IfA boss admits fears for tight T-levels timescale

The boss of the organisation that will be responsible for T-levels has admitted he has deep concerns at the “worryingly tight” delivery timeline.

Sir Gerry Berragan, the chief executive of the Institute for Apprenticeships, made his fears known during a keynote speech at an Ofqual conference for vocational education awarding organisations in Birmingham this week.

He discussed the need to “articulate” what T-levels are and how they fit into the technical education landscape, saying it was pivotal that the IfA has “success” with the wider rollout.

But his unease at the viability of the government’s proposed 2020 timeline for the first three routes was clear.

“The last thing we should do is start the first three on the wrong footing and give them a bad reputation,” he said.

I think the timeline for delivery of the three pathways is worryingly tight

“We need to deliver these successfully from the outset. I think the timeline for delivery of the initial three pathways is worryingly tight in that regard.”

He is the latest – but perhaps most significant – industry figure to admit concern about the tight timescale for T-levels, given the IfA’s central role.

A spokesperson for the Department for Education admitted its timetable is “ambitious”, but said it remains confident of meeting the 2020 rollout.

“We know that the timetable for T-levels is ambitious,” she said. “We are working closely with Ofqual and the IfA to make sure we get these reforms right.

“New T-levels are going to give young people a high-quality technical education, equal in esteem to A-levels, and we’re on track for teaching to start from September 2020.”

T-levels have been designed to increase the prestige of technical qualifications, as match for A-levels.

The first three subject areas to go live in 2020 will cover digital, childcare and education, and construction.

It was announced last October that a further eight subject “routes” should be launched from 2022.

Ofqual’s boss Sally Collier also discussed the regulator’s concerns about T-levels.

The body released its response to the government’s T-level consultation two weeks ago, in which it brought up various worries about plans for a single awarding organisation per qualification, and the FE sector’s ability to cope with yet another set of reforms.

“It is absolutely essential that the majority of the content is set before we turn to assessment strategies and qualifications design,” Ms Collier told the conference.

“Government, quite rightly is wanting to get on with it, to deliver on its commitments and see these qualifications as fundamental for improving our skill base. That means the timelines are very ambitious, and we all need to be cognisant of those risks.”

We know that the timetable for T-levels is ambitious

“That means our timelines are very ambitious. We all need to be competent of those risks.”

Her organisation has been working with the IfA and DfE for “some months” about the role Ofqual will play in helping deliver the programme, and she described “extremely good progress”.

The Confederation of British Industry shares Sir Gerry’s opinion that the current delivery timetable is unviable.

In its own response to the T-levels consultation, representatives went so far as to say they think the full delivery should be delayed further, until 2023.

These views will no doubt heap pressure on Anne Milton to delay T-levels further, after she pushed them back from 2019.

In July last year, the skills and apprenticeships minister announced first three routes would be delayed until September 2020 – a year later than planned.

The PAC’s five recommendations following its inquiry into Learndirect

The Public Accounts Committee has today published its report into the monitoring, inspection and funding of Learndirect.

Members of the committee grilled the organisations who’ve been closest to the saga involving the nation’s biggest FE provider during a hearing in January.

Learndirect was given an ‘inadequate’ rating by Ofsted in a report published in August, and the government offered it special treatment by allowing it to retain its contracts for almost a year – much more than the usual three-month termination period.

The PAC’S final report dissects the evidence from this long running debacle and gives five recommendations for the government and Ofsted to act upon. 

 

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

Having awarded Learndirect several vital contracts for a variety of public services, the PAC said the government was later restricted in its ability to take “decisive action” when the provider’s apprenticeships provision began to fail.

The DfE and other government bodies should now “develop a framework for identifying any risk that a commercial provider becomes so large and essential to the delivery of public services that it cannot be allowed to fail, or requires special treatment if it begins to do so”.

The PAC wants the Cabinet Office to report back on this progress by December, and the DfE to do so separately by the start of the next academic year.

The DfE told FE Week it would respond “in detail” to the PAC’s recommendation in “due course”.

The Cabinet Office did not respond to requests for comment.

