The OU Club


  • All 18 year olds to be awarded an education and training grant worth £15,800 to fund either university education or to purchase an apprenticeship contract with a local employer. The grant is sufficient to pay for the cost of an Open University Degree
  • Open University to be expanded to accommodate upto 300,000 new undergraduates each year.
  • Open University Students to access social, academic, multimedia and laboratory facilities through an OU club within the Tertiary Institutions mapped out elsewhere.
  • Tuition fee loans to be abolished in the light of the above.
  • Consultation with students to reform maintenance grants and loans with a view to abolishing the loan elements.
  • Rules on housing benefits for 18-21 year old to be harmonised for students and apprentices.
  • Apprentices on day release to receive a maintenance grant for their college time at the same rate, pro rata, to students in full-time education

a) Intro..

1. I have set out in other proposals to establish Guild faculties in every local area of the country to support creating 1.2-1.5 million training posts for 16-21 year old apprentices.

2. One of the key recommendations of the Wolfe Report into vocational education was the need to ensure that employers offering training to youngsters of school age receive compensation for their efforts. They are performing the role of educators. Wolfe also lamented that fact that many small employers are locked out of funding available for training providers. I whole-heartedly agreed with these key recommendations.  I have proposed that all existing funding for 16-18 year olds be converted into Teacher-Trainer Allowance that , as Wolfe puts it, follows the student. Educational institutions and employers alike would be able to claim against these allowances commensurate with the hours a student-apprentice spends with them.

3. The above will work for 16-18 year olds but it leaves a question over how matters will be funded for 18-21 year olds. I envisaged a situation where 18 year olds graduate from their Tertiary institution and move either to an undergraduate course at university or to the next level of an apprenticeship with a view to becoming time-served in their craft of profession.

4. The Guild programme, mapped out elsewhere, is designed to create a dual system of education in this country that will rival that of the Germans. One of the essential elements of a dual system, as far as I am concerned, is parity of esteem. That is too say that both vocational and academic specialisms are held in equal esteem by all the stakeholders.

5. This means that any consideration of a framework for higher education covering 18-21 year olds must give equal weight to both academic and vocational pathways and this should  be reflected in funding.

b) Funding for Higher Education & Training

1. Tuition fees were first introduced by a Labour government in 1998. They were initially set at a £1,000 per year.

2. This process was started under New Labour in response to Universities demanding more funding for degree courses. The Government of the day recognised that the country could not afford it. This presented a problem. The Government had expressed a strong desire for more young people to go to University. The residential Universities, on the other hand , hold a virtual monopoly on awarding degrees in the UK and demanded more money. A collective position by the Universities on funding effectively held a gun to the Government’s head and this remains the case today.

3. The system of student loans for tuition fees was introduced to make up the difference .
between what the universities demanded and what the government granted. The level of these fees have been increased by successive administrations. The latest raising of the tuition fee cap to £9,000 was effectively shifting higher education to a demand driven system funded by student loans rather than direct subsidy by the tax payer. Teaching grants by the Government to Universities now constituent a very small part of university funding per student.

4. This would appear to be a privatisation of university education in all but name. The Government, nevertheless, continued to regulate the cost of degree courses. First by imposing a cap on fees and secondly by imposing limits on the number of undergraduate places. This is managed by fining universities for over-recruiting on their courses. These gaps are due to be removed.

5. We are currently providing 10.2 billion per year in student loans. This is a mixture of maintenance loans and tuition fees loans. This does not reflect the full impact of raising the cap on tuition fees to £9,000 per year. The Office for Budget Responsibility forecasts that financing student loans will raise to £17.2 billion by 2018-2019. The OBR does not however break down this amount between maintenance loans and tuition fees which is regrettable.

6. The Institute of Fiscal Studies believes that students could need to borrow upto £40,000 to finance a degree course with the increase in the Tuition fee cap. They further suggest that three quarters of these will never fully repay their loans. They estimate that upto £17,000 per student will end up being written off. This is problematic to estimate since it requires speculation as to the earnings of each student over the course of their working life. Current budgeting models used by the Government assume that 46% of student loans will not be recovered.

