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Divide over FE contracts is causing 'immense frustration'

An "ideological divide" between two Government departments over how FE contracts should be managed is causing an anxious wait for hundreds of learning providers.

Under its efficiency drive, the Skills Funding Agency (SFA) - part of the Department for Business, Innovation and Skills (BIS) - wants to end direct contracts with providers where the current deal is worth less than pound;500,000.

It is encouraging providers to work together by sub-contracting and forming consortia to cut down on its administrative costs. But the Department for Education (DfE) believes the SFA should have direct contracts with all apprenticeship providers for 16 to 18-year-olds, which are jointly funded by the SFA and DfE.

The Association of Learning Providers has calculated that this would affect around 200 providers, compared with more than 420 under the SFA's preferred minimum contract levels change.

An association spokesman said: "We are pursuing BIS, the DfE and SFA to find out which system it is going to be. Our members need to know. There is immense frustration about the delays caused by the disagreement between the two departments."

Nick Linford, FE consultant and author of The Hands-on Guide to Post-16 Funding, described the situation as a political disagreement between business secretary Vince Cable's BIS and education secretary Michael Gove's DfE, and warned that delays and confusion over changes could lead to legal action being taken by providers who miss out.

"It's driving the costs further down the food chain," Mr Linford said. "The money might be saved by the SFA, but it is going on further administration costs and not being spent on learners.

"There is also a higher-risk profile for using sub-contractors, so they might not actually save any money overall because of the danger of fraud and having to do more audits."

An SFA spokeswoman said: "We are working closely with BIS and DfE and anticipate a position on this policy will be reached soon."

She welcomed providers' efforts in forming collaborative arrangements, adding: "This suggests the sector has taken seriously the need for more shared back-office functions in order to maximise the funding which reaches the front line."

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