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This publication is available at https://www.gov.uk/government/publications/esfa-assurance-work-on-post-16-funding/common-findings-from-funding-assurance-work-on-post-16-providers-and-institutions
About this report
The Education and Skills Funding Agency’s (ESFA’s) Provider Market Oversight Assurance Team (PMOA) perform an annual programme of assurance work on post-16 funding claimed by providers. This report provides details of common issues identified during assurance visits on the following programmes:
- 16 to 19 study programmes
- adult education budget (AEB)
- Advanced Learner Loans
The report also includes generic findings that apply to multiple programmes on additional learning support and sub-contracting.
The primary purpose of the work performed by PMOA is to verify the completeness and accuracy of data provided in support of the funding claimed. ESFA produces a range of documents, which set out the funding rules for different funding streams. Further details can be found in appendix A.
At the conclusion of each assurance visit, the provider receives a report detailing areas of non-compliance and recommendations to address these. In cases where funding and/or data errors are identified, the provider is required to correct their learner data, so that adjustments can be made to payments, where appropriate. Where it is not possible to do this on the individualised learner record (ILR) and funding is at risk, an invoice is issued, or funds are recovered by offset.
This report shares details of common issues arising from the programme of funding assurance work completed, relating to 2017 to 2018 funding year, to raise awareness with providers and improve compliance with the relevant funding rules.
Who is this report for?
This report is for:
- principals, managers and governing bodies in schools with sixth forms, colleges (general further education, sixth form, agricultural, specialists etc.) and independent training providers, to ensure they avoid the types of issues commonly encountered
- auditors, advisors and provider bodies, the Association of Colleges (AOC) and Association of Employment and Learning Providers (AELP) for raising awareness of issues to their members and clients
For the purpose of this report, we have described all colleges, independent training providers and institutions as ‘providers’ and have used ‘learners’ as a generic term for learners, students and apprentices funded by ESFA.
The individualised learner record (ILR) is a learner level data return that publicly funded providers must collect and return at specific periods for each funding year. The ILR is the primary data source used by ESFA to make payments to providers and by auditors to reconcile against the evidence held by providers at learner level. Therefore it is essential that the ILR reflects the information and evidence held within the learner files.
We expect providers to properly and accurately maintain ILR data and other learner documents and evidence, as required by our funding rules. ILR transactions, including learner starts, withdrawals and breaks-in-learning must be recorded promptly and accurately, so that provider ILR data accurately reflects the providers’ learner population at any point in time.
Providers must ensure that their ILR data is regularly reviewed to ensure that it is accurate. We have tools which we expect providers to use to test the credibility of their data frequently (that is, at least monthly). The tools include the funding information system (FIS) and provider data self-assessment toolkit (PDSAT).
PDSAT analyses the ILR data and produces reports that providers can use to identify and investigate potential anomalies in the data. Further information can be found in appendix A.
Many funding and data errors identified during assurance visits could be prevented if providers review their learner data in these reports for completeness and accuracy throughout the year.
16 to 19 study programme (including high needs)
The incorrect recording of planned hours on the ILR is the cause of the majority of funding errors identified for the 16 to 19 study programme. There are a number of different reasons why these errors occur, some of which can result in an underclaim of funding as well as overclaim:
- Planned hours do not reconcile to the evidence held. For example, hours stated on the learner’s timetable do not match those in the ILR; no evidence of learning against learning aims are recorded on the ILR or individual learning plan; and incorrect start and end dates.
- One of the most common errors arises from learners enrolled on distance learning provision. The planned hours on the ILR are not always supported by timetables or attendance evidence usually leading to over claims in funding.
- Where a learner withdraws from a learning aim within the first 42 days of the study programme, the remaining planned hours must be amended; in some cases, the planned hours had not been amended correctly, and this led to funding overclaims.
- Planned hours for learners enrolled on study programmes of less than 450 hours and between two and 24 weeks duration, who had completed, transferred or withdrawn within the first six weeks must be amended to match the actual hours delivered. Where providers had not updated the ILR to reflect this requirement there was an overclaim.
- Instances were noted where the core aims were flagged incorrectly on the ILR; this would have implications on funding claims in future years as it is used to calculate the retention factor.
- Activities that are not eligible for funding, in particular self-study, are included in the planned hours recorded on the ILR.
- Planned hours are incorrectly calculated or recorded, resulting in a change to the funding band.
- Planned hours are not accurately apportioned over two funding years.
There were duplicate records on the ILR for learners, resulting in funding being incorrectly claimed twice.
Some learners did not meet the start qualifying period for their programme of study, because they had withdrawn. Their evidenced actual last day of learning did not meet the minimum required period. This resulted in a funding error where the full planned hours were claimed for the aims that were withdrawn.
