3aaa: Another wake up call for the ESFA and Ofsted?

There is a well-known proverb, which I am sure you know: “fool me once, shame on you; fool me twice, shame on me.”

The Department for Education were arguably made to look like fools when Learndirect first started to unravel.

Barely a year later and the latest scandal to shake the apprenticeship sector is the sudden and seismic demise of 3aaa, and it looks like the Department may have been fooled again.

Police Investigation

It’s still not 100% clear what went wrong at 3aaa, and we may have to wait some time before the whole story is fully known.

Problems began over the summer when their latest Ofsted inspection, which many perceived would result in them sustaining their previous outstanding rating, was declared incomplete.

The latest allegation suggests that 3aaa had spent more than £1.6m on professional sports sponsorship between 2015 and 2018, despite making £2.8m in pre-tax losses in the 18 months to January 2018.

Police are now investigating allegations of fraud, with 500 staff jobs and 4,500 apprenticeships at risk.

Don’t get me wrong, if the allegations pertaining to fraud prove to be true, then the buck for that clearly stops within 3aaa itself. The bigger question is surely how the Department, and the ESFA, weren’t wise to any issues sooner.

Surely the failure of Learndirect should have served as a wake-up call to carry out a full root and branch review of all of the ESFA’s largest providers with multi-million-pound funding allocations?

After Learndirect the politicians all queued up to declare that this should never happen again, and yet here we all are.

Sports Sponsorship

As Louise Doyle, Director at the improvement software company Mesma, put it in a tweet on Friday: 

Never understood why the sponsorship wasn’t challenged. I assume its because there isn’t a mandate to challenge government money being spent on sponsorship? In fairness to 3aaa, it was hardly a secret.
Police investigate fraud allegations at 3aaa https://t.co/EjOEYc98wt

— Louise Doyle (@LouiseMesma) October 12, 2018

Louise makes a good point. 3aaa’s branding adorns the stands of Derbyshire’s cricket ground in giant letters, you can’t really miss it!

I’m not advocating that companies who deliver public services should be prohibited from all forms of sponsorship. Do we really, for example, want to prevent providers from re-investing their profits by sponsoring grass roots community sports, or similar community initiatives?

I equally believe that if a company makes a fair profit from delivering a publicly funded contract, it should be free to spend that profit how it sees fit. What we do perhaps need though are better checks and balances to prevent potential abuses.

Ofsted Inspection

This brings me to Ofsted. In 3aaa’s last (completed) inspection in 2014, it was rated Outstanding, including a contributory Outstanding grade for Leadership & Management.

The report offers detailed and deserved praise on 3aaa’s vision, commitment, and focus on quality. Nowhere within that 12-page inspection report, however, is there any reference at all to the company’s financial practices, the validation and verification of funding claims, the value for money of services, or the effectiveness of financial decision making.

This is not wholly surprising. Whilst the Leadership and Management criteria of the Common Inspection Framework emphasises the importance of rigorous performance management, professional development and self-assessment, it makes no specific reference to financial management.

There is no stated requirement to demonstrate appropriate stewardship, prudence and good financial governance in how education and skills funding is delivered.

This creates an obvious illogicality in allowing a provider to be rated as “outstanding” on one hand, whist it may also be in a potential situation of serious financial mismanagement.

And if it is not Ofsted’s responsibility to assess financial probity, then whose responsibility should it be?

RoATP Refresh

How about RoATP? With the highly anticipated refresh of RoATP expected imminently, perhaps we should consider the financial health self-assessment which forms part of the historic application.

This basic spreadsheet (with just 33 fields of information to be entered) is used by the ESFA to assess each provider’s liquidity, solvency, and profitability.

The results inform the ESFA’s judgement as to whether your company is financially fit for purpose to deliver its programmes. The question now though must surely be, is this still enough?

Perhaps we may now have to wait a little longer for the RoATP refresh whilst the ESFA digests this.