Phillipson defends ‘risible’ partial level 3 defunding pause

Students starting at sixth forms and colleges next year will need to wait until December to know what courses will be available, the education secretary has confirmed, following last week’s controversial qualifications pause and review announcement.

In her response to a letter from the Protect Student Choice campaign, Bridget Phillipson stood by her decision to only commit to pausing the defunding of BTECs and applied general qualifications that were due to be scrapped this month and not for future years. 

BTECs pause and review: Everything you need to know

Department for Education officials will carry out a “short review” by the end of December 2024 that will confirm what level 3 qualifications will be available to students from September 2025 and 2026. 

Phillipson has now explained that pausing future defunding of qualifications at this stage could “prejudice the findings of this short review” and has advised colleges to make clear which of their courses may not be available. 

“When communicating with prospective students, colleges should be clear if a qualification they are interested in offering may not be available because it is currently on a defunding list.

“However, the position will be clarified before the turn of the year and colleges will be able to reflect this in their planning and marketing materials in the new year.”

But this timetable will cause “widespread disruption,” college leaders argue.

The Sixth Form Colleges Association (SFCA) has identified 30 colleges where at least 50 per cent of its level 3 provision is in scope of the government’s review, two of which with 100 per cent. 

Source: Sixth Form Colleges Association

Courses are typically finalised in July, 13 months before the new academic year begins, the SFCA said. This means that colleges won’t be able to offer students and families certainty about their post-16 options at open days this October this year, they association added.

Analysis of over 1 million 16-18 year-olds in full-time education suggests that 54 per cent study at least one qualification now under review.  

The row stems from a pre-election commitment made by Labour to the Protect Student Choice campaign to “pause and review” the previous government’s policy of scrapping applied general qualifications, including popular BTECs, to make way for T Levels. 

The campaign, made up of 25 organisations including unions, university representatives and employer bodies and led by SFCA, wrote to Phillipson after last week’s announcement urging the government to consider a longer pause. 

Phillipson rejected the call in her response. James Kewin, deputy chief executive of SFCA, said today it “suggests policy makers are disconnected from the reality of delivery.”

Kewin described Phillipson’s advice, that colleges should tell upcoming school leavers that certain qualifications may be unavailable, as “risible”.

“It is impossible to square this decision with the secretary of state’s aspiration to support working class and disadvantaged students, as these are the young people that disproportionately study applied general qualifications, or with the government’s mission to break down the barriers to opportunity” he said.

Phillipson has promised to “engage and collaborate with stakeholders as part of the focused post-16 qualifications reforms review.”

She wrote: “The work that sixth form colleges, training and apprenticeship providers and the FE sector do is essential to the change this government wants to achieve across the country.” 

Final push for WorldSkills Lyon as Team UK ramps up training 

Team UK competitors are making a final push in their gruelling training schedule to be at their peak for the WorldSkills international competitions, known as the “skills Olympics”, in France next month.

The 31 skilled young people have just over a month left of training before flying to Lyon, France, just days after the Paralympic closing ceremony in Paris, with hopes to bring home gold, silver and bronze medals across 27 skills including cyber security, digital construction and hairdressing.

Their Olympics-style regime involves specialist training with former WorldSkills medal winners, remote assessments and international pressure tests against peers from other countries to provide insights into their training programmes.

Yesterday, Team UK renewable energy competitor Danny McBean competed in a friendly training event at Doncaster College alongside his Japanese counterpart Gunyasu Takumi.

The three-day international pressure test from July 29 to August 1 involved maintenance tasks such as changing hydraulic fluid oil and gearbox oil on wind turbines using Doncaster College’s facilities. The event included a mini competition yesterday.

Training manager Chris Turnbull told FE Week that both competitors were “pretty even”. McBean made a “small improvement” to his capability in May after receiving specialist training in Quebec, Canada.

