The Scottish Government

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Executive Summary

Introduction

1. The Scottish Executive's Business Learning Accounts ( BLA) pilot programme aims to stimulate learning and business growth in small businesses (employing less than 50 people). BLAs offer three core services to businesses: guidance to assess training needs, assistance to source training providers and financial support to pay for the training (up to 50%). The support is aimed at small companies that have not traditionally trained their staff and that have not previously engaged with business support agencies for workforce development. Eligible activities are limited to training that is clearly linked to business objectives and that cannot be funded through other sources; BLA is to act as a funder of last resort. Delivery is through Scottish Enterprise ( SE) and Highlands and Islands Enterprise ( HIE); in the SE area, BLAs are delivered in close partnership with learndirect scotland ( LDS). Four BLA pilots were launched, focusing on manufacturing, tourism and two specific geographic areas (one each in the HIE and SE areas) respectively.

2. The main objective of this evaluation was to assess the extent to which the BLA programme has increased demand for training in small businesses that have traditionally not trained their staff. The evaluation methodology consisted of:

• Analysis of monitoring data collated by SE and HIE on 386 BLA companies;
• A telephone survey of 100 BLA companies;
• A postal survey of 87 individual BLA learners ¹;
• In-depth interviews with 60 companies; and,
• Interviews with key BLA stakeholders, including SE, HIE and LDS.

BLA delivery

3. The research evidence shows that engaging with potential BLA companies happens through a number of different routes. In the HIE area, self-referrals and word-of-mouth appear to have played a crucial role. In the SE area, most referrals have come from SE account managers and Business Gateway client managers who sign-post companies to BLAs as and when they come across potential candidates. Different Local Enterprise Companies ( LECs) have referred different numbers of companies, reflecting their appreciation of the role for BLAs within the wider support structure already available in their area.

4. The typical BLA process is set out in Figure 1. Following an initial visit from the BLA 'local delivery agent', responsible for guiding the individual company through the BLA process:

• In a SE area the company may have undertaken a Business Health Check (usually delivered by the local Business Gateway) and the local delivery agent and the company complete a Training Needs Analysis ( TNA). LDS then helps source possible learning activity to construct a training plan.
• In the HIE area the local delivery agent follows through the whole process with a Learning and Development Review combining business planning and training needs assessment. The agent sources learning provision.

Figure 1.1: BLA Process

5. Company reactions to the BLA process are overwhelmingly positive. The TNA and BHC tools are rated highly in the employer telephone survey: almost 90% of companies felt that the TNA process had helped identify company training needs and almost 80% indicated that the BHC had helped them assess the state of their business. The overall support offered by the local delivery agent is evaluated positively with 93% of employers agreeing that 'the BLA consultant did an excellent job and provided quality advice'.

6. The company case-studies allowed the research team to go beyond the general impressions created by the telephone survey. The case studies confirmed the positive survey findings with regard to employer appreciation of the local delivery agent support, but highlighted a general lack of awareness and confusion among employers about the specific BLA tools ( TNA and/or BHC) used; employers experienced the TNA and BHC as an interesting 'chat' with the local delivery agent and when asked about their TNA, employers often showed a copy of their training plan to the CPC research team. This limited awareness is confirmed in the employer survey finding that one in five companies did not recognise the TNA tool.

7. Stakeholder interviews with the local delivery agents confirm that the agents indeed tried to shield their clients and limit the burden of BLA procedures for employers. For example in the SE area, rather than using the data-hungry and time-consuming TNA software in front of their clients, local delivery agents worked with a notepad when talking to the employer, putting the data into the software only after they had left the company.

8. With regard to sourcing training provision, in the SE area there were some initial hiccups in the cooperation between LDS and SE but these were dealt with, and it is fair to say that the BLA programme has facilitated a better cooperation and mutual understanding between SE and LDS. Survey companies were positive about the process of sourcing training provision: the process was seen as efficient and focused on the training activities the companies were seeking. The main concern of the local delivery agents and a number of case study companies related to the length of some of the training plans. Some companies indicated that they would have preferred a shorter plan with clear recommendations, but LDS focuses on offering impartial advice; as an honest broker, they cannot recommend training providers. In these cases, the local delivery agent acted as middle-man, reading the training plans for the employers and providing them with clear suggestions.

BLA outcomes

9. Overall, 570 TNAs were undertaken and 344 BLA accounts opened. The four different BLA pilots all reached their target of 75 TNAs, but the sectoral pilots in particular found it difficult to reach this target. Part of the problem appears to have been that the sectoral pilots depended more heavily on other LECs for their referrals than was the case for the geographic pilots.

10. The BLA programme seems to have succeeded in its objective of offering alternative learning opportunities (as opposed to traditional classroom courses) to a substantial number of companies. However, stakeholder interviews show that the 'default' option for workforce development advisors continues to be traditional training options and that additional efforts will be needed to fully achieve the shift towards wider learning opportunities.