 

2. The ESFA should publish its expectations on management fees

Learndirect has charged “unusually high” management fees of 40 per cent to its subcontractors for years, which means a “large amount of funding is not available to be spent on teaching and learning”.

Even though the ESFA requires all providers who subcontract their provision to be transparent about management fee rates, it provides no guidance on the levels of support that “might be merited by different levels” of top-slices.

The PAC said that the ESFA should therefore “formally publish”, in time for the next academic year, its “expectations about the services that should be offered to subcontractors, and the associated management fees that are reasonable”.

 

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

In assessing when to reinspect Learndirect, the PAC said Ofsted did not “take full account of the company’s size and the consequences for learners of its declining performance”.

It pointed out that a full inspection of Learndirect requires Ofsted to commit around 15 per cent of its total inspection capacity for the FE sector.

It wants the watchdog to “urgently revisit how it prioritises its use of resources and the different type of risk attached to a private sector failure, in a way that takes account of risks to high numbers of learners and the changing provider-base in FE”.

Ofsted said it keeps its inspection processes “under regular review, particularly as the skills landscape changes and new risks emerge, and will study the PAC’s recommendation”.

 

4. A new inspection deferral policy is needed for commercial providers

Ofsted’s policy for deferring an inspection “risks putting providers’ business interests ahead of learners’ interests”, the PAC said.

The watchdog originally planned to reinspect Learndirect at the start of November 2016, but agreed to defer its inspection when the provider claimed it was negotiating the sale of its apprenticeships business.

This sale never actually went through but delayed inspection for four months.

To prevent a situation like this from happening again, the PAC says that by June 2018, Ofsted should develop a “specific deferral policy for commercial providers, to ensure that learners’ interests always take priority over the pursuit of profit”.

Ofsted said it will “always put the interests of learners before any commercial considerations, which is precisely what we did in this case”.

 

5. The government needs not to hand so much power to private giants

The PAC concluded that Learndirect had received hundreds of millions of pounds of public money while “neglecting its learners in pursuit of profit and frustrating the Ofsted inspection regime with delaying tactics and spurious legal action”.

It pointed out that the ESFA gave Learndirect almost £500 million in the academic years from 2013/14 to 2016/17, during which time the quality of apprenticeships provision was in decline and the provider failed to achieve the ESFA’s minimum standard. Yet, despite this downward trend, the company waited until September 2016 to develop an improvement plan.

The PAC believes the government should “learn the lessons” from the failure of Learndirect, in particular “concerning the need to understand how many government contracts a company holds at a given time and how well it is performing against each of those contracts”.

The Cabinet Office did not respond to requests for comment.

 

The levy is not to blame for the fall in apprenticeship starts

In last week’s FE Week webinar, the skills minister insisted the 20-per-cent off-the job training rule for would be sticking around. Neil Davies explains why not all employers are in favour

While some employers might not welcome the financial cost of the levy, most undoubtedly want to maximise their return. For most, the levy is for spending on upskilling, and in the companies we work with it is seen as a huge, beneficial opportunity, even though some have been slow to formulate their approach and prioritise spend.

Across our two main businesses, Watertrain and Intelligencia Training, we are seeing significant increases in current and planned apprenticeship numbers. The level three water process technician standard and the level four apprenticeship in intelligence operations provide significant new knowledge and skills to improve the effectiveness of staff. While of great value to individuals and their organisations, the vast majority of these new starts would simply not happen if it were not for the levy.

It is upskilling that accounts for the vast majority of starts

There have been various claims about red tape and bureaucracy affecting both the roll-out and start numbers. These in our view are overstated. We are finding no process blockages at our employers, and indeed have found the whole digital apprenticeship service set-up surprisingly easy to work with.

Nor do we recognise the argument that the levy is responsible for the “collapse” in apprenticeship starts. This makes little sense when the government has money available and a relatively simple system to enable firms to spend it. If a levy employer was previously offering apprenticeships, it’s only the payment methodology that has changed – not the decision to do apprenticeships.

We no longer operate in the non-levy-paying sector, so it’s difficult to comment on what impact the employer 10-per-cent financial contribution may be having on starts. But from my experience, I suspect it will affect the ability of some SMEs to take on apprentices or upskill staff.