Hamidreza Jafarnejad, curriculum lead of IoT at DN Colleges Group, said: “By leveraging our state-of-the-art labs and equipment, this joint training session not only enhances the skills and preparation of both UK and Japanese gold medallists but also solidifies Doncaster’s position as a global hub for renewable energy innovation and training.”

The UK will participate in the renewable energy competition for the first time in Lyon, after it was introduced at the WorldSkills Special Edition in 2022. China and Japan were the joint gold winners that year.

McBean, who specialises in electrical installation and won gold at the UK national finals last year, told FE Week that he will be focusing on the digital aspect of the competition before going to Lyon.

“I feel pretty confident working with the mechanical side of it,” he said. “The only thing I haven’t really got is the design software so I think I will be heavily focused on how to use that.”

Turnbull said training McBean in the design and simulation software would involve “designing a solar install either on a house or a factory, design a wind farm, and placements of wind turbines”.

“Danny is a very cool, calm, collected person. I’m very confident that whatever problems and issues come up, he’ll take it on with quite a level head. In fact, he’s generally calmer than me,” he added.

A spokesperson from WorldSkills Japan said Turnbull “has taught us a lot of valuable maintenance and fault finding.”

“[Takumi] did very well and is a credit to Japan,” they said. “We look [forward] to securing another medal.”

Doncaster College is also home to another Team UK member, Oska Ready, who will participate in the cooking competition.

Chef lecturer Simon Barton said: “As a tutor, it has been an honour and a privilege to have played a small part in Oska’s WorldSkills UK journey and we wish him all the best for Lyon!”

Meanwhile, many other Team UK members have completed their international pressure tests in Switzerland, Finland, and across the UK. 

Some experienced training with former competitors such as the 3D game art competitor Yasmin George who got masterclasses from former gold champion Dan McCabe.

The 31-strong team of young apprentices and students will battle against 1,500 global counterparts from 65 countries during the competition, which takes place from September 10-15.

To celebrate their achievements, Team UK have been invited to an afternoon tea reception hosted by The Rt Hon. Lord Knight of Weymouth in the House of Commons this October.

It comes after FE Week uncovered monetary rewards to WorldSkills medallists from other countries – an initiative that industry bosses in the UK have called for.

FE Week is the media partner of WorldSkills UK and Team UK.

Training provider slammed for ‘coaching’ students for assessments

A training provider has been downgraded to ‘inadequate’ by Ofsted after inspectors found that teachers “coach” some students to answer assessment questions.

Free2Learn offers short, publicly funded vocational courses for adults seeking work, across the country.

Following an inspection in May, the education watchdog moved Free2Learn’s overall grade from ‘requires improvement’ to ‘inadequate’ for quality of education, leadership and management, and adult learning programmes.

However, the provider – which recorded a turnover of more than £11 million in 2022-23 – retained a ‘good’ rating for behaviour and attitude and ‘requires improvement’ in personal development.

The education watchdog said that although students are awarded their qualifications, “too often” they learned to pass the assessments rather than gaining an understanding of the course content.

‘Teachers coach all learners’

Inspectors wrote: “On the level 2 customer service course, for example, activities are limited to the completion of workbooks, and teachers coach all learners to write answers to the assessment questions, with little teaching input.

“Consequently, many students pass the assessments despite having not gained the knowledge needed.”

At the time of the inspection, Free2Learn had 235 adult learners enrolled, most attending the company’s Doncaster site. It appears to also have centres in London, Slough and Birmingham.

The ‘inadequate’ rating may jeopardise contracts the company has with combined authorities such as South Yorkshire, which expects providers to “cease recruitment of new learners” from the date of Ofsted’s feedback.

According to the Ofsted report, published today, students have “insufficient opportunity” to develop the skills needed for their desired career.

Courses ‘not appropriate’ for needs

Some students are also placed on courses that are “not appropriate” for their needs, such as their English language abilities, the report said.

