Adult education budget descends into chaos

Training providers are unhappy over the handling the adult education budget procurement process, with having their contracts rejected despite near-perfect scores in the bid evaluation.

The Education and Skills Funding Agency finally revealed how much cash private providers will receive to deliver AEB training in 2017/18 on August 4, after the results of the bidding war for the £110 million pot were serially delayed.

Since then, however, FE Week has since been inundated by providers who privately fear the tender will have catastrophic repercussions for their business, and who have complained about the agency’s bidding process from the start.

Although most are afraid to go on the record in case the ESFA makes it harder for them to win contracts in the future, a few were able to discuss what they claim is unfair treatment.

A provider based in Essex, which did not want to be named, is being forced into administration due to its failure to get an AEB contract.

During the tender process, providers had to answer six evaluation questions with a maximum score of 100 each. The minimum overall score a provider needs to achieve to be awarded a contract was 345.

The unnamed provider told FE Week that their organisation scored 575 out of 600 and had applied for £350,000, but received no allocation “whatsoever”.

In a rejection letter seen by FE Week, the ESFA said that although the bid did meet the required threshold, “we reserved the right to prioritise contract awards, in key policy priority areas”.

The letter added that due to the level of “oversubscription” during the tender “we have only considered the priority provision element of your bid when distributing the budget available”.

The agency then applied a pro-rata calculation which resulted in a contract award of less than the £100,000 minimum threshold, meaning no allocated was given.

The provider described the situation as “absolutely terrible”.

I don’t believe they had adequate funds to go around and it was all a farce

“We were delayed by months which resulted in loss of other opportunities and not given any solid reasons why we did not get an award even though we passed all the requirements.

“I don’t believe they had adequate funds to go around and it was all a farce. We will now go into administration.”

Meanwhile Debbie Tagoe, chair of Greater Merseyside Learning Providers Federation, which has 80 private training organisation members, said she knew of eight providers which not receive an allocation, but expects the final number to be “much higher”.

She said the main reason ESFA gave for not giving an allocation was that once the pro-rata reduction had been applied, many bids did not meet the £100,000 minimum threshold.

“Some of our members scored very high results on their bids – 500 points and above – but did not receive an allocation.”

Ms Tagoe claimed that larger providers who “scored as low as 350 were successful in securing funding”.

Missing out on a contract means there is “no opportunity for growth” among smaller providers, and “survival becomes more critical”, she claimed.

A Nottinghamshire provider, which did not want to be named, said it was “very concerned” about its funding which was “in effect” a 40 per cut – or £200,000 – reduction compared with its 2016-17 allocation, despite meeting or exceeding the required scoring on all of the six evaluation questions.

Private providers were told they would need to enter a tender for a slice of a £110 million pot for the AEB last October, due to changes to European Union law.

Colleges – which contract with the ESFA through a grant funding agreement – have not been affected by the changes.

There has been a 10-day standstill period between the end of the tender on August 4 and the awarding of contracts, which ended at midnight on Monday (August 14).

Providers will now be in contact with the ESFA to fight their case for getting an allocation.

If you want to tell FE Week your AEB allocations story you can get in touch by emailing billy.camden@feweek.co.uk.

What do the people behind the privatisation of Learndirect think now?

Former publicly-owned FE giant Learndirect recently lost a High Court battle to quash an ‘inadequate’ rating from Ofsted, which could prove devastating for its very existence. FE Week has spoken to major players in its 2011 privatisation, including Vince Cable, who was ultimately responsible for a sale considered by Labour, before Ofsted’s full report is published tomorrow.

 

The nation’s largest training provider was founded around the turn of the millennium as a semi-independent government agency tasked with massively expanding flexible online learning.

The move to sell it off in 2011 was overseen by the coalition government, under the watch of then-business secretary Vince Cable, now the Liberal Democrat leader, who admits things went very wrong.

“On the basis of what we have now seen, it has clearly turned out badly,” he told FE Week. “Whether that was as a consequence of the sale, or the people who were in charge of it subsequently I don’t know.”

He claimed, however, that he couldn’t remember exactly how the decision came to be made, saying: “I don’t recall the process.”

He believes it would have been “handled at junior minister level” by then-skills minister John Hayes, who declined to comment this week.

Dr Vince Cable

The UFI charitable trust, which owned Learndirect with government support before the sell-off, also declined to comment.

But Labour’s shadow education secretary, Angela Rayner, blamed Learndirect’s slump – it received a ‘good’ Ofsted rating as recently as 2013 – on the decision to sell-off the company.

“It is clear something has gone seriously wrong since the coalition government privatised this service, and future education and training of thousands is now at risk,” she told FE Week.

Joe Dromey, senior research fellow at policy think-tank IPPR, concurred. “This is not just a failure of one private provider; it is a failure of public policy,” he said. “It was the government which privatised Learndirect.”

It has also emerged that the Labour government led by Gordon Brown, one of the prime movers behind Learndirect’s launch, considered privatisation before it lost power to the Conservatives and Liberal Democrats in 2010.

Sue Pember was a top skills civil servant as the situation played out, and explained the rationale behind the decision.

“I was not in the department when UFI [and Learndirect] was created, but could understand the rationale,” she recalled.

“Individual colleges like mine at Canterbury weren’t really able to afford to embrace the possibilities of online learning – so there was a need for a push from government.

