The boss of Elmfield Training Ltd has been accused by an MP of a “rip off” over his firm’s high profit margins which have been generated by the public purse.

Ged Syddall, founder and chief executive officer of Elmfield Training Ltd, was joined by Norman Pickavance, HR Directer at Morrisons, to give evidence to the MPs on Business, Innovation and Skills (BIS) Select Committee at the Houses of Parliament this morning, and confirmed he received 95 per cent of a £3 million dividend for their 2009/10 financial year.

The news came during the fourth evidence session of the committee, which is leading an inquiry into apprenticeships.

When asked about how much of the £12.3 million pre-tax profits made by Elmfield Training Ltd was government money, Mr Syddall said: “It was all government money.”

Committee chair Adrian Bailey MP said that the profit figure amounted to a 36 per cent margin for the academic year.

The reasons behind the margin, Mr Syddall said, were due to “natural efficiencies” of dealing with large employers.

Quite frankly that much money made out of the business of your kind is a rip-off.”

Mr Syddall, although unable to provide a profit figure for Elmfield Training in 2010/11, said that this year’s margin would be “13.8 per cent” and explained that the decreasing margin was down to a reduction in rates.

He said: “We get paid 25 per cent less now than we did in 2009/10,” before Mr Bailey added: “But you’re still making 13.8 per cent (margin).”

The head of the provider, which claims to be the “fastest growing vocational training provider in the UK”, was also questioned about his pay and dividends.

He said: “Over last four years we’ve declared one dividend which was £3 million, which equated to about 15 per cent of distributable profits.”

Mr Syddall added: “I set this business up from nothing and now we have 750 people. The other thing we have done over the last three years, 40 per cent of post-tax profits have gone into social impact programmes, which helped thousands of young people back into employment.

“From every £1 I’ve taken out in the last three or four years, I’ve put £2 back to helping other people who have not been as lucky as me.”

He then confirmed that £75,000 is his basic salary.

Select committee member Brian Binley MP, who has set up two companies, said: “We have never got anywhere near the profit levels you are talking about.

“Quite frankly that much money made out of the business of your kind is a rip-off.”

He also added: “I do not see when you’re a large employer of people that you can make that sort of money.”

Mr Syddall said: “The year we are talking about that profit level was made was 2009/10. We didn’t set the rates.”

However, Mr Binley jumped in to ask: “So you overcharged?” before Mr Syddall said: “No we didn’t set the rates, so the rates were standardised.”

Again, Mr Binley asked: “You were overpaid?”

I set SkillsFirst up because I thought there was a gap in the market.”

This time, Mr Syddall said: “Or the state paid too much money, because it didn’t recognise that there are efficiencies in this kind of delivery model.

“Again, I don’t think there are many businesses out there who have put £6.5 million of its own money over the last three years supporting programmes that have helped thousands of people.”

Mr Binley said: “That’s great, but there aren’t many apprenticeships out there making the sort of bottom line that you’re making.

“You can understand why people are suspicious though, can’t you?”

The focus of the session shifted to Skillsfirst Awards, an awarding body set up by Mr Syddall, and if it represented a conflict of interests.

He said: “It is no different for instance than City & Guilds and City & Guilds for Business, who deliver Asda. It is no different than EdExcel and Pearson in Practice.”

Mr Syddall said that he was “encouraged to broaden the awarding body market by the government” before adding: “I set SkillsFirst up because I thought there was a gap in the market.

“That is now a very successful awarding body. It deals with 30 organisations, including ourselves.

“There are no rules from Ofqual to say we can’t do it. There is very robust and rigorous conflicts of interest policies that we adhere to.”

Mr Syddall also confirmed that the Skills Funding Agency doubled its contract with Elmfield Training to £40m half way through 2010/11 due to the volume they were delivering, rather than the time period they were operating to.

The topic moved to Elmfield Training’s satisfactory Ofsted grade, which Mr Syddall defended, but it was not long until the conversation moved back to the subject of the provider’s dividends.

Mr Binley said: “I really do want to make sure that the taxpayer is getting real value for money.”

The MP told the session that as well as the profit and the profit margin, a total of £6.5 million went into taxation and dividend, before asking where it went.