Many found their course was “not sufficiently demanding” while others found it was “too challenging”.

Too few students gain jobs or further training from their courses “despite the fact that this is the main purpose of the course,” inspectors found.

This was due to a lack of careers guidance, work experience, or qualifications by the time they have completed, they added.

Management and senior staff who visit lessons also failed to “identify accurately the many weaknesses in teaching and assessment,” inspectors wrote.

Board members responsible for quality oversight did not receive “accurate information” about standards of teaching, meaning they were “unable to challenge leaders to improve it”.

However, students benefit from learning in diverse groups, feel safe, have high attendance levels and “feel optimistic”.

The report noted that “despite their poor experience,” learners are positive about their studies.

A ‘comprehensive action plan’

When contacted for comment, a spokesperson for the company said that while they were “disappointed” with the overall rating, they view it as a “critical opportunity for growth and improvement”.

The company has begun implementing a “comprehensive action plan” to improve teaching and learner support.

“Free2Learn is confident that the steps taken will lead to significant positive changes in our educational standards and learner outcomes,” they added.

According to Companies House, Free2Learn is run by chief executive officer Gabriel Ghersovic but is ultimately owned by Damian Gerscovic through a parent company.

South Yorkshire Mayoral Combined Authority has been approached for comment.

Government must look again at college teacher pay

Earlier this week, the new Chancellor confirmed £1 billion in extra money for schools to cover a 5.5 per cent teacher pay rise. But to the huge disappointment of the further education sector, there was no extra funding to allow colleges to match this offer.

When taken into context with the increase of 1.9 per cent in 16-18 funding and competing pressures on budgets, there is a real prospect of a lower pay award for college staff and a further widening of the pay gap between FE colleges with schools. This gap reached £9,300 in 2023/24.

Based on the calls we’ve received at AoC, college leaders are angry at this injustice.

AoC represents colleges in national pay negotiations with five trade unions, so before I say anything more on this issue, it’s important to state that it will be our Employment Committee, not me, who make the decision on the 2024/25 FE college pay recommendation. They will discuss this with the FE trade unions in September.

The Sixth Form College Association (SFCA) carries out a similar but significantly different set of discussions with a slightly different group of unions for sixth form colleges.

Whatever both sets of college negotiations produce, the way in which HM Treasury and the Department for Education handle issues like pay, funding and VAT creates a two-tier workforce in education: those who are paid significantly more because they work in schools, and those who are paid significantly less because they work in colleges. This works directly against the stronger push to provide opportunity for all.

There’s a lot to be said about England’s divided and fragmented education system but I think it’s helpful to be specific when it comes to the question of pay.

Like other public sector review bodies, the School Teacher Review Body (STRB) was created more than thirty years ago to reduce the likelihood of industrial action and to provide an evidence-based approach to decisions on pay.  

The STRB‘s latest report is a good read on issues facing the school teaching profession, but its remit means that it tells half the story when it comes to 16-19 education. There are 1.1 million young people in Years 12, 13 and 14. Less than half of them are in schools covered by the STRB.

There is no simple solution – but there are consequences

The DfE may address pay, recruitment, retention and other issues for the tens of thousands of secondary teachers teaching post-16 students, but it’s no good if it stays silent on those who progress to colleges or other providers after GCSEs.

For as long as I can remember, the DfE has relied on the STRB report to make cost-informed decisions on school funding. With school teacher pay accounting for 50 per cent of budgets, this is a sensible way to go. But why do something different in colleges?

There’s a more haphazard approach to 16-18 funding and this isn’t always a bad thing. The formula has weightings for higher-cost programmes and elements that take account of GCSE achievement.

However, the consistent suppression of core funding rates over a period of 15 years has had an impact on pay even when taking into account a couple of recent increases. This year’s 1.9 per cent rise – unless the institution is on the school side of the boundary – leaves very little for the major staffing challenges ahead.

There is no simple solution to these issues but it’s important to emphasise there are consequences.

