System Group, a provider of HGV training, has gone into administration as reported by FE Week. The company blames the bankruptcy on “inadequate funding that cannot cover the true cost of training.”
Because of the situation at System Group, over 2,000 learners will need to find a new provider to complete their training.
According to the company’s website, System Group has been providing courses for 30 years, collaborating with employers such as Poundland and industry organisations such as Skills for Logistics.
The organisation provided apprenticeships, funded adult courses such as skills boot camps, and sector-specific work academy programmes. Two of their most popular courses were HGV training and forklift training.
Around 500 apprentices were being trained by System Group on a national scale in transport and logistics, and the company won contracts with the Greater Manchester Combined Authority and the West Midlands Combined Authority totalling £2 million and £300,000 for their respective adult education budgets.
According to its most recent financial statements, System Group, which is owned by investment firm Rcapital, lost £1.1 million in the fiscal year ending April 2021.
A spokesperson for Rcapital told FE Week that the decision to close was because government funding rates were not enough.
“The directors came to the difficult decision that System Group showed no real prospect of trading profitably, owing to the fact that the costs of training were significantly higher than the grants received from public bodies to train our students,” the spokesperson said.
Many other providers across the country have also complained that the funding given for many courses and apprenticeships doesn’t cover the actual cost of delivering them. This has become a bigger problem in the last few months.
Jane Hickie, the head of the Association of Employment and Learning Providers, said, “Many training providers are extremely concerned about what the future holds, and, despite unprecedented inflation, some funding rates have not been reviewed for many years. Unless urgent action is taken, we will sadly see more providers driven out of the market, and therefore unable to deliver critical skills programmes.”
PwC’s Eddie Williams and Tim Higgins have been appointed as System Group’s joint administrators.
PwC’s Eddie Williams said: “We know that this will be an incredibly difficult time for staff and the learners. Our team will be doing everything possible to support the employees affected. In parallel, we will be rapidly engaging with retained employees and hope to provide them with an update around their position over the coming days.
System Group currently employs 132 full-time workers. Of those, 105 were laid off immediately, with 27 retained in the short term to assist administrators.
We couldn’t find any official information about what was going on with students who were in the middle of training at the time of writing.
However, a spokesperson for the Department for Education told FE Week that the department is working with the appointed administrators to minimise the impact on employers and students.