Higher Education

Baroness Warwick of Undercliffe Excerpts

Wednesday 9th April 2014 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, it is a privilege to follow the noble Baroness, Lady Coussins, in her typically passionate plea for modern languages. I am also delighted that the right reverend Prelate the Bishop of Portsmouth, who is to follow me, has chosen this debate in which to make his maiden speech, and I welcome him warmly to this House. I thank the Minister for securing this debate, which has enabled many noble Lords to celebrate the great success story that is the UK higher education system, while alerting the Government to dangerous trends in their policies ahead.

I spent well over 20 years representing in one guise or another the higher education sector, not as an academic but as an organiser, influencer, advocate and, until a few years ago, chief executive of Universities UK. I still have some direct involvement and I declare an interest as a member of the council of University College, London, a university that is an exemplar of the ways in which a university can contribute to society and the economy as well as providing a first-class education for its students. Perhaps I should say at this point how delighted I am at the partnership between UCL, the London Legacy Development Corporation and the mayor’s office, and at UCL contributing to the Olympic legacy. However, although the decision in principle has been made to create a campus, we now need to make the finances work, and I hope that the Government will fulfil the commitment made in the autumn Statement to support this great initiative financially. If the Minister could confirm that in his reply, I would appreciate it.

My involvement in HE started in 1982 when I became head of the Association of University Teachers. Since then I have seen enormous changes in HE, many of which have been for the better. I am thinking particularly of wider participation and the exploitation of research. Many of these changes have helped to transform HE into the hugely influential sector that it is today. HE now extends well beyond the universities. We had a briefing for this debate from the Association of Colleges reminding us that 180,000 students study HE in local further education colleges. Not all of HE is now publicly funded. In 1982, the only private provider was the University of Buckingham. Now an entirely new set of alternative private providers has emerged, some for profit and some not for profit, but all looking very different from the three-year, full-time undergraduate institutions that many Members of your Lordships’ House experienced. Even that has changed dramatically, with almost 40% of students studying part time. But it is worth noting how susceptible part-time study has been recently to changes in government policy. The numbers have declined substantially, which is a cause for concern, particularly for women and in terms of widening participation. Can the Minister comment in his reply on how the Government propose to halt this precipitous decline?

Other major changes have occurred. Women outnumber men at undergraduate level, while many more students from disadvantaged backgrounds now achieve degrees. The student body is now much more ethnically diverse. A much higher proportion of students now live at home, and the Open University is providing an increasing number with the prospect of earning while learning. The proportion of international students has increased dramatically. That has been a great success story, as many noble Lords have spelt out in the debate, and during the course of the Immigration Bill many Members of this House had hoped to persuade the Government to recognise the damage their policies were doing to this success story. The Government are presiding over the first decline in international students for 30 years. I still remain hopeful that they will respond.

It is significant to note how much more publicly visible HE now is. If we had had this debate even 10 years ago, I doubt whether we would have received a briefing from Which?, the consumer magazine, but we have had one this week, which reminds us that students increasingly regard themselves as consumers, given the financial commitment they now have to make if they go to university. That, of course, is one of the most significant changes. In 1982, students made no personal contribution to the cost of their degree course and there were grants for maintenance. Today, students emerge with average debts of £50,000, albeit with a beneficial repayment regime. That funding regime, which has shifted the cost from public taxation on to students, has ramifications not just for students themselves, but for the financial stability of institutions, a point I shall come back to in a moment.

I want first to focus briefly on the HE system as it is now, the contribution it makes to the country, and its importance to future prosperity. I was really pleased to see that BIS, as the government department responsible for HE, has begun to document the benefits of HE participation for individuals and society in a systematic way, and here I refer to research paper No. 146. It presents this as “Quadrants” or a “taxonomy of benefits” which focus on greater social cohesion, reductions in crime, civic participation, political stability, social mobility and health benefits, all of which are improved by the experience of HE. It also identifies economic benefits such as increased tax revenue, faster economic growth, higher earning value to employers, increased entrepreneurial activity and productivity, all of which should be music to the ears of the Treasury. It is clear that we benefit as a society both economically and socially because our universities produce well educated and employable graduates and world-leading research.

