Ofsted has completely failed to act on a change in its rules that allow it directly to inspect subcontractors despite an embarrassing succession of major scandals, an FE Week investigation has discovered.

Monitoring subcontracting is a huge and increasingly thorny issue – there were 1,200 subcontractors accessing an eye-watering £693 million in government funding as of January. Of these, 161 had a contract worth £1 million or more, the highest of which is Learning Curve with over £10 million.

The former Skills Funding Agency had been warning as long ago as 2010 that the arrangement was “prone to mismanagement and abuse”, words which proved prophetic after the sector was wracked by a string of scandals involving providers with huge government skills contracts.

Ofsted finally took action last year by inserting a line into its handbook stating that it “reserves the right to inspect and grade any subcontractor” in their own right for the first time.

However, FE Week has found that not a single subcontractor inspection had yet taken place.

The new chair of the education select committee, the former skills minister Robert Halfon, expressed concern with the situation, saying: “The issue of subcontracting and inspection of quality is incredibly important. I hope that Ofsted will make every effort to inspect subcontractors in the same way they inspect other providers.”

An Ofsted spokesperson told FE Week: “We already inspect subcontractors and their education and training provision, as part of the inspection of their main contractors.

“While we have not inspected any subcontractors as a separate entity yet, where necessary, we reserve the right to do so.”

Mr Halfon would not be drawn on whether he would consider launching a select committee enquiry into subcontracting.

His former counterpart, the current shadow skills minister Gordon Marsden also weighed in, and said he hoped Ofsted would make more of an effort.

“I know that the new chief inspector Amanda Spielman has taken a strong interest in apprenticeships and FE, and it is to be hoped that this subcontracting issue will form part of Ofsted’s closer engagement with the sector,” he said.

Ofsted has so far only directly inspected prime contractors involved in government-funded provision, and may visit and or comment in general terms on their subcontracted provision.

But there was increasing concern before the rule change that this allowed substandard and corrupt providers to pass under the radar, while some companies were found to be actively maintaining subcontractor status so as to avoid an inspection.

One example FE Week uncovered of the inspectorate’s questionable approach to subcontracting was at grade two-rated NCG.

Ofsted’s report on its most recent inspection of what is one of the country’s largest college groups lavished praise last September on its “rigorous” contract management for subcontractors, noting that the group decommissions those “who do not respond quickly enough to improvement plans”.

But it said nothing about the quality of teaching among those subcontractors.

FE Week asked Ofsted, via a Freedom of Information request, for the names of the subcontractors that inspectors visited during the inspection.

The response was that none were visiting, and admitted: “I can confirm that, having checked the evidence from the inspection and spoken to the relevant inspectors, we do not hold any information about any subcontractors being visited during the inspection of NCG.

“The management of subcontracted provision was discussed with the college during the inspection.

“Visits to subcontractors may not be a key focus on inspection dependent upon the provider and the size and scope of this provision.”

Geoff Russell, the then-chief executive of the Skills Funding Agency, wrote in 2010 to John Hayes, the skills minister at the time, concerned about the risks of fraud. The letter was leaked to FE Week and reported on at the time.

“Subcontracting is the area most prone to mismanagement and abuse, and is responsible for about 70 per cent of our current investigations,” wrote Mr Russell at the time.

We also reported in July 2014 how the Skills Funding Agency had indicated to the BBC’s consumer affairs programme Face the Facts that it wanted closer Ofsted focus on subcontractors.

It spoke out following the demise of major subcontractor Bright International Training Ltd, and the results of a four-month investigation by the relevant awarding organisation concluded there had been evidence of malpractice resulting in at least 225 learners losing their qualifications.

The agency told the BBC: “We are in discussion with Ofsted about the possibility of having more focus on the large subcontractors. Our priority is to ensure learner interests are protected and safeguarding public funds.”

——————————————————————————————————————————————-

Editorial: What are Ofsted waiting for?

After several scandals involving large subcontractors that left learners out of pocket and without certificates, Ofsted rightly realised they had a blind spot.

They realised it was farcical to be undertaking full inspections on tiny prime providers with fewer than 50 learners whilst the multi-million pound subcontractors with thousands of learners remained off their radar.