Mr Syddall confirmed the dividend was £3 million after tax, and that there are four shareholders in Elmfield Training Ltd, but that he holds 95 per cent of shares.

Mr Binley: “I think it’s right and proper to get that as evidence because it does give us an idea of whether the taxpayer is getting value for money.

“I understand your side of it, but I think there’s a doubt in terms of the amount of money that you made in that year.”

Mr Bailey, towards the end of the session, asked about the financial situation of Skillsfirst Awards.

Mr Syddall confirmed that, as shown in their last published accounts, the firm made a loss.

However, for the following year, he said: “About a couple of million turnover but I’m not sure on profits. About £1 million.”

He then confirmed that he was the only shareholder of the firm.



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19 Comments

  1. Peter Cobrin

    The conflict between the public good and private profit is laid bare here, and crude posturing by Brian Binley MP over “rip-offs” are rather hollow from an MP who “broke parliamentary rules by claiming more than £50,000 in taxpayer-funded expenses to rent a flat from his own company” (Daily Telegraph June 17, 2009) as a result of which the Parliamentary Standards Committee said that Mr Binley was guilty of a “sustained and deliberate” breach of the rules.

    • So an entrepreneur beats the government at its own game – change the model of delivery to a national one geared to large national employers and reap the rewards of those efficiencies. The government system should have seen the benefits earlier and modified the funding accordingly as they have now done. What’s the big deal?

  2. Former Elmfield Learner

    This is yet another article highlighting that there need to be changes made within the company. My only concern is for the nearly 800 staff, I am a former employee of one of the companies which Elmfield provide apprenticeships for and I can only say that the staff on the whole are excellent and are dedicated to educating and enriching the learners. I just worry how much of this is going to have an effect on them. I think any measure taken against Elmfield MUST be directed in the right place and in such a way that the people responsible can’t pass the buck or make “the little guy” pay.

  3. Honest Dave

    Why oh why didn’t the MP’s ask him about the properties he has bought through the company using tax payers money!!?? There was uproar about MP’s claiming for 2 homes – well this bloke apparently has an empire stashed away

  4. Interested consumer
    I have read the transcript and I think Mr Binley should have concentrated on the amount of excellent training Elmfield have delivered and quite rightly Mr Sydall is entitled to his dividend because lets face it he obviously works hard at sustaining the high level of excellence Elmfield and Skillsfirst Awards achieve perhaps if our MP’s put in the same kind of effort we would not be in such a precarious position in the Global Market Mr Binley is full of hot air and no substance. Well done to Elmfield and Skillsfirst Awards.

    • Sandra, is this serious? I’m not doubting the training, but it is not an apprenticeship. The company made 12 million profit out of tax payers, if anyone else did that they would be in prison.

      • Imprisoning a Director because his company made a profit from a Govt contract? I think that would have interesting implications for thousands of Govt contractors who supply and deliver products and services for the Govt – do you think they should have that written into their contract Dave?

        I’m a sub-contractor delivering Apprenticeships (not for Elmfield) – I make a profit – it’s how I pay my mortgage and feed my kids……when do you suggest I start my sentence?

        I appreciate you may think you’re on the side of the Little Guys, and I don’t dispute the DBIS/SFA/NAS management of the Apprenticeship programme is a bag of rags (trust me, it’s like being in the grip of a 100ft high two year old throwing a tantrum) BUT don’t criticise companies for making a profit, that is what they do (and what they are legally obliged to aim to do).

  5. So what happens now? He gets a slap on the wrist and told to move on? He then opens another training company called Welmfield which NAS and Sweet FA thrown millions at because they promise to get a huge amount of starts? I think all this money should come back to the public purse and disseminated amongst the honest private providers who have to scrimp and save to be able to put their learners through what they do with them, for little or no profit
    I don’t work for a private training provider, but I do visit them regularly, and know the struggle that some of them have

    • This thread appears to have strayed from a comment by an MP in regard to ‘high profits’ to questioning ‘honesty’ and ‘going to prison’.
      Nothing in the Select Committee evidence session suggested that there was any fraudulent or illegal practices at all, so honesty and suggestion of related consequences are misguided.

      The MP’s did on several occasions qualify their questions to Elmfield saying they are trying to understand how their profits were achieved in the context of VFM. It would appear from what I heard that SFA and NAS could do with providing some evidence regarding their system and rates.