On research in particular, the system is remarkably efficient, and on every metric we outperform the money we spend on research. But it is nothing but complacency to assume that the UK has a God-given right to be a leading research nation and not make the investment that this requires. Can the Minister say whether the Government still have the aspiration to bring spending in line with the OECD average? That is because, in fact, we are dropping behind. Universities UK’s reliable patterns and trends data show that investment and expansion have slowed down in the last two to three years. This is at a time when we need to maximise the potential of HE as one of the main engines of economic growth, and when other OECD countries are increasing their investment. The noble Lord, Lord Bilimoria, highlighted the figures in his speech. It has become common to talk of universities as “economic anchors”, as institutions that can generate jobs and growth across all sectors of their city or region. Because they are spread throughout the country, they are uniquely able to promote growth that benefits all of our country, not just the south-eastern corner of it. In my own home region of the north-east, which struggles on many economic measures, universities have generated a higher proportion of jobs than in any other region. Last week, the Minister for Universities described his ambition to see new campuses built in “cold spots”, precisely because they can rejuvenate and enliven a local economy.

Universities themselves have not been idle. They have secured increased investment from the EU, charity and industry, as the Minister, the noble Lord, Lord Ahmad, himself acknowledged. There has been a substantial increase in knowledge exchange activity, which is particularly beneficial to small and medium-sized enterprises. Sir Andrew Witty, in his review of university-business interactions, highlighted the comparative advantages they offer the UK. He specifically recommended that the Government should make a long-term commitment to the Higher Education Innovation Fund, which generates £3.4 billion-worth of knowledge exchange income alongside the broader economic impact of universities of £73 billion, which represents 2.9% of GDP, and is therefore a not insignificant figure. Yet the Government, despite explicitly recognising,

“the enormous economic impact and leverage”,

of the HEIF, and that,

“every £1 of HEIF funding generates £6.30”,

have refused to commit themselves to raising the level of HEIF funding. I hope that the strength of the arguments in this debate will convince the Minister that he should urge his colleagues in the Treasury to think again, and that he will commit to that in his response.

The Treasury must surely be looking for ways to boost income. The revelation last week that around 45% of graduates will not earn enough to repay their student loans and that the system could end up costing taxpayers more than the one it replaced calls into question the decisions the Government have made about the way in which universities are funded to teach students. This week, the Higher Education Commission held its first evidence session on the topic of funding, and as we heard last night at a meeting of the All-Party Parliamentary Group on Universities, the current system is not sustainable and, worryingly, is unlikely to provide the basis for the affordable expansion of university education that the country so clearly needs. Given that we heard from three former Secretaries of State for Higher Education, the Government will need to take note of the findings of the commission and the all-party parliamentary group.

This is a complex problem. I am not going to be able to solve it in this speech but will outline a few questions that need to be considered in any attempt at a solution. First, what is an affordable and reasonable rate at which we could expect graduates to repay their loans? Does the current system provide this or could it be changed? Secondly, what is the appropriate level of state funding for higher education and how can we ensure that this does not get degraded by Treasury salami slicing over time? Thirdly, what changes can and should be made to the way in which we deliver higher education that could make it more affordable to graduates and the state? How can we persuade employers to invest in higher education for their staff and reverse the dramatic decline in part-time study?

It is a complex problem but one that it is essential for us to solve in a way that will be sustainable in the long term. Neither universities nor students benefit from major reforms taking place every few years or, indeed, from retrospective clawbacks, as happened with HEFCE funding this year, when, for example, UCL found its in-year funding reduced by £1 million. We derive enormous benefit as a country from our university sector. The world-class research it carries out and the graduates it produces are the basis of our future economic success. It provides anchors for jobs and growth throughout the country, and we damage it at our peril.

Finally, I share with the House my delight at the news this week of the first Max Planck centre in the UK, a joint centre with UCL on computational neuroscience and psychiatry. There will be others. This historic and ground-breaking collaboration with one of the most influential research centres in the world has arisen only because of the reputation of research in the UK and because of far-sighted investment. Such initiatives will be impossible in the future if we fail to invest. The Government really cannot go on ignoring this danger.

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[Lord Ahmad of Wimbledon]

My Lords, first, I thank each and every Member of your Lordships’ House who has taken part in this debate. Indeed, reflecting on the words of my noble friend Lady Sharp, I, too, was surprised when looking into this to find that it had been so long since your Lordships’ House had debated such an important subject. It was the Government’s view that it was something that we should put on the agenda, and I am glad that we have done so.

In paying tribute to all noble Lords, it would be entirely apt for me to pay particular tribute to the maiden speech of the right reverend Prelate the Bishop of Portsmouth. In his remarks, he said that he was not sure about how his opening contribution would be taken by the House. It was an excellent one, and I am sure that he will play a significant role not just in representing the people in Portsmouth and wider Hampshire but indeed the country as a whole, albeit that at times he may cause a degree of discomfort to those of us on the Front Bench with the questions that he may ask. We look forward to his future contributions and welcome him to the House.

