Why is the Department for Education paying college workers late?

Workers’ pay typically continues throughout the summer holiday break as long as they have passed their probation period

In 2017, the National Audit Office published a report on the Department for Education’s (DfE) approval of activities undertaken by colleges.

In the majority of cases – about 80% – there was a period of probation for the college before permission to award or renew a contract was issued. This period of probation generally didn’t start until an individual’s rolling probation period had ended, which in most cases happened between May and September.

Some colleges also needed final approval from the DfE before starting a new contract after a rolling probation period. This period typically lasted between January and September. So, we can use this information to estimate the average gap between the time the college’s rolling probation period ends and the time it can reapply for a new contract.

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In practice, this meant an average gap of three months, though some colleges contracted with us had to wait for longer.

The DfE never included this information in its national fraud and safety audit because the lack of access to detailed payment schedules made the statement untenable.

Professor Nick Hills, chair of trustees at the Association of Colleges, said: “This causes some colleges significant difficulties. For some the delay has meant they have had to increase monthly debts – whilst for others it means applicants have made expensive early resignations or lost out on short-term funding to maintain activities.”

Even more seriously, the 2018 NAO report raised questions about whether the College Accreditation Monitor (CAM) was an effective unit within the DfE, describing it as “weak”. (The Audit Commission has also expressed concerns about the CAM.)

This back story shows how this issue needs a solid focus. We need to understand whether there is a clear contractual and procedural framework between DfE and colleges on how to use this money and why colleges are being held to ransom on the timing of payments.

What’s more, we need to consider why there seems to be a mismatch between time for approval and time for workers to receive money. Institutions should have a deadline in place to deal with this discrepancy so there isn’t the “off-balance sheet activity” seen in several colleges.

There are several reasons to believe that data analysis of payments could help fill this gap.

A study published in late 2017, which examined the performance of colleges with current project support contracts, suggested a direct link between a wider range of factors such as financial position, management, leadership and outcomes.

This study also suggested that publishing payment processing data could inform understanding of the reasons for delayed payment and, in particular, how the payments work within individual colleges. Given the DfE’s efforts to drive and improve financial information, it’s unlikely they would rule against such a data sharing arrangement.

A study released by the University of Sheffield last year found that being able to trace the source of lost work materials over a 12-month period would lead to an increase in resource productivity for construction firms by 10%, which could potentially be saved with more effective management policies.

Despite all this, it would be an open question whether trusts and providers would be willing to provide the necessary data for analysis.

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Approval of educational contracts isn’t the only area where it is thought that there should be a clearer framework in place for making payments. Some examples include regulatory payment monitoring, which requires landlords or residents to be informed when rent has not been paid and social and sanitary hygiene standards, which requires landlords and residents to be notified when breaches occur.

While this is a good starting point, it also doesn’t address a more fundamental question. If universities aren’t properly handling and reporting data of the type provided, are they clear that it’s above board?

Professor Nick Hills is the president of the Association of Colleges and president of the Chartered Institute of Personnel and Development.

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