The first leg of Tony Blair's "knowledge race" appeared to be underway this week, with the launch of a development project on Labour's plans for a University for Industry.

Almost 18 months after shadow chancellor Gordon Brown called for a "new leap of imagination" as his idea was explained in a consultative paper, the Institute for Public Policy Research is preparing to examine the nuts and bolts of the scheme.

The notion of a self-financing public-private partnership offering education and training at home or in work through online multi-media services has indeed exercised the imagination of further and higher education leaders since Mr Brown first mooted it at a Labour Party conference in 1991.

But although last year's consultative paper put flesh on the bones, there is still a good deal of creative thinking to be done about what a University for Industry should do, and how it might work.

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Josh Hillman, a research fellow at the IPPR who is coordinating the development study to produce a blueprint for the scheme, says the first thing to realise is that it is unlikely the university will be a physical institution like the Open University.

Neither will it restrict itself to purely vocational training, despite its title.

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What it will do is make full use of the broadband optic-fibre communications link which would be made available free to all schools, colleges, libraries and higher education institutions, in the deal with British Telecom announced by Tony Blair last week in his Labour conference speech.

BT has said it will make free connections in exchange for access to the market.

Easier access to the information superhighway would make study from home, work or local institution the most cost-effective backbone of the new university.

But there are less sexy aspects of the operation which will be equally important, Mr Hillman says.

"Even if everyone has access to the Internet they will still need good quality learning materials and the kind of more traditional learning back-up that can only be provided by schools, colleges and universities. So what we are trying to do is combine the range of materials and choice that can be provided on the superhighway with the sort of traditional support which the Open University arranges for its students," he said.

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It is not yet clear where the OU would stand in relation to the new university, even though many believe it should play a significant role, given its extensive experience in providing high-quality distance learning.

Mr Hillman acknowledges that the OU "will almost certainly form part of the University for Industry network", while taking a swipe at its "poor track record on vocational qualifications" and suggesting new distance learning materials will be needed in this area.

Needless to say, the OU sees things differently. Tim O'Shea, its acting vice chancellor, pointed out that the OU already had a close involvement in the project, and had established itself in the vocational education market by becoming an awarding body for National Vocational Qualifications, forging close links with employers and running a top-grade MBA programme.

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"The OU would not be opposed to the establishment of another University for Industry, but we are quite clear that we are one already," he said.

Mr O'Shea added that although the OU thought there was a need for the initiative, it had a number of concerns.

"We hope an effort will be made to properly understand the economies of scale and the mechanisms necessary to support large-scale distance learning, and that quality assurance cannot be done on the cheap. We would also be worried if local providers like FE colleges were not involved in the process," he said.

There are concerns, too, about the BT deal - even within the IPPR. Research fellow Christina Murroni commented: "We do not think it is necessarily in the best interests of the customers in the long run. "The cable companies cannot expect protection forever, but they still face significant difficulties in establishing a foothold in the market."

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