Was government support of Learndirect sale legal?

> MPs demand answers over ESFA approving sale of Learndirect Apprenticeships in 2016
> PAC inquiry to quiz Ofsted on decision to delay inspection month before sale collapsed

MPs furious at the long-running Learndirect debacle are asking the public accounts committee to find out why the government supported the sale of the provider’s apprenticeships business, consequently delaying its Ofsted inspection.

Labour’s shadow skills minister Gordon Marsden and Wes Streeting, the MP for Ilford and a former president of the National Union of Students, are demanding answers after FE Week uncovered new information about the failed sale to Global University Systems, of which they claimed “something isn’t passing the smell test”.

The global teaching company began negotiations to buy Learndirect Apprenticeships (LDA) nearly two years ago.

The timing of this deal, which eventually fell through in December 2016, was significant because it was used as a reason to delay an Ofsted inspection that had been scheduled for November 4 that year, as was revealed in a recent National Audit Office report, and a situation the Commons public accounts committee of which has been highly critical.

I think there are serious questions to be answered by the Education Secretary, the ESFA and Ofsted about their dealings with Learndirect Ltd, LDA and GUS

To push the deal through, then-education secretary Justine Greening had to agree to transfer delivery of apprenticeships funding from Learndirect Ltd to Learndirect Apprenticeships Ltd, which would subsequently end in a sale to GUS.

Ms Greening did sign off on this, but FE Week has learned she might have had to curve EU procurement rules to do so.

A letter sent to Learndirect on October 4, 2016, signed by former ESFA boss Peter Lauener on behalf of Ms Greening, said: “Please note, if requested in the future, the SFA is unlikely to agree to the transfer of the contract from Learndirect Apprenticeships to any other legal entity.

“The SFA would have to comply with the Public Contract Regulations 2015 in relation to the award or transfer of the contract to a different legal entity.”

In other words, had the government followed procurement rules, it should have put the contract out to tender, unless it had already assured itself there would be no interest.

The ESFA sent the letter agreeing the sale to Ofsted, and despite serious concerns about the quality of provision, the inspectorate applied its referral policy and cancelled the inspection, believing the sale would take place.

Any delay to intervention is controversial, as Learndirect Ltd continued to receive millions of pounds in ESFA funding each month, even though its provision was eventually found to be severely wanting after the inspectorate eventually visited the following March.

“I think there are serious questions to be answered by the education secretary, the ESFA and Ofsted about their dealings with Learndirect Ltd, Learndirect Apprenticeships Ltd and GUS,” said Mr Streeting, who had a public spat in September with the skills minister Anne Milton about the Learndirect saga.

“Something isn’t passing the smell test here and the PAC needs to get to the bottom of this,” he told FE Week.

Mr Marsden added that “we already knew” the DfE’s handling of Learndirect had been “shambolic” and claimed this new evidence, of potential mishandling of the sale to GUS, was even more concerning.

“It now looks as if they [the DfE] may not have followed due process in terms of approving the funding itself,” he said.

“That is a very serious admission which I would hope and am sure the PAC would want to take strong notice of in their hearing on Monday.”

FE Week asked the DfE if it had complied with procurement rules and explored wider market interest in the sale, but it would not be drawn.

“Under the new regulations from 2015, contracts can under certain circumstances be modified during their term without a new procurement procedure taking place,” said a spokesperson.

Something isn’t passing the smell test here and the Public Accounts Committee need to get to the bottom of this

The DfE had previously told FE Week that officials from the ESFA met with GUS representatives in August 2016 and gave approval the following month, but refused to furnish us with the exact date or who attended.

Even though the ESFA insisted that novation of Learndirect Ltd’s contract to Learndirect Apprenticeships Ltd was a one-time offer, it subsequently agreed to a transfer that would take place in May, which Learndirect used to try and delay Ofsted’s inspection in March.

But the inspectorate rejected the request and went in for a full inspection, which ended in its infamous grade four and started a legal battle between the two organisations, eventually won by the watchdog.

The delay to Ofsted’s visit has been highly criticised by the PAC and is set to feature prominently in next week’s scheduled hearing.

Public Accounts Committee inquiry into the funding of Learndirect Ltd

The Public Accounts Committee will grill the organisations involved in the Learndirect saga on Monday (January 15).

The hearing will dissect the findings of last month’s National Audit Office report, which examined the monitoring, inspection and funding of the nation’s biggest FE provider.

Taking place around 5pm, witnesses will include Ofsted chief inspector Amanda Spielman, Learndirect boss Andy Palmer, former ESFA chief Peter Lauener, and the Department for Education’s permanent secretary, Jonathan Slater. It can be watched live via parliament.tv.

