Bill Rammell - OU Students' Association conference
Open University, Milton Keynes - 26 April 2008

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Good morning everyone. I must begin by thanking Lisa and the Association for this chance to come to Walton Hall and talk to you. I gather that the conference is being webcast, so I must also say hello to anyone who's joining us over the internet.

I'm going to speak for a few minutes and then you'll have a chance to ask any questions you'd like to. I'll be around for the rest of the morning, so I hope I'll be able to talk with some of you more informally as well.

It would be an exaggeration to claim that the Open University's relationship with the Government in general and my Department in particular has been strained over the last few months. The cause of that isn't hard to find. It's our decision to redistribute some of the public funding for ELQ students towards more first time entrants.

And that's a pity. A pity because the emotional links between the OU and my Party, the Party that created it forty years ago, remain very strong. And a pity because the OU is such a prominent landmark in the British higher education system that we ought to have more, and more important, things to discuss than this single issue.

I know that ELQs will be an unavoidable issue for us today. But the main thing I want to do this morning is set the ELQ policy in the context of the Government's wider ambitions for skills. What place we see in higher education for older learners, part-timers, people in employment and distance learners. And what I think the OU can and must contribute to making our ambitions a reality.

As Shakespeare almost said in Julius Caesar, 'I come to praise the OU, not to bury it'. I want to praise it not only because of its past record in providing opportunities for millions of learners without formal qualifications to benefit from HE but also because of its forward plans to meet the challenges of the twenty first century, working with partners like HEFCE and the BBC to name but two.

What are the challenges? The Leitch Review of skills has set us the task of equipping at least 40 per cent of adults with graduate-level skills by 2020. That's about ten percentage points more than now. At the same time, demographic changes mean that universities' traditional intake of 18 year-olds will decline after 2009. Three quarters of our 2020 workforce have already left school.

The implication of all that's not hard to see. We're going to need to get many more mature people into higher education over the next decade. You of all people well know what that means. It's no good expecting large numbers of adults with careers, families or mortgages to behave like 18 year-olds and go off to university full-time for three or four years. It's just not going to happen.

For most of the 171 higher education institutions in this country, the consequences of all that are going to be very challenging. They're going to have to enter what is, for most, very unfamiliar territory.

Dealing with older, possibly more demanding and certainly more discerning students.

Educating more part-timers. And more students who aren't just part-time, but who undertake most of their learning in their workplace or at home.

Coping with a more varied student body, in terms of age, ethnicity, social background, prior qualifications, personal circumstances and individual aspirations.

Embracing closer involvement by students' employers not just in funding higher education, but in designing and delivering it.

I could go on. But I'll stop there and just ask you whether any of that sounds at all familiar.

Of course it does.

It's the sort of learning and the sort of student population that the OU was set up to deal with 40 years ago.

It's the sort of higher education from which over 200,000 students are getting from this university every year.

80,000 of them do not have the prior qualifications usually needed to get into a conventional university.

140,000 of them are in full-time employment.

And to date, over 50,000 employers have sponsored their staff to take OU courses. We want and need much more of this type of provision in which employers, institutions and the Government through HEFCE sit down and work out how we can ensure more of the workforce acquires higher level skills. This is not something entirely new. The OU is a national asset as well as a national treasure and it does some things on a scale which no other university could do. In those areas, it is important that it works together with other national bodies like HEFCE so that reaches even more adults who have untapped potential and could benefit from higher level qualifications. I am pleased at what is now happening.

The Government's calling on universities to take a much more flexible approach to qualifications. The OU virtually invented the ladder of qualifications from basic foundation units to full Honours credits, which adults can climb at their own speed and as far as they wanted.

The Government's calling on universities to develop closer links with schools.There are schools that offer bright teenagers OU credits alongside their A levels as an extension activity. Only a few weeks ago I was at Leventhorpe School in Hertfordshire presenting OU certificates to 6th-formers.

We also want to increase the number of STEM graduates which is why they are treated differently under the ELQ rules. Here again, the OU is helping us to take forward this policy through the innovative way it delivers courses and enables STEM students to access excellent teaching.

I'm not saying that the OU, too, won't have to change in some ways and to move with the times. But I'm absolutely insistent that this creation of the idealistic1960s has an enormous amount to offer the harder-edged, globalised, competitive world of the 21st century.

Now, everyone at the OU knows all this. But the connection some people here seem to have missed, is the fact that in these circumstances the Government would have to be completely mad to do anything that endangered this institution.

Which brings me to what boxing promoters call the main event.

Many of you will have heard the arguments about ELQs before both in relation to the principles and what it will mean for the OU. I'm not quite going to say that you have made a mountain out of a molehill but I really think it is important to set what we are doing in the wider context. This is not a cut. It is a redistribution. Overall funding for higher education has gone up and will continue to go up. By 2010, we will be spending 30% more a year in real terms than we were in 1997.

So why are we making this change. The numbers tell the story.

