Memorandum from the Association of Learning
Providers
Following are examples of the problems that
providers are currently encountering with regard to the funding
of the Government's Train to Gain skills programme. Many of these
can be traced back to the non-resolution of issues surrounding
the overspend on last year's adult skills budgets, whilst others
are merely indicative of the current and ongoing state of LSC
financial management.
All the examples given have been anonymised but the
details quoted are correct:
PROVIDER A
Due to last year's overspend on Train to Gain,
the LSC this year have ringfenced two tranches of contract values
within the current 2009-10 contracts—one amount which cannot
be exceeded within Periods 1-8 (August 2009 to March 2010) and
the balance for Periods 9-12 (April to July 2010). Taken together,
they represent the full contract value for the 2009-10 contract
year.
Provider A has supplied us with copies of their profiles
for Train to Gain starts for this year and last year, as follows:
Period
| Actual Starts 2008-09 | Profile 2009-10
| Variance from 2008-09 |
| 1 | 9 | 7 |
-2 |
| 2 | 58 | 7 |
-51 |
| 3 | 53 | 7 |
-46 |
| 4 | 24 | 7 |
-17 |
| 5 | 1 | 7 |
6 |
| 6 | 67 | 7 |
-60 |
| 7 | 27 | 7 |
-20 |
| 8 | 83 | 7 |
-76 |
| Sub Total Periods 1-8 | 322
| 56 | -266 |
| 9 | 78 | 266
| 188 |
| 10 | 33 | 266
| 233 |
| 11 | 38 | 266
| 228 |
| 12 | 62 | 266
| 204 |
| Sub Total Periods 9-12 | 211
| 1,064 | 853 |
| Total | 533 | 1,120
| 587 |
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The result is that due to the ringfencing of contract values
within Periods 1-8 and 9-12, the provider is being expected to
increase their start rate between March and April 2010 from seven
individuals to 266, a rise of 3,800% in one month.
In order to make this happen, the provider will have to resource
their sales force at least two to three months in advance. However,
because starts have dropped from 62 per month at the end of the
previous contract year to seven per month at the beginning of
this contract year, their sales force has been depleted due to
an inability to maintain a cost for which no income was being
generated. Operationally, this profile is therefore almost undeliverable.
However, as it is sadly very typical of almost all contracts for
Train to Gain (and indeed other strands of adult skills funding)
being issued by the LSC this year, it goes a long way to illustrate
why ALP believes that the Train to Gain will in all likelihood
be underspent this year despite having nominally gone up from
last year when it was overspent. The way that contract values
have been allocated against profiles is simply unsustainable and
makes no operational sense.
PROVIDER B
Provider B has been a highly successful deliverer of training
to a specialised industry, operating Train to Gain with a success
rate of over 95% under sub-contract through several Colleges of
Further Education. However due to the imbalanced ringfencing of
contract values between periods 1-8 and 9-12 imposed by the LSC,
most of these Colleges have now decided to completely cut any
funding to their subcontracted provision in order to protect their
own direct delivery. Provider B has applied to become a direct
deliverer of Train to Gain in its own right but was unsuccessful
in winning contracts despite its high success rates. Despite having
companies with learners ready to start, the funding is therefore
not being made available and they are beginning proceedings to
wind the company up.
PROVIDER C
Provider C, in common with all other Train to Gain providers,
has been given a contract with a maximum contract value for Periods
1-8 and another for Periods 9-12. However, their starts profile
shows no payments being made beyond March (Period 8), which effectively
means that they have been given a contract which only guarantees
them about half of the contract value for two-thirds of the calendar
year. Furthermore, of the allocation that is guaranteed, only
18% of it is profiled to cover Periods 1-7 with no less than 82%
being profiled for delivery in Period 8. This is clearly operationally
undeliverable, particularly in view of the fact that start profiles
for the following Periods have not been confirmed, making it almost
impossible to judge whether increasing the sales resource to meet
the high Period 8 starts target is in any way a sustainable proposition.
PROVIDER D
Provider D was offered a contract worth £318k at the
beginning of the 2008-09 contract year. Due to excellent performance
this was during the course of the year extended to a total value
of £527k.
At the end of 2008-09, the total contract value delivered was
£522k, less than 1% below the contracted value for the year,
and well within the 3% annual tolerance allowable. The difficulty
involved in steering contract delivery in at the end of the year
so close to an (extended) contract value should not be underestimated.
The provider was therefore rightly pleased with performance that
had not only come in on target and budget, but had maintained
excellent quality standards throughout.
The provider has now been told that £8.2k of this money
is to be clawed back by the LSC, on the basis that in the last
quarter only of the contract year they delivered 94% of profile,
ie outside of the 97% tolerance.
In Quarter 3 they had however delivered over 98% of their
profile, within the 97% tolerance. Had they withheld the "extra"
1% and instead claimed it in Quarter 4, the LSC would not now
be clawing any money back at all.
Therefore, despite delivering 99.02% of their entire contract
value, the provider is now being punished for providing accurate
and timely data in the period in which it was delivered, instead
of artificially manipulating claims to meet profiles—something
the LSC has only recently written to all providers about to discourage.
Furthermore, the provider is now in the situation whereby it is
to have money taken back from them, for work it has already satisfactorily
delivered in excess of all required quality standards and in a
timely fashion.
PROVIDER E
This London provider has been told that their contract at
Period 3 is being re-adjusted as they have underperformed by £50k,
and this amount will be taken out of their permitted maximum contract
value for the year. The provider's LSC Contract Manager has told
them that this is because 16-18 Apprenticeships have overperformed
in London, and contract monies therefore need to be reallocated
to overperforming providers who require funding.
The National Apprenticeship Service however is telling them that
there is "a significant amount" of underperformance
on 16-18 apprenticeships across London, so the provider is now
very unclear as to what the actual state of performance is in
London, and whether or not it is appropriate for them to be having
their maximum contract value reduced.
Furthermore, it has emerged that the profile the provider
has been working to is not the one the LSC are using. It is believed
that in part this has arisen as the provider was required to submit
so many reprofiles before any agreement was reached that the LSC
has lost track of which one was the "right" one. In
the meantime the provider nevertheless stands to have £50k
of contract value withdrawn.
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