Colleges battle the pay gap with schools every single day when trying to recruit and retain teachers. And it’s not just education pay we contend with, but the pay gap with industry too.  We want skilled, professional workers teaching our students in areas like construction, engineering and health science.

Many workers can earn much more outside education than within it. While there are many non-financial benefits to working in a college, it will be hard to prepare the workforce of the future on the rationed funds we have at present.

I’m confident that a serious-minded government will look at this issue in the next spending review but it’s hard not to worry that we’ve lost another year to a process that isn’t working as well as it could.

DfE accounts: Apprenticeship underspend and insolvent provider write-offs revealed

A small apprenticeships underspend, nearly £20 million in dissolved training provider write-offs and exit payouts for two ministers featured in this year’s annual report and accounts for the Department for Education.

The report, published this week, explains how the Department spent its budgets in 2023-24 and explained its key risks and successes.

Here’s what you need to know…

Apprenticeships budget underspend

The department’s apprenticeships budget underspent by £17 million last year after the budget was revised down by nearly £60 million in year, as revealed by FE Week in March.

Of the £2.529 billion that was available in 2023-24 for apprenticeships, £2.512 billion was spent. This shows a much smaller underspend than the year before (2022-23) which was £96 million.

Simon Ashworth, director of policy at the Association of Employment and Learning Providers (AELP), said this shows there is limited “headroom” for Labour to add flexibilities to how the levy can be spent without “additional funds”.

Spending available for apprenticeships was supposed to rise to £2.7 billion in financial year 2024-25 – a commitment made in the last government’s spending review in 2021. DfE’s latest accounts suggest £2.66 billion is planned for this year, but a spokesperson clarified that the expected total budget for apprenticeships this year is £2.729 billion, after factoring in schemes such as the growth pilot and maths and English uplifts.

Bootcamps ‘success’

Despite celebrating “scaling up” skills bootcamp delivery, with 40,040 learners starting in 2022-23, the department is still unable to say how many complete their courses or see positive outcomes in their careers.

Statistics for the second wave of courses, delivered in 2021-22, will reportedly be published “later in 2024”, although the report fails to offer any reason for the two-year delay.

DfE’s director general for skills Julia Kinniberg wrote that the DfE has “scaled up” its priority skills programmes including, 40,000 learners in skills bootcamps in 2022-23, a 90 per cent pass rate T Levels last year and the rollout of higher technical qualifications.

However, challenges to T Level delivery and “worrying” dropout rates highlighted by officials in separate DfE reports are not referenced.

Last year’s £185 million cash boost for some colleges to “tackle [teacher] recruitment and retention issues” by helping them to match that year’s pay award for school teachers, was chalked up as win.

However, the report did not acknowledge the growing pay gap between college and school teachers, now estimated by the Association of Colleges to be an average of £10,000 per year.

Dissolved training providers

Just over £19million was written off funding owed to the Department from training providers that have gone bust.

DfE only has to declare waved claims worth over £300,000, but the accounts show four of the eight dissolved training providers were part of a chain owned and shut down by entrepreneur Angela Middleton in 2020.

Around £12.5 million was written off as funding that wasn’t recovered from Middleton’s businesses: Astute Minds Ltd (£9.9 million), MiddletonMurray Ltd (£1.4 million), FNTC Training and Consultancy (£900,000) and The Teaching and Learning Group Limited (£456,000).

A £3.4 million claim on Progress to Excellence Ltd, which was shut down in 2020 after an ‘inadequate’ Ofsted inspection, was also written off. Further write offs included £1.2 million from Logistics.com (UK) Ltd which filed for insolvency in 2021and £801,000 from PTS Training Ltd.

Special payments were made to Remit Group (£988,000) and Skillnet Ltd (£384,000) to “secure provision for already enrolled apprentices” from other providers.

