EMCC European Monitoring Centre on Change

UK: ERM Comparative Analytical Report on ‘Public policy and support for restructuring in SMEs’

  • Observatory: EMCC
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  • Published on: 14 May 2013



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Mark Carley
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Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

This report examines UK public policy on, and support for, restructuring in SMEs. It finds little in the way of coordinated or explicit policies in this area, but a range of potentially relevant instruments in particular areas such as promoting training/skills and business expansion, and managing aspects of restructuring. Some instruments are general and others are specific to SMEs.

QUESTIONNAIRE

Part 1: Overall policy context

1.1. Has there been public or policy debate on the specific challenges for SMEs and/or their employees in restructuring before the global recession of 2008/09? Please specify, for example:• If so, since when (e.g. up to 3 years before, 3-10 years before, longer), at which level (national, regional, sectoral, all of them) and in which form (‘real’ policy debate mirrored in policy documents or rather public debate mirrored in media, or both)?• Which policy areas (for example, SME policy, entrepreneurship policy, employment policy, social policy, regional policy etc.) were involved? Particularly: Does SME policy specifically deal with restructuring? Does ‘restructuring policy’ specifically deal with SME issues?• Did the public and policy discussions deal with restructuring as such or were specific types or phases of restructuring covered?• Which were the issues/contents that have been discussed? Which specific characteristics of SMEs in restructuring were considered in this context? Was the specific case of SMEs as subcontractors a topic for discussions?• Did the discussions rather deal with the enterprise perspective or with the employee perspective or both?

Prior to 2008-09, there is little evidence of explicit public and policy debate at any level relating to the specific challenges of restructuring for SMEs. Overall ‘joined up’ debate on anticipating and managing restructuring in general was (and remains) rare, with attention instead focusing in a relatively fragmented way at various times on particular phases and types of restructuring.

Debate specifically dealing with restructuring was mainly prompted by developments such as large-scale closures, bankruptcies or job losses, offshoring exercises, the takeover of UK-based firms by foreign companies or, less commonly, the opening or expansion of major facilities. Issues raised in this debate (which rarely led to concrete policy outcomes) included matters such as state aid or incentives to prevent closures or job losses, or attract investment, or enhanced protection against or consultation over redundancies. It was only large-scale restructuring events that tended to attract attention, and SMEs rarely featured, except as suppliers or subcontractors that suffered or benefited from major events.

However, while not being explicitly linked to restructuring, there was considerable debate over some relevant issues, notably in terms of anticipation. This was especially true for enhancing workforce skills to improve workers’ employability and adaptability, thereby enabling anticipation of restructuring and transition to new jobs, and increasing business competitiveness and productivity. This was an important policy of the Labour Party government that took office in 1997 and led to the creation of a new system for skills training (see 2.1). SMEs featured to some extent in this debate and its outcomes, and a number of the instruments developed were mainly or solely targeted at SMEs (notably the Train to Gain scheme – see 3).

Public SME policy, without being explicitly labelled as restructuring-linked, was largely concerned with business expansion, which can be seen as a type of restructuring. It focused on supporting business start-ups, growth and innovation, through a range of measures mainly related to financial assistance - grants, allowances, tax reductions, loans/loan guarantees and help with access to funding – along with advice, guidance and training. Public debate relating to SMEs dealt largely with similar issues, along with matters such as the ‘burden’ of regulation on smaller firms.

Beyond the skills/training issue, debate and action on anticipating and preparing for change and adapting to foreseen restructuring in advance was not prominent at national level, either for SMEs or more generally.

Despite public debate generally focusing on ‘negative’ restructuring events, the UK’s public instruments for managing restructuring were fairly limited. At national level, the few explicit tools included the Jobcentre Plus ‘rapid response service’ (RRS) for dealing with redundancies, introduced in 1998 (see 2.1). Legislation also provided for information and consultation of employee representatives over proposed collective redundancies and business transfers, as well as statutory redundancy payments, protection for employees’ pay-related claims in the event of their employer’s insolvency, and guarantee pay for some temporarily laid off workers. None of these policy or legislative measures were specifically aimed at SMEs or their employees, and in some cases they are of limited relevance to SMEs (see 2.1).