A number of high needs learners were ineligible for study programme funding, as they were aged 19 years or older at the start of the programme and did not have an education, health and care (EHC) plan.
Data issues, which could lead to funding errors
Condition of funding
All providers delivering 16 to 19 study programmes have to apply the condition of funding requirements set out in the funding rules. Providers which do not comply with these requirements may find that their lagged funding allocation is reduced in future years if they breach published tolerance levels.
The main issues identified in respect of condition of funding were:
- exemption codes recorded incorrectly or omitted from the ILR
- learners not undertaking an appropriate learning aim or enrolled onto a learning aim that they have already achieved
- inaccurate recording of the learner’s prior attainment level and grades
- where learners were considered to be exempt, there was no evidence to support the exemptions was not evidenced in line with the funding guidance requirements
Qualification hours or non-qualification hours and planned employment, enrichment and pastoral hours
The incorrect recording on the ILR of the split between planned qualification hours (planned learning hours) and planned employment, enrichment and pastoral (EEP) hours is a common data error noted during assurance visits.
This issue usually arises from providers not fully understanding which learning aims contribute towards qualification or EEP hours, or not capturing sufficient details on the individual learning plan and other supporting documentation to evidence how the planned EEP hours have been calculated, for example, the learner’s timetable and attendance records required to support the ILR data.
It was noted that the code used for work experience was recorded in the ILR without evidence of any work experience taking place. The work experience code must not be used under these circumstances.
Data quality and compliance
Individualised learner record (ILR)
The ILR is the primary data source used by ESFA to make payments to providers. It is therefore important that the ILR reflects the evidence held on the individual learning plan, the learner’s timetable and the provider’s attendance records, and that this is consistent across core documentation.
Particular attention should be paid to the correct recording of learning aims, planned hours and the split between qualification and EEP hours, start and planned end dates, actual end dates, and achievement outcomes. Any changes or amendments should be recorded and evidenced within the appropriate documentation.
We have identified common areas of concerns relating to apprenticeships starting before 1 May 2017, “carry-in apprenticeships”, and to new apprenticeships starting after 1 May 2017, “new starts”.
Recognition of prior learning
The main issue causing funding errors in this area for both carry-in apprenticeships and new starts relates to providers claiming funding without taking into account the learners’ prior learning including prior qualifications for apprenticeships.
This may mean that learners were exempt from part of their programme or should have had the funding reduced through the ‘proportion of funding field’ on the ILR.
Often, the achievement of prior qualifications relates to learners that hold GCSEs for which the provider is incorrectly claiming funding for functional skills. Other situations arose where learners had achieved units and progressed onto other qualifications, which required the same learning, and their previous learning was not taken into account.
For new starts, this would require a reduction to the total negotiated price recorded on the ILR.
For carry-in apprenticeships, there were some learners with prior attainment at level 4 that meant that they were ineligible for funding. Learners who already have a qualification at level 4 or above are only eligible for funding for a higher apprenticeship at level 5 or above, so any other programme or learning aim listed will result in a funding error.
Evidence of the start of learning
Another common funding error occurs when funding is claimed for learners’ continued participation on the apprenticeship, but this cannot be confirmed from the evidence of learning activity, usually for periods of learning, or occasionally from a learner’s start date. The start date is important as it is when funding starts. It is not the enrolment date if no learning has taken place on the enrolment date.
For learners who have not achieved their qualification, or are yet to achieve, this is a recurring issue found each year and accounts for a significant proportion of funding error. This applies to carry-in apprenticeships and new starts.
19+ learners on apprenticeships starting before May 2017
Full funding was claimed incorrectly for learners who were aged 19 and over and not entitled to full funding. Providers should only claim co-funding for these learners.
There were a number of apprentices who were not employed when they commenced their apprenticeship programme. Therefore they were not eligible for funding. This applies to carry-in apprenticeships and new starts.
English and Maths
For carry-in apprenticeships and new starts, some learners who had not previously achieved a level 2 qualification in English and Maths were not enrolled onto the correct aim. Where learners had completed their level 1 in English and Maths, there were cases where there was no documentary evidence that they had been offered progression to study for a level 2 qualification.
Those with prior attainment of English and Maths at level 1 were not studying for level 2, which is now mandatory under the funding rules for apprenticeships, as we expect all apprentices to work towards level 2 in these subjects and to take the assessment for the achievement of level 2. This applies to new starts.
For new starts, all apprentices must spend at least 20% of their paid hours engaged in off-the-job training.
In many instances, there was a lack of documentary evidence to demonstrate how this was planned and how this could be achieved within the available time, as well as the details of activity that comprised off-the-job training.
