My Lords, this is a probing amendment intended to explore more fully the Government’s intentions in respect of independent training providers—ITPs—and their role in relation to the provisions of the Bill. I was delighted that my noble friend Lady Greengross raised this issue right at the beginning of our debate, so it has in a sense been bookended by ITPs.
According to the Bill’s impact assessment, there were 3,737 ITPs in 2019-20, about half of them small businesses. Some 700 of these are members of the Association of Employment and Learning Providers, delivering vocational learning and employability support to 350,000 employers. They train around three-quarters of apprentices and young people on traineeships, as well as delivering adult education and programmes for the unemployed.
Some ITPs are large and well resourced, but the great majority are small, demand-led specialist businesses, often in towns and rural areas not served by colleges. There are 1,186 towns in England, I gather, but only about 170 FE colleges. Employers choose them because they are responsive and fleet of foot, as my noble friend Lord Bichard pointed out at Second Reading, and reach the parts other training bodies cannot reach, filling gaps in available training provision. The quality of their training is evidenced both in Ofsted reports and in employer and learner satisfaction surveys, with
generally higher ratings than FE colleges. As such, they are an extremely important part of the education and skills landscape, and should be fully involved in the development and delivery of LSIPs. They should also receive a fair share of the funding available under government-supported schemes, whether directly or, more often, as subcontractors to larger providers. This is by no means always the case: frequently the funding available to ITPs is capped or reduced, with the result that they are unable to deliver the level of training for which they have capacity, for which there is demand, and on which their business plans have been based.
The main focus of the Bill, in respect of ITPs, is on protecting students from the effects of providers making unplanned exits from the market and failing to complete delivery of contracted training. There have of course been such failures, some of them high-profile and resulting in learners being left with debt on their loans but no course to complete. Again, according to the Bill’s impact assessment, 60 ITPs made unplanned exits in 2019-20, but there are many reasons for unplanned exits and it is not clear how many involved scandal or fraud, or what impact there may have been on learners. I have seen little evidence to justify the unduly negative reputation of the ITP sector, nor am I convinced that the measures proposed in the Bill would resolve the problems that exist. On the contrary, I fear that they might have the opposite effect, by forcing providers out of business, or discouraging new entrants to the market, thereby reducing innovation, competition and availability of needed training. The Government’s own impact assessment for the Bill admits that the measures
“are likely to have a significant impact on small or micro businesses from a resource and cost perspective.”
There was no mention of a list of providers in January’s White Paper, and there has been no consultation on the proposal, although this is promised for next spring, by which time the Bill will no doubt have been passed. The Bill would create a new list of relevant providers, and to be eligible to receive government funding an ITP would have to be included on this list, which would require it to meet a series of conditions and to pay a fee. I have no problem with the idea of such a list, nor with its being a prerequisite for receiving government funding. There is already a register of apprenticeship training providers, including many ITPs, and a broader register of training organisations that, somewhat ironically, is being decommissioned at the end of this month.
I do worry, however, about the specific conditions likely to be required for inclusion on the list, and the fact that they appear, albeit only as possibilities, in the Bill before there has been any consultation. These conditions include requirements for student support plans, for insurance cover, for providers to be fit and proper persons, and for the provision of information to, and taking action on directions from, the Secretary of State. The Bill also makes provision for fees to be charged for entry on to the list. Some of these conditions seem perfectly acceptable, and indeed are already required under existing ESFA contracts—which is where I believe they are more appropriately based—but I would argue that imposing this additional level of centralised regulation and cost is disproportionate and potentially damaging. It is based on the idea of a unified system of protection
for all learners, without recognising the substantial differences between small independent providers and more established publicly funded bodies, such as FE colleges and schools.
There are particular concerns over the possible insurance condition. ESFA rules already require providers to maintain a range of insurance cover, including professional indemnity, employers’ liability and public liability insurance, but the Bill’s impact assessment seems to envisage a new form of insurance to offset costs to the Government in the event of a provider failure. Such insurance does not currently exist, and it is not clear how it might work in practice, let alone what it might cost. My amendment therefore proposes simply removing the mention of insurance cover from the list of example conditions in the Bill.
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Finally, there is the issue of a registration fee for entry on to the list. This would presumably not be exorbitant but, however reasonable it might be, it will eat further into the already tight margins of many smaller ITPs, without seeming likely to offer significant benefit to the recipients of their training in return—other than ultimately having to bear the extra cost. So I welcome and support Amendment 74 in the name of the noble Lord, Lord Watson, which seeks information on how the charging of this fee would be regulated.
I hope the Minister in her response to this group will be able to give some reassurance to ITPs that they will not face disproportionate restrictions or entry barriers under this Bill, and that their views will be duly sought and properly taken into account, via the planned consultation, before the proposed list of relevant providers is implemented. I beg to move.