Twelve cash-strapped colleges received secret government bailouts totalling more than £11 million in December.

It perhaps demonstrates a significant increase in the amount of money being dished out to struggling colleges – and has prompted demands for greater transparency.

The figures were published by the Department for Education as part of a scheduled release detailing monthly expenditure.

“Accountability for the use of taxpayers’ money requires full and immediate transparency; there is no excuse for anything less,” said Mark Dawe, the chief executive of the Association of Employment and Learning Providers.

“It is encouraging that the FE commissioner now has a wide-ranging brief to help colleges in difficulty turn around but the funding required seems to be getting greater.”

However, Julian Gravatt, the deputy chief executive of the Association of Colleges, argued that “publishing information about exceptional financial support (EFS) at the time of need might hit confidence in a financially weak college and would not be helpful to anyone”.

He admitted that once the college insolvency regime – introduced as part of the Technical and Further Education Act – takes effect later this year it “would be worth looking again at what is published when and about whom”.

Confronted with evidence of the payments, the DfE immediately removed any reference from its monthly expenditure list, and said they would remain secret “to ensure the college’s financial position can be managed effectively during the period of support”.

“EFS funding, where appropriate, can be found in individual colleges’ annual accounts and the value of the EFS loan book is reported in the Education and Skills Funding Agency annual accounts,” a spokesperson said.

But the sums involved are unclear; the DfE’s accounts refer only to £60 million in “EFS loans” issued in the last two financial years. No figures are published for EFS grants, and Robert Halfon, when he was skills minister, told parliament in January last year that the government expected the total EFS spend to reach £140 million by the end of that March.

Described as “one of the most significant risks” to its budget, the ESFA’s accounts to March 2017 refer to the “declining financial health of the FE sector” which is “leading to greater demand for intervention and growing pressure for exceptional financial support”.

Accountability for the use of taxpayers’ money requires full and immediate transparency; there is no excuse for anything less

EFS – which can come in the form of a grant or a loan – is only available to colleges that are “encountering financial, or cashflow, difficulties that put the continuation of provision at risk”, and which have “exhausted all other options”.

The government has indicated that these bailouts will be phased out with the new FE insolvency regime later this year, proposals for which are currently under consultation. EFS is not the only area of college finance attracting transparency concerns.

FE Week has previously reported on a number of struggling colleges receiving multimillion-pound bailouts from the £700 million restructuring facility, which is intended to help colleges pay for any post-area review changes they can’t afford themselves.

These include £25 million for Lambeth College, and an as-yet unknown sum being negotiated by Cornwall College – neither of which have immediate merger plans.

During a Commons select committee hearing last month, Halfon asked the FE commissioner Richard Atkins about the lack of transparency surrounding the restructuring facility.

“I don’t have responsibility for allocating those funds,” Atkins said, adding: “I would argue, as I do whenever I intervene in colleges, that openness and transparency is really important in running any organisation. And indeed, one of the things I find in the colleges I intervene in – not always, but often – there’s a lack of openness and transparency.”

Read more: Bradford College bailed out twice in one month

Read more: Stoke on Trent College received half a million bailout

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What happens when the bailout tap runs dry?

Even as the huge sums of money flowing into failing colleges have been uncovered, the government is consulting on its proposals for a college insolvency regime.

Legislation introduced as part of the Technical and Further Education Act 2017 created a new education administration, which is designed to allow colleges to go bust while also protecting the needs of the learners.

The consultation, which opened in December and closes on February 12, focuses on the technical details of the process by which a college can be declared insolvent.

Once the regime comes into effect – and it’s expected “late 2018”, as some of the details require secondary legislation – colleges will no longer have access to exceptional financial support.

Among the issues being discussed are how the DfE and the ESFA can strengthen intervention for colleges at risk of financial failure.

In addition to the existing ESFA process, the FE commissioner’s remit was recently expanded to include diagnostic assessments at colleges showing early signs of problems.

But the consultation asks for views on how “monitoring and intervention can be further improved” and how the ESFA and the FE commissioner can “work with and support colleges to help them self-identify financial difficulties at an early stage”.

It also asks for views on how a proposed period of “independent business review” – to be run alongside any ESFA or FE commissioner intervention but before a college enters education administration – might work.

The review, which the document says is “standard practice in most insolvencies of a reasonable scale”, might be triggered by a “breach of covenant or an unanticipated funding need”.