The noble Lord, Lord Hennessy, referred to poets and plumbers. I do not know what I shall be called by the time I sit down, but certainly if one was to look to my plumbing skills—my wife is testament to that—a plumber I am not.

This is an important subject. As we have heard from all noble Lords, higher education is an important part of what defines Britain today. It is key to the nation’s success and, as last week’s Universities UK report on the impact of universities on the UK economy noted, the sector generates jobs—indeed, 754,000—and contributes to the GDP, some 2.8% in 2011, up from 2.3% in 2007. The report also reveals that the UK higher education sector contributed an output of over £73 billion. The almost £5 billion that students contribute to local economies through their off-campus expenditure shows that the impact of higher education is felt in businesses across the country. These figures remind us that universities are absolutely pivotal to driving the growth that will safeguard a more sustainable future for everyone.

My noble friend Lord Purvis referred to university funding. University income across the whole of the UK represents £29 billion in 2012-13, as opposed to £12 billion in 1999 to 2000. Again, that demonstrates the flexibility and autonomy to which several noble Lords alluded for our universities. Education is of vital importance to the nation as a whole.

I shall take certain areas in a specific order. Several noble Lords raised the issue of social mobility. Right from the outset, I say to the noble Lord, Lord Young of Norwood Green, that, although he said that his background was not one of university education, I have stood across the Chamber from him at this Dispatch Box and talked about apprenticeships. The Government recognise the importance of apprenticeships for the future growth of our economy, which is why we have created the number of apprenticeships that we have. I am sure that he will recognise that various companies are coming on board—I accept that we start from a low base—that are now participating in the apprenticeship programme. I believe that we all share the sentiment that diversity, not just in terms of the university route but in terms of the apprenticeship route, is vital for our continued growth.

The noble Baroness, Lady Morris, spoke about social mobility from her great experience. Institutions now have a much greater responsibility to focus on widening access. The Director of Fair Access has agreed more than 160 access agreements with institutions for 2014-15. These detail the plans by universities and colleges to spend more than £700 million by 2017-18—up from £440 million in 2011-12. The Government will invest another £50 million through the National Scholarship Programme in 2014-15.

Access issues were also raised by the noble Lord, Lord Rees. It is important to note that in all these access agreements we are looking at issues of gender, social class and ethnicity. The director has certainly reflected these issues in the access agreements. However, I am sure all noble Lords agree that we need to make sure that all this money is spent where it really counts. Just last week, the Government announced a new national strategy for widening access, led by the HEFCE and OFFA. One of the key focuses of this strategy will be the employment prospects of graduates from less advantaged backgrounds. Research published last year by our Social Mobility and Child Poverty Commission showed that, three years after graduation, individuals from higher socioeconomic backgrounds were more likely to be in a high-status occupation than those from less privileged backgrounds. OFFA is also asking all universities, especially those which have not yet made progress, to invest more smartly in their access activities generally and ensure that they are properly evaluating what works, and then sharing that best practice with other institutions.

The noble Baroness, Lady Morris, raised the issue of diverse universities, as did my noble friend Lady Sharp. My noble friend Lady Perry gave examples of the universities with which she has been associated—namely, Cambridge and London South Bank. The noble Baroness, Lady Morris, rightly values a diverse system, as we all do. Of course, university rankings are not a government tool per se, and there are many different measures of a good university. Indeed, the noble Baroness, Lady Deech, highlighted a particular example of how ratings can be used. One of the reasons the Government have focused on improving student information is so that students can use their purchasing power to seek out the best course to match their aspirations—indeed, the best institution as well. Popular institutions will grow and attract more income, and this is reflected in how they are perceived.

My noble friend Lord Storey rightly wants to encourage more women to take up leadership roles. The Government are committed to supporting this aspiration. The universities are, of course, autonomous institutions and the Government do not have a specific role in micromanaging this sector. However, I believe that all universities increasingly recognise the importance of reflecting diversity in their own leadership.

The noble Baroness, Lady Warwick, raised the issue of part-time students. The Government have addressed what we considered was the primary barrier to part-time study—that is, access to tuition fee loans. We recently announced that we are examining the rules regarding equivalent or lower qualifications which rule out loans for past graduates, so that those wishing to undertake engineering, technology or computer science courses can do so.