The devolved administrations for Scotland, Wales and Northern Ireland had some role in restructuring-related policy, as did the Regional Development Agencies (RDAs) for the regions of England. This sometimes related explicitly to SMEs: for example, devolved administrations had their own instruments in areas such as supporting innovation in SMEs, or rescuing and restructuring SMEs in difficulty, while some RDAs developed similar measures (see 2.2).

1.2. Did the global economic and financial crisis of 2008/09 cause any change in focus of the above (for example, increased/decreased focus on SMEs and their employees in restructuring, change in policy areas or issues covered)?

The global economic and financial crisis and its aftermath has not, for the evidence available, given rise to any new and explicit debate on SME-specific aspects of restructuring. Its main effect has been an intensification of existing general debates related to restructuring (see 1.1), especially in the light of crisis-related jobs losses and closures. A relatively rare example of a new theme has been an unsuccessful call from some quarters, including SME representatives (see 1.3), for the introduction of a national state-funded short-time working scheme to prevent redundancies.

Some existing policies on restructuring were strengthened when the downturn hit. For example, in the area of anticipation, the government increased funding for Train to Gain, and allocated part of its budget to a ‘response to redundancy’ programme (see 3). In in the area of management, RRS funding was increased (see 2.1). There was some attention to SMEs in the overall strengthening of policies: for example, the additional Train to Gain funding was targeted specifically at SMEs, and new services and flexibilities were added for this group of companies.

The main development in SME-specific public policy in response to the crisis was the launch of a range of finance-guarantee, capital-access and lending schemes (UK1010039Q).

The devolved administrations adopted several new instruments to address the downturn. Notably, the Welsh government launched the ProAct scheme to provide financial support for the wages and training of employees placed on short-time working (a measure rejected by the UK government), and the Redundancy Action Scheme (ReAct) to provide funding for training for individuals facing redundancy, financial assistance for employers to recruit and train redundant workers, and support for employers reducing their workforce. Neither measure targeted SMEs in particular. Scotland revamped its PACE redundancy-response scheme, including its extension to small-scale redundancy situations (see 2.1).

At regional level, there was an increased focus on anticipation. Partly in response to the crisis, in 2008 the Labour government introduced a greater national coordination of economic policy, which included the creation of Regional Economic Forums (REFs), on which the social partners were represented. These forums examined the economic situation and trends affecting their region, in order to draw up an appropriate strategy to anticipate possible restructuring. An example was the South West Regional Economic Task Group.

A new Conservative-Liberal Democrat coalition government took office in May 2010. It took a number of decisions relevant to restructuring policy. For example, as part of general crisis-related public spending cuts, it abolished the RDAs (and effectively REFs) and reformed funding of skills training, including cancellation of Train to Gain (to be replaced by a smaller-scale SME-specific scheme) (UK1012039I). The coalition’s flagship new training-related schemes – such as the Growth and Innovation Fund, which cofinances measures aimed at helping employers develop skills and tackle shortages – do not appear to have significant SME-specific features.

With regard to SME policy, the new government has stressed entrepreneurship and continued with or added to existing policies on promoting start-ups and growth (see 2.2), with the aim of driving economic recovery. It has also pursued an agenda of deregulation and removal of ‘red tape’ for SMEs, which it sees as contributing to a return to economic growth following the crisis. For example, it has exempted businesses with fewer than ten employees from virtually all new legislation for three years from April 2011 (UK1104049I). Some of the SME deregulation measures have been of relevance to restructuring. For example, the government has considered introducing a system of ‘compensated, no-fault dismissal’ for businesses with fewer than ten employees, and simplifying dismissal procedures for small businesses (UK1112039I). The coalition has also scrapped earlier plans to extend workers’ statutory right to ask for time to study or train, which applies only in companies with more than 250 employees, to organisations with 250 or fewer staff (UK1104049I).