 

Struggling college awarded £21m to make merger work

A struggling college received a massive £21 million bailout from the government as part of its recent merger deal, FE Week has learned.

Telford College of Arts and Technology formally joined forces with neighbouring New College Telford to form Telford College shortly before Christmas, over 18 months after the partnership was first announced.

But a source close to the merger, who did not want to be named, told FE Week that TCAT’s financial troubles were so severe that it needed the multimillion-pound cash injection from the government’s restructuring facility.

The grade three college, which had an income of £19.5 million in 2015/16, currently has three notices of concern from the Education and Skills Funding Agency, for financial health, financial control and apprenticeship minimum standards, and was subject to FE commissioner intervention in 2016.

Graham Guest, the principal of the new college, admitted to FE Week that it had received funding, but refused to confirm the amount.

“The college continues to work with the Transactions Unit [which administers the restructuring facility] and Barclays to review its finances and long term liabilities,” he said.

“Due to the commercial sensitivity of the merger we are unable to provide more information while discussions continue to be held.”

The Department for Education would also not discuss the sums involved, and claimed the college’s accounts – which include details of any financial support – would be published in due course.

Just £120 million had been allocated to 10 colleges from the restructuring facility by October last year, meaning that the TCAT deal is worth almost twice the average sum dished out so far.

Despite this, a DfE spokesperson insisted the facility was “not being used to prop up failing colleges”.

“The restructuring facility is designed to help colleges make major changes following an area review recommendation that they cannot fund themselves and that will result in high-quality provision for the local community,” she said.

TCAT received its first notice of concern for financial health in November 2015.

This prompted a visit from the then-FE commissioner Sir David Collins, who placed the college into administered status in January 2016.

His report noted that “the college has experienced a rapid decline in its financial health in recent years”, and “over-optimistic forecasting” was deemed a “core problem”.

That July, the college earned the dubious honour of being the first to receive a clean sweep of notices of concern since the SFA started publishing them, a month after Ofsted branded it ‘inadequate’.

But its notice for inspection was lifted last year, after it improved its grade to ‘requires improvement’ at an inspection in June.

The merger between TCAT and New College Telford, also rated ‘requires improvement’, was first proposed in April 2016, shortly before the end of the Marches and Worcestershire area review which both took part in.

According to the review report, “the merger has the potential to deliver efficiency savings through a complete review of the operations of both colleges, which are sited a mile apart”.

Photo caption: Graham Guest, Telford College principal (centre) with Gail Bleasby (vice chair) and Paul Hinkins (chair)

Non-levy tender appeals are lucky for some

Multiple providers have successfully overturned the government’s decisions not to award them contracts in the controversial non-levy tender – including several big hitters.

The ESFA last week began contacting organisations that had appealed the outcome of the procurement before Christmas.

Among the winners were Focus Training Group, which has a ‘good’ rating from Ofsted, Basingstoke College of Technology, and the grade three West Kent and Ashford College.

FE Week understands that decisions on some appeals are still outstanding, including that of the grade one Exeter College and grade two Newcastle and Stafford Colleges Group, and that more successful wins could be in the pipeline.

Focus Training, which has delivered apprenticeships in the south-west for 20 years, was originally told it had not reached the minimum threshold score to secure a contract.

Following a nervy festive break, the ESFA altered its decision last week.

Both myself and all of our staff are delighted that our appeal was successful

It said that after reviewing its scores, and undertaking more quality-assurance, FTG had reached the pass mark and had its complaint upheld.

Jamie Rail, FTG’s managing director, told FE Week it had been “one hell of a month” following the initial outcome of the tender, but he was elated with the final decision.

“Both myself and all of our staff are delighted that our appeal was successful,” he said. “We were convinced from the outset that it was never the intention of the government or the ESFA to lose ‘good’ provision through this process.

“This will allow us to meet the growing demand from our employers across the region, and we now look forward to a successful 2018.”

Paul Hannan (pictured above), the chief executive of the Hadlow Group, of which West Kent and Ashford College is part, said it was a “massive achievement” to have the decision overturned.

“The ESFA dealt with our case swiftly and efficiently,” he added.

Other providers have not received such good news about their appeals.

One of these was HYA Training, rated ‘good’ and based in Yorkshire and the Humber, which passed the score criteria but fell below the £200,000 threshold above which the ESFA applies its pro-rata methodology.

