No tolerance: The true cost of resit reforms

Provider fines to hit £45m a year without 5% tolerance threshold

Provider fines to hit £45m a year without 5% tolerance threshold


Colleges and training providers face fines of around £45 million annually, if current trends continue, under the government’s bombshell English and maths resit funding reforms, FE Week analysis suggests.

Enraged leaders have warned of the “significant” financial damage this will inflict on their budgets as they slam ministers for blindsiding the sector without consultation.

Demands for the “out-of-the-blue” changes, described as a “sledgehammer to crack a nut”, also appear to have fallen on deaf ears with ministers expected to reject calls for a suspension.

The Department for Education announced plans last week, during half term, for post-16 providers to teach students a minimum of three hours a week of English and four hours of maths if they failed the subjects at GCSE, or risk losing funding. Teaching must be in person.

Under the controversial and refreshed “condition of funding” policy, the Department for Education will clawback funding for any eligible learners who have not enrolled to do resits from 2027.

Currently, penalties only kick in when the number of students breaking the condition of funding rule exceeds 5 per cent of a provider’s total 16 to 19 cohort. Funding is removed for each student above the tolerance level at half the national funding rate.

The tolerance was put in place in the early days of the policy after officials recognised there were some students who could not meet the condition of funding for reasons outside a provider’s control.

For example, learners who are on their core aim for more than 42 days and then withdraw without having 42 days on their English and Maths, or those who cannot cope with a programme where they are studying English and maths as well as their core aim due to health challenges not covered by an EHCP (education, health and care plan).

But DfE officials have decided to halve the tolerance to 2.5 per cent in the academic year 2025/26, before removing it completely from 2026/27.

FE Week analysis of the government’s 16 to 19 allocations data shows that since the condition of funding policy was introduced in 2014/15, funding reductions of £43.6 million have been made across the sector.

But if the total number of students who did not meet the condition of funding is multiplied by half the national funding rate, those fines would have ballooned to £375 million if zero tolerance had been applied.

For 2021/22 there were 22,490 students not meeting the rule across 2,811 providers, but only 209 providers (7 per cent) were above the tolerance and received fines of £3.58 million. If zero tolerance was applied, then 1,313 providers would have been penalised to the tune of £47 million. This is based multiplying the non-compliance numbers with half the then-national funding rate of £4,188.

FE Week’s analysis shows that levels of non-compliance have dropped since the policy was introduced but has remained between 20,000 and 25,000 students in recent years – a level which has concerned officials.

Asked why the DfE has decided the scrap the tolerance, the department only said: “Currently, use of the 5 tolerance of non-compliance with condition of funding prior to funding penalties is leaving students without mathematics and English support that they are eligible for.”

But a source close to the DfE told FE Week the department decided to clamp down on the resits policy after internal research showed the most economically disadvantaged students were not meeting the condition of funding, and the tolerance was being misused.

“In some cases, colleges are just not enrolling the most disadvantaged learners in English and maths because they are the hardest to convert in terms of attainment,” the source said.

They explained that the 5 per cent tolerance was “left there as a flexibility” amid calls for the condition of funding policy to be scrapped altogether. But for many years the threshold has been used routinely instead of exceptionally, in the eyes of the DfE.

“The tolerance was meant to be used as a margin for error at the start of the policy. But some colleges are now using the 5 per cent as their starting point.

“A number of schools and sixth form colleges have completely flown under the radar because their entire resit cohort is under 5 per cent of their total study programme cohort, so the condition of funding penalty hasn’t applied to them.”

James Kewin, deputy chief executive of the Sixth Form Colleges Association, said there “should always be a tolerance to allow institutions to make professional decisions about individual students”.  

He added: “If there is a problem with how the tolerance is being used, publish the evidence and focus on those with a very high level of non-compliance.”

General FE colleges are the provider type most impacted by the resit policy changes as they take on most students who finish their GCSEs without a pass in English and maths.

‘This is a sledgehammer to crack a nut’

London South East Colleges consistently goes above the 5 per cent tolerance and receives six-figure fines annually. Without the threshold, its fine in 2021/22 would’ve been £735,000 instead of £250,000.

A college spokesperson said this is predominantly due to high numbers of low-level ESOL learners who cannot access entry-level 1 or higher.

“These are often looked after children or unaccompanied minors, many of whom will, in time, have an ECHP assessment but have not been in the country for long enough. Language is a huge barrier, as well as many having significant mental health issues due to previous experiences,” the spokesperson said.

“In an already challenging financial context, removal of the tolerance will further impact our ability to provide high-quality education and skills for the most vulnerable learners.”

United Colleges Group (UCG) had 359 students not meeting the funding conditions in 2021/22 which resulted in a £270,000 fine. If zero tolerance was in force the penalty would’ve grown to £750,000.

A UCG spokesperson said the removal of any tolerance “presumes that colleges are not already working to ensure that all learners understand the importance of continuing to study English and maths, which is not the case”.

Colleges that have sat between zero and the 5 per cent tolerance in recent years are angered about being brought into scope for penalties after claiming to have followed the process diligently for years.

