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'Wasteful' changes to FE contracts will go ahead

Controversial changes to the way FE contracts are awarded are to go ahead, despite strong criticism that a series of complex rules will waste money.

The Department for Business, Innovation and Skills has finalised plans to introduce a minimum contract level (MCL) of pound;500,000 for providers that receive Skills Funding Agency (SFA) cash. The aim was to save the SFA money by reducing the number of contracts it manages.

But a raft of exemptions means that the MCL will not apply if it would lead to the loss of any apprenticeship places.

FE, specialist and sixth-form colleges, schools, universities and large employers contracted to the National Employer Service are also exempt due to the "specific nature of the contractual relationships" with the SFA.

Other employers that deliver apprenticeships could also be eligible for a one-year exemption if they can demonstrate they would be adversely affected by the contract changes.

Nick Linford, FE consultant and author of The Hands-on Guide to Post-16 Funding, said the complexity of the arrangements would create additional costs for the SFA.

"The MCL policy announcements are too late, poorly communicated and now include so many types of exemptions it will not achieve its purpose, which was to reduce SFA administration costs," he said.

Mr Linford also warned that administration costs under the new system risk being passed from the SFA "further down the food chain", using money that should be spent directly on apprentices.

The exemptions were included after objections were raised by the Department for Education, which wanted all 16-18 apprenticeship providers to have direct contracts with the SFA.

A statement from the SFA defended the changes and said the implementation of the MCL would give organisations time to make alternative arrangements to stay in business and help learners.

"Where there is a risk of specialist provision being lost, or a significant impact on the choice available in particular localities, for example, in rural communities - the agency will consider on a case by case basis whether alternative arrangements should be made," it said.

Organisations that can show that joining a consortium would be detrimental to their apprenticeships will be exempt from the minimum funding rules, it added.

A spokesman for the Association of Learning Providers, which represents independent training organisations, warned that the exemption rules set out by the SFA were open to interpretation.

"It is therefore vitally important that the SFA account managers across the regions are consistent in their interpretation; otherwise we can anticipate providers, particularly those operating in more than one area, bringing complaints to us about unfair treatment in comparison to others."

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