But in the past year they haven’t undertaken their first full inspection of a subcontractor. Also concerning is that Ofsted didn’t visit a subcontractor when inspecting NCG; which they list as having subcontracting arrangements with 11 providers.

If I was being generous I would blame the government for reducing Ofsted’s budget, but is the inspectorate using the limited resource they have wisely?

Twelve hundred subcontractors with hundreds of thousands of learners and over half a billion pounds of public money.

It’s time Ofsted not only conducted a thematic review of subcontracted provision, but inspected the largest multi-million pound subcontractors.

Waiting for a scandal, as in the case of Bright, is too late for the inspectorate to make any positive contribution.

No excuses I’m afraid. Ofsted, on this issue, requires improvement.

Nick Linford, editor

 

Ofsted’s inspection budget is expected to fall by nearly £15 million over the next three years, despite more than doubling the number of providers in scope for inspection.

The education watchdog released its annual report and accounts this morning.

Since 2010/11, Ofsted’s financial resource has been reduced by over £54 million. It currently sits at £141,685,000 but this is expected to fall by 10 per cent to £127,100,000 up to 2019/20.

The accounts also revealed that its recently departed chief inspector Sir Michael Wilshaw received a bonus of between £15,000 and £20,000.

FE Week has analysed the Ofsted accounts for previous years and it is believed this is Sir Michael’s first bonus.

Its chief operating officer Matthew Coffey, a previous director of FE and Skills, was this year given the highest bonus of between £20,000 and £25,000.

The heavy decrease in Ofsted’s inspection budget is happening over repeated warnings from the new chief inspector Amanda Spielman that the watchdog faces a “real challenge” following the influx of new apprenticeship training providers.

Published in March, the Register of Apprenticeship Training Providers first held 1,473 organisations who were given the green light to deliver apprenticeships from May and which were therefore in scope for inspection from Ofsted.

RoATP was updated in May, adding 421 providers, and now sits at 1,894 who are in line to be inspected, more than double the number there were before the introduction of the new register.

Ms Spielman initially raised concern in an interview with FE Week editor Nick Linford in March, shortly after RoATP was first published.

She described the issue as a “big problem” in an interview with Laura McInerney, the editor of FE Week’s sister paper FE Week, at the Festival of Education and Skills last month.

But she also revealed that she doesn’t expect the inspectorate to need more money to deal with the issue, saying she would retain the same number of employees to work in the post-16 system.

After being asked how the inspectorate is coping with the new providers, Ms Spielman said: “As you can imagine it is something that we have got live discussions with government about to make sure that we have [enough cash] and understand where the apprentices are actually being trained to make sure we prioritise the places where there are significant numbers.

“There is a real challenge. We have got some unpredictable movements in where the apprentices are over the next couple of years so we will be doing our best to make sure that we track and put our inspection resource into the right places.”

Ms McInerney then asked if as a result of the scale of these new providers, there would be a risk that money or staff will have to come over from Ofsted school inspectors to deal with the influx, or if the inspectorate would get more resource to deal with the issue separately.

“Well there are the same number of bodies in the post-16 system so in the first instance it is thinking about how to allocate it to make sure we are putting the effort where people are,” Ms Spielman said.

Ofsted was not approached for comment.

Further details of a £50 million pot for ‘capacity building’ work placements was announced this afternoon by the Education and Skills Funding Agency.

Education secretary Justine Greening confirmed the investment would be made available from April 2018 to fund high-quality work placements, when speaking at the Business and Education Summit in London last week.

Additional ESFA guidance on gov.uk includes a timeline for implementation (below) and claims the funding will support “a significant step change for the sector”.

It will be used to deliver “occupationally specific” work placements of around three months for each T-level, “to ensure young people secure the workplace behaviours and the technical skills relevant to the occupation that they are studying towards”.

Once the government has identified which providers will be eligible for the funding, they will be invited to “submit an implementation plan” which “outlines their intentions” and sets out “how the available funding will be used during the 2018 to 2019 academic year”.

They will be expected to outline “short-term and longer-term plans for expanding work placement provision to meet the future demand for T-level delivery”, the guidance says.
Completing the implementation plan satisfactorily will be one of the conditions of securing any of the funding.