Local and combined authorities and local enterprise partnerships are among the stakeholders who would be consulted during the review, which would take between six and 10 weeks.

Emergency funding may be given to the college “if it is required to protect learner provision during that period”, though “ideally” the review would take place before such cash was needed.

Other questions in the document relate to the technical details of the insolvency itself, including whether there should be any “specific modifications” to normal procedures “to apply them effectively to FE bodies”.

A college would only enter education administration by order of the education secretary, if administration were the “best solution” to protect the learners’ interest, if it were “insolvent (or likely to become so)” and if “no other form of intervention might help the college’s long-term future”.

“We expect such scenarios to be rare”, the document admits.

In an interview with FE Week in November, the FE commissioner Richard Atkins said that while it was “definitely possible” that a college might go bust in the future, “I don’t think that’s the same as the college closing its doors to students”.

He expects his team to be called in to carry out a structure-and-prospects appraisal, which could lead to another institution taking over.

“It would be extremely uncomfortable for any principal or chair of a governing body to be declared insolvent. I’m hoping we never get to that point,” he said.

“I’m hoping this period of independent business review will bring everybody to the position of understanding what needs to happen to secure the future of that college for the benefit of the learners and the community.”

 

Two colleges rejoiced this week as they stepped up to grade two, but there was no cause for celebration at an adult and community learning provider rated ‘inadequate’.

As reported by FE Week on Wednesday, Chelmsford College and Craven College rose to from grade three to two.

It means just under three quarters of colleges are now rated ‘good’ or ‘outstanding’, the standard considered to be acceptable by the inspectorate.

But Learning Matters, a small provider based in Ipswich with just over 60 learners mostly on English for speakers of other languages (ESOL) study programmes, dropped from a grade three to a four.

Inspectors said since the previous inspection, action taken by senior leaders to improve the quality of provision has had “insufficient impact” and led to a “decline”.

“Too few learners complete their courses and achieve their qualifications, and too many do not make the progress of which they are capable,” Ofsted noted.

“Too few learners develop the English and maths skills that they need to achieve their goals.”

Worryingly, inspectors found that staff do not provide learners with “advice and guidance” that ensures they are on the right course.

Managers’ actions to improve attendance of learners have not “had the desired impact” and too many students “do not attend regularly”.

The reason for the poor performance was put down to Learning Matters experiencing “significant changes” and a high turnover of staff since the previous inspection.

“This, and the sickness absence of key staff, has led to reduced management capacity over the last 12 months,” Ofsted said.

Back onto the good news, Craven College, which taught just over 6,000 learners last year, was highlighted for its “unrelenting” drive of leadership.

“Leaders have made good progress in realising their vision to provide high-quality education and training for students and apprentices,” its report said.

“Since the previous inspection, leaders and managers have focused unrelentingly on tackling weaknesses. They have put in place a wide range of largely successful strategies and actions for improvement.”

The report on Chelmsford College, which taught around 3,200 learners last year, was full of praise for the “high expectations” of governors and senior leaders.

It said that they “communicate well an effective learning strategy to improve the quality of provision and outcomes for learners”.

Grades three and four are considered unacceptable by Ofsted, so the news that these colleges have managed the climb will be a significant morale boost for their peers.

It also means that 74 per cent of colleges now hold the top two grades – up from 69 per cent in August.

Meanwhile, Redcar and Cleveland College had its first monitoring visit report published following its ‘inadequate’ rating in November.

It said governors and leaders “recognised as imperative” the need to take “urgent action to improve the culture within the college and the morale of staff”.

Ofsted said they maintain a “clear commitment” to improving these, through their plans for improving the quality of provision and establishing the long-term sustainability.

There was only one other FE report published this week, and it was a short inspection for employer provider HSBC Bank PLC, which maintained its grade two.

 

GFE Colleges	Inspected	Published	Grade	Previous grade
Chelmsford College	12/12/2017	07/02/2018	2	3
Redcar & Cleveland College	10/01/2018	07/02/2018	M	M
Craven College	16/01/2018	07/02/2018	2	3

 

Adult and Community Learning	Inspected	Published	Grade	Previous grade
Volunteering Matters	22/11/2017	06/02/2018	4	3

 

Short inspections (remains grade 2)	Inspected	Published
HSBC Bank PLC	09/01/2018	08/02/2018

 

A major U-turn that should allow mandatory technical qualifications to be included in new apprenticeships had been widely welcomed by the sector.

