Subcontracting will be banned for provision funded by advanced learner loans, the Skills Funding Agency (SFA) has announced.

The move, which comes into effect for the 2017-18 funding year, “aims to protect the interests of learners who choose to fund their provision with a loan, and public funds,” according to the SFA.

The agency has also announced that providers must not enter any new subcontracting agreements for the delivery of loans-funded provision in 2016-17, other than programmes already in place for 2015-16.

“In 2016-17, any provider which holds a loans facility directly with the SFA cannot also act as a subcontractor to another prime contractor for the delivery of loans-funded provision,” the SFA statement adds.

Subcontractors that could be eligible for a direct loans facility will be invited to apply.

Stewart Segal, chief executive of the Association of Employment and Learning Providers, criticised the SFA for “spending disproportionate time on addressing a subcontracting ‘problem’ that does not really exist”.

“AELP agrees that providers should be able to take a direct loan facility if they are able, but where a subcontracting arrangements works for both a prime and a subcontractor, and more specifically the learner, then those arrangements should be allowed to continue, as they allow for greater learner choice,” he added.

The announcement comes after TES revealed last month that the biggest FE providers in the country had retained tens of millions of pounds in government funding for training that they then subcontracted to other organisations.

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