1.3. Are social partners or employers’ and employees’ organisations involved in public and policy debate on restructuring in SMEs?• If so, which (types of) organisations and at which levels?• What are their opinions, perspectives, recommendations?• Did they succeed in convincing governments or public authorities at various levels of their viewpoints?

The social partners have an input into public policy relevant to restructuring through representation on various bodies and initiatives, such as the Sector Skills Councils and UK Commission for Employment and Skills (see 2.1), the RRS and PACE (see 2.1) and the former REFs (see 1.2).

The largest organisation specifically representing SMEs is the Federation of Small Businesses (FSB), which has some 200,000 members, mainly firms with fewer than 50 employees. The FSB does not appear to have any specific policy on anticipating and managing restructuring, but various of its positions and contributions to public debate are relevant to the subject, and especially business expansion. Its main demands for public policies enabling SMEs to grow include improving access to finance, ensuring prompt payment, cutting regulation and red tape, simplifying taxation and providing recruitment incentives. On skills and training, the FSB favours public policies that take greater account of the specific situations and needs of SMEs, and concentrate funding on them, given their limited resources. With regard to avoiding redundancies and creating jobs during the downturn, the FSB stressed reform of public employment services, an overhaul of apprenticeships, the creation of a graduate employment scheme for SMEs, a new enterprise allowance scheme for start-ups, the introduction of short-time working scheme (see below) and a moratorium on new business regulation.

The FSB has claimed a number of successes in influencing public policy relevant to restructuring, especially since the change of government in 2010. These include credit-easing for SMEs, deregulatory measures (including the exemption of some SMEs from new regulation – see 1.2), the introduction of a national mentoring service for SMEs, and action to make it easier for SMEs to win public procurement contracts.

The CBI, the UK’s main general employers’ body, has a dedicated SME section, which prioritises issues broadly similar to those highlighted by the FSB.

It cannot be said that trade unions have any specific policy relating to SMEs and restructuring. With regard to SME policy, their general position is that smaller firms need help to improve their performance in areas such as training and innovation. The Trades Union Congress (TUC) has at times called for public SME policy, in terms of support for start-ups and growth, to be less indiscriminate and more targeted and sophisticated. It has also suggested that small firms receive a disproportionate amount of political attention. With regard to anticipation of restructuring, unions have been strong proponents of the upskilling agenda, for example through the TUC’s unionlearn learning and skills organisation, supported in practical terms by their network of union learning representatives (see 2.1). They seek to promote training and skills development in SMEs, though this is hampered by the generally low levels of union membership and representation in smaller companies.

Trade unions support the extension of employment rights and employee representation to SMEs and oppose any moves to reduce current employment regulation in smaller firms, such as the current government’s plans to make it easier for small employers to dismiss employees (see 1.2). They argue that there is no convincing evidence that employment protection legislation hampers the development of SMEs.

The influence of unions on restructuring-related public policy varies with the political complexion of the government. For example, unions claimed the Labour government’s decision to create the RRS in 1998 as a victory for their campaigning, but union influence on the policy of the current Conservative-Liberal Democrat coalition has been very limited or nil. For instance, union opposition to the government’s 2011 decision not to extend to employees of SMEs the right to request time off to train was unavailing (see 1.2). The TUC called the decision a setback for a skills-driven growth strategy, and commented: ‘With a third of employers not providing any training to staff, and SMEs less likely than bigger firms to encourage new skills, this right is just the lever needed to get more people learning at work.’

Unusually, as SME-specific social dialogue is not a frequent occurrence, the economic downturn prompted the TUC and FSB to make a joint contribution to policy debate on SMEs. In February 2009, they called on the government to set up a nationwide publicly-funded instrument to subsidise short-term working and temporary lay-offs (as exists in many other EU countries). The aim was to help businesses save costs and give them a better chance of survival. Wage subsidies could prevent mass redundancies and the resulting loss of essential skills, as well as helping viable companies survive the downturn and ensure they are well placed to compete and expand once their financial situation improves. The joint proposal did not persuade the government to introduce a short-time subsidy scheme.

