Prepared to pay the price of a failed Ofsted report? A significant warning for apprenticeship providers

Quest Vocational Training Limited and All Spring Media Limited (the ‘providers’) disputed their recent grade four Ofsted reports, which had resulted in the termination of their funding contracts. Amongst other things, they claimed the Ofsted inspectors failed to consider the impact of Covid-19 pandemic, which led to their report being based on inaccuracies and being unfair.

After the government cancelled the providers’ respective funding contracts based on their individual Ofsted reports, the providers brought separate legal actions against the Education and Skills Funding Agency (‘EFSA’). They argued such termination was an “unreasonable” and “draconian” response to the Ofsted reports which they were also challenging.

Quest sought to overturn the inspectorate’s report by way of judicial review. In the meantime, it was concerned about losing its ability to take on ‘new starts’ in the forthcoming September (the busiest month for the education sector in terms of new intake) and sought, in the High Court, an order revoking the government-enforced suspension on new starts. It successfully obtained an order from the High Court revoking the suspension on new starts (which is understood to be the first time an apprenticeship provider has done this), but ultimately failed in its judicial review and its bid to challenge the EFSA’s decision to terminate its funding contract. Consequentially, All Spring Media also decided to discontinue its claim.

Providers have long complained about the fact the intervention regime adopted by the ESFA penalises training providers more harshly than other FE educators. The EFSA does not have the same power to end funding agreements for FE or sixth form colleges who receive a grade four report, instead they are put into special measures.

The cost of bringing High Court action means many providers who feel a grade four report is unreasonable rarely air their grievances. In 2017, Learndirect notably took action in the High Court but failed to prove that Ofsted had a “predetermined” negative view of the provider’s apprenticeship provision or that their sample size of apprentices was not sufficiently large enough to reflect the size of Learndirect. ESFA terminated Learndirect’s funding contracts (worth over £100 million) following its grade four Ofsted report and they were forced to close. As one of the country’s largest providers at the time, this made 1,600 people redundant and left 70,000 learners without a provider to complete their training.

With bleak prospects for apprenticeship providers who receive a grade four Ofsted report, the current ESFA rules raise serious questions over the future for diversified education providers who require improvement.

Our Disputes team regularly works with education providers seeking to resolve a variety of issues, from supplier disputes to tackling unpaid fees. If you need help, please get in touch.