The entire £1.5 billion adult education budget should be put out to tender owing to “persistent annual underspends and too much poor-value subcontracting”, the Association of Employment and Learning Providers has said.

It wants the “now totally discredited system” of allocating funds abandoned, including in devolved areas, which are set to take control of half the AEB from September.

Analysis by the AELP shows a budget underspend of £63 million in 2016-17 and an estimated underspend of £76 million in 2017-18 – a year in which private providers could only win AEB cash by bidding in a £110 million tender, while colleges had their contracts automatically renewed.

We can’t afford to tolerate any more the poor value being delivered

Colleges were, however, allowed to bid to gain extra funding, and FE Week research published last week showed that, of those colleges who won in the procurement, they underspent their original procured allocations by 26 per cent.

In stark contrast, all other providers exceeded their initial contracts by 31 per cent.

Moreover, four of the 19 college tender winners failed to deliver any of their procured AEB funding, and admitted that their non-procured contracts were sufficient to meet demand.

AELP estimates that in the same year, just under a quarter of total AEB was subcontracted, “essentially by colleges to independent providers for the latter to deliver adult skills provision”. 

A spokesperson said that while good AEB subcontracting “plays an important role, it is AELP’s view that too much subcontracting is not being driven by strategic planning designed to benefit local communities”.

“This results in less money reaching frontline training because funding is being swallowed up by management fees and undesirable brokerage,” he added.

A new policy paper by the AELP has also described how the devolution of the AEB for 2019-20 has resulted in “major changes” to the way the funding is being allocated and procured across England, which has led to “unintended consequences”, particularly for private training providers.

There is now a risk that “flexible, high-quality and specialist adult education and skills provision may be removed from areas, leaving gaps for learners and potentially having a detrimental impact on the social mobility of unemployed adults and adults in employment looking to progress”, it said.

The Greater London Authority and six other mayoral combined authorities are due to get control of half the country’s total AEB funding from 2019-20.

Nearly all of the devolved areas have procured anything between 22 and 30 per cent of their allocations. But one, Tees Valley, has put all of its devolved AEB out to tender.

The AELP said a 100 per cent procurement approach for the national and the devolved AEB would be an “effective way to ensure the funding is directly available to those providers who meet the local needs for individuals and employers”.

Under AELP’s proposals, all provider groups would be required to bid for “realistic” funding amounts based on their capability to deliver against the priorities set out under each area’s skills plans and emerging Local Industrial Strategies.

The association has also called for greater transparency around the level of AEB that is being subcontracted, with twice-yearly reporting by the authorities and agencies of the relevant data.

AELP’s chief executive Mark Dawe  (pictured) said: “The uncertainty over Brexit means that it would be foolish for anyone to get their hopes up on what the Spending Review might yield for further education and skills. 

“Therefore we can’t afford to tolerate any more the poor value being delivered under the adult education budget. By moving to full commissioning, more adults in local communities are likely to receive the support they need to secure sustainable employment.”

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