The noble Baroness, Lady Donaghy, referred to teacher training. The Government are carefully considering the implications of our policy on the quality of teacher training. The expansion of School Direct, to which she referred, has been challenging for many universities, but there is scope for successful school and higher education collaboration in this regard. Outstanding university providers have been guaranteed the same number of places as last year, and many have increased their share of the initial teacher training market. I understand that the higher education institutions remain involved in more than 80% of the initial training places. Additional places have been created to reduce the chance that some courses may have to close.

Several noble Lords, including the noble Lord, Lord Hennessy, referred to the loan system. We are absolutely not seeking to treat the student loan system like a private debt system. The system operates very much like a graduate contribution scheme, and we feel that it takes the best features of a graduate tax. Students repay only when they can afford and at only 9% of income earned above the £21,000 threshold. As I said in my opening remarks, the OECD recognises that what we are seeking to do through our reforms puts our higher education funding on a sustainable model basis.

I turn to the funding and RAB charge, referred to by the noble Baroness, Lady Kennedy, and the noble Lord, Lord Giddens. There has been much discussion of the Government’s estimate of the returns that they will get from student loans. However, the resource accounting and budgeting process—the RAB charge—is not a straightforward financial calculation, as noble Lords will know. It is an estimate of the economic circumstances 35 years in the future. The Government have improved the modelling. It is sound and has been quality-assured by experts in the field, such as the Institute for Fiscal Studies.

We have taken careful note of the recommendations in the 2013 National Audit Office report on student loan repayments. It is not surprising that the Government’s assessment of the proportion of loans that will be repaid has changed. After all, it is a complex analysis. Estimates are just that and they will continue to change, as they are based on assumptions about the future. However, it is important to note that lower-earning graduates will be protected, while those who benefit most from their higher education and go on to earn more will pay back their loan more quickly.

The Government are still delivering a tough deficit reduction programme. The funding model that they have used has made it possible to address the deficit, while, as I indicated, at the same time giving more income to higher education institutions to boost the quality of their provision. The Government are working with an estimate of around 45%. It could be argued that currently the savings are small but, depending on the performance of the economy—and we are encouraged by the IMF’s report published yesterday—this could change over time. However, there continue to be savings to government compared with the previous assessment, even if we take the figure of 45%. We believe that this system continues to be the best way to use limited public funds to meet the country’s requirement for long-term, high-level skills, but we must not forget what it ultimately means for students: a progressive repayment system, better information and higher-quality provision.

I turn to the STEM subjects, specifically science and research. I acknowledge the contribution of various noble Lords in this respect. Science and research, including the arts and humanities, are essential drivers of the innovation that leads to growth. The base funding awards that are made to support vital research will be distributed using the outcomes of the research excellence framework. The peer review is currently the most established method of research assessment and it underpins the academic system. Obviously, we can shape cultures both positively and negatively depending on how we measure things. The latest exercise contained, for the first time, an explicit assessment of the impact of research. There were some concerns about what that impact might mean in the UK, but it has sent a powerful reminder to researchers to think about how their research might be used or the difference that it might make, and it is encouraging much greater engagement with the industry.

Perhaps I may take some of the specific questions that were asked on research and development, including by the noble Lord, Lord Bilimoria, and the right reverend Prelate the Bishop of Winchester. The UK’s overall research and development spend was 1.72% of GDP in 2012, amounting to £27 billion. I acknowledge that this sum is lower than that of some of our trading partners such as the US, Germany and France. We continue to look to invest more and, as I said in my opening remarks, we have protected funding in this area.

Several noble Lords, including the noble Baroness, Lady Greenfield, and my noble friend Lord Storey, raised the important issue of technology transfer and asked what universities are for. It is important to note that the UK does very much better than people think. The impact of the research excellence framework is a key incentive in driving this. The excellent HEIF programme is widely recognised as supporting technology transfer. Indeed, we are in the top five globally for university/business interactions. One of the drivers behind removing the cap as an incentive is that this is demand-led: the private sector wants to see more graduates and, increasingly, there is a strong link with what universities provide in the communities. My noble friend Lord Storey gave examples in Liverpool, which the Government fully endorse and support.

The noble Lord, Lord Rees, and others talked about credit accumulation and transfer. Much has been done in this area. Many institutions allow students to build a qualification from smaller modules but the decision to accept and recognise credit has always been one for the universities, which act autonomously in this regard. Mention was made of the need for academic freedom by my noble and learned friend Lord Mackay of Clashfern. Others talked about value and gave examples, as my noble friend Lady Perry did, when she spoke of the value of freedom of the universities. The Government are fully committed to the Haldane principles, whereby decisions on which research projects are funded are made by the research councils themselves, not by Ministers. Around two-thirds of all research council grants are made through this measure—that is, not responding to any government priority.

