Guidance

Termination of ESFA funding agreements: guidance for providers

Updated 9 April 2024

Applies to England

This guidance is for providers affected when funding agreements, contracts or provider agreements for apprenticeships (all referred to hereafter as funding agreements) between the Education and Skills Funding Agency (ESFA) and providers are terminated.

This guidance only relates to the following provision funded by ESFA:

• apprenticeships
• non-devolved adult education budget (AEB)
• 16 to 19 study programme
• Advanced Learner Loans

It does not apply to Skills Bootcamp provision. If a provider’s funding agreements include an allocation for Skills Bootcamp funding and they are terminated, the Skills Bootcamp team will provide guidance and support as appropriate.

The Department for Education (DfE) has a dedicated team responsible for supporting providers affected by ESFA funding agreement termination. In most circumstances where you are affected by funding agreement termination the market change team will contact you. 

1. Termination of ESFA funding agreements

Funding agreements can be terminated by either party for different reasons. For instance, providers may wish to stop delivering ESFA funded provision and request to terminate their funding agreements. In this instance, providers must formally notify ESFA and DfE in writing giving the notice period set out in each specific funding agreement.

Alternatively, circumstances may arise that require ESFA and DfE to terminate some, or all, of its agreements with a provider.

The ESFA funding agreements clearly set out the circumstances under which termination may occur. These circumstances include, but are not limited to:

• provider request
• insolvency event
• outcome of Ofsted inspections or monitoring visits
• removal from the apprenticeship provider and assessment register (APAR)
• serious breach of contract
• financial health or control
• change of control or ownership

Your funding agreements with ESFA, along with published funding rules, take precedence over this guidance.

2. What providers can expect from ESFA and DfE if their funding agreements are terminated

DfE recognises that the termination of a funding agreement can bring about concern, worry, and uncertainty for your organisation. Providers have contractual obligations and responsibilities to fulfil if a funding agreement is terminated, and DfE will support you in managing this potentially difficult period.

ESFA and DfE’s responsibilities include, but are not limited to, the following.

ESFA will:

• issue a written, formal notices of termination, setting out the reasons for the termination, and confirming the notice period that applies

DfE will:

• assign a dedicated point of contact at DfE to help you with queries relating to the termination of your ESFA funding agreements and support you throughout the process
• issue a live learner list template for you to fill out and return to DfE
• issue a provider exit communication to you which will include an invitation to complete DfE’s provider exit survey and an information document which provides important information relevant to the applicable notice periods which apply, it is essential for all providers affected by the termination of an ESFA funding agreement to accurately complete the exit survey and the live learner list - the survey and learner list help DfE gather vital information to ensure effective support can be provided to affected learners, employers, and apprentices
• offer an opportunity for you to meet with your dedicated point of contact at DfE to discuss any concerns or issues relating to the termination of your funding agreements - this opportunity will be offered after a response to the exit survey has been received
• provide you with an action point monitoring document, which summarises the necessary actions you must satisfy to meet your contractual obligations and responsibilities - this document will be sent after we receive your response to the exit survey and aims to assist both parties in tracking progress through the termination process
• if applicable, inform you whether funds your organisation has claimed have been identified and used as European Social Fund (ESF) match funding
• notify relevant stakeholders of the termination, as appropriate (including, but not limited to) end-point assessment organisations (EPAO’s), awarding organisations, third party software suppliers which you work with, National Careers Service, local authorities, Ofsted, Student Loans Company, subcontractors, providers that you subcontract delivery on behalf of and any other third parties with a legitimate interest
• write to the employers, apprentices on a break-in-learning and learners affected, as required, advising them of the implications, and setting out the support that is available
• instruct Student Loans Company to write to Advanced Learner Loan students as required, advising of the implications, and setting out the support that is available for them
• provide support to employers to help them identify alternative apprenticeship training providers (in exceptional circumstances only)
• provide support where required to 16 to 19 study programme learners to help them transfer to an alternative training provider
• handle queries from customers and stakeholders affected by the termination of your ESFA funding agreements
• if applicable, remove your organisation from the apprenticeship provider and assessment register (APAR) which means you will no longer be able to deliver apprenticeships directly or acting as a subcontractor
• revoke access to ESFA and DfE systems such as, but not limited to Learner records service, find apprenticeship training, the apprenticeship service - your access to submit learner data will continue for an agreed duration after the termination of your funding agreements, enabling you to submit your final ILR data and download any documents you wish to keep, such as contracts and funding reports, once your final data return has been received, access to submit learner data will be revoked