The new 20-per-cent off-the-job (OTJ) training requirement is a big change to the historical apprenticeship delivery model.

We are fortunate that our water sector clients are using the new standard to upskill their operational teams and there are plenty of opportunities under “skills and behaviours” to capture OTJ activity. The high percentage is however still a real challenge. Freeing staff for the knowledge and skills elements affects operations, so to rota the release of staff from the front line, in essence, for one day a week is costly and problematic.

The rule may sound like a good idea, particularly for a 16- to 18-year-old in their first job. However, it is upskilling that accounts for the vast majority of starts, and the OTJ policy makes a huge assumption that businesses can afford to lose a member of staff’s output for one day every week.

For example, in one large tier-one contractor to the water sector, the operations director has stopped using apprenticeships to upskill in the operations side of the business given the staffing limitations. Many businesses will not have the resources to manage the OTJ. This can only mean that many thousands of potential starts will be lost.

There is a material risk that some employers, in their determination to fully spend the levy, will not necessarily commit to the intent of the OTJ.

Equally, I suspect many on upskilling programmes would rather be doing their day job than trying to create an activity log that may have little or no actual value. Politicians state that the new apprenticeship standards are about giving employers ownership of their own skills agenda. Why then do policymakers impose an arbitrary percentage insisting it is about adding quality?

Perhaps the rule-makers need to actually give employers that ownership and control, and let them decide what percentage of OTJ best suits their needs, because currently the rule constrains employers and their staff development.

Neil Davies is director of Watertrain Limited

That’s special treatment all right: Accounts committee lays into Learndirect

Learndirect was indeed given special treatment because the government considered it too big to fail, the Public Accounts Committee has concluded in its final report on the saga.

The scandal engulfing the nation’s biggest FE provider has engrossed the sector for nearly a year, and the PAC’s round-up asserts that it still “holds the whip-hand” over Whitehall and demanded more definitive action.

The PAC’s chair Meg Hillier (pictured above) told FE Week that there had been a “shocking message” to taxpayers and learners when the government “propped up” a “failing education provider” instead of stopping its funding.

She had put the wheels in motion for an investigation back in September when she referred the case to the National Audit Office.

At this point, Learndirect had been given an ‘inadequate’ rating by Ofsted in a report published in August, following a long legal battle to suppress it, including an injunction.

It was a shocking message to taxpayers and learners when the government propped up a failing education provider

The Department for Education then allowed it to retain its contracts for almost a year – much more than the usual three-month termination period – and Learndirect is expecting to receive over £105 million in 2017/18.

The government and Learndirect have attempted to defend themselves ever since, denying it received “special treatment” and claiming it acted in the best interests of the tens of thousands of learners involved.

Seven months on and after the NAO’s report on the debacle, Ms Hillier has laid waste to this flimsy defence insisting that the provider leveraged its sizeable contracts across Whitehall to stay afloat.

She believes Learndirect’s failure should act as a wake-up call for the government to get a grip on individual contractors that grow so large they become too big to fail.

“In the case of Learndirect, thousands of learners have been let down amid poor oversight by the government and at significant public expense,” Ms Hillier said.

“There has been disruptive legal action and, finally, a scathing Ofsted report. Yet still Learndirect appears to hold the whip-hand.”

Having awarded the provider several vital contracts for a variety of public services, including with the Home Office, the PAC found the government had been restricted in its ability to take “decisive action” when the company’s apprenticeships provision began to fail.

Its achievement rate has dropped considerably over the last four years: since 2013/14, Learndirect has trained 58,283 apprentices but 24,712 of them have failed to achieve their qualifications.

During this time the provider was given over £150 million to deliver apprenticeships.

Ms Hillier said it “cannot be right” that individual contractors should command such large sums of public money regardless of their performance.

“No commercial provider should be allowed to become so essential to the delivery of services that it cannot be allowed to fail,” she continued.

Thousands of learners have been let down amid poor oversight by the government

“The government has a duty to manage taxpayers’ exposure to risk diligently and we urge it to act on the recommendations set out in our report.”