“But a decade later, Learndirect had lost its other role as the national learning information helpline, and other providers were rightly questioning why it was getting special treatment from the government, when many others were now embracing flexible learning.

“It had become an awkward arrangement.

“That’s why splitting it up was first looked at during the last years of the Labour government, with the final model being agreed by the coalition.”

Dr Ann Limb

Dr Ann Limb, now chair of the South East Midlands Local Enterprise Partnership, joined the Learndirect board of directors in 1999 as the FE sector’s representative, and was chief executive between 2001 and 2005.

“I actually think it could have been privatised earlier,” she said.

“I remember going to Ed Balls and Ed Miliband in late 2001, when they were Gordon Brown’s advisors, to warn them that a business model dependent entirely on significant government funding was not sustainable.

“It was a good concept, had a very strong brand, and did something really important in expanding learning for people online, but it was always going to hemorrhage public money and needed to diversify income streams.

“The problem since 2005 is that company never became commercial enough. It and its subcontractors remained far too reliant on government finance, which made it vulnerable to a grade four Ofsted and the inevitable resulting cancellation of government funding.”

Learndirect currently has more than 1,600 employees and 70,000 learners.

According to Education and Skills Funding Agency records for 2016/17 allocations, the provider has a total allocation of £157 million, of which 71 sub-contractors held £45.8 million of contracts in July.

In the four full years since privatisation, it went from a company with £36 million in the bank and a net asset position of £11.2 million, to one with just £5 million in the bank and a net asset position of £7.2 million.

The DfE declined to comment on whether waving privatisation through was a mistake.

DfE confirms special treatment will be given to Learndirect

This evening the Department for Education said that it will not, as would typically be the case, serve a three-month termination notice on Learndirect contracts when its Ofsted grade four is published on Thursday.

During the judicial review hearing, as reported in FE Week, the Learndirect lawyer said they expected to be given a three-month termination notice, based on a conversation between the managing director, Andy Palmer, and the Education and Skills Funding Agency.

The conversation was described as ending with the ESFA saying they would not give Learndirect special treatment.

However, in a move that appears to be an intervention from the highest levels within the DfE, Learndirect has been given an additional eight and a half months, on top of the typical three months, so will receive funding until July 2018.

The DfE spokesperson told the Financial Times the special treatment is to minimise disruption for learners. 

A spokesperson said: “Following the publication of Ofsted’s report ‎we are working closely with Learndirect, employers and apprentices to find a course of action that ensures learners can complete their courses with minimal disruption.”

All adult education budget contracts end in July 2018 and the DfE spokesperson said that Learndirect would not get the opportunity for an extension.

But in a move that looks contrary to the claim that special treatment is simply to avoid disruption to existing students, the DfE spokesman also said “yes” when asked if Learndirect would be permitted to the recruit new and additional adult education budget funded learners until July 2018.

The move will come as a surprise not only to Learndirect, but to the rest of the further education sector.

In March, another very large provider with thousands of apprentices, First4Skills, was served with a three-month termination notice following a grade four.

On receiving the notice, they immediately brought in the administrators, despite having over £700,000 in the bank and three months remaining on their ESFA contract.

It is understood the Learndirect funding will end in July 2018, for apprenticeship and adult education budget funding.

However, it seems despite the termination, this will not stop Learndirect receiving funding for apprentices beyond July 2018.

In March 2016 the owners of Learndirect Ltd incorporated Learndirect Apprenticeships Ltd and successfully applied to the Register of Apprenticeship Training Providers with the new company.

Learndirect Apprenticeships Ltd also acts as a subcontractor, according to the latest ESFA list, contracting with Learndirect Ltd, as well as the supermarket giant Tesco.

As previously reported, when Learndirect were told in March they were to be inspected, they failed in an attempt to persuade Ofsted to exclude the apprenticeship provision on the basis they were moving it all to the new company.

FE Week understands that despite the grade four and the ESFA Notice of Serious Breach for Learndirect Ltd, this does not apply to the new company Learndirect Apprenticeships Ltd, so apprenticeship delivery is expected to continue.

The DfE has confirmed that neither of the two Learndirect companies have a non-levy funding allocation.

Mark Dawe, chief executive of the Association of Employment and Learning Providers, to which Learndirect is a member, told FE Week: “If special treatment has been given, then the government must be clear about what it is and whether in future it will apply to all providers whatever their size.

“Protection of the interests of current learners may be a sound motive for adopting this approach, but not if the quality of provision is poor.  There are a large number of high quality providers ready to take on the affected learners and potentially offer them an improved learning experience.”

FE Week has sought clarification from the DfE as to whether Learndirect Ltd will be permitted to recruit any new apprentices or adult education budget funded learners.

Special Investigation: Over 1,600 jobs at risk after Learndirect fails bid to overturn Ofsted ‘inadequate’

The country’s largest FE provider has lost a High Court bid to quash an as-yet unpublished ‘inadequate’ Ofsted rating, FE Week can reveal, leaving more than 1,600 of its staff at risk of losing their jobs.

Learndirect failed in its judicial review to overturn the damning report on August 4 – the release of which would by its own admission force it to call in the administrators, as it would oblige the government to pull more than £100 million in public funding contracts.