The change was announced at a special Institute for Apprenticeships briefing event, days after it was exclusively revealed on the front page of the previous FE Week.

“I think we’ve recognised that where a qualification doesn’t do damage to end-point assessment, and doesn’t duplicate it, but is a good thing and adds value to it, then we don’t have a problem with it,” said Richard Guy, the IfA’s deputy director for quality.

Employer groups can submit proposals for approval under the new rules – which will apply to both existing and new standards – from the April 11 application window, the IfA confirmed.

“Common sense prevails and the value of qualifications to apprentices is finally recognised,” tweeted Paul Eeles, the chair of the Federation of Awarding Bodies. “The apprenticeship reforms finally make sense for both employer and learner.”

 

Common sense prevails & the value of Qualifications to apprentices finally recognised. The apprenticeship reforms finally make sense for both employer and leaner @awardingbodies fully supports this sensible development by @IFAteched https://t.co/jcMUGZJ9pG

— Paul Eeles (@PaulEeles) February 7, 2018

 

“I hope this represents the start of a fundamental shift in attitude at the IfA now that we have Sir Gerry Berragan at the helm, where new apprenticeship standards really are employer-led,” said Graham Hastings-Evans, managing director of awarding body NOCN.

Sir Gerry was appointed as the new chief executive of the IfA last November, and wasted no time in making it “faster and better”.

John Hyde, executive chairman at HIT Training, said adding mandatory qualifications to the new hospitality apprenticeships would give “confidence to learners and their parents considering a career in this industry”.

“City & Guilds or BTEC are much stronger brand images than a government apprenticeship certificate signed by current minister,” he added.

Kirstie Donnelly, the City & Guilds managing director, acknowledged that “you would expect us to be pleased at this latest U-turn”, but she warned that “it seems to go against any streamlining of the system that the government is trying to introduce”.

And Rod Bristow, president of Pearson UK – which sells BTECs – said that including qualifications in apprenticeships was “an important way to recognise the achievements of the learner”.

Strict rules limiting the use of qualifications in standards have frustrated the sector for years.

Previously, the criteria only permitted a mandatory qualification in an apprenticeship where it was a regulatory requirement, required by a professional body.

It otherwise applied if a qualification was such a “must-have in the labour market that an apprentice would be disadvantaged in job applications without it”.

The guidance now allows for an “off-the-job technical qualification that does not accredit full occupational competence and would either add breadth to the apprenticeship or provide structure for the off-the-job training”.

The blanket ban on allowing employer groups to submit a standard for approval that includes a qualification still in development – introduced last summer – has also been lifted.

Another newly announced change related to the timing of funding-band recommendations, which aims to “shorten the time a standard spends waiting for approval for delivery”.

The Institute’s “faster and better” programme also aims to simplify aspects of the development process by “changing” some of the policy criteria for approving apprenticeship occupations and standards.

It also brings in improved trailblazer guidance and “intensive” trailblazer workshops.

The skills minister Anne Milton recently admitted that “some oil on the wheels” was needed.

“We have listened and responded to what trailblazer groups have been telling us since the Institute’s launch last April: that the apprenticeships standards development process needs to be faster and better,” said Sir Gerry.

“These improvements should address these concerns.”

The government has had to pump an extra £16 million into the adult education budget to appease a group of training providers who threatened legal action over last year’s controversial tender.

The original procurement had total pot of around £110 million to use this academic year.

The process culminated in widespread fury when the results were released in August, as many providers unexpectedly lost out on huge sums due to the sheer volume of applicants.

But things changed on September 29, after a coalition of furious providers threatened court action and caused a change in the rules.

The Education and Skills Funding Agency chief executive at the time, Peter Lauener (pictured) promptly found extra cash to bring most AEB contract values for 2017/18 up to 75 per cent of previous allocations.

New figures, obtained via a Freedom of Information request, shows this extra funding amounted to £16 million, which was shared between 96 successful providers.

A Department for Education spokesperson told FE Week at the time it was always “our priority” to act in the best interests of learner.

That was why “we have confirmed additional funds to support providers in delivering quality adult education across the country”.

In the ESFA’s original policy, published in January 2017, providers which did not bid or were unsuccessful were to be offered a contract worth no more than £589,148.

But the ESFA wrote to those providers on September 5, telling them that they would now receive 75 per cent of the value of their previous contract to use in 2017/18.