Part 2: Support instruments

2.1. Please provide an overall assessment about how accessible and suitable public and social partner based restructuring support for companies in general are for SMEs or their employees.• Do SMEs and/or their employees generally have access to the available instruments and are these suitable for their specific needs in restructuring?• Are there specific (types of) instruments (for example, targeting specific types or phases of restructuring, offered at specific administrative levels) that are more/less accessible and suitable for SMEs and/or their employees that for larger firms? If so, why?

Various public instruments seek to increase and update skill levels and enhance employability, with the aim of enabling anticipation of restructuring and transition to new jobs. In institutional terms, a network of employer-led UK-wide Sector Skills Councils (SSCs) address skills needs within and across individual industries (UK0211105F). They promote increased employer investment in skills, with a view to creating jobs and sustainable economic growth, reducing skills shortages and improving learning standards. Linked sectoral National Skills Academies provide training. The UK Commission for Employment and Skills (UKCES) oversees the system and provides strategic leadership on UK skills and employment issues. The Skills Funding Agency channels government funding for adult skills development. Within this framework, there is a range of general skills and training instruments and initiatives available to employers and employees.

The evidence indicates that accessibility of the skills and training system to SMEs tends to be lower than that of larger firms. While particular instruments – notably Train to Gain (see 3) – have reached a large number of SMEs, SMEs remain much less likely than larger employers to provide training to employees (see, for example the UKCES Employer Skills Survey 2011). A 2009 survey by FSB, mainly involving micro-enterprises, found that 71% of respondents had never heard of SSCs, 90% did not know which SSC related to their business and, of those who had heard of SSCs, only 10% felt that they were responsive to the needs of micro and small businesses. FSB takes the general view that the system does not meet the specific needs of SMEs, and especially micro-enterprises, whose main requirement is for short periods of informal learning that can be accredited.

With regard to social partner-based anticipation instruments related to skills/training, a key example is the trade unions’ network of workplace union learning representatives (ULRs), whose role is to promote lifelong learning, and raise interest in training and development, especially among the lowest-skilled workers. ULRs have has a statutory right to paid time off to perform their duties, in workplaces with union recognition, since 2003 (UK0305102F). Since 1998, a government-funded Union Learning Fund (ULF) has financed support and training for ULRs. ULF funding is partly aimed at anticipating and managing restructuring. For example, the 2012-14 funding round’s priorities include developing strategies and approaches to support workers faced with redundancy, and targeting areas of economic growth and future skills.

The access of ULRs to SMEs, and vice versa, is limited by low levels of union membership and recognition at smaller firms. Current data are not available for SMEs specifically, but government figures put union density at 16.3% in workplaces with fewer than 50 employees in 2011, compared with 34.9% in those with 50 or more employees. Unions were present in only 26.7% of workplaces with fewer than 50 employees and only 17.3% of employees in these workplace were covered by collective bargaining – the respective figures for workplace with 50 or more employees were 61.6% and 44.1%. In 2009, according to a unionlearn survey, only 13% of all ULRs were found in SMEs, though this represented a substantial increase from 7% in 2005. ‘Reaching out to non-unionised workplaces’ is a priority for the 2012-14 ULF funding round, and some unions have experimented with approaches such as enabling ULRs to operate across a number of SMEs in a geographical area, for example in the environmental and land-based industries.

One of the most notable instruments for managing ‘negative’ restructuring is the ‘rapid response service’ (RRS) provided by the Jobcentre Plus public employment service in the event of threatened or actual redundancies. The service provides support to employers and employees, such as on-site advice surgeries, links and referrals to other agencies, and information and advice about job-search, vacancies and training opportunities. The RRS budget was greatly increased when the economic downturn took effect in 2008. While Jobcentre Plus offers RRS support when made aware of any redundancies, it provides a full ‘proactive’ service only in cases where 20 or more redundancies are planned. This obviously limits the accessibility of the scheme to SMEs.