In other instances, there was no evidence, or insufficient evidence, of the off-the-job hours delivered. This is an essential criteria for funding, and if this condition is not met, the whole apprenticeship for that learner is ineligible for funding.
Providers must evidence the details of how the 20% off-the-job training, which does not include English and Maths, will be quantified and delivered. There must be a documented plan of delivery within the commitment statement and evidence of delivery taking place against that plan.
Apprenticeship agreement and Commitment Statement
For new starts, providers must ensure there is a signed apprenticeship agreement in place, which is an agreement between the employer and the apprentice, and a Commitment Statement, which is between the apprentice, the provider or the employer-provider and employer, at the start of the apprenticeship.
The Commitment Statement between the provider, employer and apprentice is a new requirement and an essential document. The Commitment Statement and apprenticeship agreement must be distributed to all three parties (training provider, employer and apprentice). Any changes or amendments, such as breaks in learning and changes in employment, must be recorded and evidenced within the appropriate documentation and updated on the ILR.
The information recorded on the Commitment Statement must reconcile with the apprenticeship agreement and the ILR. The absence of this evidence may result in a funding error.
For new starts, the provider must retain evidence to confirm how the total negotiated price is calculated for each learner and it must be clear that only eligible costs have been included. In some cases, the negotiated price recorded on the ILR includes elements that are not eligible for funding.
For both carry-in apprenticeships and new starts, apprenticeships that do not meet the minimum duration are one of the most common errors. This is an essential criteria for funding, and if this condition is not met, the whole apprenticeship for that learner will be ineligible for funding.
Funding errors occur when funding is claimed for learners’ continued participation on the apprenticeship programme, but this cannot be confirmed from the evidence of learning activity, usually for periods of learning, or occasionally from a learner’s start date. This is a recurring issue found year-on-year and accounts for a significant proportion of funding errors. This applies to carry-in apprenticeships and new starts after 1 May 2017.
Payment of employer contributions
Non-levy employers are required to pay a 10% cash contribution towards the cost of the agreed apprenticeship and the total of any negotiated price over the funding band maximum. In a number of instances, it was noted that there was no evidence that employers had been invoiced for the 10% co-investment or the value of negotiated price over the funding band maximum.
There is a waiver of co-investment for small employers with under 50 employees, up to the maximum value of the relevant funding band. We noted a number of instances, where this waiver was applied in the ILR, but there was no evidence or declaration from the employer to support the waiver.
The provider must ensure that they retain evidence on the learner file to confirm how the total negotiated price is calculated, and it must be clear that only eligible costs are included.
Funding errors frequently occur where learners have left early, gone on a break-in-learning, or have withdrawn without achievement, where the actual end dates are not recorded or recorded incorrectly on the ILR and are not supported by underlying records. This results in funding being claimed beyond the time when the learner has last participated in a learning activity for any of the funded learning aims. This applies to both carry-in apprenticeships and new starts.
In some cases for carry-in apprenticeships, claims had been made for the completion of frameworks, but either completion certificates were not held, or applications were not held or were greater than 3 months old. Funding errors occurred because the ILR fields recording completion had not been amended to remove the framework achievement.
Data quality and compliance
Individualised learner record (ILR)
The ILR is the primary data source used by auditors to reconcile against the evidence held by providers at learner level. It is therefore important that the ILR accurately reflects the information held on the apprenticeship file relating to the apprenticeship duration, actual start and end date, learner’s prior attainment and employment status, learning aims, learning activity, learner status and achievement outcomes.
Providers must hold evidence to support the funding claimed. This must be available and must assure us that the apprentice exists. The evidence pack within the apprenticeship funding rules provides details on the evidence required.
Recognition of prior attainment and English and Maths
For all apprenticeships, providers need to ensure that prior attainment is evidenced and held on file.
Learners must be enrolled on appropriate English and Maths learning aims, as set out in the funding guidance. Where learners are deemed to be exempt, this must be evidenced in line with the funding rule requirements and retained in the evidence pack. Providers must ensure that the ILR accurately reflects the English and Maths learning aims being undertaken, or correct exemption codes if applicable.
Adult education budget (AEB)
One of the main issues causing funding errors in this area, as with apprenticeships programmes, relates to providers claiming funding without taking into account the learners’ attainment and study of prior qualifications.
This may mean that the learner was exempt from part of their programme or should have had the funding reduced through the proportion of funding field on the ILR. Situations arose where learners had achieved units and progressed onto other qualifications, transferred, or returned from a break and the proportion of funding had not been reduced accordingly.
Learners studying programmes other than apprenticeships must be enrolled on a level of learning in English and/or Maths (and ESOL qualifications) that is beyond their assessed level. We found numerous examples where learners were studying at the same level at which they had been assessed. This resulted in funding being claimed incorrectly.