FE Week can only now report this and the other findings of a high-profile joint investigation with The Financial Times, after our lawyers successfully contested strict reporting restrictions on the case.

Ofsted will now publish the final report 48 hours after sharing it with Learndirect, and FE Week understands it is likely to see the light of day on Thursday.

During a two-day hearing in July, the Administrative Court in Manchester heard that Learndirect, a giant training provider with 1,645 employees and over 70,000 learners, had been rated ‘inadequate’ overall after a massive four-day Ofsted inspection.

The report, which was described in court but not presented to reporters, awarded grade fours to the provider’s apprenticeships and outcomes for learners.

Management of apprentices is ineffective

Amongst the criticisms Ofsted made was the fact that “management of apprentices is ineffective”, while around a third of learners on apprenticeships “do not receive their entitlement to off-the-job learning” and fail to develop “the skills they require to progress to the next step in their career”.

Learndirect challenged the report findings on two counts – that inspectors had a “predetermined” negative view of its apprenticeship provision, and that Ofsted’s sample size of apprentices was not large enough to reflect the size of the company.

However, Mr Justice King ruled that there was no evidence for the predetermination argument, and also pointed out that Learndirect didn’t cross examine the inspectors it had accused of bias.

The judge also dismissed the second point, again pointing out that Learndirect didn’t provide any expert witnesses to challenge Ofsted.

For months Learndirect could not be named due to a reporting restriction imposed by the court.

Now, however, FE Week can reveal the full story behind the provider’s attempt to quash Ofsted’s verdict – and its threat to file contempt of court proceedings against our publisher.

We reported in April that the pre-election purdah period had delayed publication of Ofsted’s report – which involved 17 inspectors reviewing Learndirect’s provision over four days from March 20.

It lodged a series of written complaints to Ofsted later the same month, suggesting that the inspection was inadequately detailed considering its size, but these were rejected by the inspectorate.

It then applied in June for a judicial review, seeking a quashing order and a permanent injunction to try and prevent the report from ever being published. The court banned publication of the report, the details within it, and even the name of the provider, until conclusion of the review.

Papers obtained by FE Week showed the court believed there would be a risk of “irreparable damage including financial consequences” to Learndirect if the report were published while the review was underway.

According to these papers, Learndirect argued that if the ‘inadequate’ grade were upheld, the consequences would be “catastrophic”, and would lead to government funding being withdrawn.

Ofsted’s press office did not realise there was a reporting restriction and at one point told FE Week it had “applied for a judicial review of its recent inspection report” and said “the report will not be published until the court process has concluded”.

We were also unaware of the restriction, and published an online article about the review, which was removed after Learndirect’s lawyers complained.

Michael Hayton QC, representing Learndirect in court, argued the report should have been quashed because the sampling by inspectors was “ineffectively unreasonable”.

He even accused one inspector of jumping to the wrong conclusion – that the provider had made a “sinister attempt” to hide evidence from the inspectorate, something the provider denied.

The inspector in question had been for a time unable to log in to Learndirect’s online training system, and wrote in his notes that he was “concerned I may have been prevented having access initially to inhibit my activity to scrutinise more of the evidence”.

The court also heard that the other inspectors had been concerned the provider was limiting their access to provision – for instance when attempting to interview learners.

But Mr Hayton described this as “another example” of inspectors coming to the view that there was some “deliberate malfeasance on behalf of the claimant to seek to limit or inhibit appropriate inspection”.

Sarah Hannett, representing Ofsted, insisted that there had been a “very serious decline in outcomes for learners”.

The court heard that Learndirect’s achievement rates had declined over the past three years and were “well below” the national average.

The Department for Education’s 2015/16 apprenticeship achievement-rate data for all providers, released in June, showed that Learndirect had fallen 7.3 percentage points to 57.8 per cent. This brought it below the minimum standards threshold of 62 per cent.

FE Week then confirmed in July that the provider had finally been hit with a serious performance breach notice, a month after its apprenticeship achievement rates plummeted below the minimum standards.

The news caused dismay across the sector as the issue date listed on the notice was March 14. 

 

Learndirect response to FE Week in full

A spokesperson said: “Ofsted’s inspection was challenged because we believe the process did not give a true reflection of Learndirect Limited’s training quality and performance.

“The business presented compelling evidence as part of the appeal to support this view.

“In particular, we felt that the sample size of 0.6 per cent used by Ofsted to arrive at its conclusions is not sufficient to judge the quality of Learndirect’s training.

“We are therefore extremely disappointed with the verdict.

“Learndirect Limited will continue working with the ESFA to ensure our learners are fully supported as they proceed with their courses as usual. 

“The outcome of the inspection does not affect the non-ESFA and e-assessment contracts held within our adult skills business, Learndirect Limited or Learndirect Apprenticeships Limited, which is independent and was not subject to an inspection from Ofsted.

“We continuously review our performance and strive to provide the highest standards of service for learners and apprentices.

“Learndirect Limited will continue to be well-supported by our stakeholders, and we will ensure our employees remain fully engaged around the ongoing evolution of the business.”

 

Who owns Learndirect?

This once publicly-owned company is the largest FE provider in the UK.

According to Education and Skills Funding Agency records for 2016/17 allocations, Learndirect has a total allocation of £157 million, of which 71 sub-contractors held £45.8 million of contracts in July.