Ministerial severance payments

Departing ministers Nick Gibb and Robert Halfon each received a £7,920 severance payment.

Gibb stepped down as schools minister last November, announcing he was seeking diplomatic post and would stand down as an MP.

Halfon announced his retirement from the House of Commons in March and quit as skills minister the same day.

Colleges unaccounted for

The impact of reclassifying colleges continues to impact government accounting, with an ongoing disagreement between the DfE and the Treasury over the “the most appropriate” way to report their annual spending.

At present, colleges publish their own accounts every year, after the end of the academic year.

However, this causes difficulty for the Treasury as public spending cannot be consolidated into the DfE and whole government’s accounts.

FE Week understands a trial is underway with a select group of colleges to work out how colleges can report on their finances by financial year, rather than academic year. A change in financial year-end from July to March was slated by college finance leads when it was first proposed.

Local authority SEND risk ‘critical’

Deteriorating local authority finances were made a “top-tier” risk. DfE said financial challenges in local authorities can “impede the delivery of essential support services” including SEND provision with now “critical” risks to “outcomes for the most vulnerable and exacerbating cost pressures”.

High needs cost pressures had also “worsened” in year with demand outstripping available funding “significantly.”

Fraud levels falling

The DfE saw a significant drop in detected errors and fraud, from £36 million to £10 million and from £58 million to £6 million respectively. Meanwhile, recoveries increased from £10 million to £27.5 million.

The report said: “The apparent decrease this year in detected fraud may be due to our continued efforts in fraud prevention, which have resulted in an estimated £3.1 million in prevented fraud, although once Q3 and Q4 figures are finalised we expect detected fraud levels to be similar to last year.”

What the Olympics teach us about celebrating our learners

My wife has just pointed me to a clip of the BMX Freestyle event at the Olympics wondering if our five-year old grandson, experiencing his first Olympics and in the early stages of riding his bike, might think it looks like a fun thing to try.

Children of all ages and backgrounds will be inspired by what they see; many will go on to take up a new sport, and some will no doubt excel in time and get to compete in some future games.

That has been made a little easier by an innovation on the Olympic Games website, and it’s an innovation colleges should learn from.

When I chaired the board of my local college, I was always invited to our annual celebration of achievement, where we recognised our students’ good work.

It clearly meant a great deal to them. Many would never have been recognised for anything they’d done before, and most brought family members to share their success. I particularly remember one young woman who thanked her mum for flying all the way from her home in Ghana to be there.

So I was embarrassed when, all too often, the staff member announcing names stumbled over the pronunciation. I’m talking about a college in London, so we had students whose heritage spanned the globe and whose names were often challenging to pronounce, even for our multicultural staff.

Those staff were conscientious, good people, but we were letting our students down at what should have been a big moment for them.

I’ve experienced it myself. I was introduced at a huge event in Oregon once as “our most travelled guest this evening, Mr Ay-ane Mackinnon”.

I laughed. I’m used to it and I’ve had plenty success in my life, so it washes over me. But my own experience has made me more sensitive to the fact that names are so often said wrong. Typically, of course, they are the names that originate outside the historic mainstream of British society.

Faced with the same problem, US presidential candidate Kamala Harris found a rather elegant solution. She posted a video on social media of children having a crack, and teaching them and viewers the right way to say her first name. 

The fact that many accept as normal that their name gets mangled is no excuse

But for many college students the experience is very different; the fact that many would just accept as normal that their name gets mangled is no excuse. We should get it right.

After all, had their teachers, tutors and support staff not done this over the past two years, it’s unlikely they’d want to celebrate anything with us. As college leaders, we share that responsibility – not just in times of triumph but in their challenging moments too.

When I first raised the question, colleagues were sympathetic but worried. “How can we be sure to get their names right, Iain?”

“Ask the students”, I said. “They’ll know how to pronounce their own names.”

And that’s exactly what the Paris Olympic authorities have done, asking each athlete to pronounce their own names and including the recording on their profile page.

