Taxpayer is paying over the odds for UTCs says Public Accounts Committee

In a report published today, Wednesday 13 June 2020, the Public Accounts Committee calls on the Department for Education to set out a new clear roadmap, with financial targets and new measures of success for students, for University Technical Colleges.  

University Technical Colleges (UTCs) were established in 2010 as an innovative model of secondary education focused on providing practical, technical education and qualifications for young people aged 14 to 19. However, the Committee’s report finds that UTCs have struggled to provide a distinctive, financially sustainable education offer.  

At January 2019, the 48 open UTCs were operating at 45% capacity on average, and ten of the original UTCs had already closed. Over half of UTCs were rated as less than good by Ofsted in October 2019, and 14 UTCs accounted for nearly 10% of the total cumulative revenue deficits of all academy trusts in 2017/18.  

The Department has put nearly £750 million into opening UTCs and keep them going, including £680 million in capital funding and nearly £37 million in extra revenue funding. The lack of students means the Department has been propping up the finances of UTCs for several years, and most of the extra funding will not be paid back.  

The Department for Education is nearing the end of a three-year programme to improve the financial and educational performance of UTCs. However, the Committee finds that the Department does not have a clear vision for UTCs in the future, and is a long way from achieving its aim of improving the financial performance of UTCs by summer 2020. 

Designed to provide an education and qualifications outside the standard exam-based measures, the Department has still not defined what success looks like for UTCs, as distinct from other secondary schools. It regards student destinations as a better metric but has not adjusted its performance framework to reflect this, or to indicate how the success of UTCs should be judged. While the limited available data shows that a higher proportion of UTC students go into apprenticeships compared with other secondary schools, most of these apprenticeships are at a level equivalent to secondary school qualifications rather than any higher.

The Baker Dearing Educational Trust - owner of the UTC “brand”, in an unusual setup - receives money from the Department to support the opening of UTCs but also charges each school an annual licence fee. The Committee expressed concern about the Department’s apparent lack of interest in what UTCs are getting from paying out taxpayer’s money to the Trust in this way.  

The Committee says the Department for Education should now:  

·                  Work with those UTCs that have higher occupancy levels to help UTCs that are struggling to attract students.  

·                  Set clear three-year financial targets for each UTC and be prepared to close UTCs that are not meeting those targets at the end of that period.  

·                  Within three months, explain in writing to the Committee how it uses data on student destinations to track the performance of UTCs, and what steps it will take to help parents assess the benefits of a UTC education.  

·                  Work with UTCs to gain assurance about the value schools are getting from payments to the Baker Dearing Educational Trust, and submit its findings to the Committee within three months. 

Meg Hillier MP, Chair of the Public Accounts Committee, said: 

“An awful lot of money has gone into this idea with good results alarmingly thin on the ground – although it’s very hard to tell when the Department hasn’t managed in 10 years to say what a good result is. While the Department determines what success is for the students already committed to a UTC education, it needs to look to the future and financial management of UTCs.  

“It is not fair to make this kind of alternative offer to students trying to equip themselves to make a living, and then not ensure that it delivers a sustainable, quality, recognised measure of success for them. For students in UTCs it’s not an expensive if innovative experiment, it’s their future – more uncertain now than ever as we face what the Chancellor has described as an unprecedented recession. The Department must show us how it is going to make UTC education worthwhile - for students, their parents and the taxpayer.”

Notes to eds:  

All media bids and queries to Jessica bridgespalmerj@parliament.uk / 07917488489

Full Committee info including Membership: https://committees.parliament.uk/committee/127/public-accounts-committee/ and full details of this inquiry: https://committees.parliament.uk/work/37/university-technical-colleges/