Scotland has its own Partnership Action for Continuing Employment (PACE) framework to facilitate a partnership approach in responding to redundancy. Established in 2000, it aims to ensure that local and national public sector agencies respond to potential and proposed redundancies as quickly, effectively and consistently as possible. The scheme provides tailored help and support to individuals facing redundancy, including Jobcentre Plus services, counselling and access to training. PACE originally targeted only large-scale redundancies, and was therefore of limited relevance to SMEs. However, in 2009, in response to the recession, it was refocused to apply to all redundancy situations, regardless of the numbers involved.

At company level, employee representatives have statutory rights to be informed and consulted on a range of matters relating to the anticipation and management of restructuring (relating to the firm’s activities and economic situation, employment, and substantial changes in work organisation or in contractual relations), in businesses where employees have made a valid request for the establishment of information and consultation arrangements. However, the relevant legislation applies only to businesses with 50 or more employees, thereby excluding many SMEs. Further, information and consultation rights over collective redundancies apply only where at least 20 redundancies are planned. There are no such minimum thresholds for information and consultation rights over business transfers.

2.2. Do there exist specific public or social partner based support instruments explicitly targeting at SMEs and/or their employees in restructuring? Please specify, for example:• If so, by whom are they offered (public vs. social partners/employers’/employees’ organisations) and at which administrative levels (national, regional)?• Are the activities of different support service providers coordinated? If so, how and how well does this work?• Which phases of restructuring do they target?• Which types of restructuring do they target?• Do they target SMEs in general, or specific size classes, sectors, regions, legal forms, roles (for example, as subcontractors) etc.? Do they target employees of SMEs in restructuring?• What type of support do they provide? What specific challenges for SMEs in restructuring do they address?• Is there some information about how well they are known among SMEs and their advisors and about how they are generally assessed by the SME sector? What are their strengths and weaknesses? Are there recommendations for improvement?

At present, national public policy relevant to restructuring of SMEs focuses largely on the area of business expansion. There are numerous schemes (such as the New Enterprise Allowance) aimed at promoting business start-ups and initial growth – further details are provided in UK1108039Q. There are also various sources of public support for innovation and research and development (R&D), aimed specifically at SMEs. For example, the Smart scheme provides grants to SMEs to engage in R&D projects in the areas of science, engineering and technology; and the Small Business Research Initiative (SBRI) provides funding to SMEs to develop innovative products to meet specific public sector needs. Further, SMEs receive an enhanced rate of the tax credit aimed at encouraging business investment in R&D.

The devolved administrations also have their own R&D/innovation instruments. For example, SMART: SCOTLAND provides grants to SMEs to support technical and commercial feasibility studies, and R&D projects.

Aspects of current government SME policy of relevance to business expansion include:

  • improving access to finance (see below), through a range of schemes in areas such as loan guarantees, co-investment with ‘business angels’ and equity funds, and access to financial advice;
  • providing advice and guidance on business growth and improvement, notably through the Business Link website, a helpline, support for mentoring and coaching schemes, and an SME leadership and management programme (see below);
  • making new legislation as ‘small business friendly’ as possible; and
  • making it easier for small firms to win public procurement contracts

An important development in public SME policy in the face of the financial crisis was an increased focus on improving lending to SMEs. Discussions between the government and major banks (as part of wider initiative known as Project Merlin) led to a commitment by the banks to lend £76 billion (approx. €97 million at July 2012 exchange rates) to SMEs in 2011 (15% more than in the previous year). The banks also agreed to a range of other measures to benefit SMEs (developed in a Business Finance Taskforce), including support for a network of mentors, and financing a Business Growth Fund to invest in firms with significant growth potential. The banks did not fully meet their SME lending target in 2011, with banks pointing to falling demand for credit from SMEs and business organisations blaming high borrowing costs and overly strict terms and conditions. No new agreed target was set for 2012. In 2012, a new Business Finance Partnership scheme was launched to provide lending to SMEs cofunded by the government and private investors, as part of a general government policy of credit easing for business, which includes a new National Loan Guarantee Scheme for SMEs.