Take Farida Abaroge, for example. She’s a 1500m runner with the Refugee Olympic Team, originally from Ethiopia and now living in France. “Farida” looks pretty straightforward to pronounce – though she puts more emphasis on the final syllable than a Brit would typically do. And “Abaroge”? Where does the stress go? Click the button by her name and you get the authoritative answer.

From her profile, it looks unlikely that Farida will appear on the rostrum this time round. (She came 62nd in the world cross country championships in Belgrade earlier this year.). So commentators probably won’t have to worry about pronouncing her name. But it’s simple respect, isn’t it?

I hope Farida stood just a little taller knowing that someone had troubled to ask her to record her own name for the website so people would get it right.

I hope our students stood just a little taller at our achievement celebration knowing that the announcer had taken the trouble to get their name right.

And I know it can only make it easier for every five-year-old watching to imagine their name one day being celebrated – whether their success is in BMX or BTECs.

Labour snubs colleges in public sector pay awards

The recommendation to uplift school teacher pay by 5.5 per cent, accepted by the government today, will not apply to colleges.

Chancellor Rachel Reeves today announced that the government has accepted in full the School Teachers’ Review Body’s (STRB) recommendation of a 5.5 per cent pay rise for teachers.

The announcement was part of a package of cost-cutting measures to save £3 billion from government budgets after the new Labour government found a “£22 billion hole in the public finances”.

The pay rise will hand out £1.2billion in additional funding to schools, starting from September 1, and is equivalent to an increase of over £2,500 for the average teacher.

But the Department for Education has said the recommendation will not be extended to college teachers.

“It is disappointing that funding was not found to allow colleges to match that award,” said Association of Colleges chief executive David Hughes. “The result is a no-change position for college finances and pay in the short-term.”

‘We had come to expect such neglect from the Tories’

The University and College Union (UCU) said Labour’s decision not to match the pay award for schools was “at odds” with their mission for government.

Jo Grady, general secretary of UCU, said: “‘Failing to invest in further education is simply not good enough.

“Ultimately, this decision is at odds with Labour’s core missions for government. We had come to expect such neglect from the Tories but we expect more from a Labour government which aims to spread opportunities for working class people and kickstart a decade of national renewal.”

The government’s response to the STRB review was expected in May, but Reeves accused the former education secretary Gillian Keegan of having the pay review recommendations “sitting on her desk”.

The AoC said it deferred its recommendation to colleges until DfE confirmed its decision on schools.

Hughes said today’s announcement makes colleges’ positions more “difficult” as FE funding rates are not high enough to match the offer for schools.

“The next meeting between FE employers and unions is in September and that looks likely to be the start of a set of difficult negotiations – with a significant gap between the pay awards colleges want to be able to offer, and the funding available,” he said.

The £1.2 billion funding will provide £63 million to schools delivering post-16 provision.

ABS ditched

The chancellor also scrapped the former government’s proposal to replace T Levels with the Advanced British Standard, a new qualification estimated to cost £200 million next year.

She slammed former prime minister Rishi Sunak’s introduction of the Advanced British Standard at the conservative party conference last year for not putting “aside a single penny to pay for it”.

“If we cannot afford it, we cannot do it,” she told MPs.

DfE said a cumulative spending commitment of £3 billion by 2028/29 will be avoided as a result of cancelling the ABS.

The department added that the funding for retention payments for teachers and for GCSE maths and English resits, initially announced as part of the ABS, will be unaffected.

The next budget will take place on October 30, during which the chancellor will lay out final budget plans for this year and set the 2025/26 budget, concluding the multi-year Spending Review in spring 2025.

ESFA accounts: Major write-off for insolvent training provider

A jump in fraud detection, new loans to colleges and a £5.7m write-off from a training group provider insolvency have all been revealed in this year’s annual report and accounts of the Education and Skills Funding Agency (ESFA).

