Governance The Lounge - General Chat

Terminate Your Contract – Coincidence or Not?

So today, 12th May 2021 the ESFA have issued their guidance on the process for termination of provider contracts. I do not say REVISED because to the best of my knowledge, they have never issued any before nor did the SFA do before them.

Again, you cannot argue that any guidance that provides clarity should be welcomed by the sector but to me there are some concerning messages in the document and for providers most fundamentally one major omission that has never been challenged but should be by the appropriate provider bodies. If I was paying my membership fees to a provider body, I would be beating down the door asking for strong representation – but I won’t hold my breath. 

The core of the relationship between the ESFA and providers is the contract which is subject to annual renewal and signature. For those of us who have been in the sector for many years, whilst any contract should be negotiable – I have never known any PTP successfully able to negotiate changes to the contract and only one large employer having been successful in changing the contract terms. It’s put simply a take it or leave it contract – consistent with the attitude of the ESFA and the people within it.  

As a leading QC once said to me many years ago ‘remember you don’t have to sign the contract because the provisions are not balanced.’ In return I said, ‘but I don’t have a business unless I sign the contract’ and his terse response was ‘so live with the consequences then’. I will return to this later. 

The document sets out the process for termination and emphasises the EXIT meeting. However, ‘if required’ is neatly inserted into the document. Call me cynical but the decision to hold an exit meeting will be at the discretion of the ESFA and not a natural part of the process. I know of over 200 PTP’s that have had their contracts terminated within the past two years, many of them under the radar – and very few of them have had the privilege of an EXIT meeting. That should not be the norm!

Is it a surprise or coincidence that this document has been issued the day after ROATP re-opens and also the day after providers have started to get communication from the ESFA about being on the register and not enrolling learners over the past six months – I don’t think it is co-incidence. I have had numerous providers on the phone who have had their email from the ESFA in the past 24 hours. 

Does the ESFA not realise we have had a pandemic and providers who may have been looking to expand Apprenticeships and were admitted onto the register in March 2020 have had little chance to make a start – indeed I would argue that starting Apprenticeship delivery in this period would have been exactly the wrong decision for a board of directors to make.  

I do welcome the guidance about distributing learners when a provider fails and the need for this to be planned properly and that the ambulance chasers should be removed. However, in my experience Providers genuinely offer to help from a real perspective of helping learners and employers – most, often with little or no financial advantage of doing so and picking up a hole heap of rubbish along the way. BUT the ESFA need to operate more quickly. It is months before the ESFA get into gear with little or no regard for the welfare of the learners or employers. The system will only work if the process is planned, smooth and efficient. 

These is clear evidence of the ESFA starving businesses of cash to in essence force insolvency or collapse based at best vague investigations – resulting in a contract termination after insolvency. I am sure the ESFA can claim they never terminated the contract and were simply acting after the event; but they know what they are doing because there are too many examples of it happening almost on a weekly basis. They have no regard on the impact of the staff or indeed the learners or employers. 

So, turning back to my QC discussion referenced above. The biggest issue with the guidance and the contract itself is ‘there is absolutely no right of appeal and the ESFA’s decision is final’

The ESFA know this very well – but many providers don’t. Natural justice doesn’t apply in this sector with Judicial Review beyond the pockets of 99% of providers and it is too late anyway when you have been starved of cash by being put on hold for starts or payment suspended for existing learners. 

So, I close this article with the quote ‘caveat emptor’. Buyer beware – because in this sector the ESFA who ironically is the buyer have just confirmed they can do what they like, how they want to with no recourse to natural justice. 

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