With regard to support for upskilling and training in SMEs in England, the main instrument over 2006-11 was Train to Gain (see 3) which, while not exclusively for SMEs, was largely targeted at, and taken up by, SMEs. It has now ended and is being replaced by a smaller-scale SME-specific programme.

The Scottish government operates a Flexible Training Opportunities scheme, whereby businesses with up to 150 employees can apply for cofunding of training costs, aimed at enhancing employees’ skills and bringing benefits to the business, such as improved productivity.

The UK government funds leadership and management training for owners and managers of SMEs (as formerly provided under Train to Gain) in various ways. Further, in 2012, it launched a GrowthAccelerator coaching programme to support SMEs in England with high growth potential. The scheme provides coaching to managers in areas such as strategy, change management, sales, marketing, organisation and systems, along with expertise on innovation and access to finance.

At the level of devolved administrations, Wales and Northern Ireland have relatively small-scale state loan or loan-guarantee schemes aimed specifically at rescuing SMEs in difficulty and then helping them to reorganise on the basis of a long-term viability plan.

There were formerly a number of public schemes run by RDAs at regional level that helped manage restructuring in SMEs. An example was the East Midlands Pan Business Redeployment Project and Midlands Engineering Industries Redeployment Group (MEIRG), which offered pooled retraining and redeployment services to the employees of engineering SMEs in restructuring situations. However, the abolition of RDAs in 2012 has terminated these schemes or ended their public status.

A wide variety of publicly funded schemes at devolved-administration, regional and local level (for example, through Local Enterprise Partnerships, promoted by the current government to replace RDAs) provide support for SMEs in the form of access to loans and investment, advice, training, mentoring and so on.

No specific information is available on SMEs’ views on the instruments outlined above. The FSB’s 2012 member survey found that 38% of respondent had received support from government funded resources in the previous year (36% of micro-enterprises and 44% of small businesses), and only 42% of these had found the support helpful.

Overall government policy on SMEs and business support is coordinated through the Department for Business, Innovation and Skills – specifically its Enterprise Directorate - and various agencies. However, business organisations have long criticised the system as being too complex and ineffective, and lacking overall direction, and attempts have been made to rationalise and simplify the system in recent years.

Part 3: Good Practice

  • Name of the instrument in national language and English:

Train to Gain

  • Justification for selecting this measure as Good Practice:

Train to Gain has been selected as a ‘good practice’ because of its large scale and take-up, and its generally positive assessment by the social partners and public authorities. While open to businesses in general, it sought particularly to reach SMEs and had a number of SME-specific features, and most employers that used it were SMEs.

  • Date of launch of the instrument and end date (if applicable):

Following a number of pilot projects, Train to Gain was launched nationally across England in 2006. It was amended several times, most notably in 2008. In November 2010, the government announced that the scheme would be abolished. The Train to Gain ‘brand’ was discontinued in July 2011, but some of the main funding mechanisms remained in place until July 2012.

  • Initiator/administrator (organisation):

The government initiated the scheme, which was managed by the public Learning and Skills Council (LSC) and, following the LSC’s abolition in 2010, by the Skills Funding Agency (SFA), part of the Department for Business, Innovation and Skills (BIS).

  • Other involved actors and their roles:

Under the scheme, employers were initially referred to independent ‘skills brokers’, which provided training advice, or could liaise directly with colleges and other training providers, such as learndirect (the formerly publicly owned online learning provider). SSCs had a role in identifying the skills and qualifications relevant for each industry. Trade unions cooperated with the LSC in promoting Train to Gain at workplaces where they were recognised, including through the work of union learning representatives.