• usually place payments on hold until your account can be reconciled against your final data return - you will be notified when your payments are scheduled to be withheld

• release your final payment if any is owed to you

• send you an invoice and reconciliation statement to recover funds if an overpayment is identified - there is no fixed timeframe for reconciling and releasing any final payments - DfE endeavours to complete this process within 3 months of receiving the final ILR submission, however, this timeline is not guaranteed as anomalies in the data or other issues identified during the termination process may prolong the reconciliation process

3. What ESFA and DfE expects of providers if their funding agreements are terminated

Your funding agreements with ESFA outline the expectations when funding agreements are terminated.

You are required to fulfil the contractual obligations and responsibilities outlined in the relevant clauses in your funding agreements, especially clauses relevant to the termination and exit arrangements which exist upon expiry of the contracts.

ESFA and DfE require full co-operation from you, you are expected to continue to work with DfE to minimise any disruption to learners and employers affected.

This section outlines your obligations and responsibilities categorised by subject headings. Understanding all the following contractual duties and responsibilities is essential.

Once you have submitted a response to the exit survey, DfE will provide you with an action point monitoring document. This document will summarise the actions relevant to your organisation which you need to fulfil to meet your specific contractual obligations and responsibilities.

3a: General responsibilities

If any of your funding agreements with ESFA are terminated, your general obligations and responsibilities include, but are not limited to, the following.

You will:

• provide a suitable point of contact within your organisation for DfE to liaise with directly regarding the termination of your funding agreements

• keep DfE informed of your progress in satisfying necessary actions to meet your contractual obligations and responsibilities

• immediately stop recruiting any learners onto any learning programmes - ESFA will not make payments to you for any new learners you recruit on or after the date ESFA issues the formal notices of termination

• not deliver training once the termination date of your funding agreements have passed - ESFA will not make payments to you for any training you deliver after the termination date confirmed in the formal notices of termination for each funding agreement

• not share any personal information about learners, apprentices, or employers with any other organisation - you must remind any staff members who might transfer employment to another provider that they must not try to take personal details of learners, employers, or apprentices with them

• complete DfE’s live learner list template and return it back to DfE within 5 working days from the date this is sent to you - this will give DfE an updated summary of the progress of all affected learners, confirming various details, including but not limited to:

  • which learners will complete within any applicable notice period (or prior to the termination date)
  • which learners will need to transfer to other alternative provision to continue with their training
  • any issues DfE may need to be aware of relating to specific learners

• respond to DfE’s provider exit survey within 5 working days (if you need more time to complete the survey, you can discuss this with your designated DfE contact)

• continue to support learners and apprentices during any applicable notice period, either until suitable alternative provision has been secured (by the employer, learner, or DfE), or the termination date is reached

• ensure that all learners have complete copies of all their learning evidence to date. If portfolios are hard copy, you must transfer them to the learners - if portfolios are electronic, you must ensure learners have immediate access to them, provide instructions on how to download their portfolios, and explain to learners how they can escalate any access issues to the third-party software supplier you work with

• ensure any certificates which an awarding organisation has sent to you have been transferred to learners

• notify relevant stakeholders (such as subcontractors, awarding organisations, EPAO’s, third party software suppliers) that some or all your funding agreements with ESFA have been terminated and the applicable termination date - you must remind all stakeholders that they must not share any personal details of learners, employers, or apprentices with any other organisation

