Subcontracting – a tried and tested formula

Recently Roger Francis of Creative Learning Partners articulated an argument for an end to subcontracting. While there are undoubtedly some sharp practices creating salacious headlines, we are in danger of moving from an era of banker-bashing to prime-prodding based on a minority of miscreants.

So here are 5 good reasons (if I were American I’d say damn-good reasons) why subcontracting works:

1. Primes act as a ‘point of entry’ for new providers. Many new providers possibly including entities like Creative Learning Partners simply haven’t got the infrastructure or track record to withstand the burdens of being an Apprenticeship provider. Primes act as nurseries for new businesses to learn, grown and improve under the protective umbrella of a more experienced organisation.
2. Primes have the trust of government. Many primes are long standing colleges, charities and commercial organisations. They have endured approval processes far more robust than ROTO which any fool can pass. Through decades of provision, Ofsted and audits primes have earned the trust of the SFA to essentially act on their behalf. This has helped lower the cost of administering the SFA, allowing more money to be directed to actual provision.
3. Some subcontractors like it. Believe it or not some providers do not wish to hold contracts. They are quite happy not having to go through Ofsted directly or the dreaded SFA audits. They will happily pay a management fee to avoid the additional costs associated with being a prime.
4. There are currently insufficient controls on market entry. Unlike a school or college anyone can set up a training provider. I worry that, with an end to prime relationships, there will be a free for all in the market with cowboys muscling in to devalue the Apprenticeship brand. Employers, especially those new to the service, could easily part with money in exchange for a very poor return on their investment. Primes are able to limit or prevent this happening.
5. The position of guarantor. If a subcontractor fails (and they do now and then) the prime has to be able to pick up the liability. This is great risk management for the employer, learner and tax payer. I think employers actually like to know that behind a subcontractor is the safety net of a viable, reputable and successful prime.

As a prime I have been approached by many new providers looking for a subcontracting arrangement. Some of them I wouldn’t wish on employers or learners, and a good prime will send them packing. However, I acknowledge that all is not rosy in the garden and some primes have hurt the cause.

So rather than throwing baby and bathwater onto the heads of innocent passers-by here are three simple solutions:

1. Offer successful and established subcontractors ‘Prime Status’. They have cut their teeth as subcontractors and can now be accredited to stand alone and possibly pass on the love to other new subcontractors.
2. Cap management fees. Any prime caught abusing this has their status as a prime revoked.
3. Ensure that all subcontractors let employers know the management fee being charged. An employer can then make an informed choice on whether they wish to continue.

Finally, let us not forget that many primes were forced into their current position. In 2010 providers panicked at the SFA minimum contract values. We were told to form these relationships and everyone would either be a prime or a subcontractor. I believe that 99% of primes have responded admirably and have excellent supportive relationships with their subcontractors. Both parties have invested heavily in making it work and it has helped the industry endure five years of significant change. It would be a mistake to dismantle this infrastructure as we enter the unprecedented upheavals that await us in 2017.

I don’t know what the future holds. I would advise the government that, with some tweaking, prime-subcontracting relationships are robust and well established. They offer financial security, quality assurance and regulatory compliance. Furthermore they spread good practice and innovation. They are, in my mind, a rock of stability upon which the Levy and New Apprentice Standards can build foundation and strength.

Matt Garvey is managing director of West Berkshire Training Consortium