We feel the process of adopting a pro-rata methodology left providers such as ourselves second-guessing

It appealed the decision on the basis it had been unaware of the pro-rata percentage rule, but the appeal was not upheld.

“We feel the process of adopting a pro-rata methodology left providers such as ourselves second-guessing what would be a safe and secure allocation to tender for and, like many other providers, we would of course have tendered for more had we known,” Patrik Knowles, the managing director of HYA, told FE Week.

The FE sector has been up in arms about the outcome of the tender ever since results were released after a long delay in December.

A total of 714 providers were given an allocation to train apprentices with small employers between January 2018 and March 2019, but 227, nearly a third, are on their first direct apprenticeships contract.

As revealed by FE Week, one organisation that went out of business two months ago, for example, was awarded a contract in the procurement – even while several high-profile colleges ranked ‘good’ or ‘outstanding’, including Exeter, missed out.

Those which had been successful started receiving their contracts just before the Christmas break.

Level 2 apprenticeships are vital for social justice

The boss of the AELP wants the education select committee to help him get rid of the 20-per-cent off-the-job training rule hated by so many small ITPs

The education committee’s inquiry this week into the quality of apprenticeships could not be more timely after the change at the top of the Department for Education.

The good news is that Damian Hinds brings with him the same commitment to social mobility as his predecessor. AELP’s pitch to both the secretary of state and the select committee is that the drive for more social justice is endangered by the current state of the apprenticeship reforms. The committee could play a very important role in putting them back on track.

The government remains resolute about pursuing its target for three million starts, and the committee is understandably concerned that the reforms should safeguard the quality of provision within the apprenticeship programme. After all, the interests of social justice are not going to be served if apprentices are experiencing poor training at any level.

So first of all, we want to acknowledge that four out of five apprenticeship training providers in the independent sector are rated ‘good’ or ‘outstanding’ by Ofsted – and a long succession of employer and learner surveys have given providers the kind of satisfaction ratings that other industries could only dream of.

The interests of social justice are not going to be served if apprentices are experiencing poor training at any level

But there is no room for complacency and one very positive gain from the new apprenticeship standards is the greater emphasis on ensuring the apprentice receives hands-on training rather than an assessment of progress.

However, we cannot properly improve quality without adequate funding, and the new system under the levy requires the funding to cover not only the actual training but also the new end-point assessment, and the quality-assurance of that end-point assessment.

How can any provider deliver a quality apprenticeship with 20-per-cent off-the-job training on a minimum 12-month programme, when the maximum amount of funding on some standards and frameworks is only up to £1,500 per apprentice? Adequate funding is required, particularly at the lower levels, to ensure that programmes can be delivered in a compliant way that also produces ‘good’ or ‘outstanding’ results for all levels in all sectors.

In AELP’s submission to the committee, we cite evidence from employers that that the rigid implementation of the off-the-job rule is reducing recruitment of level two apprentices.

This has a particular impact in sectors with high-volume, lower-wage employment and typically lower margins, those where many of the first steps in education and training are taken. Meeting the off-the-job rule is often a poor substitute for properly supported on-the-job training, and AELP believes it is no measure of quality.

The government should not allow the price of an apprenticeship to be negotiated downwards by employers

We are urging MPs to dismiss the ill-informed, elitist rhetoric that level two learning, even when meeting a new standard, does not count as an apprenticeship, nor that it involves adequate development of knowledge, skills and behaviours.

The government should not allow the price of an apprenticeship to be negotiated downwards by employers, as this potentially reduces the quality of the experience for the apprentice – the only current example of reverse auctioning in the education system.

Removing nationally recognised qualifications from apprenticeship standards further reduces apprentices’ job mobility.

Another policy that runs counter to social justice is that provider funding for maths and English in apprenticeships is miserly, at only 50 per cent of the classroom rate. This comes in below the cost of delivery and provides no incentive to take on the most challenging individuals.

AELP is pleased that the committee is looking at the issue of subcontracting, although time is short if we want to stop the repercussions of the disastrous non-levy procurement, which threatens to remove hundreds of good-quality, niche providers from the programme.

We want the MPs to join us in demanding greater flexibility in subcontracting rules and reinstating the previous rules for the 15-month transition period until the next set of levy reforms take effect.

Mark Dawe is CEO of the Association of Employment and Learning Providers

How to simplify traineeship funding

The traineeship funding processes could be simplified to help successful providers grow their provision more successfully, writes Joe Crossley

Providers are pulling out of the traineeship market with alarming regularity and it is not hard to see why: the funding methodology is complicated, growth is hard to achieve, and the client group is one of the most challenging to engage with.