  • Source of funding:

The scheme was funded by the government, via the LSC and latterly the SFA. Employers contributed to the funding of some types of training.

  • Target group/eligibility/coverage:

Train to Gain was open to all businesses, but special emphasis was placed on reaching SMEs, and additional services and funding were available to SMEs. In practice, SMEs made up the vast majority of employers involved. In terms of which employees/training were eligible for funding by Train to Gain, this changed over the lifetime of the scheme. Broadly speaking, the basic ‘core offer’, applicable to businesses of all sizes, was full funding for employees’ training leading to first qualifications; at level 2 for all age groups; at level 3 for employees aged 19-24; and level 3 for those aged 25 or older who did not already hold a level 2 qualification. Full funding was also available for the completion of level 1 qualifications and training in basic skills (such as literacy/numeracy). Partial funding was available for some other training. In 2008, the rules on which training was funded were relaxed for SMEs – for example, they could obtain full funding for level 2 qualifications and partial funding for level 3 qualifications, regardless of whether the employee already had a qualification at this level.

  • Phase of restructuring targeted:

Mainly anticipation, with some management aspects in latter phases of scheme’s existence.

  • Type of restructuring targeted:

Mainly business expansion and internal restructuring

  • Purpose/content/characteristics/description of services provided:

The Train to Gain ‘core offer’ provided public funding to employers in England, to enable lower-skilled employees to obtain training leading to qualifications. It also provided tailored training advice to employers. The aim was to contribute to overall upskilling of the workforce and thereby increase productivity and competitiveness.

From its inception, Train to Gain had specific additional features for SMEs. For example, companies with fewer than 50 employees received a contribution to wage costs to cover the cost of time off to train, while those with 10-250 employees could receive support for leadership and management training. In 2008, in response to the economic downturn, Train to Gain was revised and its budget increased, with much of the new funding aimed at SMEs. The reform also added new SME-specific features to the scheme. Targeted at employers with fewer than 250 employees, these included access to small-scale focused training programmes in business-related subjects, and a relaxation of the rules on which training was eligible for funding. Further, funding for leadership and management training was extended to businesses with five to ten employees.

From 2009, also in response to the recession, part of the Train to Gain budget was allocated to a ‘response to redundancy’ programme, targeting training and skills development of workers who were newly redundant or under threat of redundancy.

  • Outcome of the instrument (e.g. number of beneficiaries, effects):

From 2006 to 2010, 1,977,000 employees started training under the Train to Gain scheme, and 1,346,000 successfully completed the training (according to statistics from the BIS-linked Data Service). In February 2010, the LSC reported that more than 175,000 employers had been involved in the scheme. In the 2007-09 period, according to the LSC, around 97% of employers involved in the scheme had fewer than 250 employees. Over 40% had 10-49 employees, while around 20% had one to four employees and a further 20% had five to nine employees.

Based on the findings of regular surveys of employers and employees involved in the scheme, the LSC stated in 2010 that Train to Gain performed well in encouraging employers to engage with training and development of staff, and that employers had been able to train more staff and give them access to higher-quality qualifications than they would have done otherwise. Employees’ satisfaction with Train to Gain was high, with more than 90% pleased with their training.

A 2008 Office for Standards in Education, Children’s Services and Skills (Ofsted) report found that Train to Gain was successful in raising employees’ personal skills and knowledge and in providing them with qualifications to recognise their vocational competence. A majority of employers interviewed reported various benefits such as improvements in work practice, staff retention or, less commonly, improved competitiveness.

A 2009 National Audit Office (NAO) report found that three-quarters of surveyed employers considered that training under Train to Gain gave their employees useful job-related skills. While a majority reported no difference to profit margins or sales, two-thirds reported improved long-term competitiveness, and around half an increase in productivity. Learners reported benefits including improved work skills, self-confidence and attitude. Around a quarter reported a pay increase, promotion or bonus as a direct result of their qualification.