7. This whole business of tuition fee loans has descended into an unsustainable farce. It is has been so mangled by political dogma and compromise over the years that it has degenerated into a mess of smokes and mirrors based on highly subjective assumptions on future earnings of graduates. Parties have become so entrenched in their positions that they failed to see that the entire notion of student tuition fee loans had been fatally compromised. I set out some criticisms of the student loans system elsewhere. ( Appendix1 )

9. I have to say that I was opposed to the Government giving into the universities that demanded more funding. Most of these campuses were built using public funds and should have been regarded as a state-owned. We have seen in recent years how those universities are quite happy to drive up the cost of a degree in the face of successive governments who are unable or unwilling to say no. The notion that this is all being paid for by student loans is clearly a fallacy.

10. In contrast to have the above, the Skills funding Agency provides an umbrella for £4 billion of funding for with respect to funding  vocational and other training of adults. This includes the 24+ advanced learning loans. This is a far cry from the parity of funding that i believe a dual system of education and training would demand.

11. I believe that the escalation in costs of university education will continue unabated unless the Government finds a means to break their strangle hold on undergraduate education. There is a way that can be done

12. I hold that what we , as a country , are prepared to provide to young people over the age of 18 wishing to go to university we should also, for the most part, be prepared to provide for young people wishing to learn a trade or vocation.

13. We need an approach to funding education and training for 18-21 year olds which puts them in the driving seat , is true to the notion of a parity and is affordable from existing budgets

c) Reform of Funding for Higher Education and Training.

1. All students/apprentices should be credited with a lifelong education grant at the age of 18. This will be the equivalent of the full tuition fees for a degree from the Open University. This would be worth £15,800 at time of writing.

1.1. The education vouchers will be attached to a national insurance number on the holders 18th birthday. They can be used towards the cost of a university education or to purchase an apprenticeship with a local employer. The vouchers, for apprentices, take over from the Teacher-trainer allowances for 16-18 year olds set out in the Guild programme.

1.2. The vouchers do not need to be claimed at the age of 18. They can be claimed at any time after the end of compulsory education as along as they are applied to either a Bachelor’s Degree or professional/craft training. They are not transferable and cannot be converted to cash or used for any other purpose. They do not have to be used all at once. A person would be able to make as many claims as they like against these vouchers over the course of their lifetime until the balance is exhausted.

1.3. The vouchers will worth the cost of a Open University degree course. This is currently worth £15,800 at the time of writing . An employer, on the other hand, would be able to claim this amount to offset the cost of training and employing 18-21 apprentices. They will be able to draw down against these vouchers over the course of the training  contract .

1.4. Issuing vouchers of this sort each year is expected to cost £9.48 billion per year from BIS budgets for Student loans and Skills funding.

2. The Open University will be expanded to ensure that there are sufficient places to meet demand from 18 year old graduates from Tertiary institutions

2.1. The planning assumption will be to create places for 900,000 OU undergraduates over three years at the rate of 300,000 per year. The OU will also need to expand its offerings to ensure a full catalogue of courses are available.

3. Adult Education Faculties in Tertiary institutions , as mapped out in the Guild programme,  will provide social, recreational and academic facilities for all registered OU students in their catchment area. This will be in the form on an OU Club.

3.1. Some courses cannot be delivered by distance learning alone. OU needs a bricks-and-mortar facility in every local area for students to access academic , multimedia and laboratory facilities. These will be provided by Tertiary institutions under the auspices of their Adult Education Faculty.

3.2. The National Union of Students should be invited to establish social and recreational facilities for OU students in Tertiary Institutions..

3.3. This is the additional role for Adult Education Faculties that was referred in the reforms suggested by the Guild Programme.

4. Tuition Fee loans for Students would be abolished under this system.

4.1. The Education & Training  Grants do not need to repaid. They are sufficient to fund a degree course with the Open University. The voucher can be applied to tuition fees charged by residential universities but the student will need to make their own arrangements for funding any shortfalls.
5. Education institutions seeking to claim against educational vouchers must be licensed to do so by DfE.

5.1. There was a brief experiment with lifelong learning vouchers by the previous administration that was shut down after frauds were discovered. DFE will need to ‘audit’ institutions claiming to offer Bachelor Degree course or professional qualifications before granting a licence that allows that institution to claim against the grants.

6. Maintenance Grants and loans for students will continue to be available, for the interim, subject to consultation with students on new arrangements.

