Rail provider terminated amid combined authority funding dispute

A rail engineering training provider is set to close after a combined authority suddenly terminated its adult education contract amid a dispute over “unsatisfactory” funding claims.

GNR Training has been left effectively bankrupt after Cambridgeshire and Peterborough Combined Authority (CPCA) stopped paying the provider in February after accusations of “serious non-compliance” with its rules were made.

But GNR, a family-run business that delivers short adult-education courses, has strongly refuted the authority’s allegations and even claims the provider has itself been underpaid by officials over the past three years.

GNR is now attempting to rally its local MP to intervene in what it claims to be a “stitch-up” situation in which it was “set up to fail”.

More than 30 rail engineering learners have been left in limbo as a result of the stand-off.

‘Unsatisfactory’ use of funds

CPCA began contracting with GNR in the 2020/21 academic year and entered into a direct contract worth £82,000, having spent a few years providing freelance teaching for other providers.

The Sheffield-based firm opened a new training centre in Peterborough and delivered a fresh contract the following year worth £477,000 in 2021/22, before securing a five-year contract, which began in August 2022, worth millions.

It delivered a 21-week level 3 diploma in engineering technology, as well as previously teaching a 12-week level 2 diploma in rail engineering, but the rug was pulled when CPCA terminated the agreement in April.

The termination followed an audit of GNR, commissioned by CPCA and carried out by Mazars, between September 2022 and the end of January 2023, which concluded there had been an “unsatisfactory use of funds”.

The audit report, seen by FE Week, said that there was £95,862.17 overpaid by CPCA for National Skills Fund (NSF) money, with just over £53,000 in adult education budget cash claimed over the agreed contract value by GNR.

The breach of contract notice said that achievement payments had been claimed in relation to free courses for jobs (part of the NSF), “without any evidence to support such claims”.

CPCA has now invoiced GNR for £84,539 to recover free courses for jobs funding.

In addition, CPCA said that GNR had failed to notify the authority of a change in circumstances, namely a suspension of direct claim status (DCS). DCS allows centres to claim certification of learners without waiting for external quality assurance.

The agreed contract for 2021/22 totalled £477,640, but GNR claimed £529,120 on its individualised learner record.

In a response to a Freedom of Information request by GNR, Cambridgeshire and Peterborough said: “The combined authority will only pay up to the contract value, irrespective of claims made via the ILR, unless an agreement has been reached to vary and increase the contract value.”

‘Set up to fail’

But GNR has hit back at the authority, claiming that it has been underpaid to the tune of about £110,000.

The provider asserted that the contract value did not account for CPCA uplift payments for learners.

GNR claims those uplifts included a flat £600 per learner because they were considered required skills for the area, as well as area and disadvantage uplifts that were based on learners’ circumstances and calculated as a multiplier.

GNR claimed it was “set up to fail” because CPCA had set a target number of learners that, if achieved, would exceed the contract value in 2021/22.

Rachael Bull from GNR told FE Week: “The need for rail people is phenomenal, it is off the chart. Now there is a training company that is wiped off the face of the planet – that was training good engineers that had jobs to go to – the industry as a whole suffers.”

GNR disputed CPCA’s claims that there was no evidence for free courses for jobs learners, saying that it did provide evidence and was unclear why it was not accepted.

Furthermore, internal quality assurance documents between the awarding body EAL and GNR, seen by FE Week, suggested GNR did have DCS for its level 3 offering.

The provider has also contested the audit findings. It said the NSF overpayment was because CPCA believed that, without DCS, the certificates were void and therefore claiming for learners who had not completed. On the AEB claim, GNR insisted that a variation in the contract agreed by the authority wasn’t taken into consideration.

A GNR FOI request also showed that only about £37,000 of the £94,368.91 in completion payments had actually been paid by CPCA.

Bull said the firm has not received payment since February and, had it known of an intent to cease its contract, could have completed learners and found additional contracts elsewhere.

Multiple attempts to see reconciled accounts to determine which completions had been paid for had allegedly fallen on deaf ears.

She added: “If they [CPCA] had concerns about our performance, why did they waste more taxpayer money on giving us a prime contract only to end it in four months and strand the learners?”

Rallying support

GNR contacted the Education and Skills Funding Agency (ESFA) in a bid to investigate, but said the ESFA confirmed the matter was for CPCA to deal with.

Peterborough MP Paul Bristow did not respond to FE Week’s requests for comment.

CPCA said it was unable to comment as the GNR case was an “ongoing matter”.

GNR and CPCA are due to meet today (Friday) to further discuss the dispute.