Learndirect’s funding comes to a halt at the end of July, but it remains to be seen as to whether the provider will even survive until then.

Its latest set of accounts, published in November, it showed that its long-term survival hinges on the success of its sister companies, including Learndirect Apprenticeships, over the next 12 months, as it is saddled with debts of more than £50 million.

In February, Learndirect entered redundancy talks with an unknown amount of its staff.

The PAC used its report to publish five recommendations for government and Ofsted to take action on to ensure a scandal like this is not repeated (which you can read here).

A DfE spokesperson said Learndirect’s contract to provide apprenticeships and adult education was coming to an end “because of its failure to meet the high standards expected”.

She reiterated that the department’s priority “has always been to protect learners” and make sure they “do not lose out and get the opportunity to complete their courses”.

Learndirect declined to comment.

Public accounts committee wants top-slicing action by August

The government should publish guidance on how it expects management fees to be applied by August, the public accounts committee has said, piling pressure on ministers to act faster on subcontracting.

The demand came in the committee’s report on Learndirect, which is published today and slams the provider for charging “unusually high” top-slices of 40 per cent.

It said that even though the ESFA requires all providers who subcontract their provision to be transparent about management-fee rates, it provides no guidance on the levels of support that might be merited by different levels of top-slices.

The PAC has urged the government to “formally publish” its “expectations about the services that should be offered to subcontractors, and the associated management fees that are reasonable”, in time for the next academic year.

It adds to similar calls from Robert Halfon’s (pictured below) education select committee.

READ MORE: Anger as ESFA dodges MPs’ scrutiny on subcontracting fees

In December, he accused the government of double standards on subcontracting charges, after it missed its own deadline for issuing templates for providers to submit their figures.

Colleges and independent training providers have since 2013 been obliged to publish the amount of government cash they withheld before paying subcontractors to run training by the end of November each year.

But the ESFA recently decided it would publish all the figures instead.

FE Week has been badgering the ESFA to get on with it, and in January it said it “aimed” to publish by the end of March – four months after its own deadline and too late to make them available for scrutiny by various committee inquiries into the issue.

Learndirect, which retains all of its contracts despite an Ofsted grade four last year and special treatment from the DfE, is notorious for its high management fees.

In 2015/16, it retained £19.8 million from its 64 subcontractors, 36 per cent of its total SFA funding for that year.

Meg Hillier, the PAC’s chair, described this as an “outrageous scooping off of profit”.

“All management fees should be transparent,” she told FE Week. “I’ve spoken with third-sector providers and some of them are not savvy enough in the commercial world, and only take tiny amounts of management fees.

“There are a lot of good providers out there who are swimming with the sharks which are these companies who learn how to botch things up.”

She said transparency on fees would enable the ESFA to monitor the wider subcontracting picture and identify any problems which need to be acted on.

There are a lot of good providers out there who are swimming with the sharks

Mark Dawe, the boss of the Association of Employment and Learning Providers, backed her call.

“AELP strongly supports the PAC’s recommendations on subcontracting and associated management fees,” he said.

“We want full transparency and we are disturbed that while the ESFA is restricting funding to the non-levy market, some lead providers are using the opportunity to charge unjustifiably high management fees.

“This is totally unacceptable and we hope that official guidance which tackles such poor practice will be available soon.”

The AELP believes that the government’s amendment to the funding ruless that providers don’t have to publish their subcontracting arrangements and associated management fees was “mistaken” and in the “interests of maximising the amount of funding that reaches frontline training”, transparency around the practice “should be restored”.

Julian Gravatt, the deputy chief executive at the Association of Colleges, said his organisation also agrees with the PAC’s recommendation.

The DfE said it would respond “in detail” to the PAC’s recommendation in “due course”.

FE Commissioner: “Structural change” could follow £1.4m emergency cash injection

The FE Commissioner has warned a college may need “structural change” after it was given £1.4 million in emergency cash.

A report published today revealed Kirklees College in Yorkshire was issued with a notice of concern on September 28 following a request for exceptional financial support from the Education and Skills Funding Agency.