Similar to the apprenticeships programme, funding errors occur when funding is claimed for learners’ continued participation on the AEB programme, but this cannot be confirmed from the evidence of learning activity, usually for periods of learning, or occasionally from a learner’s start date. This is a recurring issue found year-on-year and accounts for a significant proportion of funding error.
Full and co-funding
There were also instances where funding was claimed incorrectly for learners who were not entitled to full funding. Providers should only claim co-funding for these learners.
Workplace learning is not eligible for funding unless these specific criteria are met:
- ESFA has confirmed a national level concession that responds to a significant negative economic impact for a specific industry
- it is statutory entitlement learning stated in paragraph 167 of the AEB funding rules
Where evidence to confirm the eligibility under the funding rules for workplace learning cannot be confirmed, such funding will be recovered.
Advanced Learner Loans
The main issue relates to learner files having different data and information compared with the ILR, Student Loans Company’s (SLC’s) learning provider portal data, individuals’ Learning and Funding Information Letters (LAFIL) and learning agreements, resulting in inaccurate data. This predominantly included learning start and planned end dates.
Advanced loans funding was recovered from providers where they had claimed for learners, who were otherwise entitled to be funded for their first level 3 and the learner had not waived their entitlement. We also identified errors where learning was delivered outside England, which is not eligible under the funding rules.
Other issues included:
- earning aim reference numbers were recorded incorrectly
- the fee charged to the learner/value of the loan wasn’t recorded consistently
- where learners had withdrawn, the change in status had not been recorded correctly on the SLC’s learning provider portal
- where learners had achieved their aim, achievement details were not always recorded on the ILR
- there were instances where the loan had not been approved and the learners’ data had not been removed from the ILR
- provider’s not retaining a copy of the SLC’s Learning and Funding Information Letter issued to the learner
Recommendations to improve data quality and compliance
Providers must ensure that the ILR and SLC portal accurately reflects the information held on the learner file relating to the Loans and Funding Information Letter, learning aims and learning activity start and end dates. Providers must ensure they are compliant with the funding rules in respect to their delivery location. Providers must ensure that they are compliant with the eligibility conditions that apply to the loans provision, particularly for those learners that are entitled to government funding for their first level 3 qualification.
European Social Funding (ESF) match funding
ESFA is unable to use funding paid to providers as ESF match funding, where the providers’ data does not comply with the ESF programme funding rules.
Findings can be broken down into a number of issues:
- ESF logos were not present across learner documentation, provider and subcontractor websites and plaques or posters not on display in premises
- ESF declarations were not included in learner documentation to confirm match funding and ESF fields on the ILR were not completed
- document retention policies were not suitable for ESF requirements to confirm evidence being retained until 31 December 2030
Additional learning support (ALS) is claimed at a monthly rate of £150 (on the ILR) and excess learning support is claimed on the earnings adjustment statement (EAS). Poor quality documentary evidence to demonstrate ALS was a common theme. Such documents must provide evidence of:
- the details of any support needs identified, including an assessment and how the provider will meet those needs
- the specific support provided to meet the learner’s identified needs
- the reviews of the learner’s progress and continuing needs
- a record of all outcomes
We identified learners ineligible for funding where providers did not carry out appropriate checks and controls when learners start their programme, specifically to ensure that they meet the eligibility criteria set out in the relevant funding rules. Providers must retain evidence that appropriate checks have been carried out to confirm eligibility, but should not retain copies of passports or birth certificates on the learner’s file.
A number of common issues were identified where subcontracting arrangements were not fully compliant with the funding rules:
- subcontracts were not always in place or were signed after delivery had started.
- funding delivered under subcontracts exceeded the limits set out in the contracts.
- contracts did not contain all the minimum clauses, required by the funding rules, including adequate document retention clauses. For new starts, the document retention clauses are detailed within the provider agreement and non-levy contract.
- in addition, the most common findings for AEB and apprenticeships were that the details and subcontractors listed on the subcontractor declaration did not reconcile to the details recorded on the ILR; the provision was not declared where required, either on the subcontractor declaration, or on the ILR, or both
Useful resources and guidance
All references to the following documentation relate to the latest versions available at the time of the release of this document. The documents that set out the ESFA’s funding rules are available on the following ESFA pages of the GOV.UK website:
- Young people (16 to 19)
- Carry-in apprenticeship frameworks and standards (for starts prior to 1 May 2017)
- New apprenticeship programme (for starts from 1 May 2017)
- Apprenticeship technical guidance
- Adult education budget including traineeships for students aged 19+
- Advanced Learner Loans
- European Social Fund
Documents that set out the technical requirements of the individualised learner record (ILR) and guidance documents for completion of the ILR are available on the following ESFA pages of the GOV.UK website: