A pilot scheme involving Sunderland University is being set up by the centre-left think-tank, the Institute of Public Policy Research (IPPR), created in the 1980s by leading Labour party acolytes, including Baroness Blackstone, now Minister of State for Education and Employment in the Lords.

Chancellor Gordon Brown invested much of his political credibility in the success of the UFI when in Opposition. He sees it as the chief means of bringing low-cost, efficient training courses into the workplace.

The institute put flesh on the bones of Labour’s idea in a detailed study, Creating a Learning Network, by IPPR research fellow Josh Hillman.

On the eve of the general election, Mr Brown made a pledge that the new-style institution would help transform management training in the workplaces of small businesses, the backbone of the UK economy.

But there is a nervousness among new ministers that the venture could be over-hyped following constant claims that the UFI could do for industry what the Open University did for higher education.

Many colleges have expressed an interest in being providers of the new courses, packaged as distance-learning programmes, and are hoping to win contracts.

But with the crowded parliamentary agenda, following this week’s Queen’s Speech, the UFI is unlikely to be rushed into existence.

The new Labour Government’s first commitment is to the Welfare to Work scheme. Other initiatives will follow.

The IPPR, meanwhile, is drawing together a range of providers, including the University of Sunderland, adult centres, colleges, libraries, schools and companies to test out the ideas in the IPPR report.

“They will be focusing on the key skills needed in the workplace,” Mr Hillman told The TES. “Tutorials will be available on-line from colleges in the area.”

Most of the details are under close wraps as the management team seeks supportive private firms. The pilot must reflect the new Government’s commitment to public-private partnerships.

Money is coming from the training and enterprise councils and local authorities. Numerous companies are understood to have expressed an interest or to have signed up to the pilot scheme.

The project is expected to run for about a year before there is any detailed consideration of it going nationwide.

The advantage of it being piloted by an independent group of institutions and firms is that the UFI can be distanced from the sort of political label that cursed Tory initiatives, as city technology colleges were in their early days.

Colleges outside the pilot area that have said they want to be involved include Doncaster, which already provides distance-learning programmes to the workplace using new technology.

Principal Terry Ashurst said: “We have all the basic central systems in place to move straight into the sort of work the UFI is looking at.

“We deliver programmes not only to small and medium-sized enterprises but to big companies.”

Josh Hillman warned against assumptions that colleges were already doing what the UFI was planning. But, he said, such colleges would be needed to develop the UFI’s programmes.

The UFI will commission work rather than create its own learning packages and will provide a learning resource for the home as well as libraries and colleges.

A small central intelligence unit will research and monitor market trends and be expected to identify training and skills gaps, and work to remedy them, before they can damage the economy.