an intervention by the former FE commissioner Sir David Collins.
His report, based on a visit that September, found problems with the collegeâs finances that were so severe it was âno longer sustainableâ unless it merged.
In December 2016 the college announced it would âjoin the London South Bank University family in principleâ.
The merger had been due to complete by July 2017, but was subsequently put on hold while the college went through an FE commissioner-led structure and prospects appraisal to find an alternative partner.
That process concluded in March 2018 with a recommendation to stick to the original plan, and a new merger date was set for the end of the year.
The merger date was put back again, to January 31. A college spokesperson said this week that the plan âis very much on track, with proposed entry date for joining the LSBU family being only a few days awayâ.
Meanwhile, the college has been dependent on government bailouts for the past two years.
According to its 2017/18 accounts, it owes almost ÂŁ15.5 million in exceptional financial support, and has agreed a support package from the restructuring facility worth ÂŁ15.8 million.
âThe college made a further large loss in 2017/18, it remains dependent on exceptional financial support from the government and its financial position is accurately described as âinadequateââ, the accounts said.