Providers fail in high court to stop ‘draconian’ contract termination

Two providers argued it was 'unreasonable' for ESFA to end contracts based on disputed Ofsted reports

Two providers argued it was 'unreasonable' for ESFA to end contracts based on disputed Ofsted reports

Two apprenticeship providers have had their funding contracts terminated by the government after a failed high court challenge. 

Quest Vocational Training Limited and All Spring Media Limited hired the same law firm to launch separate legal actions against the Education and Skills Funding Agency’s “draconian” decision to end their agreements after Ofsted slapped both providers with a grade four this year. 

The providers claimed there were factual inaccuracies and disproportionate judgements made by the watchdog, including that inspectors failed to take into consideration the impact of the Covid-19 pandemic. They argued that it was “unreasonable” for the government to cancel their contracts based on a disputed report. 

One of the providers, Quest, was successful in forcing the government to overturn an initial suspension on starts in September while it took Ofsted on through a judicial review. However, the Dorset-based firm ultimately failed to overturn the inspectorate’s grade in court, which led to the ESFA immediately terminating its contracts last month. 

It was at this point that Buckinghamshire-based All Spring Media decided to discontinue its legal claim against the agency. 

Quest, which was ordered by the high court to also pay for the ESFA’s legal costs, declined to comment on the outcome of its case and whether the provider will be forced to close. All Spring Media has said it will be able to continue as apprenticeships are just one part of its offering. 

Training providers have long complained about the harsh intervention regime adopted by the ESFA. The agency has the power to end all funding agreements for training providers when they receive a grade four Ofsted report.

A spokesperson for All Spring Media said the ESFA was provided with witness statement evidence to support its position as to why its grade four Ofsted report was “factually inaccurate and unreasonable”. 

Despite this, the agency “maintained that it could, under its contract, terminate on 30 days’ notice without reason…given that the ESFA contracts are model form agreements, this position allows the ESFA to terminate at any time without reason on notice. 

“Therefore, any improvements made by a training provider after an ‘inadequate’ rating will usually not be able to be evidenced in a monitoring visit by Ofsted because the training provider would have likely already been removed from the register of apprenticeships training providers”. 

The spokesperson for All Spring Media told FE Week its ESFA contract allowed for other “less draconian measures than termination”, such as contract monitoring, but the agency “did not accept that the other monitoring measures were proportionate steps to take in the circumstances”. 

Private providers often threaten legal action against Ofsted grade four reports and subsequent ESFA contract termination where they feel the judgement is unreasonable, but they rarely follow this through due to the significant cost involved.  

Most providers, whose business is predominantly apprenticeship training, are usually forced to close as a result. 

The most high-profile high court case against a grade four Ofsted inspection report involved Learndirect in 2017. The company was the country’s biggest training provider at the time. Its lawyers argued that inspectors had a “predetermined” negative view of the provider’s apprenticeship provision, and that Ofsted’s sample size of apprentices was not large enough to reflect the size of the company. 

Ofsted won the case which led to the ESFA terminating Learndirect’s funding contracts worth over £100 million. The provider was then forced to close, which put 1,600 people out of work and 70,000 learners needing to find other providers to complete their training. 

QVT was formed in 2012 to provide apprenticeships for the health and social care sector. It initially operated as a subcontractor but became a main provider in 2017 with its own direct funding contract. The provider employs more than 50 staff and was training almost 700 apprentices at the time of Ofsted’s inspection last year. 

QVT declined to comment on what contract termination means for its future. 

All Spring Media launched in 2011 and delivers a various skills training courses for the film and television industries. It has six staff on payroll and works with several freelancers. Almost 140 apprentices are now being transferred to alternative training providers. 

All Spring Media’s spokesperson said apprenticeships are “just one intervention in a sector that is seeing one of the biggest skills challenges in its history” so it will “continue to support a pipeline for diverse talent for the film and television industries”. 

Both companies instructed Alice Straight, a solicitor for Lester Aldridge, to handle their litigation. 

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2 Comments

  1. Bob Smith

    It would be good to see AELP doing something about this situation regarding the ability of the ESFA to terminate contracts without appeal, natural justice or indeed any duty of care from them. But I wouldn’t hold my breath as the situation has been like that for many years

  2. Quote: “Despite this, the agency “maintained that it could, under its contract, terminate on 30 days’ notice without reason…given that the ESFA contracts are model form agreements, this position allows the ESFA to terminate at any time without reason on notice.”

    This is appalling. In effect, if an Independent Training Provider questions the Department of Education and Education and Skills Funding Agency it could have its contract terminated “without reason on notice.” The policy is clearly to protect the inspection agencies at all costs because otherwise, apparently, no one can have faith in the inspection system.

    However, as systemic issues within the police force have demonstrated, when the policing of the police is inadequate it leads to huge miscarriages of justice. It also enables the ‘policing agencies’ to avoid adequate scrutiny of their internal policies, processes and personnel. As many of us have experienced with a few inspectors who seemingly have very little understanding of what they are inspecting.

    Thank you Quest and All Spring Media for your bravery in challenging this. In the words of Sonny Curtis: you “fought the law and the law won.” The injustice in how ITP’s are treated compared to other types of training providers must be challenged by AELP. I will asking why this has not been a priority in their policy reviews with senior officials and ministers. Too little and too late for both organisations and to the people who took the decision to challenge this, I again say thank you. Its becoming apparent that this is a situation that could happen to anyone of us.