Four providers have been stripped of more than £100,000 due to the controversial English and maths condition-of-funding rule, although one is questioning the ruling.

The ESFA deducts funding from providers for students who do not achieve at least a grade C (now 4) in GCSE English and maths and then do not enrol in the subjects for their further education courses.

The original rule stated that any student who failed to enrol would be removed in full from funding allocations for the next-but-one academic year.

However, the condition was relaxed from 2016/17, with the penalty halved and only applied to providers at which more than five per cent of students did not meet the standard.

The DfE decided earlier this month to extend this five-per-cent tolerance indefinitely “in recognition of the continued efforts of institutions” to achieve the targets.

Lambeth College faced the highest deductions this year, losing out on £231,162 after it failed to meet funding conditions for 209 students in 2015/16.

“Problems in 2015/16 arose from higher recruitment numbers than planned and the need to recruit additional staff,” said a spokesperson for the college.

“For subsequent years, numbers have been closer to plan and therefore the same issue has not arisen.

“As in all colleges, any reduction in funding causes operational difficulties.”

Cornwall College had the second highest deduction total, with £211,946 removed from its allocation for 329 non-compliant learners. 

Newcastle-based provider group NCG had the highest number of learners who did not meet the condition, and had £156,884 wiped from its funding for 463 students.

However, it has a total of 13,356 students, putting its proportion of non-compliant students at 3.5 per cent, well within the tolerance limit.

A spokesperson for NCG said it was “checking the figures” with the ESFA but are yet to receive a response.

A spokesperson for the DfE said it would be looking into NCG’s concerns.

“This is an exceptional case based on the merger of two colleges, where one of the colleges had been above the five-per-cent tolerance,” they said. “As a result of this merger, NCG has gained around £10 million in funding overall.

Manchester’s YMCA Training became the only independent learning provider in the top five biggest fines, losing out on £102,385, with 103 learners not meeting the funding conditions.

A fifth provider, Birmingham Metropolitan College, was deducted £97,522 for 456 non-compliant learners.

Analysis of latest 16-to-19 allocation data for this academic year revealed that in total, 19 general FE colleges were deducted £1,211,930 under the condition-of-funding rules.

A further 45 ILPs shared losses of £673,456, and 39 local authority providers were fined £377,498. No sixth-form colleges were penalised.

These figures are an improvement on last year, when £2,842,016 was deducted across 26 general FE colleges.

City of Liverpool College alone lost almost £500,000.

FE Week revealed a glaring flaw in the way the condition is calculated last year, which makes it impossible for any institution to achieve 100-per-cent compliance, and could even cost them funding.

If a learner drops out of a course after the qualifying period of 42 days, they are counted as “funded”, but if they record fewer days studying English and maths during the same period they count as not complying with the rule – even if their last day of attendance on each course is just a few days apart.

Last year, FE Week estimated that as many as 9,000 college learners across England could be affected by this failure in the system.

“All providers including colleges can ensure they are not having funding deducted by identifying those who don’t yet have English or maths GCSE grade four, and provide them with the opportunity to achieve this standard as part of their study programmes,” said a spokesperson for the DfE.

“Providers must ensure this is compliant with the specific condition of funding requirements set out in 16 to 19 condition of funding guidance.”

A cash-strapped London college spent more than £3 million on plans to develop one of its sites that never came to fruition, FE Week has learned.

Lambeth College, which has been in such severe financial difficulties that the FE commissioner warned earlier this year it was “no longer sustainable” unless it merged, submitted detailed proposals to redevelop its Vauxhall site to Lambeth council in September 2016.

But the plans, which included a new skills centre, a hotel and flats, were pulled six months later.

A Freedom of Information request by FE Week has found the process cost the college £3.228 million.

This was spent on “project development and decant costs in connection with the development of the Vauxhall site” over 2015/16 and 2016/17.

“This is an ongoing project and is currently the subject of a revised bid to the London Economic Action Partnership,” it said, referring to the local enterprise partnership for London.

“The plans are to develop the whole site as an FE entity, with one third of the original scheme being retained and two thirds being revised to result in the expansion of FE facilities.”

But our questions on what the money was spent on were denied on the grounds that it would be “prejudicial to the financial viability of the ongoing project as a whole”.

Monica Box, the college’s interim principal, also refused to say where exactly the money had gone.

“Monies spent to date will support the ongoing proposals for the site which will produce a significantly higher degree of education and training usage,” she said.

“The change of plan was to facilitate more FE-based estate on the site.”

The Vauxhall campus was formerly home to the college’s construction and engineering courses, and is the second largest of Lambeth’s three sites, at 16,700 square metres.

According to the planning application submitted to the council, the proposal was for “demolition of existing college buildings and the erection of a mixed-use development of six buildings ranging from six to 26 storeys in height”.

These buildings included a “new college facility”, a hotel of “up to 184 bedrooms”, which was intended to be a training hotel, and up to 232 residential units.

Lambeth College said at the time that the existing college buildings – deemed to be “no longer fit for purpose” and failing to “meet employers’ needs” – would be replaced with “a groundbreaking education and training facility with a focus on construction, hospitality and science and technology”.

The scheme, which would have involved partnership with the construction firm Carillion, and Arlington Real Estate Ltd, was also set to “benefit from up to £22.25 million” in funding from the LEAP.

The existing site has been standing empty since it was closed in August 2016, and was recently targeted by flytippers, although the rubbish has now been cleared.

Lambeth, which was rated ‘requires improvement’ at its most recent Ofsted inspection, is planning to merge with London South Bank University, although proposals have yet to go out for consultation.

FE Week reported last month that plans for a “back door” takeover of the college by the university, through changes to its governance, had been delayed.