It was previously owned by the UFI Charitable Trust, but in October 2011, the business was sold in a management buyout backed by Lloyds TSB Development Capital (LDC) for £36,309,000.

The vehicle used to acquire it was Pimco 2909, which had been incorporated the previous month by Sarah Jones, then the chief executive of Learndirect.

The acquisition was funded by a £40.2 million loan from LDC.

In the four full years since the acquisition, Learndirect went from a company with £36 million in the bank and a net asset position of £11.2 million, to one with just £5 million in the bank and a net asset position of £7.2 million.

Over the same period, £5.5 million was paid in net interest and £20.25 million was paid in dividends.

The FT, which is running its own report into Learndirect’s finances in tandem with FE Week, asked why 84 per cent of the cash generated by the business is being spent on interest payments, fees and dividends, particularly given the declining strength of the balance sheet?

Normal dividends were paid to our shareholders when the business was growing rapidly

A spokesman for Learndirect said: “Normal dividends were paid to our shareholders when the business was growing rapidly, generating significant profits (more than £25 million in 2013), and the sector outlook was positive.

“In addition to this there were significant intra-group dividends paid as part of a group reorganisation, none of these resulted in cash leaving the group. No further dividends have been paid since.

“Learndirect Ltd’s recent financial performance has been significantly impacted by external factors, in particular successive central government funding cuts which have reduced our revenues by £100 million over the last three years. Significant cuts have affected all providers in the sector.

“We have responded to these difficult market conditions by changing our operating model and diversifying our income, and we have remained competitive throughout this period.

“We have a supportive shareholder in LDC, which has reinvested over £37 million into Learndirect over the last three years to support the business during these funding cuts, and together we remain committed to providing the highest standards of service for learners.”

The inspection report as described during the case

The provider was given grade fours for overall effectiveness, apprenticeships, and outcomes for learners, with all other criteria receiving grade threes.

It said the great majority of its apprentices are employees of small and medium-sized enterprises, and mostly at level two and three, spread evenly. The majority are delivered directly by Learndirect with the rest by subcontractors.

The management of apprenticeships was described as “ineffective”, with oversight “weak”.

“Around one third of apprentices do not receive their entitlement to off-the-job learning,” the report was said to have added. “So apprentices do not develop the skills they require to progress to the next step in their career”.

The proportion of apprenticeships who do not complete their apprenticeship on time has increased steadily over the past three years and is very low

It warned that “leadership and management have allowed standards to slide since previous inspection”, and “the proportion of apprenticeships who do not complete their apprenticeship on time has increased steadily over the past three years and is very low”.

The report also stated: “The new senior management team has begun to tackle main weakness and early signs of improvement indicates their actions are beginning to have an impact.”

However, “until very recently company directors and senior leaders have presided over a sustained decline in performance”, and “leadership and management at all levels failed to oversee and challenge the particularly poor provision delivered by apprenticeship subcontractors”.

The one positive finding on apprenticeships came at the end: “Leadership and management develop very effective partnerships with a range of high-profile corporate clients. Managers work very closely with these to meet new standards. Apprentices make good progress, develop new skills and enjoy their learning.”

On day two of the hearing, the court heard that five apprentices had been selected at random, and looked at on Learndirect’s online ‘e-track’ system.

None of the learners, chosen at random, had an initial assessment or an individual learning plan in their e-portfolio – as they should have done, detailed in their procedure.

Learndirect’s apprenticeship manager was said to be shocked to see this. They apparently stopped the meeting and wanted to do scrutiny on their own, with the Ofsted nominee happy with this. There was said to be nothing covering starting point and progress monitoring, nor any evidence of targets being set in individual learning plans – which simply were not present.

 

Learndirect’s judicial review focused on two claims

There was limited apprenticeship evidence base for such a large provider – REJECTED:

Learndirect provided examples that it believed showed a “meagre sample size”.

It claimed just 0.6 per cent of apprentices were spoken to, which was an “insufficient sample leading to unreasonable conclusion”.

As an example, it claimed Ofsted spoke to just one apprentice out of 5,000 enrolled on level two apprenticeships in health and social care.

Ofsted claimed Learndirect actually deliberately tried to scupper its on-site inspections, such that there was “a strategy by the provider to limit our evidence base”.

It said it was initially only given the details of 97 out of 21,000 apprentices to visit, and when it was finally given the details of more, it was not supplied with addresses or postcodes.

In another example, Ofsted said it was told there was evidence of monitoring progress in audio files. So it asked for the audio files and found no evidence of monitoring progress. The inspector asked in his notes if Learndirect was “gaming evidence”.

Ofsted undertook a post-inspection review of the sample size by an inspector from a different region, who concluded there was “a comprehensive evidence base clearly supporting the judgements made”.

On the matter of whether the inspection was detailed enough for a large provider, Ofsted pointed out that it deployed the equivalent to 55 inspector days, when the typical highest Ofsted inspection tariff is 24 days.

So that was said to be more than double the intensity, plus there were two senior HMIs when there is normally just one.

The judge was critical of Learndirect’s claim in two regards. Firstly, it did not bring forward an expert witness to explain why the evidence base was too small.

Secondly, the Learndirect lawyer said the size of the sample simply “spoke for itself”. The judge replied that the sample size did not speak for itself.

The judge said: “It is an expert judgment taken by an expert regulator. I have no proper basis upon which I could interfere with the expert judgment made by this expert regulator.”

