Supplier relief: Deal to pay private training providers with no course delivery for next three months

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Training providers in the West Midlands will continue to be funded for the next three months irrespective of their recruitment levels, FE Week can reveal.

A letter sent last night from the West Midlands Combined Authority (WMCA) to its adult education budget providers (see links below) said monthly profile payments will be made to providers based on an average of their monthly earnings over the previous three months.

The announcement appears to be the first of its kind based on Cabinet Office supplier relief support due to COVID-19 and comes ahead of any news of support from the Education and Skills Funding Agency.

Last Friday, the chief secretary to the Treasury, Steve Barclay said in answer to a parliamentary question that “both the Treasury and Department for Education are exploring the impact of the current disruption with training providers” but that they are still working on “detailed operational guidance, which will be circulated as soon as possible”.

While the WMCA’s funding will be handed over regardless of delivery, their officials will “assume that providers are continuing to deliver where they can and/or are not making a profit on levels of performance below the payment amount”.

In light of these measures, the WMCA said it is “expected” that providers and any subcontractors will “not furlough employees involved in the delivery of WMCA AEB funded learning but will continue to pay them at their current rate”.

The combined authority confirmed their policy reflected the Cabinet Office Guidance Procurement Policy Note – Supplier relief due to COVID-19, published on 20 March, and “our commitment to maintaining a strong and responsive provider base”.

Cabinet Office’s supplier relief guidance states: “Central government organisations should note that managing public money prohibits payment in advance of need in absence of Treasury consent as this is always novel contentious and repercussive.

“However, in the circumstances Treasury consent is granted for payments in advance of need where the Accounting Officer is satisfied that a value for money case is made by virtue of securing continuity of supply of critical services in the medium and long term.

“This consent is capped at 25 per cent of the value of the contract and applies until the end of June 2020.”

Last week, Liverpool City Region and Tees Valley combined authorities announced they would honour their AEB payments for the rest of the 2019/20 academic year. But Liverpool’s also said “any funding deemed to have been spent inappropriately will be recovered from providers.”

Mark Dawe, chief executive of the Association of Employment and Learning Providers, said providers in the West Midlands will be “very appreciative” of the support that mayor Andy Street and his team has “offered in this very difficult time”.

“We’re also grateful to the other elected mayors for the statements which they are issuing on AEB payments and AELP is asking all MCAs to look carefully at the details of the WMCA announcement and adopt a common approach,” he added.

“The WMCA announcement exposes again the entirely contrary approach that the DfE is taking towards the Cabinet Office guidelines in respect of apprenticeships, national AEB and other skills programmes and in the absence of an explanation, we have to ask why it is refusing to comply with them.”

Lawrence Barton, managing director of GB Training – a private provider that contracts with the WMCA, told FE Week the profiled payments structure set out marks a “strong, pragmatic and sensible approach that offers training providers the financial support they need during this unprecedented period of economic uncertainty”.

“As the COVID-19 crisis unfolds it is leading to significant fluctuations in demand for various skills sets across the region,” he added.

“The WMCA’s model gives us the flexibility we need to be nimble in responding to those variances.

“More fundamentally, the model vindicates the decision to devolve adult education funding provision.”

A spokesperson for BCTG, another private provider contracted with the WMCA, said: “BCTG really welcome this commitment from WMCA to provide stability and clarity in terms of funding in the medium term.

“BCTG supports a sub-contractor supply chain of 15 providers, who are reliant on maintaining cashflow. The additional flexibilities introduced will allow us to target those most affected by the crisis, such as those needing to reskill and those who are at increasing risk of losing their jobs.”

The Department for Education said last week it would only continue to pay grant-funded colleges during the Covid-19 crisis, and that government policy “does not allow payment for services in advance of delivery”.

Six mayoral combined authority areas and the Greater London Authority had millions in adult education budget funding devolved to them in August 2019. The West Midlands Combined Authority’s annual budget totals £125.6 million.

Around £28 million of that was put out to tender and split between 21 private training providers. The rest goes to grant funded providers, such as colleges.

Important documents for WMCA providers (click to view):

Letter to AEB providers

Payment declaration

Information about Covid-19 flexibilities

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  1. Adrian Bouckley

    An interesting development which currently effects 13 lead providers and their subcontractors.
    If the lead provider was on profile prior to April presumably the 25% cap will be triggered in the coming 3 months. You then have to demonstrate that these payments will not result in the generation of a profit but if delivering 100% of your contract does not generate a profit then it is difficult to understand why an ITP is operating in the first place.

    So these arrangements will support lead providers who were presumably already below profile or those who choose or are forced to do very little from here on in. You are not allowed to furlough staff so you are potentially supporting further inefficiency. Apologies if I have misinterpreted the guidance but that’s how it appears to look.

    What arrangements have been made for subcontractors of grant providers who are presumably effected in an identical way? Are the grant providers going to make monthly payments?

    The furloughing/CBILS route that the Government have set up may not be perfect but it at least encourages ITPs to work proactively in order to survive this pandemic rather than essentially relying on a bailout.

    I’m sure these comments will be shot down in flames but I sincerely hope that the WMCA model is not replicated across the board. However fair play to them for trying to do something different.

  2. Phil Hatton

    First positive step but more important for apprentices who have been furloughed to remain in learning where a provider can support them, keeping them engaged and mentally healthy. Current rules prevent this as furloughing means being out on a break in learning and the ESFA urgently need to take action so that apprentices can see a way forward in their careers.

  3. Ian Fellows

    Seems fair enough whether or not primes will be giving money to their Sub Contractors will be the main issue as especially in the West Midlands the wonderful authority chose all profit making organisations as their AEB providers and now when the country needs them the most the community and voluntary organisations who delivered AEB in the past do not have the tools of the past to help their communities. Nice one WMCA lets hope you don’t just give the money to your primes and ensure that the WMCA has thorough checks to ensure that the organisations doing the real work ie subcontractors get their rightful share of the money and not lining the pockets of the rich prime owners.