College leaders have blasted new proposals that could see them pay higher awarding body fees for T Level students if they under-recruit students.
FE Week revealed earlier this week the Institute for Apprenticeships and Technical Education (IfATE) is planning to introduce a new “demand-sensitive” pricing model in its new contracts for re-licensed wave one and two T Levels.
The move has been designed to make T Levels more “commercially attractive” for awarding organisations, enabling them to achieve the profit margin agreed with IfATE when they bid for the contracts.
FE Week understands that lower-than-expected student numbers on T Levels so far, as well as high development and operating costs, have left several awarding organisations barely breaking even, or even making losses, on their current T Level contracts.
Pre-procurement documents, seen by this newspaper, indicate that a full invitation to tender will be launched by March for a new awarding organisation to run T Levels in health, healthcare science and science. Those contracts are currently held by NCFE. It’s not yet clear whether NCFE will re-tender.
This means all T Levels in the first two waves of their rollout, in 2020 and 2021, now have a timetable for re-procurement.
IfATE launched its so-called “generation two” procurement for seven T Levels in December for education and early years, construction and digital.
The new contracts will feature a “demand-sensitive” adaptive pricing model, which means awarding organisations can charge providers higher fees if student numbers are lower than expected. Fees could also be reduced if student numbers are higher.
Awarding organisations with generation two T Level licenses will be allowed to make a “one-off adjustment” to the entry fee it charges providers if the projected number of students increases or decreases over the generation two contract term.
ABS ‘not helped’ T Level recruitment
FE Week reported in October that several colleges had abandoned some T Level courses due to low student uptake.
College leaders have also expressed concern that the introduction of the Advanced British Standard, announced by the prime minister as a successor qualification to A-levels and T Levels, will hit student interest in T Levels.
James Kewin, deputy chief executive of the Sixth Form Colleges Association, told FE Week there was “no justification” for increasing awarding costs amid already rising fees from awarding organisations, and the factors affecting T Levels that are out of colleges’ control.
“Schools and colleges should not bear the risk of national T Level numbers being lower than expected. Our members already pay a significant and growing amount in fees to awarding organisations and there is no justification for introducing further cost and uncertainty into the system.
“The government’s announcement that T Levels are being scrapped has not helped T Level recruitment. Colleges and schools should not have to pick up the tab for that, or for making T Level contracts more commercially attractive,” Kewin said.
Ministers are standing firmly behind T Levels despite the prime minister announcing they are set to be replaced by the Advanced British Standard in the next decade.
Writing for FE Week in October, skills minister Robert Halfon said, “This is not the end of T Levels, which will be the backbone of the new [ABS] qualification. The Advanced British Standard will build on the success of T Levels.”
IfATE operates a single-license model for the technical qualifications in each T Level, meaning that one awarding organisation is responsible for updating content and assessment materials, providing training to teachers and provider staff, quality control, and assessing and grading students.
Catherine Sezen, director of education policy at the Association of Colleges, said, “Colleges have faced many questions from prospective students, parents and carers about the longevity of T Levels following the prime minister’s announcement of the Advanced British Standard.
“Regarding the adaptive demand sensitive [pricing] model, colleges need to have reassurance that any price increases are not going to be passed on to them.”
New contracts will be awarded for five years, with the option for up to three annual extensions, overlapping with level 3 qualification reforms and the development of the Advanced British Standard.
Start dates for teaching of the newly re-licensed T Levels will be staggered.
Students will be taking new generation 2 T Levels in early years, construction and digital from September 2025, while the health and science T Levels won’t be ready for teaching until September 2026.
The awarding organisations that currently hold T Level licenses can re-tender, though the generation 2 contracts do make provisions for staff to be transferred under TUPE regulations if a new awarding organisation takes over.
Documents also state “there will be a need for constructive collaboration” in the event of an overlap from one T Level license holder to another.
Interested awarding organisations have been provided with DfE estimates of health and science T Level numbers over the generation 2 contract period. They currently predict 32,400 entrants to the T Level in health over the five years, 9,700 entrants to the T Level in healthcare science and 16,900 to the T Level in science.
‘Adaptive’ pricing locks in awarding body profits
If student numbers don’t reach forecasted levels, providers could be left fitting the bill.
Chris Morgan, deputy director for commercial and business analysis, told FE Week: “The adaptive pricing (AP) model has been developed to make sure T Level contracts remain commercially viable in support of quality delivery for the young people taking these gold standard programmes.
“In finalising arrangements for these procurements, IfATE and DfE have ensured the contracts provide security for learners, providers and awarding organisations. Colleges will always have the best of their students at heart and enrolment decisions should never be made against students’ better interests.”
FE Week understands the Department for Education will recalculate student number projections after the first two cohorts of generation two T Level students have enrolled, but ahead of cohort three. These contracts will be for at least five annual cohorts.
If forecasted student numbers are higher by more than 15 per cent from what was in the tender documents for the contracts, the awarding organisation will be allowed to lower the entry fee it charges providers. Vice versa, if the new projections are 15 per cent lower, the entry fee can be increased from cohort three onwards.
Procurement documents state: “Where the updated projection is 15 per cent or more below the projection of total learner volumes in the tender documents, the authority will calculate an entry fee, being the maximum level to which the supplier [awarding organisation] will be entitled to increase their entry fee for learners with effect from the commencement of cohort three, for the remainder of the contract term.”
The fees paid by colleges and providers will, according to the documents, “be set at a level that would maintain the opportunity for the supplier [awarding organisation] to achieve the percentage profit margin for the contract established in their pricing schedule.”
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