Many believe this U-turn came as a result of the special treatment offered to Learndirect, which withdrew its tender bid earlier in the year.

The nation’s biggest FE provider had a contract worth £60 million last year, but received roughly £45 million to recruit and train adult learners until July 2018, even though it was slapped with an ‘inadequate’ rating from Ofsted in August – a situation which usually causes the DfE to terminate a provider’s funding.

Learndirect’s boss Andy Palmer even admitted he was “surprised” by this large allocation after his provider’s tactical withdrawal during a recent Public Accounts Committee hearing.

At this point, other providers that had been successful in the tender had seen their AEBs slashed.

For example Somerset Skills & Learning, a provider rated ‘good’ by Ofsted a history of more than 100 years, was awarded a contract worth just three per cent of its previous budget. It later lobbied with MPs to overturn the decision.

Other providers rallied together and geared up for collective action against the government.

This coalition claimed it had suffered financial loss and damage as a result of the tender – and believed it had sufficient grounds to launch a judicial review against then education secretary Justine Greening, or even appeal to the EU Commission.

They alleged that the ESFA was negligent of – or even complicit in – corrupt practice under the Public Procurement Act 2015, which states that a procurement must not be interfered with once underway.

They argued that had they known the ESFA would change its rules and reduce allocations by just 25 per cent for those that did not participate, many would have ignored the bidding round to secure sufficient funding to survive.

Ofqual will begin auditing awarding organisations’ on the “control” they have over their individual providers, after finding evidence it has reduced in recent years.

The exams watchdog wrote to AOs today explaining the decision has been made due to concerns over “direct claim status”.

It is now asking all bodies to review their “arrangements with centres” to ensure “compliance with our rules as a matter of priority”.

“As you know, irrespective of the responsibilities delegated to centres, you retain accountability for your qualifications,” wrote Phil Beach, Ofqual’s executive director for vocational and technical qualifications.

“You need to ensure that your centre controls are robust and effective, otherwise you are at risk of non-compliance. There is intelligence to indicate that the level of control exercised by awarding organisations has reduced in recent years.”

The watchdog added that a failure to comply with its “conditions” can “call into question the integrity of assessments, undermine the maintenance of standards and damage public confidence in the qualifications Ofqual regulates”.

It will be undertaking a “series of audits” over the coming year, which will focus on a “range of centre controls”.

Ofqual raised concern specifically over “direct claims status” – where there is no AO moderation prior to certifications being awarded.

“Awarding organisations and centres have told us that in some circumstances moderation of centre-marked assessments takes place only after the awarding organisation has issued results and certificates to learners,” Mr Beach wrote.

“We recognise that such an approach has immediate benefits for centres and learners, because it is efficient and allows results and certificates to be issued quickly. However, it clearly carries a risk that results and certificates for the same qualification, issued to learners assessed at different centres, will not indicate a consistent level of attainment.”

If Ofqual decides as a result of this work to change the “regulatory framework” on moderation, then it will consult on those proposals, and “we will be clear about what elements of the conditions are subject to change”.

“We will provide a period of time for awarding organisations to achieve compliance before moving into any enforcement action,” he confirmed.

The audits will begin in February, by looking at centre approvals, before looking “more widely” at other aspects.

If an AO is selected for audit, Ofqual will write to it separately nearer the time of the visit.

John McNamara, the chief executive of the Federation of Awarding Bodies, welcomed the audits.

“FAB supports full compliance with Ofqual Conditions of Recognition, and all FAB members are committed to maintaining high quality across the range of qualifications they offer through their centres,” he told FE Week.

“Ofqual are inviting AOs to provide further input on the implementation of conditions relating to centres, and FAB and its members will be contributing as part of this work.”

After an overwhelming response to our call for nominations, the shortlist for the inaugural AAC Apprenticeship Awards has been announced.

Earlier this month the judging panel (pictured above) met in central London to deliberate on the eventual winners; over 250 organisations submitted nominations this year, from colleges and training providers to the Home Office and BT.

FE Week and AELP are delighted to announce the shortlists for the AAC Apprenticeship Awards in association with CMI, and the national results will be held at next month’s Annual Apprenticeship Conference to recognise the very best in apprenticeship provision.

Those shortlisted in each category will be recognised at a prestigious reception, at the start of National Apprenticeships Week. Robert Halfon, the education select committee chair and a former skills minister, will meanwhile host a reception at the House of Commons.

