1 Providing businesses with the services
they need to become more productive
1. In the UK, workforce productivity lags behind
that of other major industrialised countries such as the United
States, Germany and France. Our workforce has low levels of skills
compared with workers from such countries (Figure 1) and,
for example, almost 12% of the productivity gap between France
and the UK has been shown to be due to differences in skills levels.[2]
2. Many UK employers educate and train their workforce
to the standards of their best competitors. However, about 40%
of enterprises do not provide any training at all. Reasons include
staff time away from work and lack of spare resources to cover
the time staff require to train; travel costs and time to get
to the training; fear of trained staff being poached; and a lack
of access to information on available training.[3]
3. Ufi has created one of the largest e-learning
networks in the world, and has the largest number of students
of any educational organisation outside China. Up to July 2005,
1.7 million learndirect learners undertook four million courses,
and Ufi achieved brand recognition of 74% for learndirect. Small
and medium-sized enterprises also recognise the brand, with awareness
at 71%, but their awareness of what learndirect can offer to businesses,
as opposed to individual learners, is much lower, at 37%. There
are a number of ways Ufi and learndirect can reach small businesses,
for example through a trusted adviser such as their accountant
or the Small Business Service. It is important therefore that
these people also know about the learndirect service and what
it can offer. Ufi acknowledges that it needs to do more to reach
small and medium-sized enterprises.[4]
4. Ufi has built its reputation in the world of education
and learndirect has the potential to provide a very useful service
to business. Companies that have used the service are positive
about the impact on their business. Since April 2002, however,
approximately 180,000 small and medium-sized enterprises - only
4% - have used learndirect, with employees taking almost 600,000
courses. Figure 2 shows that most have done so through the learndirect
centre network. Enrolments thorough learndirect providers who
specialise in supporting a particular occupational sector or organisation
(known as sector hubs and single organisation hubs respectively)
are rising, but still contributed only a small amount of the take-up
in 2004-05 (Figure 2). Just two operators have been responsible
for over half of the courses delivered by single organisation
and sector hubs: Assa Training and Learning, which covers the
sectors for automotive components, automotive skills, science,
engineering and manufacturing and visual communications; and a
single organisation operator, the Army. Ufi also works closely
with trade unions, and the Trades Union Congress is one of its
hub operators.[5]
Figure
2: There have been almost 600,000 enrolments from small and medium-sized
enterprise employees
5. Ufi's products have been designed more for the
individual learner, rather than for an organisation or business
needs, though in practice the majority of people who learn through
learndirect are also in employment. Its portfolio has been confusing
for businesses, with an overlap between what was free and publicly
funded and what businesses had to pay for. In addition, the small
to medium-sized enterprise market is itself fragmented, so Ufi
has to research gaps in the supply of generic training and develop
products best suited to meet shortfalls. Ufi is working with Sector
Skills Councils to learn more about what businesses want and build
more employer-led products around their needs.[6]
6. One of Ufi's original objectives was to generate
substantial commercial income, but at present it remains dependent
on public funding. Up to 31 July 2005, Ufi had generated only
£12 million in commercial income, including the Connexions
and NHSU help lines, which generated £6 million and
£1.1 million respectively. Ufi plans to increase commercial
income through:
- private sector activities;
- collection of fees from learndirect centres;
and
- course sales to small and medium-sized enterprises.[7]
7. Under the original organisational structure, Ufi
could not borrow commercially or generate reserves from its publicly
funded activities to provide sufficient investment to develop
commercial activities. Ufi established learndirect Solutions Ltd
in August 2004 to provide services to large employers on a purely
commercial basis, with no support from public funds and operating
outside Ufi's public sector remit. Two people are employed on
rolling contracts to manage the venture, overhead costs are kept
very low, and there is no capital other than the infrastructure
for the ICT, which the employer pays for when it is on their premises.
Current business is small but profitable, with a turnover of £1 million.[8]
8. Ufi can charge for some services, but in practice
most of Ufi's services for employees of small and medium-sized
businesses have been almost entirely publicly funded, except for
charges amounting to a current annual fee income of around £250,000.
This compares with total expenditure by small and medium-sized
enterprises on business training estimated at £3.8 billion
a year, spent mainly with local training companies. Ufi has set
an aspirational target of £40 million a year by 2010 for
fee income from small and medium-sized businesses. The target
is very challenging but Ufi considers it is credible based on
the research into demand, and the Department believes Ufi will
meet the target based on its business plan and the advice from
the business people on Ufi's own board. From large employers,
Ufi's revenue is continuing at around £1.0-£1.5 million,
and larger employers need to be willing to pay the costs of developing
the training, so that Ufi can focus on a company's specific training
needs.[9]
2 C&AG's Report, para 1.3 and Figure 5 Back
3
ibid, para 1.5; Q 22; Learning and Skills Council, National
Employer Skills Surveys 2003 and 2004 Back
4
C&AG's Report, para 3 and Figure 2; Qq 1, 3, 36 Back
5
C&AG's Report, paras 3.20-3.23; Qq 2, 20, 41 Back
6
Qq 24, 31, 39 Back
7
C&AG's Report, para 4.19; Qq 13, 43 Back
8
C&AG's Report, para 4.20; Qq 37, 54-63 Back
9
C&AG's Report, paras 3.24, 4.22; Qq 14, 37, 40, 42-53 Back
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