College fraud a test case for mergers scrutiny

-->

The Guardian in its recent editorial LINK on the Government's newly introduced Apprentice Levy stated:

The biggest flaw is that, like so many other government initiatives, this latest attempt to boost the number of apprenticeships could have been designed to be gamed. Experience has surely shown by now that setting a target, generating the cash, and launching the scheme before systems of monitoring and assessment are up and running is an open invitation for employers to cheat.

I can reveal that a KMPG report into the College fraud has exposed serious deficiencies in the so called tightened monitoring system LINK in place, and in my view, provided sufficient evidence backing up the Guardian Opinion of 17 April April 2017 

The KPMG report which focused on the apprenticeship training provided (or rather, it appears, not provided) by Keyrail LINK was limited in scope and provided 'for information purposes only', however, beneath the bland account's language, KPMG reveal some pretty devastating deficiencies: 

•   Despite assurances that due diligence had been performed and a contract given to Keyrail Training Solutions for signing KPMG had been unable to find the majority of due diligence paper work or a signed contract

•   An increase in approved apprentice numbers from 20 to 90  was not underpinned by documentation or risk assessment

•   Learner evidence was requested from Keyrail but was delayed or not completed meaning the the College failed to comply with Skills Funding Agency's funding rules regarding ongoing monitoring

•   The College did not have a formal policy regarding monitoring of subcontractors prior to July 2015.

•   Out of a total of learner 40 files reviewed KPMG considered all were ineligible for funding as there were multiple compliance issues, including no achievement evidence

•   Of the 79 apprentices for whom funding was claimed, only 7 were recognised by the employer with whom they were supposed to be placed, Specialised Engineering Services Limited (SES)

KPMG summarise by stating they did not see sufficient evidence to demonstrate that valid learning took place in relation to the Keyrail apprentices
 
The Report went on to observe the following risks:

The College’s current subcontractor procedures are insufficient to demonstrate            compliance with the SFA overall subcontracting requirements.

The College is unable to demonstrate compliance with the SFA overall subcontracting requirements.

The College is unable to demonstrate it complies with the SFA Selection and Procurement and Entering into a subcontract rules and requirements

The College has reduced assurance over the completeness and accuracy of enrolment documentation relating to subcontracted provision. This increases the potential for errors within the subcontracted population on the ILR not being identified. In turn, this could detrimentally affect the College’s funding claim should enrolment issues be identified by any external audit of the College’s ILR

The College is unable to demonstrate sufficient controls over the monitoring of apprenticeship subcontracted provision. The inability to determine the level of outstanding review/contact evidence for all apprenticeship subcontracted learners increases the risk of ‘gaps’ in a learners on-programme activity and therefore the risk of an incomplete and inaccurate ILR, resulting in a misstatement of the College’s funding claim. This will directly impact on the College’s decision making process over the determination of monthly payments to its subcontractors. 

 If a learner is not registered or incorrect registered, then the College is at risk of not being able to substantiate a learner achievement. This will impact on any achievement funding claimed, as well as success rates.

The College is unable to demonstrate it complies with the SFA Monitoring of Subcontractors rules and requirements, and has increased risk of data completeness and accuracy issues relating to subcontracted provision

The College is unable to demonstrate it complies with the SFA Fees and Charges rules and requirements

The College is unable to demonstrate it complies with the SFA Monitoring of Subcontractors rules and requirements.

In addition, as KMPG only had available documentation going back to March 2015, it made further comments as to the implication of what it found having looked at the available documentation. However, because of the lack of documentation it was unable make recommendations:

During the course of the substantive testing, a number of observations have been identified which are recorded below. No recommendations are made to the College as Keyrail ceased trading in May 2016. The documentation retained by the College in relation to Keyrail is considered as final as there is no scope for additional evidence to be provided.

1.     Where learners are enrolled onto apprenticeship programmes that do not meet the funding eligible rules and criteria, all funding claimed is deemed ineligible

2.     There is a risk that funding claimed and/or data held in the ILR cannot be substantiated to underlying records

3.    There is a risk that where no underlying records are retained, funding claimed is deemed ineligible

4.    Where underlying records are incomplete or potentially contradictory, there is a risk that the learners English and maths enrolments on the ILR cannot be substantiated

5.    There is a risk that the funding claimed is not supported by documentation signed by the learner.

6.    There is a risk that the funding claimed is not supported by underlying records

CNWL made total payments to Keyrail for what appears to be non existent apprenticeship training of £214,572. The College discovered in early summer 2016 that the company had been dissolved.

One learner in a College telephone interview in April 2016 put it succinctly:

The course no longer going on and this was all a scam. The staff forced to go in and do the course; if not they were sacked (sic). 

In a further twist, highlighting the growing concern over apprenticeship, UCU at its annual congress adopted a resolution calling for an apprenticeship charter LINK

The TES quoted Peter Monaghan, regional secretary of the UCU Eastern and Home Counties Committee:

Certainly I would support the fact that apprenticeships shouldn’t be at the expense of a wider, broader curriculum, most definitely...and also I would say the key to the success of apprenticeships in the future is our involvement, not employers’ involvement, our involvement as unionists and educators. 