At the reception, regional winners will be crowned in the ‘apprentice employer’, ‘apprenticeship provider’ and ‘promoting apprenticeships campaign’ categories.

“It’s a testament to the world-class apprenticeship opportunities provided by our sector that the standard of applications was so high

The winners of the national awards will be announced at a glittering ceremony and dinner at the Annual Apprenticeships Conference in Birmingham on March 22.

Shane Mann, publisher of FE Week and chair of the judging panel, described the awards as “a great opportunity to celebrate the amazing work of employers and providers in the apprenticeship sector”.

“We were delighted to receive so many nominations for the inaugural awards,” he added. “It’s a testament to the world-class apprenticeship opportunities provided by our sector that the standard of applications was so high, and the judges had a challenging job to determine the winners.

“We’d like to thank everyone who took the time to submit a nomination and our judges for their time and consideration. I can’t wait to kick off the celebrations at our parliamentary reception at the start of National Apprenticeship Week”.

Mark Dawe, chief executive of FE Week’s awards partner AELP, who helped with the judging, said, “it was very difficult to choose winners in each category”.

“It’s fantastic to get so many applications in the first year. I was blown away by the range of amazing work being done by providers and employers,” he continued. “We partnered with FE Week on these awards as a way demonstrate the amazing work done by providers in supporting their learners and employers – we certainly have many examples of outstanding work demonstrated across the sector.”

Robert Halfon said the awards are “a fantastic opportunity to showcase and celebrate the excellent work going on in apprenticeships”. 

“I want to offer my congratulations to all those nominated, and I look forward to welcoming those shortlisted to parliament during National Apprenticeship Week next month,” he added.

The AAC Conference will run from March 21 to March 23 at the International Convention Centre in Birmingham. National award winners will be announced at the AAC Gala Dinner on Thursday 22 March.

The conference programme is created in partnership with the DfE, and in a close working relationship with bodies including AELP, the Institute for Apprenticeships, the University Vocational Awards Council and Ofsted, making it the flagship national apprenticeship conference for employers and providers.

 

Stoke-on-Trent College is almost £16 million in the red and received more than £500,000 in exceptional financial support in December alone, while it awaits the outcome of a £21.9 million application to the government restructuring facility.

In the meantime, it is “reliant on the continued availability of bank loans (in respect of which covenants have been breached) and an overdraft, together with short-term cashflow support from the Education and Skills Funding Agency”, according to its 2016/17 financial statements.

These circumstances “constitute a material uncertainty that may cast significant doubt on the group’s and the college’s ability to continue as a going concern.”

The college went through four different principals during the year – one of whom cost the college £67,000 for just over three months’ work.

An additional £150,000 was spent on “compensation for loss of office paid to former key management personnel”.

A spokesperson for the college insisted that remuneration for the top job “represented a salary consistent with the previous year” – which was between £170,001 and £180,000, according to the accounts – but with the “addition of a one-off expenditure that was in line with the organisation’s contractual responsibilities”.

He said the college had “implemented a number of cost-saving measures in the past year to stabilise its finances”, and these “unavoidable” payments were an “element of the fresh-start process through which the college is going”.

The college would not be drawn on what this fresh start involves, but a note from the college’s July 2017 governing board minutes indicated that it was expected to cost £550,000 in 2017/18.

The grade three college, which had an operating deficit of £1.61 million in 2016/17 and debts including a £12.75 million loan from Lloyds Bank, had two separate requests for EFS approved during the year, the accounts revealed.

The first, in February, was for £990,000, and the second, in July, was for £2.55 million.

It’s not clear if the £535,959 it received in December was part of, or in addition to, this £3.5 million.

Unlike other colleges with similarly precarious finances, Stoke-on-Trent has no plans to merge.

An FE commissioner-led structure and prospects appraisal in February “recommended a ‘fresh-start’ approach as the college had been unable to find a willing strategic partner”.

Despite this, the college is in the process of submitting a bid to the restructuring facility – a fund designed to pay for post-area review changes that colleges are unable to afford.

But the £21.9 million it has requested is intended cover the college’s debt, along with “a small short-term loan request to provide additional headroom in the context of adverse variances against forecast operational cash flows”.

Stoke-on-Trent, which slipped from ‘good’ to ‘requires improvement’ in November 2016, received a notice of concern for financial health in October 2014, which led to intervention by the FE commissioner.

That process concluded a year later, although the notice remained in place – and was joined in February last year with a notice for financial control.