After several years of hard work to create an effective traineeship programme, we are finally seeing substantial development, but this was hindered, rather than helped, by the surrounding bureaucracy. We believe that traineeships are valuable for young people and providers can manage them successfully but there are things the government could do to make that easier.

Understanding the rules for each funding stream is the first challenge, as 19+ trainees are funded differently to 16- to 18-year olds.

It would make a lot of sense for the ESFA to amalgamate the funding methodology into one model

For the younger students, financial backing is calculated based upon the hours delivered, regardless of the content included in the programme. What’s more, there is no additional “job outcome” payment outside the base funding rate. This alone disincentivises providers from working towards the outcomes for which traineeships are built: progression to an apprenticeship or employment.

Students aged 19 to 24 are easier to understand and are backed through a combination of a single traineeship programme rate and any embedded qualifications that are included in their plan, with 80 per cent paid on programme and the rest upon achievement. An additional payment is made for students who progress to an apprenticeship or employment, providing they retain this outcome for at least six weeks.

It would make a lot of sense for the ESFA to amalgamate the funding methodology into one model, adopting the latter method as the norm. This would enable providers to make more accurate projections based on actual instead of planned delivery, and reward providers’ hard work.

Growth is difficult to achieve. Although 16- to 18-year-olds are seen as a priority area, many providers are denied it. Overperforming on a contract is a risk, but necessary for businesses wanting to increase their provision or enter new markets.

When growth is not granted, particularly where overperformance is the case, it puts pressure on providers: do you stop your growth plans and reduce your staff base? Or use networks and contacts to find new partners, a different type of risk, with a reduction in revenue based on the management fees involved.

More than any other year in recent memory, 2017 demonstrated how vulnerable training providers are

We know of one provider which, due to an unsuccessful growth request, did not get paid between January and March in 2015. Then, in April, after several months of uncertainty, it was told that its overspend would be paid by the ESFA and was retrospectively awarded the growth for which it originally applied!

More than any other year in recent memory, 2017 demonstrated how vulnerable training providers are, with numerous centres closing their doors due to insufficient funds. Providers used to have a real, tangible relationship with a dedicated ESFA account manager, and this ongoing association allowed funding to be awarded based on actual, physical evidence of good work. This is no longer the case.

One solution would be to allow for a rolling, monthly window to apply for increased allocation, but to limit the number of times per year one provider can apply.

The roll-on/roll-off recruitment of trainees means that growth is required at almost every point throughout the academic year. Sometimes its award has negative consequences – we were given more than we asked for in March 2017 and missed our maximum contract value by around 20 per cent at the next review point, meaning exclusion from the most recent growth opportunity in

October as the ESFA, “would not expect to support an increase where your performance in 2016/17 was less than 97 per cent of your final allocation”.

It would be a real victory for the sector if the ESFA redesigned the system, because when delivered well, the traineeship programme is the most rewarding I have had the pleasure to oversee.

Joe Crossley is CEO of Qube Learning

Social mobility is about education for people of all ages

Justine Greening may be gone, but her social mobility plan lives on. Ruth Spellman wants to see much more adult education.

In December last year, Justine Greening released her plan to improve social mobility through education.

With her exit from Cabinet this week, the sector is right to be concerned that further disruption will distract government from the job at hand. Her plan deserves to live on, and we hope her replacement Damian Hinds, who has a positive track record on social mobility, shares her vision that “everyone deserves… a chance to go as far as their hard work and talent can take them” – not to mention her belief that education is a vital part of securing this future.

Justine Greening

This belief has underpinned the work we’ve done at the WEA for over 100 years, but at the moment the reality doesn’t match up.

There is a large and growing gap in education, employability and housing, between those people with good prospects and those who are being left behind.

Better education at all life stages is vital in closing this gap, but investment in adult education and skills makes up considerably less than 10% of the DfE’s budget – meaning a fraction is available for people who need repeated opportunities to improve their education and skills.

Despite acknowledging that the government has “not done enough to invest in FE” Ms Greening’s plan failed to highlight the contribution that adult learning makes towards tackling the social mobility challenge.

The WEA’s latest report, ‘How adult learning transforms lives and communities’, demonstrates the role that lifelong learning can play in helping the people and communities we need to reach.

 

Damian Hinds

We have over 50,000 students, nearly half of whom have no or only low-level qualifications. Over a third live in disadvantaged postcodes and 48 per cent are on income-related benefits. Our students face challenges that are a direct result of social inequality, and adult education has offered them a way to overcome some of these.

