Prime contractors attacked for ‘outrageous fees’

Smaller training providers gave prolonged applause to Robust Training CEO Roger Lynch as his rousing speech ended AELP’s annual conference earlier this year.

In a no-holds-barred address, Lynch hit out at some prime contractors taking 30 per cent of fees, declaring that “high management fees are unacceptable and counter productive. We cannot go on charging colleagues outrageous and unjustified fees. Removing the profit margin from the supply chain inevitably leads to corner cutting and lowering of quality; it is the industry that will suffer.”

Lynch pointed to one college that he said was charging £600,000 on what he described as £2 million worth of delivery.

He continued: “Once again we are turkeys voting for Christmas. The recently-published supply-chain list is a shot across the industry’s bow and we must recognise that management fees are under scrutiny. A solution will soon be imposed that will not involve more funding – or help with our admin and quality costs.

“We will all suffer if providers and colleges alike use management fees as an income stream.”

Lynch, who founded the south London-based Robust Training group, said the answer to the prime contractor’s issue was  to give someone else the problem and charge them 30 per cent for the privilege. He said “it did not make business sense to hand your budget to a competitor and let them prove they can deliver your training programmes for a 25-40 per cent less than you.”

A former Black Entrepreneur of the Year and one of the famed 100 on the Power List of leading black citizens, Lynch is the elected representative of smaller providers on the AELP board.

At the event, he thanked smaller providers who gave him “candid feedback” to how they view the flexibilities found in the Adult Skills budget and making apprenticeships pay.

“I am giving a provider perspective on funding from a business point of view, looking at how, or if, small providers can exist in the current funding climate,” he said.

He also reminded delegates that “securing more work may not be the solution if you cannot run your current concern at a profit; it’s not the size of your contract that counts.

“What matters is whether we can make our contracts pay. And if we can’t, what will we do about it? Remember: ‘Turnover is vanity, profit is sanity; but cash-flow is reality’. If you do not sort out your cash-flow you will fail.”

Lynch’s principal business, Ruskin Private Hire, boasts thousands of fully-trained, regularly updated workers. A strong advocate of the value of quality training, Lynch started Robust Training when he failed to find a provider that met his demanding standards.

He finished his address with a plea: “I can think of no other industry where a price has been agreed and set but then an unnecessary market is created which seems hell bent on driving down income for all parties.

“We are inviting government to create its own market where the training and apprenticeship business goes to whoever can deliver qualifications for the lowest price….paid on results.”

(Pictured: Robust Training CEO Roger Lynch)