SFA will stop subcontracting of loan-funded provision

Provision paid for by advanced learner loans will have to be delivered directly by lead providers from the start of 2017/18, the Skills Funding Agency (SFA) has revealed.

The announcement was made on the SFA website this afternoon.

It said that the agency would “cease to allow subcontracting within the advanced learner loans programme from the start of the 2017 to 2018 funding year”.

This means, it added, that delivery of all loans-funded subcontracted learning aims must be completed by July 31 next year.

Providers must also “not enter any new subcontracting agreements for the delivery of loans funded provision in 2016 to 2017, over and above those which they are already be engaged with in 2015 to 2016,” it said.

Meanwhile, in 2016/17 “any provider which holds a loans facility directly with the SFA cannot also act as a subcontractor to another prime contractor for the delivery of loans funded provision,” the SFA added.

The agency also confirmed that it will be contacting existing loans subcontractors over the next week “whom it considers may meet its criteria to access a loans facility directly”.

These organisations will be invited to apply for a direct loans facility for the 2016/2017 funding year — subject, where applicable, to them entering the SFA register of training organisations and “passing the capacity and capability questions”, a spokesperson added.

Stewart Segal, chief executive of the Association of Employment and Learning Providers (AELP) raised concern about the planned changes.

He said: “AELP agrees that providers should be able to take a direct loan facility if they are able.”

But he added: “Where a subcontracting arrangements works for both a prime and a subcontractor and more specifically the learner then those arrangements should be allowed to continue, as they allow for greater learner choice.

“We should therefore monitor the situation over a longer period before making any changes, as we believe many of the examples of subcontracting that are often cited are not what we would categorise as subcontracting at all.”

Lead contractors get a loans allocation each year, which they can use up for their learners in non-funded or co-funded courses.

The learner applies for the loan, but their loan comes out of the provider’s allocation.

Lead providers can currently pass on some of their allocation to their subcontractors to use with the subcontractors’ learners, and it is this that the SFA wants to stop.

It comes after SFA funding and programmes director Keith Smith warned college leaders last November that they need to face up to a future without sub-contracting.

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