“The defendant [Ofsted] had to make a judgment about suitable sample size,” said the judge. “It is an expert judgment taken by an expert regulator. I have no proper basis upon which I could interfere with the expert judgment made by this expert regulator.”

 

The lead inspector for apprenticeships had a closed and predetermined mind – REJECTED:

Learndirect claimed the lead inspector for apprenticeships stuck to his view from day one and declined to accept evidence to change his mind.

Learndirect did not cross-examine the lead inspector for apprenticeships, nor claim he had undue influence on the other inspectors.

The judge said “matters relied on were short” and were only in the form of written witness statement from Learndirect employees.

The judge said there was “no evidence of predetermination whatsoever”, and that Learndirect didn’t even get beyond the first stage of mounting a claim.

He said the lead inspector for apprenticeships reached his conclusions based on a considered assessment that emerged during the inspection – not predetermination.

The judge said this “supports the defendant’s conclusions”, namely:

– Complete confusion on how data was recorded

– Inability to demonstrate how progress was monitored

– Learndirect’s forecast for outcomes was insecure

The judge repeated that “no material has been shown to me which effectively demonstrates a closed mind”.

 

Consequence of a grade four for Learndirect

Learndirect said that if it were given a grade four, the SFA had confirmed it would serve a three month-termination on all contracts, worth over £100 million.

This, Learndirect told the judge, would force it to call in the administrators, which would put 2,000 staff out of work and over 20,000 learners in need of help to find an alternative provider.

Learndirect also told the judge that going into administration would end its ability to fulfil contracts with the Department for Work and Pensions (pre-employment training), the Home Office (to deliver immigration tests) and the Standards and Testing Agency (to deliver the professional skills test for prospective teachers).

 

Timeline

March 6 – The Skills Funding Agency issues a ‘notice of serious breach’ for 70 per cent of apprenticeships in 2015-16 falling below minimum standard.

March 15 – Notices of concern become public but Learndirect is not named. It is not until some time after FE Week publishes an article asking why it was excluded that the list is updated to include Learndirect.

March 16 – Ofsted informs Learndirect it will begin a full inspection on March 20. Learndirect managing director Andy Palmer asks for its apprenticeship provision not to be included in the inspection as it is trying to move its provision to a new company set up in 2016 (Learndirect Apprenticeship Limited).

March 17 – Ofsted rejects Learndirect’s request and tells it apprenticeships will be included in the inspection.

March 20 – Seventeen Ofsted inspectors begin a four‐day inspection. Six are focused on apprenticeships, including a lead inspector for apprenticeships.

March 23 – The last day of four‐day inspection; in the grading meeting Ofsted indicates (subject to internal moderation) that the overall grade will be ‘inadequate’ (grade four), as well as the apprenticeships grade and the outcome for learners grade. All other grades will be ‘requires improvement’ (grade three).

April 11 – Learndirect writes to Ofsted making a series of complaints, including that the inspection was inadequately detailed for such a large business.

April 12 – Ofsted plans to publish the report, but without taking external advice decides to delay publication until June 9, owing to a concern around general election purdah rules.

April 28 – FE Week reports that the Learndirect inspection report has been delayed until after the election, quoting an Ofsted spokesperson.

May 4 – Ofsted writes to Learndirect to say the quality assurance process for the inspection has been completed, including a full review of the evidence base. The letter says Ofsted is satisfied the evidence base was complete and that no additional evidence is needed.

May 11 – Ofsted writes to Learndirect to say its letter of complaint had been rejected.

Unknown date – Learndirect’s MD claims in court that the Skills Funding Agency told him it would serve a three-month termination notice on all contracts if a grade four is confirmed.

June 5 – Learndirect applies for a judicial review seeking a quashing order and permanent injunction so the report is never published. Learndirect wins interim relief – such that there can be no publication of the report nor can the provider be named until conclusion of the review.

The judge (HHJ Moulder) uses Ofsted’s decision to delay publication owing to purdah, and says there appears to be “no particular urgency or prejudice should the defendant be restrained from publishing the report whilst the judicial review application is considered. By contrast on the evidence put before me, the claimant’s business may be severely damaged and irreparable financial and reputational harm could result even if the proposed grade is subsequently withdrawn.”

Had Ofsted chosen not to delay publication until after the election it may well have been published on the April 12.

June 8 – Ofsted’s press office does not realise there is a reporting restriction and tells FE Week that “Learndirect Ltd has applied for a judicial review of its recent inspection report. The report will not be published until the court process has concluded.”

FE Week publishes an online article about the judicial review, which it removes when Learndirect’s lawyers get in touch about the reporting restriction.

June 15 – The SFA publishes the 2015/16 apprenticeship achievement rates for all providers. Learndirect falls 7.3 percentage points to 57.8 per cent. Timely achievement rate fell 8.2 points to 40.3 per cent.

June 24 – FE Week publishes an article with the headline “Achievement rates at Learndirect fall under minimum standards”.

July 14 – The SFA updates its published list of notices of concern and Learndirect’s notice of serious breach for falling below minimum standards becomes public knowledge. The apprenticeship minimum standard is a 62 per cent achievement rate, and when 40 per cent or more apprentices are below 62 per cent, a notice of serious breach is sent out.

