The sole director of a training provider paid millions in public funding to deliver adult education received benefits worth £3.6 million over just two years, Tes can reveal.

This included £2 million spent on a “second-hand offshore life policy” in 2015-16. Free2Learn has one director, Gabriele Gherscovic, who has been in post since the provider came into existence. Her husband, Gabriel Gherscovic, is the company's chief executive.

The majority of Free2Learn's income comes through adult education budget provision funded by the Education and Skills Funding Agency (ESFA). The benefits listed in Free2Learn's accounts for 2015-16 equate to 17 per cent of its £11.8 million turnover that year.

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'Scandalous' training provider spending

The spending has been called “scandalous” by the University and College Union. Last month it emerged that Free to Learn Ltd, which trades as Free2Learn, had received a share of £130 million in contracts to deliver adult education from the Greater London Authority, although the exact value has not been announced.

The accounts for London-based Free2Learn list director’s benefits of £1.6 million in 2014-2015, and for £2 million in 2015-2016.  According to those accounts, no director's benefits were allocated in 2016-17. Ofsted has not yet carried out a full inspection of the provider, but a monitoring visit report is due to be published shortly.

The 2015-16 accounts state that “the company acquired jointly with a member of their key management personnel a second-hand offshore life policy from a third party where the company’s consideration was £2,000,000”.

National insurance 'underpayment'

It adds: “The company bought the policy in order to provide a benefit to an employee who sought to use the policy to hedge her risk in respect of certain transactions that she had separately undertaken.”

The most recent accounts, for 2016-17, also reveal an underpayment of £2.3 million in tax and national insurance contributions, of which Ms Gherscovic had agreed to repay almost £2.1 million personally.

The accounts state that an “underpayment of [Pay As You Earn and national insurance] has arisen for the accounting periods ended between 2014 and 2016 in the sum of £2,330,158. As £2,095,956 relates to the income tax and NI of the director, she has given an undertaking to repay this sum personally under an instalment plan to HMRC, who have accepted this plan without objection.”

UCU head of further education Andrew Harden said: “It is scandalous that several million pounds of taxpayers’ money has been spent on a single individual while the wider further education sector has suffered a decade of cuts. UCU has repeatedly warned about the dangers of allowing for-profit companies into our education system, because the interests of shareholders should never trump the interests of students.”

Hospitality and construction

He added: “This is money which would be much better spent on the front line, providing thousands more opportunities for people to improve their skills.”

The value of the benefits far outstrips the salaries of the best-paid college leaders. The best-paid leader in 2017-18 was Gateshead College chief executive Judith Doyle, whose published overall pay of £344,000 was made up of a £225,000 salary, a £35,000 bonus and £84,000 which was "an accrual relating to a remuneration scheme which has not yet been paid".

Free2Learn offers courses in a range of areas, from hospitality and construction to security and warehousing. It received the vast majority of its funding from the Education and Skills Funding Agency’s adult education budget – either directly or through subcontracted provision it delivers for other providers.

'National leader'

According to its website, it aims to fight unemployment by “providing an opportunity for anyone to move from welfare to work as quickly as possible”. It adds: “We have grown to become a national leader in the delivery of free training courses and have expanded to several offices in London and the North East of England, including Oldham and Doncaster.”

In 2015-16, the company reported a turnover of £11.8 million, dropping to £10.6 million the following year – the most recent period for which accounts have been published.

In both years, Free2Learn made an operating profit – over £1.3 million in 2015-16, the year in which the £2 million benefit was noted.

According to ESFA’s current list of declared subcontractors with contracts worth £100,000 or more, the prime providers using Free2Learn as a subcontractor include some of the biggest colleges in the country, such as NCG, Activate Learning, LTE Group and the WKCIC Group.

'No concerns raised'

The total value of subcontracted ESFA-funded provision for 2017-18 adds up to £9.7 million – the majority of Free2learn’s income in this period. For 2018-19, Free2Learn has also been allocated £2,530,200 in AEB directly from the ESFA.

Promotional material recently published by the provider states that its “high-quality training has been quality assured as ‘good’ by a number of recent external quality assurance audits". It adds that “alongside their qualifications, learners are well supported to progress into employment or further education by a dedicated employer engagement team, with 69 per cent of learners currently going to positive destination outcomes in employment or further learning”.

A spokesman for Free2Learn said: “We are committed to addressing all and any concerns raised in relation to our financial statements, whether they are made directly to us or through the media. All the financial statements of Free to Learn Ltd have been audited by external third parties in line with legal and regulatory requirements. No concerns have been raised by the company’s auditors, HMRC or the ESFA.”

A Department for Education spokesperson said: “We do not comment on the contents of training providers financial statements. However, if the Education and Skills Funding Agency has concerns with any training prover they will investigate accordingly.”