Activate Learning had 163 eligible students who did not meet the condition of the funding in 2021/22, which is 2 per cent of its 7,943 cohort of 16- to 19-year-olds. Without the tolerance, its fine would have been £340,000.

Cheri Ashby, deputy chief executive of Activate Learning, said: “When the condition of funding policy was first implemented, there was no tolerance and it was soon deemed to be financially punitive on colleges.

“For many colleges, Activate Learning included, there are students who we simply cannot get to meet the threshold for reasons out of our control. This includes people who may have been withdrawn from their main aim after day 42 but whose last English/maths enrolment didn’t pass day 42, or those who are struggling with attendance due to mental health challenges not covered by an EHCP.

Cheri Ashby

“We have diligently followed the process, yet despite this we see on average 2 to 2.5 per cent of our students not meeting the criteria. This means that while the first year of the phased removal won’t impact us, after that there will be significant financial implications.”

Ashby added this move, coupled with the introduction of the face-to-face minimum teaching hours for English and maths, means “we will need to recruit more teaching staff to deliver this, something that presents us with a challenge in an already competitive market where there is a shortfall of qualified staff”.

Over 100 independent training providers also deliver 16 to 19 study programmes each year and are set to be hit by the condition of funding changes.

Nacro has scores of non-compliant students each year. The provider’s principal and director of education and skills Elise Temple said: “Nacro Education works with some of the most disadvantaged young people, some of whom have disengaged from education entirely before coming to us. The 5 per cent threshold ensures we can apply careful professional judgment to individual student needs and make decisions about the most appropriate programme mix at a given point in time.

“Taking away this threshold reduces our ability to do this. A one-size-fits-all approach to educational funding risks compounding the challenges of the most vulnerable young people.”

Learning Curve Group also has a large 16 to 19 cohort annually. Chief executive Brenda McLeish said the reforms “disproportionally impact those learners who are most disadvantaged and struggled to engage with maths and English at school”. She suggested: “Perhaps improvements to this area in school would have been a better starting point.”

Funding consultant Steve Hewitt said removing the tolerance needlessly penalises providers for circumstances that the department has agreed for nearly a decade are out of their control.

“This is a sledgehammer to crack a nut,” he told FE Week. “Where is the evidence that DfE are using to make this decision? It feels to me like someone wanted to look ‘cool and hard’ in front of a minister rather than working with the sector to understand why there might be more learners failing to meet the condition of funding.”

Minimum hours here to stay

Department for Education rules haven’t stipulated a minimum number of teaching hours for those resit students until now. 

From September 2024, full-time resit students will be “expected” to study at least three hours per week for English and four hours for maths and pro-rata for part-time learners.

This study should be “stand-alone, whole-class, in-person teaching, with any additional support, such as small group tuition or online support, supplementary to these minimum classroom hours”, according to the new rules.

The minimum hours will only be an “expectation” in 2024/25 to “reflect that despite best efforts not all institutions may be able to meet this from as early as September 2024”.

But they will become a strict rule from 2025/26 from which point funding reductions will be made in cases of non-compliance.

FE Week understands the DfE had become concerned that colleges had moved away from offering these sorts of teaching hours after the Covid-19 pandemic.

The DfE said: “The minimum hours of classroom teaching reflect established practice across providers pre-pandemic, and we know that most settings are already meeting them or on a journey towards this. By mandating teaching hours, this will ensure this progress is consistent across the country, so no learner is left at a disadvantage.”

Association of Colleges chief executive David Hughes has called for the new rules, which go alongside the “modest” funding of £375 per learner, to be suspended while alternative solutions are drawn up.

“It will damage the life chances of the students it is meant to help, it is unworkable because of the low pay in colleges making recruitment of new maths and English teachers almost impossible, and it flies in the face of the work DfE is doing to simplify the system. Perhaps most worryingly, it shows how little trust there is from DfE in colleges,” he said.

The DfE appear to have rejected the demand. Asked if it would suspend the rules, the department told FE Week: “We will continue to work closely with the sector through this phased implementation to deliver on the shared ambition to support students to progress in these crucial subjects.”

Tightened up rules you may have missed

FE Week understands the DfE had become concerned that multiple colleges and providers were entering lower attainers on the same level of English and maths courses, instead of progressing them to higher level courses in line with the rules.

Condition of funding guidance has now been changed to explicitly state: “Institutions must be able to demonstrate progression for students enrolled on maths and/or English qualifications. In most cases, we expect that it will be appropriate for students to study for a qualification at a higher level than they have already attained, rather than just improving their grade at the same level as their previous achievement.

“When a student is studying for a qualification at the same level as a previous achievement, institutions must have evidence of why the qualification is the best choice for the student.”

Students with special educational needs and/or disabilities and an EHC plan, who are assessed as not able to study towards either GCSE or stepping stone qualifications, can be made exempt from the condition of funding.

FE Week understands the DfE had become concerned that providers were exempting all SEND students with EHCPs, so officials have changed the wording of the rules to state: “Institutions must consider all exemptions on a case-by-case basis. There is no blanket exemption for whole institutions.”

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