The announcement on gov.uk also indicates the ESFA anticipates that “the majority of funding will be used on building capacity with a commitment to commence an agreed number of work placements early to help ensure that the sector is ready”.

Further details will be issued by the ESFA in September to explain the government’s expectations for work placements, the assessment criteria for completing implementation plans, and more information about the funding formula.

Implementation plans should then be submitted by the end of October, to be reviewed by the Department for Education from early November through to mid-December.

The guidance says successful institutions will then be notified by the end of December and any institutions with incomplete implementation plans will be asked to resubmit by the end of January 2018.

These will then be reviewed by the end of February, when the allocation amounts will be finalised for each provider.

Institutions will be written to in order to confirm the allocation they will receive, and will be expected to “build the work placement funding offer into their funding strategies” in March.

The funding will finally be released between April and June 2018, with the first placements delivered in the autumn of that year.

The £50 million funding should then increase until the 2020/21 financial year, the ESFA anticipates, as the number of placements also increases.

The ESFA adds in the guidance that it “will be working with sector bodies over the summer and refining our approach”, but “further details are not available until we issue the September guidance”.

However, questions, comments or concerns can be submitted via an online enquiry form available on the gov.uk website.

The construction industry will not be released from the “double whammy” of levy charges it currently pays, the new skills minister has revealed.  

The government will continue to back the Construction Industry Training Board, which is part-funded by its own levy on employers in the sector – even though the Confederation of British Industry has complained that the fee is being charged alongside the wider apprenticeship levy on all employers which have a payroll of more than £3 million.

Anne Milton (pictured above) has now backed the arrangement in a letter to the CITB chair James Wates, which was published today ahead of the full results of a government review into industry training boards which is due in the autumn.

On the same day that she confirmed government support for the separate Engineering Construction Industry Training Board, the minister wrote that “colleagues in the industry will want to know when they cast their votes whether or not the government is likely to conclude that CITB should continue with levy-raising powers.

“We are therefore writing to confirm that, having reviewed the options for making sure that the construction industry has the skills it needs, we have concluded that the CITB should be retained.”

The letter, co-signed by minister for housing and planning, Alok Sharma, and senior peer Lord Prior, also suggested that if the industry rejects proposed reforms to the CITB  and opts not to support the levy, “the CITB may have to close”.

Acknowledging that “there is concern across the industry about the effectiveness, efficiency and responsiveness of the CITB”, she also warned that the government’s ongoing support for the construction body would be dependent on its current reform programme being “seen through”.

Mr Wates (pictured right) said he appreciated Ms Milton’s “confirmation that the CITB should be retained, provided industry supports it”. 

“Rest assured that CITB has listened – and will continue to listen – to concerns of industry,” he said.

The CITB recently sold its awarding body, Cskills, to NOCN, to enable it to focus on its primary function as an industry sector skills council, and to remove any conflict of interest as it develops skills standards for the sector.

The body, which supports training in the construction industry, is in the middle of consulting on its levy proposals – a statutory requirement that takes place every three years.

The government’s consultation into the future of both the CITB and the ECITB was launched in February.

According to Ms Milton’s letter, while the full report had been due in the spring, publication has been put back until the autumn due to the general election.

Both bodies charge firms a levy to support training in their industries – but grave doubts have been raised about the sense of maintaining these levies alongside the apprenticeship levy, introduced in April.

The CBI warned in 2015 that “it’s important that employers are not hit by a double-whammy”.

The apprenticeship levy was launched in April, and affects all employers with a payroll of more than £3 million.

Ms Milton’s letter acknowledges that some construction employers had “expressed concern” about the affordability of paying two levies.

“But the purpose of the apprenticeship levy is quite different from the industry training levy: it is specifically to support and incentivise investment in apprenticeships,” she said.

Ms Milton wrote separately to the chair of the ECITB, Shirley Watson, to confirm the government’s continued support.

“We have therefore concluded, and have decided to confirm now, that the ECITB should be retained,” she wrote.

Chris Claydon, ECITB’s chief executive, said: “We welcome the minister’s recognition of the importance of engineering construction to the economy, the need to continually drive skills growth in our industry, and the role of the ECITB in delivering this.”