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Training providers 'facing meltdown' as cash box is locked

Our company, Qube, operates in a single business sector: work-based learning. We deliver programmes and qualifications funded by the Learning and Skills Council, through Train to Gain and apprenticeships, and are focused on supporting the objectives as laid out in the December 2006 final report of the Leitch review of skills.

Train to Gain was launched nationally in August 2006, and the first year was challenging for all concerned. Providers were pushed hard by the LSC to engage with maximum numbers of employers and learners.

By the start of the second year, in August 2007, providers were being encouraged to engage and enrol learners at the highest possible levels, told not to worry about maximum contract values and reassured by LSC regional directors that all training work completed would be funded.

At the start of the third year, the approach by the LSC was even more aggressive, with advice and persistent requests to build the learner numbers and the capacity to deliver. LSC directors and senior staff were consistently making these statements.

With no forewarning, on March 31 this year, all training providers received letters from the LSC regional directors to inform them that maximum contract values could not be exceeded for Train to Gain or apprenticeships in 2008-09.

At Qube, we are fortunate that we have sufficient maximum contract values to continue enrolling learners and to fund most of the on-programme and completion payments for the rest of this year.

We know this is not the case for many other training providers.

The news has had a catastrophic effect on the sector and it will certainly place a number of training providers' businesses at risk. For those who can survive, including Qube, it will be necessary to reduce the sales staff and, later, the number of assessorstrainers.

It appears that the change of policy has arisen as a result of recognition that budgets would be exceeded.

Tony Allen, LSC regional director for the South East, told a meeting at the Kidlington office on May 7 that he had warned the LSC national office in December of the possibility of overspending. The response was "Don't worry about it and keep going."

This is merely a single regional example of how the situation has been managed by the LSC. While there are significant regional variations, the issues relate to a national scale.

It follows that there will be fewer learners. The change in policy means the sector is facing meltdown. These changes will render the system increasingly complex for employers and significantly reduce the choices available to them as many providers may be unable to weather the storm.

The LSC's policy change has been sudden and extreme. All training providers are reviewing their strategies, and some have been forced to take immediate action. Some have stopped all learner recruitment until August; that's four months with no new learner starts. Some have stopped learner recruitment in certain regions or on particular contracts.

Some have a shortfall in funding to cover their existing learners' on- programme and completion payments.

Nearly all providers have put a freeze on staff recruitment. Some have started the redundancy process with their business development teams and are taking advice with regard to delivery teams. Some providers are seeking to subcontract with others to cover their shortfall in maximum contract values.

The sector is awash with rumour and speculation. Senior managers are wading through the information available, meeting as many LSC representatives and other providers as possible to access intelligence.

This is not a productive way to run a business. We can only conclude that this is not supporting the UK Commission for Employment and Skills' strategy, is not helping employers and, most of all, is not helping the people who could be receiving skills development.

Debbie Gardiner, Managing director, Qube Qualifications and Development.

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