The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)
My Lords, I join noble Lords in congratulating the noble Lord, Lord Blunkett, on securing this very important debate and thank him for the way he introduced it. I underline how both personally and on behalf of the Government I absolutely share his aspiration that there should be equal opportunity for every young person to access the benefits of higher education. I am not sure whether I am meant to declare this, but I am the slightly bemused recipient of an honorary degree from the University of Bath.
I thank all noble Lords for their contributions to this important debate. Our world-leading higher education sector plays a pivotal role in driving economic prosperity, creating employment opportunities and supporting the local communities that are the foundation of our levelling-up agenda. To reassure my noble friend Lord Willetts, I say that the Government accept that there are definitely different models of higher education. Indeed, we are investing in a number to encourage this diversity. We had a great example from the noble Baroness, Lady Chapman, regarding Teesside University and some others. I also absolutely agree with my noble friend Lord Norton of Louth that there is a wider social good that universities bring to their students and more widely to their communities.
As we have heard from noble Lords this afternoon, England’s higher education system already stands at the forefront globally, and it is imperative that we sustain this position. We should be proud that more than 40% of UK adults have achieved level 6 qualifications equivalent to a bachelor’s degree or above, surpassing other G7 nations and exceeding the OECD and EU averages, although I hear my noble friend Lord Johnson’s aspirations to go further. We continue to invest in our higher education system. Our latest reforms are introducing stringent controls to ensure that higher education courses deliver positive outcomes for all students and for taxpayers.
The noble Lord, Lord Blunkett, and the noble Viscount, Lord Chandos, talked about the importance of the quality of courses and I think a number of noble Lords, including the noble Baroness, Lady Chapman of Darlington, criticised the Government for some of the language used about the range in their quality. I would say from talking to universities that they share our view that it is incredibly important that we maintain quality in our higher education sector. That is hard to do—I absolutely recognise the pushback from noble Lords—but if we were to have evidence of poor-quality courses, that would risk besmirching the reputation of all our universities, as well as impacting on international students and the soft power to which noble Lords alluded.
Reference was made to the report in the Times. I suppose that the nuanced version of the balance of our great institutions and where we are focusing to ensure that quality is maintained does not make such good headlines.
We also recognise the central importance of technical and further education in delivering the key skills needed for economic growth. The Government’s reform agenda, outlined in the Skills for Jobs White Paper and subsequent legislation, aims to strengthen this sector by putting employers at the heart of post-16 skills through an integrated offer that includes T-levels, higher technical qualifications, apprenticeships—including, of course, degree apprenticeships—and improved support and guidance. The noble Lord, Lord Londesborough, referred to a number of those points in his remarks about the importance of links with employers. We have really tried to weave that through all our skills reforms.
I hope that the noble Lord, Lord Freyberg, is reassured a little by a number of the T-levels, which directly address some of the points that he raised. We will introduce T-levels in craft and design, and media broadcast and production, from September this year. There is, of course, a digital production design and development T-level as well.
My noble friend Lord Patten made the case strongly for degree apprenticeships. My right honourable friend the Secretary of State would certainly agree with him vehemently, given her experience as a degree apprentice. I will come in a moment to respond to my noble friend Lord Willetts’s points about the funding of degree apprenticeships going forward.
Our comprehensive reforms are supported by a substantial investment of £3.8 billion over the course of this Parliament. Specifically, £185 million in 2023-24 and £285 million in 2024-25 will address recruitment and retention challenges faced by colleges offering high-value technical, vocational and academic programmes—something which the noble Viscount, Lord Hanworth, was concerned about. This investment ensures that higher and further education training aligns with employer needs and empowers individuals to enter the workforce, progress and develop new skills continually through their lives. This skills development is imperative, because we know that one-third of labour productivity growth can be directly attributed to skill level improvements. Enhancing our workforce’s competence will help drive economic growth right across the country.
The noble Baroness, Lady Blackstone, asked about progress with the university enterprise zones. She will know that in October 2023, the Government invested £60 million in the regional innovation fund, which is obviously about aspiring to similar outcomes in driving regional business engagement and growth through knowledge exchange. But we have a number of pilot university enterprise zones: 24 of them were set up between 2015 and 2019 and are currently being evaluated for their impact.
Turning to research and development, higher education providers contribute significantly to the UK’s current R&D efforts by delivering a massive proportion of the UK’s current research and development expenditure. Our universities deliver 77.5% of the UK’s non-business R&D and innovation activities, which is significantly more than in other comparable countries. For example, in France the figure is 59.8%, in Germany it is 55.2%, and in the United States it is 46.5%.
The noble Lord, Lord Wallace of Saltaire, made the very wise point that R&D should not be seen only in terms of its immediate pay-off. One of the things that university R&D does is stimulate private investment. This is incredibly important for growth. Public spending on R&D is at its highest-ever level, and we are fulfilling our commitment to spend £20 billion per annum by 2024-25, in the knowledge that every £1 of public expenditure leverages double the amount of private investment in the long run.
This record wider investment is a key part of how the Government are delivering the long-term change to ensure that our country has the brightest possible future, growing the economy and improving opportunity for all. This most recent investment builds on the £137 billion we have invested in R&D across all parts of the UK in the last decade.
As noble Lords have illustrated, we are home to a world-class research community. We have thriving technology and life sciences sectors, excellent green skills and a fantastic creative sector. Those sectors help us lead Europe in terms of investment, particularly in relation to science and technology. We are focused on ensuring that we have the right skills for the future, the right conditions for start-ups and scale-ups, and the right regulatory environment that supports innovation and long-term business confidence.