Twenty million people in this country do not have a first HE qualification, half of whom are women, a quarter of whom are over fifty and a quarter of whom have a disability. Over two million are from ethnic minorities. They are also much more likely to come from less well-off backgrounds.

These are the priority groups who will have more opportunities as a result of the ELQ policy, especially the six million with A levels or equivalent who do not progress to higher education under the current system and we need to make a start in offering them from this September. The majority are likely to be mature learners from non-traditional backgrounds who want to study part-time.

In other words they are exactly the sort of potential learners a Labour Government had in mind when it first created the OU. If Harold Wilson and Jennie Lee had not been confident that millions of adults without formal qualifications had the talent to benefit from going to university, the OU would never have been built and none of you would be in this room today.

In exactly the same way, this Labour Government took the ELQ decision first of all as a matter of principle and on grounds of fairness and social justice.

The ELQ policy simply sharpens the incentives in the system for universities to produce more of them to match our economic competitors. An extra 5 million people will need to go through university by 2020 if we are to achieve the skills base we need to prosper.

Countries like the USA and Japan have already reached that level and they are not going to stop. Lord Leitch not only set out the challenge, but was clear about the priorities for funding: the higher the qualification, the greater the level of individual or employer contribution. He argued that that was fair, given the benefits for individuals and employers who gain higher-level skills. Those principles are being applied across the adult education system.

Of course we value those who have got a first higher education qualification and who want to retrain in a different subject. There should be opportunities available for them through, for example, Foundation Degrees, employer co-funded provision and in some cases career development loans. And we are only redistributing about 30% of the £325 million we currently spend on ELQ students. We will still be spending more than £200 million a year on ELQ students in 2010, not least to support many of them to do subjects, especially STEM subjects, which are strategically important to this country.

Those with a first degree earn on average £100,000 more after tax over their working lifetimes than those with just A levels. That financial return is among the highest in the world and what is more, it gets bigger as people get older. There is no evidence that qualifications obtained years ago lose their value in terms of what employers are prepared to pay graduates.

Against that background, the system is not, and is deliberately not intended to be, as generous as regards public funding as it is for those without a degree.

I am deeply concerned about some of the misleading figures which have been bandied about what this change means for the OU.

First, the OU's share of the amount being redistributed is nothing like the £30 million figure which has appeared in some of the letters I have read about this. It will be £3.8 million this year and increase by a similar amount in the following two years. £3.8 million a year might sound a lot but it is about 1 per cent of the total income the OU now generates each year, over half of which we provide in HEFCE grant. The OU already raises over £120 million a year in tuition fees and has over £100 million in reserves. It is one of the biggest beasts in the educational jungle.

Far from its grant from HEFCE being cut by £30 million this year, the OU actually received an increase of over £4 million and it gained from the withdrawal of ELQ students from the allowance for widening participation. We have explained on a number of occasions that this means that if it recruited another 3,000 part-time students in each of the next three years it would recoup its share of the £100 million to be redistributed.

For an institution with over 200,000 students that ought to be manageable.

That's the context in which we need to see ELQ policy. It's not a question of stealing from the poor to give to the rich, or taking money away from older learners in order to give it to the younger ones. It's not even a redistribution of wealth from the haves to the have-nots in any meaningful sense.

What it does represent is a redistribution of opportunity. And if that's not what the OU thinks it ought to be about, the something has gone horribly wrong.

The changes that we are making won't disadvantage anyone in this room and there's no reason why what is at the end of the day a redistribution not a cut has to disadvantage the OU. The ELQ policy is a challenge, but a challenge that can be met. My Department, HEFCE and me personally are all willing to help the OU come to terms with it and find the right way forward. I want to say publicly today that I very much welcome the steps it is already taking to work with us and HEFCE in some of the areas I have mentioned.

To help the OU be as worthy of the mission for which it was created in the next forty years as it has been for the last forty.

And I can tell you today that this help is already being given.

Higher education is changing and the OU can do much more than simply change with it. The OU should be leading the process of change. It should be showing the rest of the sector how to reach out with new kinds of courses to new groups of learners, and to support them through new kinds of learning experience.

I normally spend my Saturdays in Harlow trying to help my constituents with their problems. With the local elections less than a week away, there are more reasons than usual why I should be in Harlow today.

I hope the fact that I'm here in Milton Keynes instead gives some indication of just how great a force the OU can be in 21st-century higher education. And of just how tragic I think it will be if it doesn't rise to the challenge and live up to that role.

I've called the OU a big beast already. Everyone who cares for and admires this place, as I do, must be careful not to let the big beast become a dinosaur.

I was having a look at your website the other day and I found some words there that I thin sum up the attitude I'm talking about. They're the words of Lisa Carson, your own President: She writes: "I'm going to lead this organisation to a future where it is stronger, where it is more relevant to the thousands of students it represents and where it is more confident that it sits full square in the 21st century rather than being afraid of leaving the 20th century".

That's the right approach for your Association.

And I think that's the right approach for your university, too.

Thank you.