Its accounts, for the year up to March 31, 2024, break down how the agency paid out £72 billion in more than half a million separate payments to colleges, independent training providers, academies and local authorities.

Here are a few key insights from the report:

Headline budget figures

The FE sector only accounts for a relatively small chunk of the agency’s total annual budget – it distributed £4.8 billion for 16-19 education.

This is slightly larger than the £4 billion spent on early years.

In comparison, pre-16 education funding paid to academies and local authority maintained schools totalled £62.8 billion.

It also oversees £500 million for adult education – although more than twice this budget is devolved to mayoral authorities such as the Greater London Authority.

Fraud increased, largest part is ITPs

The amount of fraud detected or prevented rose by a third to £91 million, with £19 million of this relating to apprenticeships.

In total, £28 million was recovered, including from previous years.

Suspected fraud is flagged through data analytics, in collaboration with other government departments, and by the ESFA’s counter fraud and investigations team.

About half of the 142 new allegations brought to the ESFA were about independent training providers, with 20 FE colleges and 47 academy trusts investigated.

The agency “successfully” petitioned for the closure of one unidentified independent training provider due a failure to repay its debt, and five other directors were disqualified, the report says.

Chief executive David Withey said he hopes the figures send a “very clear message” that the agency works tirelessly to “recognise and remedy” fraudulent activity.

College loans on the increase

The ESFA’s total loan balance to the FE sector was £170 million, a £109 million increase in one year alone through new lending to 19 colleges.

Much of this increased support for FE follows the reclassification of colleges as public sector bodies, which limited their ability to take out new commercial loans.

“The sector will pay considerably less interest for this debt than commercial market alternatives,” the report said.

Financial support from the ESFA, DfE and Further Education Commissioner also included ten colleges “at risk of insolvency,” although these are not identified.

Such loans and support often result in colleges agreeing to restructure by merging, closing or reducing their staff costs, according to FE Week reporting.

Losses

The funding agency’s overall losses rose to £12 million during the financial year.

Although its cash losses fell from £2.3 million to only £192,000, the ESFA was forced to write off £5.7 million due to the insolvency of independent training provider MiddletonMurray.

In March last year, the agency submitted a clawback claim of £10.1 million to liquidators following an investigation into how contracts were used across four skills training companies owned by Angela Middleton, including MiddletonMurray.

Other waived or abandoned claims included £1.2 million owed by City College Southampton, which is now part of South Hampshire College Group, and £327,000 owed by University Technical College Leeds.

The total number of cases increased almost six-fold to 169 during the year, but details are only reported about losses over £300,000.

The accounts also include one mysterious “special payment” of £18,000 to an unknown party.

Pay rise for the boss

The year marked the first full period under chief executive David Withey, whose total cost of salary and pension benefits is £390-395,000 per year.

Withey’s basic salary also rose by about 16 per cent, from £125-130,000 to £145-150,000.

Including benefits and bonus, the chief executive earned four times the median salary of an ESFA employee, which was about £40,000 per year.

Staff

Although staff turnover continues on an upward curve from 4 per cent in 2021/22 to 11 per cent in 2023/24, the ESFA’s average staff size fell by more than 100 to 714 during the year.

This follows a halving of the staff size since the agency was stripped of its policy role in 2022, following a review of its effectiveness by Sir David Bell.

However, spending on consultancy fees has increased from 345,000 to £1.5 million.

According to the report, £400,000 of this was related to FE loan “legal consultancy costs” and £1.2 million to the deployment of school resource management advisors.

Lifetime Training’s losses more than double to £21m

Losses at England’s largest apprenticeship provider more than doubled to £21 million in the last financial year – partly due to a £5 million penalty to the government’s skills funding agency.

Lifetime Training reported the figures in the company’s accounts, published today, for the turbulent 18-month period to July 2023 which included two leadership changes.