Embargoed to 00:01 Wednesday 10 June 2020: PAC Conclusions and recommendations  

5.               UTCs have struggled to attract enough students and three-quarters are less than 60% full. At January 2019, the 48 open UTCs were operating at 45% of capacity on average, with 13,572 students in total compared with a maximum capacity of 29,934. Just two UTCs were full or virtually full, and three-quarters had occupancy rates of less than 60%. The Department explained the steps it has taken to improve the information provided to parents about UTCs. These include since 2017 requiring local authorities to write to the parents of prospective pupils about their options. In addition, since January 2018, secondary schools that are not UTCs have had a statutory duty to provide their pupils with information about neighbouring UTCs. The Department has written to five multi-academy trusts that have failed to comply with this duty. Most students at UTCs are boys – at January 2019, 72% of UTC students were male, compared with 50% in all secondary academies and free schools. This is disappointing given the ambition for more girls to study STEM subjects and the focus of UTCs on technology.  

Recommendation: The Department should work with those UTCs that have higher occupancy levels to identify and share lessons and good practice for other UTCs that are struggling to attract students.  

6.               The lack of students has meant the Department has been propping up the finances of UTCs for several years, and most of the extra funding will not be paid back. Because the funding that schools receive is mainly based on student numbers, UTCs’ failure to recruit enough students has damaged their financial viability. In 2017/18, 14 UTC academy trusts reported cumulative revenue deficits totalling £7.7 million, representing nearly 10% of the deficits of the 195 academy trusts that reported deficits. The Department has provided extra funding to support UTCs’ financial position totalling £36.8 million between 2015-16 and 2018-19, most of which will not be paid back. As part of this, it has given every UTC transitional funding, which is not available to other schools. Transitional funding has usually been £200,000 per year, but will reduce to £100,000 in 2020-21 and then stop. The Department asserts that it has been tough on UTCs in recent years, providing support to viable UTCs on the basis of clear three-year plans and closing those that are unsustainable. However, the Department is a long way from achieving its aim, by summer 2020, of improving the financial performance of UTCs.  

Recommendation: The Department should set clear three-year financial targets for each UTC. At the end of the three-year period, it should be prepared to close UTCs that are not meeting those targets.  

7.               The Department has still not defined what success looks like for UTCs as distinct from other secondary schools. The Department’s view is that standard exam-based measures of educational performance are not appropriate for UTCs given UTCs’ age range and technical focus. It regards student destinations as a better metric but has not adjusted its performance framework to reflect this view or to indicate how the success of UTCs should be judged. The Baker Dearing Educational Trust collects information on destinations as students leave their UTC and therefore has data for students who left in summer 2019. In contrast, the Department publishes data on student destinations sustained over a period of time, which are therefore lagged with the most recent available data relating to students who left in 2016/17. Both datasets show that, compared with other secondary schools, a higher proportion of UTC students go into apprenticeships. However, most of these apprenticeships are at levels 2 and 3, equivalent to GCSEs and A levels, rather than at a higher level. The Department has committed to look at how information is presented to consider whether it could make more prominent on its website the warning that the educational performance of UTCs should be measured differently from other secondary schools.  

Recommendation: The Department should, within three months, write to us to explain how it uses data on student destinations to track the performance of UTCs, and what steps it will take to better inform parents about how they can use these data to assess the benefits of a UTC education.  

8.               We are concerned that the Department could not tell us what schools get in return for the £10,000 annual licence fee they pay to the Baker Dearing Educational Trust. The Department invited applications to set up UTCs between 2011 and 2015 and paid £893,000 to the Trust between 2012/13 and 2017/18 to support sponsors planning to open new UTCs. As the Trust owns the UTC brand, a school must have a licence to operate as a UTC and pay an annual fee to the Trust. The Trust increased the fee from £5,500 to £10,000 in 2019/20. The Department regards the decision to pay for a licence, and any assessment of the value received in return, as matters for individual UTCs not the Department. We are concerned by the Department’s apparent lack of interest in the value for money that schools are getting from using taxpayer’s money to pay the licence fee for a particular model of school on top of the already generous funding that the Department gave to the Trust.  

Recommendation: The Department should work with UTCs to obtain the information necessary to gain assurance about the value schools are getting from the licence fee they pay to the Baker Dearing Educational Trust, and write to us with its findings within three months