A mergers and acquisitions specialist has hit out at the government after his group of training providers’ skills funding contracts were terminated for a “contentious” reason, forcing them to go bust.
BEI Education Group Ltd and its three subsidiaries – Best Practice Training and Development Limited, Leaders in Business Limited, and DNA Apprenticeships Ltd – have filed for insolvency with a combined loss of around 50 jobs.
It’s unclear exactly how many apprentices and learners are currently on their collective books and will need to transfer to alternative providers, but their most recent Ofsted reports show the providers had well over 1,000 individuals between them.
David Kitchen set up BEI Education Group in 2019 to act as a holding company as he acquired several commercial and apprenticeship training providers to operate in different sectors such as retail, care and IT.
However, all providers under the group had their register of apprenticeship training providers (RoATP) refresh applications rejected this year. Best Practice Training & Development Limited also had its near-£500,000 adult education budget (AEB) contract – awarded in July 2021 – terminated by the Education and Skills Funding Agency (ESFA).
Kitchen claimed there was no financial or performance issues with the providers themselves, two of which have received positive outcomes in Ofsted monitoring visits.
He said the ESFA decided to no longer contract with any providers under the BEI group because it had to put another separate provider – Create Care Training Ltd – into liquidation two years ago.
Kitchen told FE Week his firm took over Create Care Training while it was failing to save it from going under. But, his attempt was unsuccessful, and the firm went into liquidation in late 2020.
All affected learners as well as staff were placed elsewhere as the provider closed down – an effort that Kitchen said led to the ESFA sending a letter of thanks.
He said it “seemed like a clean exit”, although he was expecting clawback of some funds which he claims has not been requested by the agency.
His other providers have continued delivering government-funded training as well as winning contracts, which made the ESFA’s sudden rejection of RoATP reapplications and AEB termination this year bemusing.
“The agency rejected the refresh because of what happened with Create Care back in 2020,” Kitchen told FE Week.
“From our point of view, it is quite contentious, because shareholders are not responsible for the debts of a company, and a parent company is not responsible for the debts of its subsidiaries. In this case, we took on a struggling company back in 2020 with good intentions and then it closed; other companies in the group were judged on this event in 2022 without any direct connection or common directorship.
“A lot of people lost their jobs, which is very upsetting.”
He said there were no investigations or audits into any BEI’s providers.
Kitchen continued: “In fact, in the summer of 2021 we spent a lot of time working with the ESFA to help rescue a very specialist niche provider that worked with struggling learners, but despite putting together a very strong business case the ESFA rejected it, and closed it down anyway displacing a lot of staff and learners as a result.
“And strangely enough one provider – Best Practice – was issued an AEB contract eight months or so after Create Care had gone down. That AEB contract was on track in summer 2022, there were no issues, and they didn’t take that AEB contract away at the same time as the RoATP. They said it was unrelated. Four months after they took the RoATP away from Best Practice (in May 2022) they confirmed the new AEB contract value for 2022-23 then they took it away in July. Two weeks later they sent the new 2022-23 contract to be signed. Absolutely bizarre.”
The ESFA declined to comment on BEI’s RoATP reapplications but told FE Week as part of its assurance checks, the agency checks if any directors in control of the bidding provider are subject to the “funding higher risk organisations and subcontractors policy”.
Under the policy, the agency can terminate contracts where the director of a provider “is the subject of insolvency or winding-up proceedings”.