The firm, which trains almost 20,000 apprentices a year for over 200 companies including Tesco and McDonalds, put the results down to a “historically challenging period including the legacy of the Covid-19 pandemic and its impact on business operations and clients”.

Lifetime’s main economic sectors include hospitality, care, active leisure, retail, healthcare and leadership and management.

The company was sold by private equity parent Silverfleet Capital to the lenders Alcentra in 2022. Its turnover fell from £71.1 million to £68.4 million over the following accounting period, while after-tax losses increased from £9.2 million to £21.1 million. The company had made a profit of £6.9 million in the year ended July 2020.

The accounts state that the tough trading environment was made worse by the “lack of upward adjustment to the funding caps on apprenticeship standards, which had remained static for several years”. 

Lifetime’s cost base had also “not been appropriately aligned to the volume of learners for much of the period under review”.

The company’s highest-paid director, which would have included former bosses Alex Khan and Jon Graham’s salaries, totalled £513,739. FE Week understands this figure includes the pair’s severance payments. Individual figures cannot be released due to confidentiality agreements.

ALS clawback significantly reduced

Lifetime’s losses were exacerbated by a £5 million clawback to the Education and Skills Funding Agency, staff restructuring costs of £1.2 million and software implementation costs of £500,000.

The clawback relates to a long-running dispute over the company’s claims of additional learning support (ALS) funding, which is available to meet the costs of putting in place reasonable adjustments for apprentices with a learning difficulty or disability.

Lifetime’s previous accounts had set aside a contingent liability of £13.7 million to settle the dispute following an audit. 

While £5 million has been included in today’s accounts, a final repayment figure is still to be determined through further audit work. This could increase the total liability by around 20 per cent, or £1 million, according to the accounts.

The financial statements said the ESFA has agreed that any future liability will be subject to a mutually agreed repayment plan to protect the working capital of the company.

During the last accounting period, Lifetime said it transitioned back to a largely face-to-face delivery model and, “given the national reach of our business operations”, this resulted in “significant incremental costs associated with travel and learning coach numbers”.

The move did however pay off in terms of quality of delivery, as Ofsted upgraded the provider from ‘requires improvement’ to ‘good’ in a report published earlier this month.

‘The issues raised have now been largely addressed’

A Lifetime spokesperson told FE Week that under new leadership, with former Post Office managing director David Smith joining the firm in July 2023, the issues raised within the accounting period “have now been largely addressed”.

A “major” restructuring of the group’s balance sheet took place this month which reduces Lifetime’s group debt and “eliminates interest charges by over £100 million, thereby improving future cash flows”, the spokesperson said.

They claimed this will “enable us to bid for new contracts more easily and, potentially, take on debt so we can invest further in the business”, adding that the company is “now profitable”.

Funding caps on apprenticeship standards are being reviewed upwards and several standards offered by Lifetime in retail and care have already had pricing uplifts from August 2023, which will benefit the business by around £1.5 million in 2023/4, the accounts said.

Similarly, with effect from January 2024, the government boosted funding rates for functional skills by 53 per cent which will “positively impact group profits by £800,000” this year.

Lifetime’s spokesperson said the company’s financial position has been shared “extensively” with ESFA and the agency is “happy with the corporate results as reported in the full accounts up to July 2023”.

“There is no current intervention, and we’ve found common ground with ESFA around our historical learning support payments and are expecting to settle this in the coming months,” they added.

Low apprenticeship achievement rates have plagued Lifetime Training in recent years, which sat at 35 per cent in 2022/23.

This month’s Ofsted report said the proportion of the provider’s apprentices completing and achieving their programme has now increased to half – around the same level as 2018/19. However, the company’s spokesperson offered a different figure today.

They said: “We are forecasting a rise in qualification achievement rates of 10 per cent over the next reporting period and we retain positive ongoing relationships with our employer partners, who continue to put their trust in us to deliver quality skills and apprenticeship programmes for learners.”