Minister stands firm as tensions grow over provider contracts axe

11th March 2011 at 00:00

FE minister John Hayes has said he will "prevail" in scrapping contracts for small apprenticeship providers for reasons of efficiency, despite objections by the Department for Education (DfE).

As the deadline for colleges and training providers to confirm what apprenticeships they would provide passed last month, the Skills Funding Agency (SFA) was forced to allow more time because ministers had still not resolved whether a pound;500,000 minimum level would apply to apprenticeships for teenagers.

While the agency thinks it can save money by dealing only with a smaller number of large providers, there are concerns that creating chains of subcontractors could be a fraud risk. The agency admitted discussions "at the highest level" of the DfE and the Department for Business, Innovation and Skills (BIS) were continuing as the deadline came and went.

But Mr Hayes, who is responsible for apprenticeships within the DfE in addition to his FE and skills duties at BIS, said he would have the final decision. He denied any fundamental disagreement between the Government departments and said: "I only have one view, and my view in the end will prevail. That view is that it is right that we raise the minimum contract levels."

He said that because some "niche" providers might be put at risk by the decision he had asked the SFA to consider possibilities for protecting them in some instances, such as providers in rural areas.

"I've asked the SFA to work with the National Apprenticeship Service to look at ways we can retain this provision," he said.

Under pressure to reduce central costs, the SFA is hoping to cut the proliferation of small providers with low-value contracts: about 60 per cent of providers are above the threshold and receive 96 per cent of around pound;3.8 billion in funding. The remaining 644 providers share just pound;132 million, according to last year's allocations.

But for small providers, it means becoming a subcontractor to a larger firm, which can charge tens of thousands of pounds in management fees. Those providers protest that the change effectively means passing on administration costs to them.

The deadlock over the minimum threshold is not the first time that BIS and the DfE have clashed, with the two departments also having differing visions of how 16-19 college provision should be funded.

That round was won by the DfE, with the establishment of a future Education Funding Agency in 2013 to cover all education for under-19s.

Mr Hayes said initially that they had not abandoned the Conservative manifesto plan for a revived Further Education Funding Council, responsible for college provision at all ages, although eventually the SFA was restricted to post-19 funding.

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