Private provider’s bankruptcy leaves north east IoT £3m out of pocket

Millions in capital funds invested into an independent training provider to help grow one of the government’s flagship Institutes of Technology have been lost following its bankruptcy earlier this year.

NA College (NAC), in Washington, Co Durham, fell into administration in June, four years after winning a £3 million grant to build a ‘smart factory’ extension and buy specialist equipment for apprentices.

NAC was a key partner in the local North East Institute of Technology (IoT) and responsible for training around 270 apprentices working at Nissan’s Sunderland car factory.

Thanks to its links to Nissan the company was one of only five private providers in England to win a share of £300 million in IoT capital funding provided by the Department for Education.

The DfE did not respond when asked why it took the rare step of gifting capital funding to a private training company without securing any guarantee to recover its investment if the firm went bust.

NAC’s property was auctioned off soon after its collapse and the company’s newly upgraded training centre, which was secured by a 20-year lease, is now available to let.

Nissan is understood to have moved its apprentices to nearby Sunderland College, which is not part of the IoT.

Scrabbling for capital funds

The NAC failure, and the loss of its taxpayer-funded property, raises questions about the safety of investing capital funds into private businesses to deliver further education.

FE private training providers frequently call for “fair access to capital funding”, arguing this could help solve capacity issues in post-16 education.

But capital funding pots, such as the £1.5 billion FE capital transformation fund and the £230 million post-16 capacity fund, were only available to public education institutions such as general FE colleges.

Ben Rowland, chief executive of the Association of Employment and Learning Providers (AELP), which represents hundreds of training bodies, said: “It is always sad to see an independent provider cease trading, especially for the learners and staff affected.

“NAC was not an AELP member and we are yet to know all the facts. What we do know is that there are so many independent training providers carrying out fantastic work right across the country delivering for hundreds of thousands of learners and employers.

“As a result, we shouldn’t allow government policy to be determined by what happens in one or two cases – especially as we don’t yet know what happened to this particular provider.”

What has been lost?

With £3 million of IoT of funding, NAC built a new 390 square-metre “smart factory” extension for its training centre – reportedly completed in 2022 – and spent £1 million on specialist equipment.

According to a freedom of information response, obtained following months of wrangling by FE Week after the DfE attempted to suppress details, the equipment included £400,000 for “internet of things” connectivity infrastructure, £249,000 of integrated assembly process kit, £160,000 of automated warehousing equipment and £34,000 in augmented reality technology.

All this grant-funded equipment – which has an “uncertain” re-sale value – was owned by NAC at the time of its bankruptcy, the DfE confirmed.

Neither the DfE nor court-appointed liquidator Begbies Traynor would comment on the fate of the publicly funded equipment, claiming the ongoing bankruptcy process prevented them from responding to questions about the case.

Neither the DfE nor Begbies Traynor directed FE Week to a website that reveals the centre’s equipment was sold off at auction in late June.

It is unclear how much was paid for hundreds of items including machinery, tools, teaching equipment and specific items that the DfE confirmed it funded, such as 3D printers and augmented technology headsets.

New College Durham, the licence holder and accountable body for the North East Institute of Technology, declined to respond to questions about NAC, including whether any funding or equipment was recoverable.

What happened?

NAC was part of the North East Institute of Technology, one of 21 ‘institutes’ in England created through regional collaborations between 77 colleges, 35 universities and 99 employers.

Set up in 2005, NAC had close links to Nissan, training hundreds of apprentices from the automotive giant’s huge factory in Sunderland each year. It received a ‘good’ Ofsted rating in 2022.

In May, several shocked employees of the company took to social media to appeal for work after NAC abruptly closed its doors.

According to Begbies Traynor the business had debts totalling £13.5 million.

In its assessment of the financial difficulties, the liquidator said the company experienced “cashflow difficulties” in January, when one of its 15 subsidiaries tried to buy equipment but discovered there were “insufficient funds”.

It then emerged NAC owed “several credit notes” to Nissan, which decided to move its apprentices elsewhere shortly afterwards.

The report concluded: “Despite cost savings being implemented by the group, including a number of staff redundancies, due to the significant reduction in revenue as a result of the loss of the Nissan contract the company was unable to trade.”