Examination of Witnesses (Questions 40-59)
DEPARTMENT FOR
EDUCATION AND
SKILLS, LEARNING
AND SKILLS
COUNCIL AND
UFI/LEARNDIRECT
21 NOVEMBER 2005
Q40 Kitty Ussher: Do you have particular
targets for the number of small business clients you hope to have?
Ms Jones: We are not targeting
in terms of numbers of clients. We are targeting in terms of revenue
that we can derive from the market and it will be £40 million
per annum by the year 2010 which, based on the fact that we have
got £12 million so far in five years, is quite a stretching
and demanding target for us.
Q41 Kitty Ussher: One of the other
ways that the Government has been trying to increase the skill
level of the workforce is through a trade union learning centre
which seems to have proved quite successful because it helps people
overcome inhibitions that they may have on the current workforce
shop floor. Is there anything you can learn from this and is there
any scope for collaboration with these people?
Ms Jones: We work very closely
with the trade unions. In fact, the TUC is one of our hub operators.
Q42 Greg Clark: Can I pursue this
question of commercial revenue? Ms Pember, most of the £12
million revenue over five years that was mentioned to the Chairman,
came from the public sector, not from commercial businesses. Is
that right?
Ms Pember: I thought it was a
mixture of both, myself. Yes, it was a mixture of both.
Q43 Greg Clark: According to the
report there were two key contracts. One was with Connexions and
the other one was with the NHS University, the NHSU. Is that correct,
that they were the main contracts?
Ms Jones: I can give you a figure.
Connexions was £6 million and the NHSU was £1.1 million.
Q44 Greg Clark: So £7.1 million
of the £12 million was not commercial revenue at all. It
was from the public sector?
Ms Jones: Yes.
Q45 Greg Clark: That is significant,
is it not, because the Chairman's questions were about whether
this was popular with SMEs and small businesses. It is a different
matter having a massive contract with another part of the state.
What plans do you have to increase it from a tiny amount, about
a million pounds a year, up to £40 million a year by 2010,
which is only five years away? Is that a credible target?
Ms Jones: It is a very stretching
target.
Q46 Greg Clark: But is it credible?
Ms Jones: It is credible based
on the work that we have done in terms of research in demand sectors.
Q47 Greg Clark: What revenue have
you got this year from non-public sector sources?
Ms Jones: We are still in the
development phase for learndirect business. From large employers
we have a revenue which is still continuing around the £1.0-£1.5
million mark and from the SME sector it is still very small because
we are about to go to the market with new pilots which will test
different areas of activity.
Q48 Greg Clark: So this year is pretty
much written off in terms of getting to that target?
Ms Jones: It has been a developing
year.
Q49 Greg Clark: You have got three
years to get from about £1 million a year to £40 million
a year.
Ms Jones: Yes.
Q50 Greg Clark: Who chose this target?
Ms Jones: It was agreed by our
board.
Q51 Greg Clark: With whom?
Ms Jones: With the management
team.
Q52 Greg Clark: So you set it yourself,
this target?
Ms Jones: Yes.
Q53 Greg Clark: Ms Pember, does the
Department have anything to say about this target? Do you have
any role in supervising the choice of targets?
Ms Pember: We have looked at and
analysed the way that learndirect has developed that target and
with the business plans they have got in place and with their
board, who are all key business figures who have been quite successful
in their own right, and the business plan that we have behind
it, we think that learndirect will probably achieve that target.
Q54 Greg Clark: If it does not achieve
it does the Department have any say in this, given that the organisation
itself set it?
Ms Pember: Because they are not
using public funds to support that exercise it will not be a loss
to the Department. This is a new business venture and that is
why they have set up the separate company in learndirect Solutions.
Q55 Greg Clark: Who contributes the
capital for that company?
Ms Pember: The capital is not
the same. They are hubs and they are franchise organisations at
the learning centres. They do not have capital in the way of a
normal college.
Q56 Greg Clark: So there is no capital?
Ms Pember: There is no capital
other than the infrastructure of the ICT but then most of that,
when it is on employers' premises, is paid for the employer.
Q57 Greg Clark: So there is no capital,
there is no working capital? This commercial subsidiary needs
no capital with which to operate?
Ms Jones: The only investment
we need, as Ms Ussher was saying, is when we are building specific
courses if we want to do bespoke work, so that is where, if I
am working with a large employer, I expect the large employer
to make that investment in the product.
Q58 Greg Clark: Does it have a dedicated
staff who work in the subsidiary?
Ms Jones: Very small because it
is a very small business.
Q59 Greg Clark: Is it profitable
from the beginning?
Ms Jones: It is. Learndirect Solutions
is profitable.
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