In my view, the UCU Congress motion on Apprentice charter as well as Guardian leader comment, lends strong support to the UCU branch at the College who are calling for an independent public enquiry into the admitted subcontractor fraud LINK

Backing the unanimous decision of his branch members for an independent inquiry, Indro Sen, suspended Branch Secretary at CNWL, said.
 

When students are 10 minutes late, managers instruct the class teachers to monitor their attendance. When teachers do not cross the "t) and  dot the"i" in their marked work, they are monitored by their managers and some end up under capability procedures, but when a fraud as large as £356K can take place under the very nose of SFA auditors, borough police chief, Governors and senior management teams, who monitors their performance?

Only an independent public enquiry can get to the bottom of this. Can any students' life chances be said to be in safe hands unless each and every sub-contractor is thoroughly checked out on the Government declared Sub contractor list and those checks are made public for students to see what they are getting into. Until such time, Mr. Boles should consider putting the levy scheme into abeyance.

It is not known how SFA and the college have reacted  to this call for an independent public inquiry, however, it is clear the KMPG report itself is not such an inquiry.  It is to be hoped that CWC undertook due diligence prior to the merger decision.

Greening would be wise to delve a little deeper into the merger between College of North West London and City of Westminster, before rubber stamping it. LINK   If she did so, she would only be carrying out her boss, May's manifesto promise of greater scrutiny over mergers, a bit earlier and proactively. This related to commercial mergers but should also apply to corporations as they move closer to commercial models.

Apprenticeship schemes under scrutiny as CNWL alleged fraud raises more questions

The Institute of Fiscal Studies Report on apprenticeships LINK raised a number of key issues: I draw particular attention to the highlighted issue of concern to us in Brent over the College of North West London alleged fraud by a subcontractor which led to 78 students missing out due to a non-existent course LINK:

• Although the apprenticeship levy increases taxes on large employers, the new subsidies for employers to train apprentices mean that employers will have to pay nothing, or at most 10%, of off-the-job training costs for apprentices, up to certain price caps set by the government. This will increase the incentive to employers to hire apprentices, particularly those aged 19 and over for whom employers paid at least 50% of training costs prior to 2017.

• This zero or near zero cost of training poses considerable risks to the efficient use of public money. Employers will have little incentive to choose training providers who can provide training at a lower price. Employers will also have a big incentive to re-label existing training schemes as apprenticeships.

• The target of an average of 600,000 new apprentices a year in this parliament is a 20% increase on the level in 2014–15. This large expansion risks increasing quantity at the expense of quality. Although the government is trying to increase the quality of apprenticeships, the Institute for Apprenticeships may come under pressure to approve new apprenticeships quickly. Ofsted will take on an expanded (and welcome) role with respect to inspecting training providers and employers. However, it has already expressed serious concerns about the quality of apprenticeship schemes, particularly those created more recently.

• The apprenticeship levy will put downward pressure on wages. The Office for Budget Responsibility assesses that it will reduce wages by about 0.3% by 2020–21. While only 2% of employers will pay the levy, at least 60% of employees work for employers who will pay the levy.

• The government has set every public sector employer with at least 250 employees in England a target that 2.3% of their workforce must start an apprenticeship each year. This takes no account of big differences between organisations. Unless existing employees start apprenticeships, the targets imply around one-in-five new public sector hires must be an apprentice. Such a blanket policy cannot be an efficient way to improve skills in the public sector. It risks costly reorganisation of training and inefficient ways of working. These targets should be removed.

• The government has also failed to make a convincing case for such a large and rapid expansion in apprenticeships. In seeking to justify these changes, it quotes statistics that show a collapse in employees’ training. However, better measures of training show a much more modest decline. The government also makes wildly optimistic claims about the extra economic activity or earnings such investment in apprenticeships could generate (with quoted benefit-to-cost ratios of over 20:1). While there is a clear need for a better-trained workforce, this cavalier use of statistics risks undermining what might be a perfectly sensible case for a gradual expansion of apprenticeships in areas where quality can be assured.

I can reveal that the company involved in the alleged apprenticeship scheme fraud at the College of North West London was  Keyrail Training Ltd/Keyrail Training Solutions Ltd, an Approved Apprenticeship Training Agency listed at the Skills Funding Agency.

Interestingly this notice was posted on the Companies House site revealing that it was dissolved in May 2016.

However the company remained on the Skills Funding Agency (SFA)  Declared Subcontractors List in September 2016 with an entry of £256,000 for the College of North West London. It was removed from the list in January 2017. The entry for May 2015 had been under the name of Keyrail Training Ltd and was for £100,000 for the College of North West London.

The alleged fraud was  uncovered in the summer of 2016 and the removal from the list may have followed the result of that investigation being reported to the SFA.

The extent of the alleged fraud clearly  supports the IFS concerns but also raises the whole issue of governance of the FE sector, monitoring and audit arrangements, the role of the SFA and risks associated with the privatisation of the sector and the lack of democratic accountability. There is also concern that Indro Sen, the UCU representative at CNWL who assisuously pressed for a full investigation into the issue remains suspended by CNWL management.

It reminds me of the whistleblowing by Hank Roberts, ATL representative at the then Copland High School when he uncovered a fraud at the school.

It is unclear what action has been taken by the police but it is perhaps noteworthy that Mark Gallagher, Brent Borough Commander, is on the governing body (Corporation) of the College of North West London.