July 28 – Day one of the judicial review in open court. Attended by FE Week reporter John Dickens, it primarily features Learndirect outlining its case as the claimant. FE Week publishes an article about the first day of the judicial review, not identifying the provider. Nevertheless, its lawyers successful apply to the court for an injunction on the story, which is then removed from the FE Week website.

Learndirect’s lawyers also inform FE Week that they intend to make oral application to the judge against the owners for committal for contempt of court, a criminal offence which can lead to a fine or even imprisonment.

July 31 – Day two of the review, primarily Ofsted outlining its defence, attended by FE Week editor Nick Linford. Learndirect’s lawyers decide not to make an oral application to the judge against the owners of FE Week for contempt of court.

August 4 – Judicial review judgement. After a three-hour summary, the judge concludes Learndirect has no valid evidence and rules against it. Against the wishes of Ofsted and FE Week, he extends the publication and reporting restriction to 4.30pm on August 14 and gives Learndirect until August 10 to apply for an appeal.

The judge indicates for the first time he is not pursuing an matter relating to contempt of court.

August 10 – Lawyers acting on behalf of Learndirect file an application to the court to appeal the judgment.

August 11 – Lawyers acting on behalf of FE Week file an application to overturn the reporting restriction.

Exclusive: Grade four Ofsted-rated provider in administration

A Norfolk-based provider that was hit with a grade four Ofsted rating in May has entered into administration, FE Week understands.

The news on Norfolk Training Services was confirmed this afternoon to FE Week by administrators Larking Gowen.

FE Week reported three months ago that the provider had received the lowest possible overall-Ofsted rating. The report included grade fours for effectiveness of leadership and management, 16 to 19 study programmes, and quality of teaching, learning and assessment.

The Education and Skills Funding Agency was unable to confirm ahead of publication if NTS’s £1.3 million government funding – as of June this year – had been pulled as a result of the Ofsted rating.

It is though normal practice for independent providers to be given a termination notice of their skills funding contracts, after receiving a grade four.

FE Week, which attempted to contact NTS ahead of publication without success, received an email from an employee claiming to be from the company, lamenting the distressing developments.

“Just to let you know that Norfolk Training Services entered administration today,” he said.

“Staff were informed at 12pm, most of whom were laid off with immediate effect.”

When asked if this was true, a representative from Larking Gowen would only say: “Yes that is correct.”

The provider had made it onto the new apprenticeships register when it was quietly revised in April, after the ESFA revisited a number of applications in exceptional circumstances.

That decision was understood to be related to the way RoATP Ofsted rules were interpreted for an inspection report that was, at the time, yet to be published.

When the report was published in May, it revealed the provider had received a grade four overall but a grade three for its apprenticeship provision – which meant it was eligible to be on the register.

In the report, inspectors criticised leaders at the independent training provider for their “ineffective” efforts to “improve the weaknesses identified at the previous inspection” in February 2015, which resulted in a grade three rating overall.

“Leaders and managers do not identify most weaknesses accurately or plan to rectify them swiftly,” the report noted.

However, inspectors noted in its first monitoring visit since then, published last week, that leaders had established a quality improvement plan that features a “comprehensive range of actions to rectify all the weaknesses identified at inspection”.

Managers were said to have “intensified” their actions to support and challenge tutors whose practice was as below expectations.

 

Update:

The administrators provided the following statement on August 17:

Andrew Kelsall and Lee Green of Larking Gowen were appointed as joint administrators of Norfolk Training Services Limited on August 16.

The Company is the leading independent provider of apprenticeships and logistics training in Norfolk and operates mainly from sites on Hall Road Norwich, but also in Great Yarmouth and Kings Lynn. The Company has approximately 60 staff and 400 apprentices in training.

Andrew Kelsall, head of business recovery at Larking Gowen said “Obviously, this is very disappointing for all involved from employees, apprentices, directors, shareholders and creditors, but with the company having incurred trading losses over past months and no predicted upturn the company has simply exhausted all working capital.

“The company has been placed into administration to avoid further losses and will to cease to operate.

“We will contact all employers, apprentices and trainees to inform them of the situation and will enter into discussions with the ESFA regarding the continuity and completion of apprenticeship training.”

Mr Green added that the ESFA would be making contact directly with the apprentices and employers/Guardians regarding the provision of future training.

Rejected appeal application looks like the beginning of the end for Learndirect

The country’s biggest training provider has had its desperate attempt to appeal against a judicial review flatly rejected – in a move that will finally give Ofsted leave to publish its damning ‘inadequate’ inspection report.

Skills giant Learndirect lost its first High Court bid to overturn the grade four-overall verdict that will cost it £100 million in government grants two weeks ago, but it applied for permission to appeal the decision late last week.

FE Week can now reveal that the appeal application has been thrown out by Mr Justice King, a decision about which Ofsted said it is “very pleased”.

The report is based on an inspection undertaken way back in March and is now scheduled for publication on Thursday.

It will, by Learndirect’s own admission, oblige the government to withdraw more than £100 million in public funding contracts, and this they say, may force them to call in the administrators.

In his ruling at Manchester Administrative Court, the judge said: “Permission to appeal is refused, as I do not consider any of the grounds sought to be pursued has a real prospect of success.”