We know that we have ground to make up compared with France, Germany and the US on productivity. Although the global financial crisis triggered an international productivity slowdown, the UK suffered a greater slowdown than some of those nations. Our investment in research and development, our reforms to higher technical education and our drive to increase participation in degree apprenticeships will all drive the change needed to fill this missing middle in our skills landscape and improve our productivity. My noble friend Lord Johnson of Marylebone referred to this.
Employers are demanding level 4 and level 5 skills to fill vacancies, yet only 4% of people have a level 4 or level 5 qualification as their highest qualification by the age of 25. Higher technical qualifications, approved to provide the skills employers need, will help to improve the prestige, profile and uptake of these valuable skills.
On funding growth in degree apprenticeships, which my noble friend Lord Willetts asked about, we are providing an additional £40 million in the next two financial years to support providers to expand their offer and improve access for young people and disadvantaged groups to these valuable programmes. Overall, investment in the apprenticeship system in England will increase to £2.7 billion by 2024-25. As I know my noble friend knows, 65% of all apprenticeship starts so far this year have been at level 2 and level 3, with level 3 remaining the most popular level, accounting for 43% of all apprenticeship starts.
The noble Baroness, Lady Garden, asked about evidence of encouraging adults back into education. Of course, it is too early to see the impact of the lifelong learning entitlement, but we can see tens of thousands of people taking our skills bootcamps, particularly in future-facing skills such as digital and data.
Levelling up was the focus of the noble Baroness, Lady Wilcox of Newport, and the noble Lord, Lord Watson of Invergowrie. Despite the noble Lord’s remarks, levelling up remains at the heart of the agenda to build back better after the pandemic and to deliver better productivity for every part of the UK. As noble Lords know very well, ability is evenly spread in education but opportunity is not. The department’s focus on levelling up differences in the quantity and quality of human capital between different parts of the country is essential; we know that this is the single most important factor in driving differences in productivity over time.
The noble Lord, Storey, spoke eloquently about the importance of skills, and he is right. To help improve people’s lives and boost the economy, the Government’s skills mission sets out an ambition for 200,000 more people to complete high-quality training in England each year by 2030. This includes 80,000 more people completing courses in areas of England with the lowest skills level. We want to make sure we are raising skills levels in the places they are needed most, so that more people have the skills that they need to get good jobs.
As the noble Lord, Lord Shipley, articulated, the higher education sector is one of the major partners in delivering the research and development levelling-up mission through hubs of research and innovation. The Department for Science, Innovation and Technology is leading delivery of the research and development levelling-up mission—a cross-government commitment to increase domestic public investment in R&D outside the greater south-east by at least 40% by 2030 and, over the spending review period, by at least one-third.
We are supporting this through ambitious programmes such as the innovation accelerators, investing £100 million to support Glasgow, Greater Manchester and the West Midlands to become major centres for research and innovation, bringing together higher education with local government and business leaders. The programme is pioneering a new model of research and development decision-making that empowers local leaders to harness innovation in support of regional economic growth. Strengthening innovation clusters is a top priority for driving growth across the UK. As many noble Lords said, universities, as anchor institutions, play a crucial role in this, creating a pipeline of skilled graduates, attracting talent and investment, spinning out innovative firms, and catalysing collaboration across the local ecosystem.
The noble Baroness, Lady Wilcox, was critical of the Government’s record on spin-outs and university commercialisation. This surprises me, because, looking at the data, we see that the number and value of equity investments secured by academic spin-outs has increased from just over £1 billion in 2014-15 to comfortably over £5 billion in 2021-22. If you consider the research resource, UK universities generate more income from intellectual property, and only slightly fewer spin-outs, than US universities.
A number of noble Lords, including the noble Lords, Lord Bilimoria and Lord Parekh, my noble friend Lord Vaizey and the noble Baroness, Lady Prashar, talked about international students. My noble friend Lord Norton of Louth asked me to confirm our commitment to our extraordinarily successful international education strategy—that remains firm.
The noble Lord, Lord Blunkett, was generous enough to say that I had already said this, but I shall say it one more time: international undergraduate student numbers have grown in recent years, but not at the expense of domestic undergraduate numbers. Most international entrants to the UK higher education system are at postgraduate level.
The noble Baroness, Lady Prashar, asked about taking international students out of the migration statistics. Net migration is a demographic measure, and it can always be derived even if we were to take students out, but that is ultimately a decision for the Office for National Statistics.
In closing, I want to mention the speech of the noble Baroness, Lady Wolf, who put in a far more sophisticated way than I am about to do some of the wider reflections on the role of higher education as we look forward in a rapidly changing world. Historically—when I was lucky enough to be at university—models of higher education facilitated, in effect, a smaller number of more privileged students to achieve university places and go on to very well-paid and high-status careers. The inequalities of those models have rightly been challenged, including by the reforms of the Blair Government, with that focus on widening participation.
Of course, higher education is a vital part of social mobility. However, as we continue to support, we must also challenge the higher education sector as participation widens to make sure that we do not lose that focus on quality, on employability and on good outcomes for all its learners. The noble Baroness, Lady Wolf, raised wider questions, but while higher education plays a critical role in growth and productivity both nationally and regionally, it needs to be part, and is part, of a wider growth strategy that addresses the worsening trends in inactivity in the working-age population, the levels of investment across the economy, and the education and careers that our children and young people deserve. That is where this Government are focusing.