• ensure that your subcontracting declaration is current and up to date - to submit or update your subcontracting declaration, use the manage your education and skills funding service

• remove any advertisements and references to DfE or ESFA currently featuring on your website or any marketing material

• support DfE with queries from learners, employers, and other stakeholders (such as awarding organisations, EPAO’s, third party software suppliers, subcontractors)

• co-operate with ESFA and DfE with all requests for information

3b: Document retention responsibilities

If any of your funding agreements with ESFA are terminated, your document retention obligations and responsibilities include, but are not limited to, the following.

If your organisation will continue to trade, you will retain all documents in relation to evidence of delivery as per retention of document clauses within your funding agreements and the published guidance on GOV.UK regarding record keeping and retention information for training providers making available any learner files or records for audit or investigation purposes prior to or after a termination date.

After termination, if your organisation ceases to operate before the files you agreed to retain are destroyed according to the retention schedule, then these files become the property of DfE. In this scenario you must promptly notify DfE so that arrangements can be made for the files to be transferred to our storage facility or systems.

If your organisation ceases to trade, you will:

• promptly assist and collaborate with DfE (and relevant partner organisations) to provide all learner files and evidence packs, including but not limited to:

  • learning and apprenticeship agreements
  • e-portfolios
  • initial assessment documents
  • personal learner information
  • copies of identity documents
  • any other correspondence or documents as detailed in the retention of document clauses within your funding agreements and the published guidance on GOV.UK regarding record keeping and retention information for training providers

• securely organise (index and label) files and help DfE (and relevant partner organisations) by supporting the transfer of files to DfE’s possession

Any files transferred to DfE should be logically arranged and clearly named, containing the full learner name, unique learner number (ULN), and ideally, details of the funding provision and year.

If you are unable to provide this assistance your legally appointed representatives must legally act on your behalf.

For hard copy documentation, you will facilitate the collection of files to ensure smooth transfer of files to DfE’s possession.

For electronic documentation, you will:

• confirm the digital footprint of the files held

• transfer the files to DfE via Galaxkey’s secure delivery service (SDS) (instructions will be provided via dedicated point of contact at DfE) - DfE is unable to accept any external data drives as these pose a risk to the security of our devices

• if applicable, confirm the name of the third-party software provider, the contact person, and the contract terms (such as annual, monthly, or lifetime) so that DfE can assess any potential risks or concerns

By electronic documentation we refer to files which are either stored on your organisations internal servers or hosted with a third-party software supplier.

3c: Data responsibilities

If any of your funding agreements with ESFA are terminated, your data related obligations and responsibilities include, but are not limited to the following.

You will:

• continue to submit timely and accurate individual learner records (ILR) data returns throughout any applicable notice period

• agree with DfE your planned final data return period

• cleanse your data return, including undertaking the following actions (not an exhaustive list):

  • review your post-16 monitoring dashboard (accessed via view your education data) and take action to correct any errors that are highlighted

  • review the ‘rule violation report’, which is available after each ILR submission on submit learner data, and address and correct any errors or warnings identified

  • review the ‘FM36 Learner Level Summary’ on submit learner data (if applicable)

• ensure any continuing learners are recorded as either withdrawn or completed in your final data return. It is assumed that ‘continuing’ learners will transfer to another training provider; in your final data return you must ensure that any learners who still have a continuing completion status are marked as withdrawn and you must use withdrawal reason 7, “Learner has transferred between providers due to intervention by or with the written agreement of the ESFA” - for further information refer to the provider support manual

• ensure you record accurate actual end dates for all learners which match with the last day of evidenced learning, the actual end date must not be after the termination date - if the last day of learning for an apprentice is not the last date of the month, then you will not receive the on-programme payment for that apprentice for that month - for further information see to the ‘monthly instalments’ section of the apprenticeship technical funding guide

• confirm to DfE when you have submitted your final data return

• if applicable, ensure data on the Student Loans Company’s ‘learning provider portal’ is accurate and up to date for all your advanced learner loans-funded learners

Not resolving data errors could impact your expected payments. After submitting your final data return, your access to submit learner data will be removed, this will prevent you from correcting any errors affecting your payments that you identify later on.