Mr Justice King dismissed Learndirect’s insistence that he’d been wrong during the initial judicial review to reject its claim that Ofsted’s sample size of apprentices was not large enough to reflect the size of the company.

Lawyers acting on Learndirect’s behalf complained, during the two-day hearing in July, that Ofsted had spoken to just 0.6 per cent of apprentices, an “insufficient sample leading to unreasonable conclusion”.

The judge’s notice, seen by FE Week today, scotched the claim

“The claimant seeks to raise on appeal a ground not pursued before me,” he wrote. “Namely that the defendant had no particular expertise as regards the sufficiency of the evidence base, and accordingly the court erred in law in giving the deference it did to the defendant’s own assessment of the sufficiency of the base.”

He also alluded to a previous criticism that the provider’s legal team had not brought forward an expert witness to explain why it felt the evidence base was too small.

“Not only was this ground not pursued before me, but I also do not consider it can be correct,” he said.

“Decisions about the adequacy of the evidence base must be an integral part of the defendant’s inspection process and part of her core functions as an expert.”

He saw no other “compelling reason for the appeal to be heard”, adding that “this was a decision applying established principles to the facts and circumstances of the particular case”.

An Ofsted spokesperson confirmed to FE Week this afternoon that the inspectorate would now publish the report on Thursday, August 17.

“We are very pleased with this outcome,” he said.

“Seventeen inspectors took part in this inspection over four days, when they spoke to learners and apprentices.

“Inspectors interviewed employers, apprentices and learners in person and over the phone, reviewed portfolios of work, and looked at progress reviews when they gathered evidence.

“As well as visiting apprentices in their workplace, inspectors also reviewed a wide range of evidence to ensure that both the judgements and inspection grades were secure.”

A spokesperson for Learndirect said it was “extremely disappointed” by the result of the appeal.

“Ofsted’s inspection was challenged because we believe the process did not give a true reflection of Learndirect’s training quality and performance,” he added.

“The business presented compelling evidence as part of the appeal to support this view.”

The provider had previously warned that if it were given a grade four, the government had confirmed it would serve a three month-termination on all contracts, which are worth over £100 million in total.

This, Learndirect previously claimed in court papers seen by FE Week, would force the group and learndirect to become “insolvent and forced into administrators”, leaving more than 1,600 of its staff at risk of losing their jobs and over 70,000 learners in need of help to find an alternative provider.

But it has now told FE Week: “The outcome of the inspection does not affect the non-ESFA and e-assessment contracts held within our adult skills business, Learndirect Limited or Learndirect Apprenticeships Limited, which is independent and was not subject to an inspection from Ofsted.

“Learndirect Limited will continue to be well-supported by our stakeholders and we will ensure our employees remain fully engaged around the ongoing evolution of the business.”

Government ‘making it up as they go along’ on non-levy tendering

The government has been accused of “making it up as they go along” on critical questions over non-levy tendering, especially concerning maximum bid sizes.

The Education and Skills Funding Agency launched a new tender process for delivering apprenticeships to employers not subject to the levy last month, after its first attempt was “markedly oversubscribed” and later ditched.

It claims that this new minimum-£440 million procurement has a number of “critical differences”, including new tender value caps and contract award limits.

These, it says, will “ensure greater confidence that awards are set at realistic levels” – but many in the sector have blasted official replies to queries about the way these caps are calculated for doing anything but.

Guidance put out by the ESFA as part of the invitation to tender states that the cap for new directly contracted apprenticeship providers will be based on their turnover in 2015-16.

The assumption widespread across the sector was that this would exclude providers if they weren’t trading in 2015-16, as they wouldn’t have published accounts showing turnover for that year.

But in an official response to clarification requests from bidders, the ESFA indicated that this may not be the case.

“Organisations who were not trading in 2015-16 and therefore cannot provide turnover for this period, should submit 2016-17 turnover values,” it said on its Bravo e-tendering portal.

There are now concerns about how the ESFA intends to verify providers’ 2016-17 turnover claims, seeing as that year’s accounts have yet to be published.

One bemused sector expert, Steve Lawrence, the managing director of East Essex Vocational Training, complained to FE Week that “they appear to be making up the rules as they go along”.

“The whole thing in terms of guidance and clarity gives no real faith in the process,” he said. “The process of making procurement simple for small- and medium-sized enterprises appears to have gone out of the window, along with the idea of what the answer should be with regard to the turnover.”

This was not the only confusing answer to one of more than 140 questions: one provider asked which financial year start and end dates it should use as its accounting period differed from the standard April 1 to March 31 window.

They appear to be making up the rules as they go along”.

It was told to “provide your organisation’s declared turnover from the published accounts for the year 2015-16”.

This left providers whose accounting periods go by calendar year – from January to December – scratching their heads over whether they should state their turnover from 2015 or 2016 – and if it is the year ending 2016, some won’t be verifiable as they haven’t been published yet. And some had an extended accounting period in 2015-16, covering 15 months.

In another twist, the ESFA today notified bidders that they are “currently dealing with a number of queries in relation to mergers. We are aware that you are awaiting our response and we will come back to potential providers as quickly as possible.”

The current tendering process for delivering apprenticeships to non-levy paying employers was launched on July 28, and covers the period between January 2018 and the end of March 2019.

According to the ESFA’s ITT document, providers can be awarded contracts from a minimum of £200,000 up to a maximum “derived from the annual figure, as set out, adjusted to reflect that the initial contract period is a 15-month term (1.25 years)”.