  • Strengths/success factors of the measure:

From the perspective of the current report, a strength of Train to Gain was that it was one of the few restructuring-related instruments that made special, tailored provision for SMEs, for example giving them access to ‘flexibilities’ and small-scale focused training programmes, in addition to the scheme’s ‘core offer’. It was used principally by SMEs.

As well as the positive results listed above under ‘Outcomes’, specific strengths/success factors identified in various reports by LSC, Ofsted, NAO and the FSB included the following:

  • The scheme focused strongly on employers’ actual training requirements, leading providers to respond more fully to employers’ needs.
  • Train to Gain helped to build a culture of employer investment in staff training and development, with many employers that used the scheme making at least some contribution to the costs of training.
  • From a trade union perspective, the scheme allowed them to promote their work on training at the workplace, and their involvement in the Train to Gain process was formalised in a protocol signed by the TUC and LSC.
  • Weaknesses/bottlenecks of the measure:

Specific weaknesses/bottlenecks identified in various reports by LSC, Ofsted, NAO and the FSB included the following:

  • Many employers used Train to Gain to fund training that they would have provided anyway, rather than the scheme leading to additional provision.
  • The scheme was complex to administer, with frequent changes to funding and rules.
  • There was a frequent lack of awareness among smaller employers, and especially micro-enterprises, about some of the SME-specific services offered by Train to Gain. Further, the scheme did not sufficiently take into account the specific nature of training in micro-enterprises.
  • The fact that the qualifications involved were in many cases at level 2 or below meant that they did not make substantial improvements to employees’ technical or practical skills.
  • Employers were not sufficiently involved in employees’ programmes of training or assessment.
  • The eligibility criteria did not allow sufficient access to training for employees who already had a qualification but in an unrelated area, or focused too narrowly on the completion of a full award.
  • There were weaknesses in the programme’s management, initially characterised by over-ambitious targets, and underspending as the scheme failed sufficiently to expand demand for, and supply of, training. When wider eligibility for training and the onset of the recession increased the attractiveness of the programme for employers, the budget could not fully meet demand.
  • Was the instrument formally monitored/evaluated? If so, please specify (by whom, how, what were the finding and how were the findings used etc.)

The delivery and performance of Train to Gain were monitored on a continuing basis by the LSC and later the SFA. The LSC conducted regular research into the views of employers and employees involved and various adjustments were made to the instrument in successive funding rounds. Various external public bodies evaluated Train to Gain, including the NAO), Ofsted and the House of Commons Committee of Public Accounts. Their key findings are summarised briefly above under ‘Strengths/success factors’ and ‘Weaknesses/bottlenecks’

  • Weblink:

The former official Train to Gain website can be accessed through The National Archives web archive.

  • Information sources used for filling this section:

Archived former official Train to Gain website

Archived former Learning and Skills Council website

Skills Funding Agency website

BIS website

TUC unionlearn website

FSB website

Ofsted website

NAO website

House of Commons website

Commentary

There is arguably little debate on ‘restructuring’ as a single integrated concept in the UK and a coordinated or explicit set of national public policies for anticipating and/or managing company or economic restructuring is absent. This applies to SMEs as well as to larger firms. Instead, the UK has a range of public instruments that are, potentially at least, of relevance to particular aspects of anticipation (notably relating to skills and training) and, to a lesser extent, of management (notably relating to redundancy, reemployment and retraining), and applicable to specific types of restructuring, especially business expansion, internal restructuring and bankruptcy/closure. SMEs have difficulties in fully accessing some of the general instruments. Instruments targeted at SMEs tend to focus largely on business start-up and expansion, and to a lesser extent on skills/training.

Business policy is largely devolved within the UK and the administrations for Scotland, Wales and Northern Ireland have developed their own instruments relevant to restructuring, a number of which are SME-specific. In some cases, the devolved administrations have taken a more interventionist role than the UK government, notably in terms of managing restructuring. Within England, the current government has largely abolished the regional level of policy-making, which had previously developed a number of relevant instruments.

Mark Carley, IRRU/SPIRE Associates

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