A parliamentary committee says that the UKeU, set up to offer university courses online, failed because it allowed technology to drive its strategy

A government Internet scheme to attract overseas students to UK universities failed because it had no understanding of consumer demand, got carried away by the dotcom boom and allowed technology to drive its strategy, according to a report released by MPs on 3 March, 2005.

The report by the Commons Education and Skills Committee says that the UKeU scheme attracted just 900 students against a target of 5,600 and cost £50m before it was shut down last year.

The committee is highly critical of bonuses paid to senior staff which it says were were "wholly unacceptable and morally indefensible". The report rejects claims by the former chairman and chief executive that their rewards were in line with private sector practice and reflected the risk involved.

"Any company which paid bonuses of this kind having underperformed in the way that UKeU did would face severe criticism from its shareholders," says the report. "It was backed with £50m of public money; the risk was to that public investment, not to the company."

The committee highlights a £44,914 performance related bonus paid to John Beaumont, the UKeU's former chief executive, in addition to his £180,000 annual salary in March 2003. The project was a year behind schedule at the time.

One key reason for the scheme's failure was its approach to technology, says the report. The UKeU focused too much on providing an integrated e–learning platform and allowed technology to drive its strategy.

"It had a skewed focus on the platform, based on an assumption that once this was right, the original projections of very high student numbers would be easy to realise. Unfortunately this assumption was not based on research evidence, but on an over-confident presumption about the scale of the demand for wholly Internet based e-learning."

There was also no formal market research carried out to assess demand for e-learning, it says.

"UKeU's attempt to form genuine partnerships with the private sector was a commendable aim and could have helped it to stay competitive and market orientated," says the report. "Instead, UKeU became another example of how difficult the public sector finds it to form successful partnerships with the private sector."

The MPs have called on the government to clarify its national strategy for e-learning.

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