Kirklees College received the emergency bailout money at the end of last year as it battled to control high levels of long-term debt and minimal cash reserves, but the FE Commissioner’s report raised concerns about the “effectiveness of governor oversight of finance and risk” and whether the college had the “capacity” to deliver “imperative” financial improvements.

It says: “Significant improvements in the governance and leadership of the college are now urgently required, which demonstrate evidence of action to improve financial performance and give greater confidence that a stand-alone solution for Kirklees College remains a realistic prospect.”

The report, which was written by FE Commissioner Richard Atkins following a visit to the college on October 30 and November 1, reveals Kirklees pinned its hopes of financial redemption on receiving “substantial” money from the government’s restructuring facility fund.

However, although the college spent “considerable time and effort” on its application for the money, which it assumed would “underpin a long-term recovery plan built on growth”, ESFA was forced to tell the college it was not eligible for any funding as the West Yorkshire area review had recommended that it stayed as a stand-alone college.

As a result, Kirklees lodged a request for “substantial” exceptional financial support, which it received at the end of last year.

Atkins made a series of recommendations to the college, including strengthening the effectiveness of financial oversight by governors, ensuring its board has the “skills, confidence and capacity” to lead it to recovery, developing a “robust and comprehensive” financial recovery plan to address the operating deficit and “stem the rapid decline in cash” and address issues such as small class sizes.

He added that if Kirklees was able to “demonstrate sufficient evidence of improvement in leadership, governance and financial recovery” by a stocktake in January this year, consideration should be given to review the area review recommendation.

This could include “a potential fresh start solution”, which would require Kirklees to significantly change its business or operating model, including a possible change in senior leadership.

If, however, the Commissioner team did not think sufficient progress had been made, Atkins said “the need for structural change will need to be considered.”

The Department for Education and Kirklees College had not responded as to what the result of the January stocktake was at the time of publication.

The report was published alongside a letter from skills minister Anne Milton warning that “leadership and governance need to improve” if Kirklees is to achieve financial sustainability, and saying it was “critical” that a new chair was appointed to oversee a recovery plan.

Kirklees College is rated ‘good’ by Ofsted. In his report, Atkins also acknowledged that achievement rates at the college are above the national rates and said quality had been “sustained overall” despite its financial woes.

The college has been undergoing estate reconfiguration since 2010, including the opening of the Engineering Centre in 2012, Huddersfield Centre in September 2013 and the Process Manufacturing Centre in September 2016.

Commissioner report shows governors’ surprise at college’s dire finances

A new FE Commissioner report has shown how the dire financial position of a college that needed two government bailouts last December came as a surprise to its governors.

The report on Bradford College, following intervention by Richard Atkins and his team, was published today.

“The college now finds itself with a serious cash shortfall and inadequate financial health,” it warned.

The grade three-rated college was hit with a financial notice to improve in November.

But today’s report pointed out that it “was only at the meeting of June 22, 2017 (month 11 of the financial year) that the board were made aware of management concerns around the college finances”.

It adds that “during the period July 2016 – June 2017 there is insufficient evidence in the board minutes to demonstrate questions being asked, actions being taken, and challenges being made to address the deteriorating financial position of the college”.

“Management accounts were consistently late, and papers are confusing and unclear,” it added.

FE Week revealed last month that Bradford College had to be bailed out twice in December, to the tune of £1.5 million each time.

Figures revealing the amount of exceptional financial support were published accidentally by the Department for Education.

No reason was given at the time for the bailouts, and the college didn’t provide one when asked for a comment.

The FE commissioner was sent in to carry out an assessment of the college’s “capability and capacity to make the required changes and improvements”, and shortly after it was announced that its chief executive, Andy Welsh, would be stepping down at the end of the academic year.

The executive team were recognised in today’s report for acknowledging that “mistakes had been made between April and July 2017, when they became aware that savings needed to be made”.

The report concluded that the college has “some serious financial challenges to overcome”, and is currently working on developing a strategic financial recovery plan to start this process.

It warned of a “lack of ownership of the financial problem” as there “seemed to be a consistent view of blaming others” during interviews with the intervention team.

The commissioner was forthright in his recommendations.

He said the board should urgently commission “an independent piece of work to enable governors and the executive to understand what went wrong in 2016/17 and why it was not reported until after the year end”.

