BL-2022-002117 - [2025] EWHC 2794 (Ch)

Nick Linford was the founder and editor of a trade publication called “FE Week” and was well known in the apprenticeship provision sector. Mr Linford was not called as a witness and did not give evidence.

In October 2015, Mr Linford sent an email to Sir Peter, who he appeared to already know, informing him that he had heard that 3AAA’s Investment Memorandum claimed that the Company would hit profit margins of 70% in the near future “using high value apprenticeships and delivering nearly all the training in just the first few weeks”. He described Peter Marples as “of Carter and Carter fame” and said he had been trying to sell the company for six months. Sir Peter responded to Mr Linford reminding him of Funding Rule 64 and assuring him that his information would be acted on.

The SFA and the Company had only recently in April 2015 negotiated an arrangement under which there was to be a 5% reduction in the funding paid to the Company in respect of one cohort of apprenticeships to give better value for money. Mr Linford’s email prompted the SFA to look again at the Company’s funding rates and whether they offered the value for money required by Funding Rule 64. That process culminated in a further agreed reduction in December 2015 of 10%-15% in respect of several cohorts.

In January 2016 Mr Linford emailed Sir Peter again asking for a meeting with the SFA as he had documents which he did not wish to send by email. That meeting was organised by Keith Smith and he and Helen Knee met with Mr Linford. Mr Linford handed over a copy of the Baker Tilly report and followed up with an email to Mr Smith, identifying from it three topics for investigation. Mr Smith downplayed his role, perhaps to avoid questioning about receiving information which was probably obtained in breach of confidence, but this was an example of Mr Smith seeking to reinterpret the contemporaneous documents which suggest he took the lead in arranging and running this meeting, and obtaining the Baker Tilly report and the topics for investigation. The SFA failed to realise that it already had the Baker Tilly Report (from 3AAA itself) and treated the report as highly confidential information provided to it by a whistleblower.

The SFA commissioned KPMG to carry out an investigation on the three issues identified by Mr Linford, and KPMG attended the Company’s premises on 3 February 2016 without notice to take documents and begin its investigations. During the investigation, the SFA suspended payments to 3AAA and prevented it from recruiting new learners. This had a serious impact on 3AAA’s cashflow and brought the Company to the brink of entering administration. Around £2.6 million had been extracted from the Company in previous months by way of director’s loans and the Company had limited cash reserves. The Company’s pleas for assistance were not heeded. Sir Peter readily accepted in cross-examination that he did not believe that the Company could have got into serious difficulty so quickly and he thought they were bluffing. On either 23 or 24 March 2016, the Company’s Board voted unanimously to place the Company into administration. At this point, Sir Peter intervened and arranged for expedited payment of approximately £3.87 million, which enabled the Company to continue operating. That intervention by Sir Peter was voluntary and without obligation. The SFA was entitled to suspend payments during an investigation.

The KPMG Investigation report was released on 19 May 2016. It identified a significant number of errors, but it did not find any evidence of deliberate circumvention of funding rules. The SFA confirmed by an email dated 28 July 2016 that in its view the allegations made against 3AAA were unfounded.

The SFA confirmed this in its letter dated 24 August 2016, stating that there was no evidence found of deliberate circumvention of funding rules by 3AAA. However, the Investigation concluded that 3AAA should repay the SFA around £300,000 and both parties agreed in correspondence that the deduction would be made without admission of error.