The upper limit varies depending on the status of the provider, be it a new provider, a subcontractor or an existing apprenticeship provider.

These range from “turnover 2015-16 financial year multiplied by 1.25, or £750,000; whichever is lower” for new providers, to “110 per cent of non-levy historical delivery for 2015-16 funding year (August 1, 2015 – July 31, 2016), multiplied by 1.25” for existing providers who delivered more than £1.5 million of apprenticeships to non-levy paying employers that year.

A spokesperson for the Department for Education said: “Providers can find out this information and more by submitting a query via the message boards on our e-tendering portal, Bravo.”

WEA awards nominations close in 10 days

Just 10 days are left for nominations for a prestigious awards ceremony that recognises exceptional students and staff in adult education.

The WEA Awards, run by the Workers’ Educational Association and sponsored by auditing giant KPMG, is fast approaching its August 21 deadline.

Now in its fourth year, the awards are open to anyone working, teaching, volunteering or studying with the WEA between January 2016 and August this year.

Eleven categories are open for applicants, including two new categories which recognise “partners” in adult education and those who have made a great “social impact” (a full list of categories can be found here).

Stories and evidence-based nominations must demonstrate “the ethos of the WEA in practice”.

Ruth Spellman, the chief executive of WEA, said the awards celebrate the “extraordinary achievements” of those who have “transformed their lives, and the lives of those around them, through lifelong learning”.

“It is vital to celebrate the adult education sector, where all too often many achievements go unrecognised,” she told FE Week. “Many of our students are achieving educational success for the first time and have struggled against the odds to get there.”

As well as the 11 categories, each region will also select one individual, group or partner from their local nominations to receive a regional award.

The awards ceremony will take place November 2 at one of KPMG’s private member spaces in London.

FE Week is the media partner and will be reporting the full results as they happen.

Main image caption: WEA chief executive Ruth Spellman (centre) with some of the winners from the WEA Awards 2016

How government can widen participation through FE

To boost participation of under-represented groups in higher education, further education colleges should play a greater role, argue Profs Claire Callender and Kevin J Dougherty

If the government truly wants to widen participation in higher education in England, it should provide more financial support and policy attention to the role FE colleges can play.

Ways in which colleges can boost social mobility have been ignored by successive governments. They educate roughly nine per cent of all HE students in England and 18 per cent of the same in Scotland and Northern Ireland yet despite this, they have great difficulty attracting policy attention.

The Department for Education did sponsor area reviews of post-16 education that examined the missions, funding and market situation of FE colleges and sixth form colleges in England, with a focus on determining whether they should be reconfigured – including merging with each other or with universities.

The government is also creating new Institutes of Technology as part of its industrial strategy, aiming to increase the provision of higher-level technical education.

Still, it is unclear to what extent these initiatives represent a sharp policy break with the longstanding English focus on universities rather than sub-degree institutions.

Any commitment to widening participation in HE should play close attention to improving the further education sector. While about half of those completing sub-degree Higher National Degrees go on to achieve bachelor’s qualifications, students with vocational education qualifications still have more risk of not entering universities or dropping out of them.

So what can be done to help students get better access to universities?

We recently completed a study in which we compared and contrasted policies for widening participation both in England and the United States. We have two recommendations for improving FE’s contribution to widening participation in England, drawing on the experience of community colleges in the United States.

1. Transfer agreements

One way that the HE role of FE colleges could be enhanced is by developing transfer agreements for movement into university first-degree programmes. In contrast to the current system, these should apply not just to a small set of universities, but to a wide swath of universities and should focus on the transfer of students on vocational courses. 

This would mirror the system-wide arrangements that US states have developed between their public two-year community colleges and their public universities. For example, many states have developed “articulation” arrangements where community college students who complete certain courses are guaranteed that those courses will contribute towards an undergraduate degree at all the public universities in those states. These articulation agreements often apply not just to traditional academic programmes in the humanities and sciences but also to vocational programmes. 

This is not to gainsay the difficulty that FE programmes are often in vocational subjects that have no university equivalent. However, such transfer arrangements may become easier if English HE were to develop a credit-hour system similar to that in the US, which greatly eases the transfer of portions of a degree.

2. More links between colleges and universities

Another change would be to promote deeper links between FE colleges and highly selective universities. Such efforts would require attention to the ways selective universities discourage FE graduates by, in some cases, only crediting one year of a foundation degree towards a university degree. 

FE colleges need to be at the centre of the conversation

Similar issues have arisen in the US, with frequent reports of university resistance to fully accepting sub-degree courses when they are offered by community colleges and other sub-degree institutions. However, this transfer friction can be eased when universities and sub-degree institutions are brought together – particularly under the aegis of government – to discuss their perceptions of the academic demands of each other and to work out arrangements that put each at ease by protecting both academic quality and student mobility.

For example, the states of California and Illinois regularly hold formal curricular conversations between the universities and community college systems using their articulation agreements. 

In a time of growing demand for wider participation in HE, FE colleges need to be put at the centre of the conversation, just as has happened for community colleges in the US in the last decade. 

Claire Callender is professor of higher education policy at the UCL Institute of Education and Birkbeck. Kevin J Dougherty is professor of higher education at Teachers College, Columbia University