11. Despite these positive outcomes, the BLA programme does not appear to have succeeded in reaching its target group. Only 5% of companies had not been engaged in training in the 12 months prior to their BLA involvement and, although sample sizes are small, the majority of BLA companies had already received advice on (70%) or financial support for (60%) workforce development. These difficulties in reaching the target group - experienced across all four pilots - can be explained by a number of elements in the design of the BLA concept:

• The use of targets is an important part of performance management but for some the objective of BLAs did narrow down to the achievement of 75 BLAs, in particular in the SE area. This has strained the delivery of BLAs into areas where the eligibility of companies and the quality of outcomes are debatable; also, companies eligible for BLAs could only be characterised (according to the design of the programme) by what they had not done which made selection difficult;
• It was always going to be hard to reach companies that had traditionally been outside the reach of (the workforce development branches of) the business support agencies. Active outreach to these companies would have required far more additional resources than LECs were willing or in a position to provide, especially considering the de facto ban on marketing of the BLA pilot. In theory, it was possible for the BLA pilot to engage with companies already known to and supported by the LEC networks in other areas (not workforce development), but business support is an integrated package and it would have been strange for the BLA pilot to have discovered a multitude of LEC or Business Gateway customers with undiagnosed workforce development needs;
• The role of 'funder of last resort' assumed a degree of integration between local training and business support services which existed only rarely at the outset of the BLA pilots. In some local areas, the range of local support is such that it has been very difficult to identify where BLAs can fit into the jigsaw. The HIE pilot suffered less in this regard, with local workforce development support in the domain of the HIE network only.

Perceived benefits

12. Employees and employers alike are positive about the benefits of the BLA programme: more than 80% of employees felt that participation in the BLA programme had increased their skills needed for their job and 70% or more of employers had already noticed an increase in employee job satisfaction, business efficiency and professionalism. It is very difficult to assess to what extent BLAs have led to business growth. The set-up and timing of this evaluation have meant that only a small proportion of companies (12%) had completed their BLA training activities when they were contacted for the telephone survey. The survey evidence that is available points towards increased business profits in half of the BLA companies, but qualitative evidence from in-depth company case studies put these findings in perspective: case study companies struggled to clearly indicate how to measure improved performance and, crucially, attribute this performance to the BLA programme.

Added value of the BLA programme

13. The additionality of the BLA programme compares favourably with other workforce development programmes: full additionality is limited (5%), but so is deadweight (13%). In the vast majority of cases (82%) the BLA programme achieved partial additionality in terms of training undertaken earlier or to a larger scale than would otherwise have been the case.

14. Assessment of the sustainability of the programme is difficult as it is based on company perceptions of their future training intentions, but in general these company perceptions are positive; about half of the BLA companies believe they will approach training in a more systematic and structured way in future.

15. The research findings provide some partial evidence on the importance of information market failures as barriers to SME training. The case study companies suggest that neither latent skills deficiencies nor lack of access to information about training opportunities are the main barriers to training in SMEs. The main barrier appears to be the opportunity cost of managers' and staffs' time spent organising and undertaking training. The BLA programme points towards the right approach for policy-makers to address this barrier. The local delivery agent support fulfils a dual role in both limiting the amount of time the employer has to spend on organising the training and forcing the employer to invest that remaining time.

16. The total cost of delivery per BLA account opened is £3,994; average company turnover is £1.1 million. This means that, for benefits in terms of increased company turnover to exceed costs, the BLA programme must lead to an average increase in company turnover of 0.4%, on top of any increase in performance due to other (non- BLA) factors, by no means an impossible scenario.

Conclusions

17. Overall, to the extent to which the evidence allows the evaluation to draw conclusions, the BLA outcomes appear fairly positive:

• Estimates of additionality compare favourably with similar programmes;
• Sustainability of outcomes sits at a respectable 50%;
• The degree of flexible learning opportunities included is substantial; and,
• The break-even cost/benefit scenario for the BLAs is not implausible.

18. Although the BLA pilot appears to have succeeded in increasing demand for training, BLAs have not succeeded in increasing demand for training in those companies that have traditionally not trained their workforce. The research findings indicate that, while the design of the BLA concept clearly identified the BLA target group, a number of other elements in the design of the concept have contributed to this. Companies not already on the radar of (the workforce development branches of) the LEC networks are unlikely to ever be reached by any programme that does not include a serious and sustained effort at active outreach and that does not provide the substantial additional resources needed for this. Rather than rolling out the BLA pilot programme, it is to be recommended to (continue to) mainstream the successful elements of the BLA delivery, in particular the one-on-one support and the flexible approach to learning in workforce development delivery in Scotland.

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