3d: Apprenticeship specific responsibilities  

If your apprenticeship funding agreement with ESFA is terminated, your apprenticeship specific responsibilities include, but are not limited to the following.

You will:

• immediately remove any apprenticeship vacancies advertised on ‘find apprenticeship training’ which you are managing on behalf of employers - to manage these vacancies log into your apprenticeship service for training providers account

• immediately remove any apprenticeship vacancies advertised on your website or any other location

• ensure all co-investment payments you have collected from employers to date are recorded on the ILR

• confirm your schedule for collecting employer co-investment contributions (that is, do you typically collect co-investment payments from employers in monthly or quarterly instalments, or do you collect the full contribution at the start of the apprenticeship)

• undertake a review to determine if you need to reimburse employers for co-investment contributions paid to you where you have not delivered the training - for further information refer to the apprenticeship funding rules

• ensure that any employer additional payments that have been paid to you are passed on to employers immediately (additional payments should be transferred to employers within 30 days of you receiving the payment from DfE) - for further information refer to the apprenticeship funding rules

Any additional payments included in your final payment will be retained by DfE and the payment will either be made directly to the employer, or it will be sent to their new training provider for them to give it to the employer.

End-point assessment

The cost of end-point assessment (EPA) is paid to you as part of the monthly on programme payment (OPP) funding you have claimed from ESFA. It is important to understand that the completion payment does not cover the cost of the EPA.

If any apprentices reach gateway on or before the termination date of your apprenticeship agreement, you have the option to continue supporting them through their EPA provided that the EPA can be completed within the same academic year that your apprenticeship agreement with the ESFA is terminated.

You are eligible to claim the apprenticeship completion payment only when the EPA is completed within the same academic year that your apprenticeship agreement has ended. This is only applicable if the apprentice reached gateway before your termination date, in this circumstance you must commit to paying the end-point assessment organisation (EPAO) all outstanding EPA costs.

You will:

• confirm whether you intend to support apprentices who reach gateway before your termination date with their EPAs - you need to confirm which apprentices you will continue to support in the live learner list template you are required to complete and return to DfE

• ensure that any apprentices who reach gateway by your termination date are registered with the EPAO

• ensure that you provide the EPAO with evidence to confirm the apprentices are at Gateway so that the EPAO can proceed with the EPA without your involvement, if required

• pay the EPAO the EPA costs, this funding will have already been paid to you

• if applicable, update the ILR with an accurate achievement date (the date which the apprentice completes their EPA) to generate the completion payment - you can only claim the completion payment if you have continued to support apprentices through EPA

3e: Advanced Learner Loan specific responsibilities

If your advanced learner loan agreement with ESFA is terminated, your loans specific responsibilities include, but are not limited to, the following.

You will:

• talk to your students about the possibility of continuing delivering training to them throughout any applicable notice period, in line with the published Advanced Learner Loans funding rules

• tell your students if you can no longer deliver training to them

• update your ESFA ILR data and the Student Loans Company (SLC) learning provider portal and ensure you withdraw any students that will not be able to complete their training by the termination date

• stop delivering training either before or on your termination date

You are accountable to the student for directly providing training funded by loans.

Should you fail to deliver the agreed training or if there is evidence that the student has not been enrolled for the qualification with the awarding organisation, or if you have not adhered to the policies and procedures of the awarding organisation, you will be liable for reimbursing any incurred fees to SLC.

4. Learner and apprentice transfers to alternative training providers

Where you cannot complete learners in any applicable termination notice period ESFA and DfE expect you to co-operate in the transfer of learners to a new provider. Even if this is prior to the actual termination date of your funding agreements.