Sir David Collins, the former FE commissioner, reported on the college in March, based on a visit in September 2016, made after a “significant deterioration” in the college’s finances, caused by poor financial management.

FE Week asked LSBU if it was behind the withdrawal of the college’s redevelopment plans, but it declined to comment.

The autumn budget will be delivered by the chancellor on November 22, and leading sector bodies have made requests to benefit colleges, and independent and adult learning providers. FE Week looks at key recommendations.

Sorting out major problems dogging non-levy apprenticeship funding is a high priority.

In its pre-budget submission, the Association for Employment and Learning Providers has called for “an open debate” on funding non-levy apprenticeships after April 2019.

Teething issues with the new levy system have been compounded by the saga surrounding funding for apprenticeships in non-levy-paying firms. A second procurement process descended into farce last month, after the first, which was massively over-subscribed, was scrapped.

Only employers with an annual payroll of at least £3 million currently pay the levy, while smaller firms also have to contribute to training costs for the first time, through a 10-per-cent co-investment model. This should involve the government paying 90 per cent of costs from leftover levy revenue.

The Association of Colleges also fears the system isn’t working and called in its submission for “a review of the rules”, which it said grant levy-paying employers control of 110 per cent of funds generated through their levy payments.

This figure is a reference to levy-payers, which get a 10 per top-up of the funds in their digital account, so in theory they can spend 10 per cent more than they pay.

This situation “gives larger employers the first call on training funds” and “squeezes” smaller non-levy paying employers into “second place”, the AoC warned. It called for the proportion they control to be reduced to 75 per cent “to release funds to address failures in the training market”.

Last week, it was revealed that total apprenticeship starts since the levy launched were down 61 per cent, compared to the same period last year.

The AoC also wants a crackdown on school sixth forms, reflected in the Sixth Form Colleges Association’s plea for “a competitive process for establishing new sixth-form provision”.

“It would be sensible for regional schools commissioners and councils to be asked to review sixth forms which are particularly small and/or underperforming,” read the AoC’s submission.

“There has been no rationalisation of school sixth-forms for more than 20 years as a product of ideology and DfE neglect,” it added.

It also wants a review of the struggling university technical college programme.

The AoC and Havering Sixth Form College challenged the DfE last year over its decision to fund a new sixth form at Abbs Cross Academy and Arts College in Hornchurch, Essex.

One standout demand, this time from the adult learning provider membership body Holex, is for the creation of a special adult basic skills fund for low-skill sectors, to ease anticipated home-grown recruitment problems post-Brexit.

It thinks this should work alongside a new cross-department post-16 education, skills and employment strategy.

Delivering “better value in a post-Brexit economy” also motivated the AELP to ask the government “to consider whether all ESFA non-schools funding and programmes should be subject to open tender”.

On loans it called on the government to “allow the existing adult-fee loans programme to fund units of qualifications”, and “promote adult level 3 and 4 students by providing maintenance loans”.

People also want the DfE to review compulsory 16-to-19 English and maths resits policy, which the AoC supports in principle but warned are “not working”.

The AELP wants “equitable funding” for additional English and maths provision for apprenticeships.

It previously drew attention to “the large differential in post-16 funding between English and maths taken as part of an apprenticeship (£471) and that available for the same subjects in the form of classroom provision (£724)”.

“Our research shows that many providers deliver the learning at a loss within an apprenticeship and AELP believes that all English and maths delivery for apprentices should be funded as a minimum at the equivalent stand-alone rate,” it explained.

It also wants a £200 increase to the national funding rate for 16- to 19-year-old learners.

“We estimate that increasing the rate to £4,200 per full-time student would cost £244 million per year to implement,” said the SFCA, which “could be partly funded by using the underspend in the DfE’s budget for 16-19 education”. This amounted to £135 million in 2014/15 and £132 million in 2015/16.

Association of Colleges

Significant requests:

1. Review rules that grant levy-paying employers control of 110 per cent of their funds
2. Carry out targeted reviews of school sixth-forms and university technical colleges
3. Look again at 16-to-19 compulsory English and maths resits condition-of-funding policy
4. Set a target to increase public spending on education to five per cent of GDP by 2025
5. Introduce an immediate £200-per-student uplift in funding in 2018-19 to improve education and support
6. Ensure there is adequate funding for the T-level transition year, and for three years of study for those who need it
7. Simplify the high-needs funding system to provide more clarity for those with learning difficulties and disabilities
8. Extend child benefit and other social security payments to young people taking apprenticeships
9. Develop learning accounts to test approaches that could encourage more adults to invest in learning and training
10. Support local authorities to invest in support for transport up to 18

Association of Employment and Learning Providers

1. A greater and sustained commitment to the outcome-effective traineeship programme
2. Equitable funding for additional English and maths provision within an apprenticeship programme
3. An open debate on how non-levy apprenticeships should be funded after April 2019
4. Full commissioning of the adult education budget as a means of reskilling adults for sustainable employment post-Brexit

Holex:

Significant requests:

1. Announce the preparation of an adult education, skills and employment strategy with equal status to the industrial strategy
2. Create an adult basic skills Brexit fund for low-skilled sectors so they can recruit staff from the resident UK population
3. Pledge additional new funding for an adult-led national retraining scheme linked to an extended right to request time off to train
4. Expand loans and allow the existing adult-fee loans programme to fund units of qualifications

Six Form Colleges Association:

Significant requests:

1. Increase the national funding rate for 16- to 19-year-olds by £200
2. Introduce a competitive process for establishing new sixth form provision
3. Introduce a VAT refund scheme for sixth-form colleges
4. Introduce a capital improvement fund to help successful SFCs develop their estates