Examination of Witnesses (Questions 60-79)
DEPARTMENT FOR
EDUCATION AND
SKILLS, LEARNING
AND SKILLS
COUNCIL AND
UFI/LEARNDIRECT
21 NOVEMBER 2005
Q60 Greg Clark: So it has no overheads?
Ms Jones: The overheads are kept
very small. Also, we make sure that if we are using anything of
our central government funded organisation then we charge it at
a commercial rate in learndirect Solutions.
Q61 Greg Clark: What happens if the
revenue does not come in in the way that you anticipate and you
cannot cover even those minimal costs? What is the procedure then?
Ms Jones: The costs would fall
away. Each contract bears its own costs so if the contract falls
away then the costs fall away.
Q62 Greg Clark: So there is no-one
employed specifically to manage this commercial venture?
Ms Jones: There are two people
employed there at the moment.
Q63 Greg Clark: Who pays their salary
if there are no contracts to support them?
Ms Jones: They are paid by the
contracts we have in that side of the business and they are on
rolling contracts so if the contract was not renewed their contracts
would not be renewed.
Q64 Greg Clark: In terms of your
overheads, which again were referred to earlier, you have had
a reorganisation during the summer, you said. How many people
are working in marketing now?
Ms Jones: 20, 23?
Mr Lloyd: Something like that.
Q65 Greg Clark: How much of a reduction
is that?
Ms Jones: In marketing I believe
by about a third.
Q66 Greg Clark: And in the more general
overheads? Is that consistent?
Ms Jones: Yes.
Q67 Greg Clark: It would be helpful
to have up to date figures. Can I ask about this rather worrying
reference in the Report to your noticing that there have been
significant weaknesses in internal controls that may have resulted
in some units receiving funding to which they are not entitled?
Can you give your latest assessment of how many units and what
level of funds we are talking about?
Ms Jones: As part of the background
behind that we do regular audits, we do quarterly audits and then
we do an end of year in-depth review. In preparation for the end
of year in-depth review, which will take place now.
Q68 Greg Clark: I am happy about
the process you have gone through but what is your latest assessment
of what public funds are at risk? What is the quantity?
Ms Jones: We analysed our own
data and we spotted a potential trend.
Q69 Greg Clark: I know how you have
done it. What is the quantity now that is in question?
Ms Jones: No more than £2
million.
Q70 Greg Clark: What is the minimum?
Ms Jones: I do not have a minimum
figure. What I have is a maximum figure. It is no more than £2
million and we are now dealing with the detailed investigations
to build that number up.
Q71 Greg Clark: And if some of these
organisations have received funding to which they are not entitled
how are you going to recover that?
Ms Jones: Our normal procedure
is that we go in, we do a detailed investigation with the organisation,
we recover the monies and then we send the report to the police.
Q72 Greg Clark: And in terms of the
public getting its hands on money that may have been misallocated,
how does that happen?
Ms Jones: We recover the funds.
Q73 Greg Clark: From?
Ms Jones: From the organisation.
Q74 Greg Clark: What if they have
not got any money?
Ms Jones: We still attempt to
recover the funds from any provision that they may have.
Q75 Greg Clark: Is it part of your
assessment when you enter into contracts with suppliers that they
are robust enough financially to be able to pay that?
Ms Jones: Absolutely.
Q76 Greg Clark: So if you find that,
say, a million pounds is owed, you are confident that that would
not be written off and you would get it back?
Ms Jones: Yes.
Q77 Greg Clark: Finally, can I ask
the National Audit Office: it was difficult to discern from the
report whether the NAO's view is that Ufi offers value for money.
Can we clarify that at this stage?
Sir John Bourn: Our view is that
it potentially offers value for money but it does not do it yet
because of the reasons that have been canvassed in the discussion
so far, like the quantity of overheads, like the degree of market
penetration and other factors of that kind.
Q78 Greg Clark: You will have experience
of the Open University which is quite effective in a different
market at delivering services directly. I was surprised that there
were not more benchmark comparisons yet to be able to make that
assessment. Was that something that went on or is there a reason
why that was not there?
Ms Hands: The learndirect service
is pretty unique. It is quite difficult to get comparators. In
terms of the costs per course, for example, those are only just
becoming available. Because it is an online system it is not directly
replicated elsewhere.
Q79 Greg Clark: Online systems are
not that unusual nowadays.
Ms Hands: In terms of the way
the Ufi one works they are quite unique.
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