12 June 2007

Jim Murphy MP

Secretary of State for Work and Pensions

Open University Curriculum Strategy Forum

Skills, Employability and Social Inclusion

Tuesday 12th June 2007

[Check against delivery]

I am delighted to be here today. The Open University, I believe, encapsulates so much of what we as a society should be striving for. As the Labour manifesto proclaimed back in 1966, its creation gave “genuine equality of opportunity for millions of people for the first time”.

Despite misgivings at the time, doubts on feasibility and fears about quality, the Open University is now a world renowned success. I know my colleague Bill Rammell was with you last year to launch your Open Learn website. In a world where, so often, information has a price attached, it is refreshing and inspiring to see the internet being used in such a positive, open way, where everyone can have access to learning for free.

The services you offer will only become more essential in the future. The development of skills, especially of those already in the workforce, will become ever more important in the years to come.

In a decade’s time, the economies of China and India are each likely to be bigger than the economies of the UK, France and Germany combined. Workers are competing not just with those in the same town or even country; but in a world wide labour market.

Take the example of food production. A well known food company catch prawns off the coast of Scotland; fly them to China to be shelled; and then fly them back to be sold as local Scottish prawns.

We cannot shelter ourselves from the impact of globalisation. Indeed, I believe the success of the UK labour market is down to us embracing, rather than protecting ourselves from globalisation. But we do need to adapt.

On top of the impact of a global labour market; we must also face the fact that shortly, there will be more people reaching their 85th birthday than starting primary school. From ten workers supporting ever pensioner in 1950; now there are only four, and in a decade’s time this will have reduced to three.  

So our aim of eighty percent employment is not arbitrary. Our success in tackling the challenges of the years ahead rests not simply on technological improvements or scientific advancement – important though they are. It rests on people; individuals able to fulfil their potential – important for them, and critical for the country.

Therefore we must ensure that all those who are able, fulfil their ambitions in the labour market. This not only means extending opportunities to those who have traditionally faced disadvantage in the labour market, but also enabling people to advance in a career.

Since 1997, the most disadvantaged groups have seen their employment rate rise faster than anyone else – but for one exception: those with low skills.

And there is a strong link between low skills and social divides.

• More prosperous adults are roughly four times more likely to reach level 2 or above in literacy than those from the poorest households.
• Of the 4.6 million people with no qualifications, 3.5 million fall into at least one of the groups which are specifically targeted in my department’s Public Service Agreement targets - disabled people, lone parents, people over 50 and those from an ethnic minority.  
• And as last year’s report on child poverty by Lisa Harker made clear, as the premium placed on high skills in the labour market increases, the skills of parents will become ever more significant in its impact on lifting children out of poverty.

Of course, skills alone will not solve the disadvantages people face – but increasing skills must be part of the package to break down the barriers of the some of the most socially excluded parts of our society. 

That is why your contribution is so important. The argument is clear; we have to address the skills gap – not just for the sake of the economy, but for society as a whole.

The Leitch report, published in December last year, outlined the scale of the challenge we currently face. 

Although recognising that the UK’s skills base has improved rapidly over recent years, because we started from such a low base, our performance against our comparators remains mediocre at best. Across thirty OECD counties, the UK lies 17th in low skills, 20th on intermediate and 11th on high skills.

We are currently considering the recommendations and will shortly be outlining how we intend to move forward on this agenda. But this must not be viewed in isolation; it must also be assessed alongside the recent review on welfare reform by David Freud.

His report outlined the challenges for our welfare state in the near and long term future, and set out proposals of how the welfare state could react to this – how the skills agenda fits with this will be crucial.

There are three key principles that must be considered in all our deliberations about employment and skills for years ahead.

Firstly – sustainability of work.

We have made great progress in unlocking disadvantage; opening doors to people who had previously been denied. But we still find that some people are captured in a revolving door in between benefit dependency and low paid work. Two thirds of our Jobseekers Allowance customers have claimed before; whilst quarter of a million people have spent at least three-quarters of the last two years on benefits. We must engender a system where people are helped not just to get a job; but to stay in a job and progress in a career.

Currently as a government , at best we have a very limited view of what a ‘sustainable’ job outcome actually is – we measure it as just 13 weeks. But the Freud report offers the proposal of contracting out support to the hardest to help groups to private and voluntary sector organisations; and paying them over a three year period. So rather than just simply placing a person in a job; it would be their responsibility to help that person stay in work for a significant period of time.

This has the potential to revolutionise the welfare state, extending its boundaries further than ever before. But this will only be achieved if the right kind of in-work support is in place.

This brings me on to my second point – accessibility of training.

Everybody should have access to learning and development – from people who have been out of the labour market some time, to those who are in jobs but wish to move up the career ladder. Seventy percent of the 2020 working age population have already left compulsory education; making in-work training and education even more important.

The Open University has been playing a huge role in delivering this already. The range of courses and flexibility of learning means that many more people can gain access to attaining high quality, highly respected qualifications whilst maintaining their position in the workplace.

But employers themselves also have a responsibility; for ultimately, they are one of the primary beneficiaries of a skilled workforce. Again, there are some great examples of good practise already, but this needs to be extended more widely. That is why one of the recommendations from Leitch was to launch a pledge for employers to voluntarily commit to train all eligible employees up to level 2 in the workplace.

And thirdly – employability.

According to a recent CBI survey, two thirds of respondents said that they expected skills shortages to be the biggest obstacle to business growth in the next six months. Skills must be economically valuable; for the sake of the individual’s prospects, and the prosperity of business as a whole. We must get this connection right and create a real and lasting integration between the employment and skills agenda.

The creation of a Commission for Employment and Skills, as outlined by Leitch, will be critical. We must strengthen the role of the employer’s voice in qualification content. But government must also play its part, which is why we are working towards creating a joint target with the Department for Education and Skills, to ensure we have a coherent, structure embedded within our systems which can drive the agenda forward.

So  looking to the future, we know it is possible for us to achieve our goals. But we also know it requires investment. This is not always welcomed; sometimes there is a sense of defeatism; that those who are disadvantaged should just be left to a life on benefits because they are too hard to help.

But what we need to create is a sense of progressive self interest. A philosophy that says the reward back from supporting people overcome their barriers to work will not only payback dividends to the individual, but to families, communities and society as a whole.

Looking back at the inspirational efforts of Jennie Lee and her contemporaries in establishing the Open University, they were very much at the forefront of the assault on inequality in our society. At a time when higher education was still often the privilege of the few; when much of the working population had never had the opportunity to go on to university, it offered a whole new arena of possibility.

Since then, it has continued in this vein. In many ways, the Open University has just as challenging task today as it ever had in the past – to reach out across the spectrum of skills, age groups, social circumstance and qualifications to provide a service that will equip people in a global labour market.

But with the experience of the last forty years and your worldwide reputation, you will meet this challenge, and I hope contribute to the continued success of our economy, and our continued fight against poverty and inequality across the UK.