The management team, to include all budget holders, should also “undertake finance training to enable them to effectively monitor their own budgets and the whole college financial performance, as a team”.

The college was unavailable for comment ahead of publication.

For Careers Week, all pupils should learn about vocational routes

Now the Baker clause is law and schools are obliged to inform pupils of non-university routes, Anne Milton is expecting a careers revolution

Next week we are celebrating National Careers Week and National Apprenticeships Week. Both give young people a nudge to start thinking about what they do next. I am really pleased that this year, more employers are getting involved, with the likes of RBS and the BBC giving their backing.

One of the most common ways for people to get careers advice and guidance is during their time at school or college. I launched the government’s careers strategy at the end of last year to set out how we expand the breadth and effectiveness of careers advice for young people. We need to make sure that whatever a young person’s background, they get good advice and information.

For too long there has been too much focus on the traditional university route

We want that advice to properly outline the full range of opportunities that are out there, so young people know how to get the skills and qualifications they need – not just for now, but for the future, too. One of the key ways to do this is through contact with employers and training providers. This could be through work experience, talks from education providers and employers in the area, as well as class visits or mentoring, for example.

In order for this to be a success, it’s really important that schools and colleges understand the responsibility they now have to provide their pupils with a fuller picture of all the options out there.

For too long there has been too much focus on the traditional university route.

Under the new laws we introduced in January, schools now have a duty to make sure they are providing opportunities for a range of education and training providers to come in to talk to pupils about technical education and apprenticeships – according to what’s known as “the Baker clause”. Under the laws, schools must also publish a statement on their website which sets out how training providers can access the school in a practical and supportive way.

READ MORE: Milton on the non-levy procurement exercise

I expect to see schools setting up careers events, assemblies and options evenings so that providers can talk to pupils about what they offer and what it is like to learn in a different environment.

It’s really important that every young person, no matter their background, has a good understanding of both the technical and academic routes to a rewarding job.

There is no exception to who can participate. We all need to work together to expand the breadth of information that young people get on all education and training options. It is only by talking directly to a range of providers, including FE colleges, university technical colleges, and apprenticeship providers, that young people can truly appreciate the opportunities available to them.

The focus on careers and apprenticeships this week demonstates the government’s commitment to supporting everyone to get the skills they need to get ahead, fulfill their potential and in doing so help to boost the economy of the future. I want this new legislation to be the start of a change in how schools and parents look at what young people do in future, and give all pupils access to these exciting career options.

Do have a look at the careers strategy. I hope this will help you to highlight the opportunities available. Please get in touch with your local school or college and find out how you can support them, and if you have any problems do let me know.

Anne Milton is Minister for skills and apprenticeships

The incoming subcontracting tax bombshell

Our front-page story will make for very uncomfortable reading for principals, chief executives and accountants at hundreds of colleges and training providers.

In fact, a mild panic may set in after reading that HMRC has tasked over 20 of their specialist inspectors to sniff out unpaid VAT on management fees for subcontracting.

And all the evidence we’ve seen suggests this will come as a huge bombshell to the sector, especially for colleges, as very few of them chargesubcontractors the required VAT.

It is honestly quite shocking to me that so few people in the sector knew that VAT was meant to be applied in this way. Perhaps HMRC should bear some of the blame for leaving the situation so murky?

Exactly how much unpaid VAT and over how many years is not known, but some basic analysis of the few subcontracting figures that are available suggests the tax office should expect to receive around £40 million per year in VAT on top- sliced management fees.

This guestimate is based on 20 per cent VAT for £200 million in management fees on £1 billion in subcontracting. And I’ve arrived at that last amount because, as in May last year, the ESFA’s list of self-declared subcontracting for apprenticeships, ESF and AEB amounted to just over £800 millionacross 504 prime providers and 1,308 subcontractors.

Plus, in 2015/16 there were over 27,000 16- to 18-year-olds on study programmes across 317 prime providers and 627 subcontractors according to the ESFA’s list published last July.

There is no way to sugar-coat this: the final VAT bill over the past six or more years, plus fines, could run into the many hundreds of millions of pounds.