We see the benefits in the employability of our students, who also go on to become active members of their communities, developing new skills and growing in confidence, which in turn is passed on to their children and beyond.

We need to address the fact that five million adults lack basic reading, writing and numeracy skills required for everyday life. This impacts not only employability but confidence, health and wellbeing. We need a cross-departmental strategic approach to improving performance, unlocking opportunities for millions of adults who are currently held back.

We know that school performance tends to set adults on a path limited by their performance at 16, and it is difficult to make up the ground. It also tends to turn people away from education for life. Adult education can change the course of these people’s lives and greater provision in local, community-based venues can encourage them back into the classroom.

We need investment in appropriate education pathways for students of all ages

We need to see real choice at post-16 and post-19. Adult education works best when it meets specific needs. Although adults can apply to be apprentices or study for technical qualifications, many will need to first build their confidence through non-accredited courses or access courses.

We need investment in appropriate education pathways for students of all ages, otherwise apprenticeships and T-levels will benefit only those who have consistent support to get them to the appropriate level.

The WEA wants an adult education strategy that covers access to learning, infrastructure issues and rights for adult students to enjoy parity of esteem with the traditional student. We are not just talking about vocationally specific and higher-level skills but delivering opportunities for people to access current entitlements to English, maths and digital skills.

We should commit to removing the barriers that stand in the way, making good the current deficiencies which exist in every community. The “working poor” need to be able to earn and learn, and older people who have left the workforce should be able to derive the health and social benefits which come from continuing access to education.

For tens of thousands of people across the UK, community and adult learning provides a life raft to a better future. We must not write off the adults in our society as lost causes, and instead give them equal opportunity to learn, develop and to contribute as active citizens.

Ruth Spellman is general secretary of the Workers’ Educational Association

Bake Off Crème de la Crème winner hosts chocolate workshop at Bath College

An accomplished chocolatier who won the BBC Two show Bake Off Crème de la Crème has visited Bath College to teach students a range of chocolate-making techniques.

Mark Tilling, an award-winning confectioner who came 7th in the 2009 World Chocolate Masters Finals in Paris, showed students how to melt and temper chocolate, how to create a marbled effect, stamp medallions and make different shapes during a three-hour workshop.

His visit was part of an employability week at the college, which has so far included workshops for catering students on bread making, cocktail mixing, wine tasting, cooking demonstrations and mock interviews with employers.

“I always think it’s important to teach the next generation, to come into college and show the students what we do,” said Mr Tilling. “They are the ones who will carry the industry into the future, and hopefully they will pass on their skills when they look back and realise how useful these experiences were for them.”

“We’re always looking to engage with industry and are so thankful for the experts that continue to support our students,” added Ryan Hanson, the college’s deputy head of hospitality and catering.

Horticulture students line Leicestershire rehabilitation centre driveway with trees

Horticulture students are helping to transform the landscape around a new rehabilitation centre in Leicestershire.

The team of level three learners from Brooksby Melton College helped plant 30 trees along the Get Busy Living centre’s driveway, and have already volunteered more of their time to help with future projects to develop the surrounding area, using the skills they’ve learned on their course.

The £1 million rehab centre provides support, advice, relief and treatment for people who have suffered a serious injury or disability through taking part in sport, and is the first of its kind in the UK.

Grace Smith, one of the students who helped with the tree planting, said: “I enjoyed being a part of something for a good cause. It will be fantastic to look back in a few years and be able to see the tree that I planted during this visit.”

“Visiting the centre was a fantastic experience for our level three horticulture students,” added Mike Salotti, a horticulture lecturer at the college. “They were able to gain valuable experience of planting over 30 Fastigiate Hornbeam trees.”

Royal Shakespeare Company engages with budding filmmakers

The Royal Shakespeare Company tasked creative media students at Stratford-upon-Avon College to film trailers for their upcoming productions as part of their coursework.

Students on the college’s level three creative media course made promos for an upcoming RSC production, pitching their artistic visions to the RSC’s marketing team in a Dragon’s Den-style presentation before getting the go-ahead to film.

Kris Vankay (pictured left), a senior video technician at the RSC, supported the students during the two-week process, advising them on how best to present their ideas.

Mr Vankay also acted as a judge at the premiere screening of the finished trailers, handing out awards to the students in categories including ‘best original idea’, ‘best lighting’, ‘best cinematography’ and ‘best overall trailer’.

“These are the next generation of creative people and we should support them in any way we can,” he said. “It’s great for us to know that there’s some serious young talent coming through locally and, likewise, I think it’s really important that the students know that there are creative companies and opportunities on their door step.”

WATCH: The student trailers