Subcontracting post-16 education and training with Education and SKills Funding Agency (ESFA) funding

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Closes 17 Mar 2020


About this Consultation

We welcome responses to the consultation from those working in, or with, the post 16 education and training sector, public bodies, and representatives of those otherwise involved in the provision of post 16 education and training.

By subcontracting we mean provision delivered by a third party organisation with whom the provider, directly funded by the ESFA, has entered into contractual arrangements for the delivery of a proportion of the education provision funded by the ESFA, and for which payments are dependent on student numbers and/or formula funding values.

Purpose of the consultation

The subcontracting of education and training for learners over the age of 16 is a long established and widespread practice in the sector. Our analysis indicates that currently there are 674 prime providers that subcontract education and training for 576,000 learners to 2,288 subcontractors. The total value of subcontracted provision is £484.5m which is, as a proportion of total ESFA funding, 10.6%. Given the scale of this activity, we want to be assured that it is good value for money, leads to good outcomes for learners and is regulated, managed and overseen appropriately.    

Where subcontracting is done well and for the right curriculum reasons, it can:

  • enhance the opportunities available to young people and adults
  • fill gaps in niche or expert provision, or provide better access to training facilities
  • support better geographical access for learners
  • offer an entry point for disadvantaged groups.

However, we are aware that in some instances subcontracting is not entered into for the right reasons and we continue to see cases where subcontracted provision is not appropriately controlled, overseen or managed by the lead provider.

We are committed to strengthening ESFA’s oversight of the approach to subcontracting in the sector, and reducing the overall volume of subcontracted activity, by eliminating that which is undertaken for the wrong reasons and/or is poorly managed and delivered. The review aims to improve our approach to:

  • ensure public funds are properly and effectively spent, maximising the benefit for learners
  • strengthen our monitoring and improve our assessment of risk to identify problems earlier
  • work with Ofsted to ensure that inspection arrangements for subcontracting reflect risks
  • intervene more quickly and decisively when required
  • harmonise and clarify the rules and requirements across post-16 funding streams where it makes sense to do so
  • improve oversight of subcontracted activity in the sector and improve the outcomes and experience for students
  • eliminate subcontracting that is undertaken for purely financial reasons
  • retain subcontracting that meets niche or specialised needs, improves access and provides opportunities for disadvantaged learners
  • on site subcontracting, particularly where provision is niche. This can be deployed more quickly and cost effectively to deliver better outcomes than through direct provision.

The purpose of this consultation is to hear from those who have an interest in subcontracted delivery to inform our thinking about the nature and extent of reforms to subcontracting arrangements and the timing of them. We want to implement as much of the required change to these arrangements as is practicable for the 2020/21 academic year, but recognise that some elements of the changes may require a period of transition to enable providers to adjust their existing arrangements to ensure compliance with the new rules, and to ensure that there is no disruption to learners’ existing programmes.

The proposals set out here are high level principles for operating. Final operating principles will have more implementation and application detail.  More information will be provided in our published response to this consultation.

Subcontracting touches on several aspects of the system – for example the operation of the Register of Training Organisations and the Register of Apprenticeship Training Providers. Any changes to the operation of the registers will take into account the implications for our subcontracting requirements.

There are a number of other reviews and pieces of development activity and, where relevant, subcontracting will be taken into account in that work. This includes the wider strategy for independent training providers and the reforms to financial monitoring arrangements.

Consultation Proposals

Our analysis of subcontracting declarations made via and from the information submitted on the individualised learner record and school census returns shows that subcontracting is widespread in the post 16 sector. To ensure that our changes are sensible, practical and deliverable we would like to hear from as wide a range of interested parties as possible.

For European Social Fund (ESF) provision that was awarded through a competitive tendering exercise for the period April 2019 to July 2021, some of the proposals will not apply as we recognise the delivery model for this provision differs from other types of provision. We indicate where ESF provision is not in scope in the proposals.