DfE will issue tailored communications to affected stakeholders to advise on next steps:

• apprenticeship employers will be signposted to available support to enable them to independently identify a suitable alternative apprenticeship provider for apprentices who are continuing with their apprenticeship

• apprentices on a break-in learning will be advised to contact their employer should they wish to return to learning

• learners who wish to continue their 16 to 19 study programme and AEB funded training will be supported to identify an alternative training provider either by DfE or another specialist agency (National Careers Service)

SLC will write to all students in learning undertaking training funded by an Advanced Learner Loan and students will be signposted to National Careers Service

National Careers Service are committed to offering free and impartial information, advice, and guidance to help learners identify alternative provision to enable them to continue with their training.

You must not seek to source alternative provision for learners or employers affected when any of your funding agreements with ESFA are terminated. This could result in a breach of contract for any new provider appointed.

Your funding agreements with ESFA state that you must not share any information about learners with another organisation, unless the ESFA or DfE provides written authorisation for you to do so.

5. Providers wishing to support learners and employers affected by the termination of another provider’s funding agreements

When learners, apprentices, or employers seek assistance from alternative providers due to the termination of their original provider’s funding agreements, you can proceed with accepting the transfer of learners or apprentices to your organisation without requiring permission from DfE.

You should consider the following points before agreeing to any such transfers:

• you need have the appropriate funding agreements with the ESFA in place
• you must have sufficient headroom within your allocation to accommodate the additional learners, if applicable
• you must conduct an initial assessment
• you must accurately account for and record recognition of prior learning (RPL)
• you must encourage learners and apprentices to provide a complete copy of all their learning evidence to date to inform the initial assessment and RPL review
• you should be approved by the same, or an appropriate alternative, awarding organisation, to deliver the same qualifications that the learner started
• you must collect personal information required to satisfy enrolment and start up process directly from the learner or apprentice

Providers that have had their funding agreements with ESFA terminated must not share any information about learners or apprentices with any other organisations without written permission from DfE to do so.

If you employ former employees of another provider, they must not share information about learners or apprentices with you.

Receiving learner or apprentice personal information from any other organisation could potentially lead to a breach of your ESFA funding agreements.

We closely monitor the destinations of learners and apprentices who transfer following the termination of a providers funding agreements, and we will challenge any concerning behaviour.

For apprenticeships, in addition to the above, you must ensure you satisfy the applicable apprenticeship funding rules, this list is not exhaustive.

You:

• will need to agree a new total negotiated price (TNP) with the employer for the balance of delivery remaining, including the cost of EPA where applicable

• will need to put in place a new contract for service with the employer and agree a new commitment statement

• must record the learner as a re-start (see provider support manual), not a new start in your ILR

• must ensure that the minimum duration criteria is met (for example, by adding the time spent on programme with the previous provider to the planned duration you identify is required)

• must satisfy the 20% off the job training requirements for the proportion of the apprenticeship you deliver as the new provider

• must aim to continue to deliver the same programme that the apprentice started

• will need to work with the employer to review the amount of funding remaining to fund the rest of each individual apprentices training

• will only claim the balance of funds remaining within the funding band maximum (FBM) for the apprenticeship from ESFA, accounting for funds already paid to previous providers (the FBM applies across all instances of the same programme)

Additional funding above the funding band maximum will not be made available via ESFA.

If you believe that additional funding is required, and there is insufficient funding available in the FBM to complete an apprentices training, then you will need to establish with the employer why their apprentice has made insufficient progress compared to the funding claimed to date and agree how the employer will pay for the required amount.

This cannot be funded from an employer’s apprenticeship service account.

Refer to the apprenticeship funding rules for further information.