6.1. The current rates and arrangements for maintenance grants and loans will remain in place but will be subject to review with the following principles in mind:

6.2. I object, on principle, to the size of a student’s maintenance grant being determined by parental income. There’s no such implied obligation for parents of 18 year old apprentices. 18 Year olds are legal adults in their own right and should be treated as such regardless of which path they pursue. I would want to see the system of maintenance grants providing a flat rate for all.

6.3. I would prefer to see an end to maintenance loans. This is part of the student debt mountain that we should work against.  I am of the view that we should just add the non-recoverable part of the loans (46%) to the existing maintenance grants and have done with it. This would do away with the expense of trying to recover student loans all together. It would add £2,640 to the existing living at home maintenance grant raising it to £6,027. A London weighting would add a further £1,044 to this sums .

6.4. These amounts would represent a cut in the total funds available for the cost of living for students when the existing combinations of grants and loans is considered. It would arguably make it difficult for students to move into their own place during term-time but the principle behind these reforms is that we are funding a non-residential Open University Course. It would be price to pay for ending loans for maintenance as a well the loans for tuition fees. These proposals do not allow funding for apprentices to move into the own place as 18-21 year olds and so enabling students to do so would be an inequality.

6.5. Any changes to the funding of maintenance grants and loans must be made within existing budgets.

7. Pro-rata grants for part- apprenticeships on day release to Guild Faculties should be introduced at earliest opportunity.

7.1. Local employers will not be expected to compensate apprentices for the hours they spend at their Guild Faculty on day-release. A maintenance allowance to compensate for loss of earnings for apprenticeships should be introduced pro-rata to the same maintenance grant awarded to university students. There should be equal treatment for students and apprentices in this regard.

8. The Rules on housing benefit for students should be reviewed to create a system that is fair to both students and apprentices.

8.1. I am concerned that some full-time students are entitled to housing benefits and others aren’t. I also note that part-time students appear to be entitled to housing benefit, provided it is not for halls of residence, regardless of their circumstances. Full-time apprentices are not, as far as I know, entitled to anything.

8.2. The rules on housing benefit for 18-21 years olds need to be harmonised and equitable.

9. Interest rates on student loans, should they continue, will be fixed as a variable premium above base rate and not the current RPI plus formula used by the government.

9.1. This should end the profiteering on student loans that seems to be going on.

10. DfE will retain discretionary budgets to fund an additional year’s tuition at the Open University for courses that typically last four years.

10.1. There are some undergraduate courses that run to four years and we should be prepared to fund this extra year if the funds are available. A decision on this funding must be made before the students registers for the course and is binding on the department once made. We can allow the department to withdraw funding for a final year when a student is part way through their course.

11. Maximum draw-down for employers in any one year will be £5,250

11.1. Larger employers can apply to offset their PAYE/NIC liabilities by the above amount using a monthly rate for each apprentice they employ. They must agree to have the Local Guild acting as auditors to verify that the apprenticeship training is taking place.

11.2. Small employers can contract an apprentice through the Guild faculty and simply pay-over the difference to the Guild. In this regard, the Guild would be acting in a similar fashion to an Apprenticeship Training Agency. Either approach should minimise the administrative burden to the employer


d) Closing remarks:

1. The introduction of tuition fees may have seemed like a solution at the time but has subsequently descended into a farce. A privatisation in all but name with hidden government subsidies. It is time to end this farce and allow the universities to go their own way.

2. They will stand or fall by their ability to attract students at home and abroad. They will need to re-invent themselves and possibly merge with other institutions or go out of business. Our elite institutions are assured. They have endowments and international reputations which means they will never be undersubscribed. This is the nature of market forces.

3. The Open University enables this country to make a pledge to meet the cost of a degree course for every 18 year old. That pledge is part of what defines our society as a strong one . We must be prepared to make a similar commitment to those that choose an apprenticeship. The Education and Training Grant means that we can promise to help all employers off-set the cost of training 18-21 year old apprentices.

4. The above reforms along with the Guild programme set out elsewhere will give the UK a dual system of education and training that gives both students and apprentices a start in life. A system that can be funded from existing budgets and provide downward pressure on the associated costs.

5. Key to these proposals is a major expansion in the Open University. This will break the monopoly of residential universities over under-graduate education in this country. Next time they try holding a gun to the government’s head on funding then they can be invited to pull the trigger.

6. We’re bullet proof. We will have the people’s university.

RSM, CoE, OS, KoR,

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