05 Nov 2012

Education system needs to adapt to support the UK's smallest firms

Less than half of the UK’s smallest firms (45% of those with 1-4 employees) believe that the education system responds satisfactorily to their needs, according to a new survey.

In addition, smaller firms continue to report a worse performance than larger firms, with companies in the £100,000-£250,000 turnover bracket reporting a negative net sales balance of -11%, compared with +19% for firms in the £1m-£5m bracket.

The survey also highlighted a continuing trend that small to medium sized enterprises' (SMEs) are being hit harder by the on-going economic crisis compared to their larger counterparts, with firms pessimistic about their prospects for growth in Q4. “Economic environment or demand” remains by far the greatest concern for SMEs, irrespective of size, sector or region. Overall, 42% of respondents identified it as the main problem affecting their business.

These findings come from latest edition of The Quarterly Survey of Small Business in Britain, produced by The Open University with support from The Association of Chartered Certified Accountants (ACCA) and Barclays Business Banking.

Manos Schizas, Senior Economic Analyst at ACCA, said: “The report's findings seem to confirm suspicions that the unexpected growth in Q3 is largely due to a temporary effect from the Olympics. Only London's SMEs are turning their optimism into jobs. On the other hand, even that is something to celebrate.”

The survey examined SME’s views on education and training, considered critical to the continued competitiveness, innovation and resilience of UK firms. The most frequent calls in the survey were for higher quality vocational education, particularly in areas such as engineering and design.

David Foreman, owner of Middlesbrough-based structural glass installer Forefit Ltd and a respondent to the survey, said: “As a nation of builders (not just construction but ship-builders, car-makers, aircraft manufacturers etc.), engineers and scientists, I'm not sure that we are doing enough to serve students wishing to follow a practical, hands-on route in to a career.”

Conversely to the smaller firms, almost three quarters of the UK’s medium-sized firms (73% of firms with 50-250 employees) believe the education system meets their needs. Almost half of all respondents were in favour of keeping the current mix of vocational and academic courses at secondary school level. Amongst those wanting to see further changes, there was more support for increasing vocational courses (38%), with a minority wanting additional academic courses (14%).

The survey also revealed marked differences in the amount and type of staff training provided by the UK’s SMEs and in their experience of management training. For example, while the proportion of medium-sized firms that did not offer any formal training to staff was small (6% of those with between 50 and 250 employees), the figure increased to more than two fifths (44%) for firms in the ‘1-4 employee’ band. Levels of formal management training varied by industry sector: the lowest levels were reported in agriculture, forestry and fisheries (36%), retail (42%) and manufacturing (48%), while the highest were to be found in hotels and restaurants (64%), closely followed by business services (60%) and transport (57%).

Professor Rebecca Taylor, Dean of The Open University Business School, said: “This survey gives a voice to the views of SME owners and managers, and reveals mixed views on the appropriateness of existing provision. The evidence on staff and management training poses particular challenges for those of us working in the sector, as we seek to deliver more effective models for practice-based learning that break with the traditional divide between classroom and workplace.”

The full survey is available as a free PDF download at:

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