      As for payment for starts is concerned, from my experience that went out years ago, with Success Rates and outcome related funding, you can only get paid over the longer term by constantly delivering results.

      Finally, the specific year (2009/10) that keeps being mentioned isn’t viewed in the wider context of the last 4 years where the business made far lower profits and over the 4 year period only distributed 15% of its distributable profits as dividends – the rest being paid over as Corporation Tax or being reinvested back into the business.

      I think there is quite a difference between fraudulent activity to get financial gain and efficient processes on a national scale to increase profits.

  6. TAKE A GUESS

    Yet again the Government f**ked up and someone business savvy took adavanatge off it, same as all the scroungers and other people out there screwing the system. At least these Guy’s given something back to society, jobs, investment, etc…
    Lets look at who’s really at fault, the Government and all their loopholes.

    • I think the government is deflecting from A4E which was awarded by Cameron, and fraud is being proved there. I think there are 2 different sides here, Fraud and profit. and as some one stated earlier legitimate profit is fine, especially if reinvested and jobs/training is given.
      Fraud is a different thing, and then they and those who are responsible should have the book thrown at them.

  7. Honest Dave

    Some very interesting comments as the debate continues. An ‘Apprenticeship’ in 12-24 weeks……..are you having a laugh!! Elmfield have completely discredited the brand and devalued the meaning and purpose of an Apprenticeship. Elmfield offer little more than an accreditation service (laughably through their own awarding body!!) of existing skills in the main to the incumbent workforce of large employers. How is this adding to the skills development of the UK workforce? Yes, they get the ‘new hire’ staff an employer takes on but the majority of people achieving a qualification (and I use that term lightly)receive very little added-value, personal support (Ofsted rated this as grade 4 in their recent inspection!)not to mention personal development. This programme is one huge sheep-dip and Mr Syddall has exploited a loophole and I quote….”we don’t set the rates” – deplorable!! Shame on you Mr Syddall. There is no problem in making a profit but where does morality and the boundaries of acceptability kick in? £12m / £14m of taxpayers money – in anyones books, that’s wrong. Mr Linford has previously raised the question of several properties allegedly having been bought through the business. Obvioulsy bought from the profits (taxpayers money). Wonder who lives in them?? Nothing illegal – maybe, maybe not?? Mr Syddall has been laughing all the way to the bank under the auspices of entrepreneurship. Mr Binley was absolutely on the nail – it is a rip off, ironically at the taxpayers expense. If I were Morrisons I would be questioning the association with Elmfield, least of all from a moral standpoint and public perception. Panorama on Monday – bring it on!

    • Dave who do you work for could it be possible you may have a vested interest if Elmfield have their contracts removed shame on you….. get your facts straight before opening your mouth and spouting drivel and Dan the only ones ripping off the taxpayer is our wonderful MP’s and their salubrious friends the bankers…….there is no shame in making an honest profit

      • I agree with Sandra, what a lot of the people commenting on this do not know or are ignoring is that a high percentage of the learners in Morrisons have no funding whatsoever, it was agreed that everyone was entitled to complete the apprenticeship at a cost to Elmfield. If you want to talk about people screwing the tax payer it’s the benefit scroungers, it appears to me that Elmfield have done nothing more than help people get into work or gain a qualification. Who looks at the MP’s claiming ridiculous benefits when the country is on it’s knees!! no-one is the honest answer.

  8. John Smith

    The “little guys” are already beginning to pay the price as Elmfield started its first round of redundancies this week. As a dedicated employee who has been involved in assisting learners to enhance their skills and increase their employabilty prospects ( which is what the company so proudly presents as its goals) we are now faced with being thrown on the scrapheap as a result – hypocrasy in the worst form.

  9. Supernova

    Someone needs to Talk to the Assessors that are working for the company.
    Some of the unethical things they have been forced into doing over the last 18 months has been scandalous. Assessors have been bullied, and pressured into signing qualifications off in 1 visit to achieve their 100,000 QCF goal. I understand that they have as of today not actually achieved this goal, but have reported to Morrisons that they have !!! Naughty Naughty. I am reliably informed that they are quietly behind the scenes panicking in case Morrisons find out and pull the plug.
    Speak to the Assessors, they will tell you all you need to know.