Mention was also made by my noble and learned friend, and the noble Baroness, Lady Deech, I believe, of where higher education should sit. Should it be in BIS or in Education? I have noted the comments, as I have noted the wider debate, and will take those suggestions back.

The noble Baroness, Lady Coussins, raised modern languages.

[Baroness Warwick of Undercliffe]

I wonder whether I may refer back to the noble Lord’s support for HEIF to ask the specific question that I asked in my intervention. Do the Government see it as important to accept the Whitty recommendation to increase that fund?

[Lord Ahmad of Wimbledon]

If I may I will write to the noble Baroness in that regard, and, of course, share it with all those who have taken part in the debate.

The Government are committed to the teaching and learning of modern languages in schools. As the noble Baroness, Lady Coussins, acknowledged, from September 2014, primary schools will be required to teach a foreign language at key stage 2. Thanks to the English baccalaureate, modern languages GCSE entries are improving. The Government have prioritised higher education funding for modern language courses to ensure the continued availability of language study in higher education institutions. The noble Baroness raised some other questions, but with her permission, and in the interests of time—at five hours, this has been somewhat of a marathon—I will write to her and share that letter with other noble Lords.

The explosive growth in massive open online courses was raised by the noble Lords, Lord Giddens and Lord Rees, among others, and by my noble friend Lady Sharp. We have seen growth in this area and the UK’s new MOOC platform FutureLearn brings together free courses from 23 top UK and international universities. In the four months since the first course began, FutureLearn has already 450,000 sign-ups. Users come from an impressive 90 countries and a range of backgrounds.

My noble friend Lord Holmes mentioned the BPP. The BPP is the third university to achieve the university title last year and it is respected for its professionally geared education. My noble friend flagged that particularly in his comments. Various issues were raised by the noble Lord, Lord Bilimoria, the right reverend Prelate the Bishop of Winchester, the noble Baroness, Lady Warwick, the noble Lord, Lord Giddens, among others, and my noble friend Lord Holmes. I underline that on specific questions I shall write to noble Lords, in the interests of time. I reiterate that the Government are fully committed to international students and we have announced that we will extend options for people to stay on following their study. I will write with the details. Just to be clear, the numbers of international students are not capped. I can do nothing better than quote my right honourable friend the Prime Minister when he visited India last year and said that we were open for anyone wishing to come to the UK for a legitimate course at an accredited university. The doors are open. As I said, I will write with further details.

I fully acknowledge the points made by my noble friends Lord Watson and Lady Sharp, and the noble Lord, Lord Hennessy, about the importance of soft power when we travel the world. Indeed, my noble friend Lady Bottomley spoke about this with great passion. English itself is an incredibly powerful tool in ensuring that the issue of soft power both at home and abroad is not forgotten. I totally ally myself with the comments made on that point.

My noble friend Lord Addington raised issues about the disabled students’ allowance, specifically on dyslexia. These changes will not come into effect until 2015 and we are working through the sector-driven centres to consider specific individual needs and to inform higher education institutes how we expect them to offer support in this regard.

My noble friend Lord Norton of Louth, spoke with great expertise in this area, as ever. I particularly commend and welcome his commission’s report on the future regulation of the university sector. Again, perhaps I may write to him in respect of the specific questions he raised.

In conclusion, we have had five hours of debate and even Lord Robbins, if he was here and reflected on the words of the debate, would say that it has perhaps been a useful consultation exercise in its own right. I can assure noble Lords that I have been listening. The noble Lord, Lord Young, made the point about the range of speakers. I have been riveted to my Front Bench seat during this extremely informed debate.

Our universities are one of our greatest national assets. UK universities are second in international rankings only to the US. They contribute to the nation’s wealth and to the rich cultural fabric of our society. The thousands of extra higher education places that the Chancellor announced at the end of last year will help the nation to grow and flourish.

Again I thank all noble Lords who have participated in the debate. Their thoughts, perspectives and suggestions have provided a valuable resource as we seek to further strengthen our world-renowned higher education sector—a sector which is central not only to our economic growth but to our position on the global stage. As a Minister responding to such a debate it is appropriate for me to finish with a quote from Aristotle. He said:

“It is the mark of an educated mind to be able to entertain a thought without accepting it”.