Other considerations:

• you cannot enrol an apprentice who is already at gateway - this is because only the EPA element of the apprenticeship remains to be delivered, that is, no further training is required

• you cannot include learners on your ILR if no learning has been delivered - you would be unable to claim any OPP funding or the achievement or completion payment as no learning will have taken place

• if an employer has already paid all the co-investment payments to a previous provider ESFA does not expect an employer to make those payments again to the new provider - visit our help centre to find out more about the provider co-investment waiver in the context of provider failure

• an employer’s eligibility to additional payments is not affected by the termination of their previous providers funding agreement. If an additional payment was not earned by their previous provider, you will be able to earn any subsequent additional payments due - visit our help centre to find out more about additional payment in the context of provider failure

6. Subcontractors of lead providers that have had their funding agreements with ESFA terminated

If you are a subcontractor, any delivery you undertake on behalf of a lead provider will be affected if the lead provider’s funding agreements with ESFA are terminated.

If a lead provider’s funding agreements with ESFA are terminated, as well as writing to learners and employers, DfE will also write to any subcontractors affected to notify them of the implications and any actions that may be required.

DfE will work with the lead provider, and their subcontractors where appropriate, to ensure that learners affected can continue with their programme.

The following options are subject to learner and employer choice, learners and employers may choose to independently identify an alternative provider. DfE will issue a communication to employers and learners which will signpost them to available support.

Options available for consideration by DfE and ESFA include, but are not limited to:

• allowing existing delivery arrangements to continue if a learner can complete their programme during the notice period given (subject to agreement between all existing parties, as well as review and approval by ESFA)
• allowing the subcontractor to deliver the remainder of the programme directly (subject to the subcontractor having the appropriate funding agreements with ESFA already in place, as well as review and approval by DfE and ESFA)
• allowing the transfer of affected learners to another lead provider that the subcontractor has an existing subcontracting arrangement in place with, and for the subcontractor to continue delivery as a subcontractor to the new lead provider (subject to the agreement of all parties concerned, assurance that the delivery will continue to adhere to funding rules, and ESFA review and approval)

Subcontractors must not implement any of the options above without first discussing them with DfE and ESFA. Subcontractors must not seek to source alternative provision for any learners affected. If you are affected by the termination of your lead provider’s funding agreement termination you can contact us using the customer help portal.

Any subcontracting relationship that a subcontractor has with a lead provider is a commercial arrangement. ESFA is not responsible for ensuring subcontractors receive payments for delivery they undertake on behalf of a lead provider. Any enquiries a subcontractor may have about outstanding payments earned should be made to the lead provider, or their legally appointed representatives where applicable.

If you are the lead provider and a provider that subcontracts delivery on your behalf has their funding agreements terminated, it remains your responsibility to ensure that delivery can continue. You must ensure that delivery continues either directly, or by arranging for another provider to subcontract delivery on your behalf (subject to continued compliance with the relevant funding rules).

7. Get help with DfE and ESFA enquiries

We regularly publish articles on our help centre for commonly asked questions.

Articles specific to provider failure have been published to the help centre, if you are a learner or employer the help centre articles will help.

If you haven’t been able to find an answer in the guidance, you can contact us using the customer help portal.

When prompted with the ‘Is this enquiry about a specific organisation?’ screen select Yes and provide details of your organisation.

When asked ‘What is your enquiry about?’ select provider closure.

If you need additional support regarding apprenticeships and using the apprenticeship service, contact apprenticeship support.

8. Related published guidance, policies, and useful links

ESFA funding agreements and contracts

ESFA apprenticeship agreement for training providers (for the provision of apprenticeship training)

ESFA policy on funding higher risk organisations and subcontractors

ESFA oversight of independent training providers: operational guidance

Apprenticeship funding rules

Apprenticeship end-point assessments - rules and guidance

Apprenticeship gateway and resits for end-point assessment (EPA)

Apprentices that have been made redundant

APAR conditions of acceptance

Record keeping and retention information for training providers

Subcontracting funding rules for post-16 education and training