Post-18 Education and Funding Review

Lord Kakkar Excerpts

Tuesday 2nd July 2019 Lords Chamber

[Lord Kakkar (CB)]

My Lords, I join noble Lords in thanking the Minister for the thoughtful way in which he introduced this important debate. In doing so, I declare my interests as professor of surgery at University College London, chairman of UCLPartners and a member of your Lordships’ Science and Technology Committee, which is chaired so ably by my noble friend Lord Patel.

Quite rightly, the debate has welcomed many of the findings in this important review in achieving the important objective of driving forward greater equity in post-18 education and emphasising the importance of providing opportunities for our fellow citizens to avail themselves of lifelong learning. However, I will concentrate on the potential implications of some of the report’s recommendations in terms of our universities’ ability to conduct research.

Of course, it is clear that the question of research was not in the review’s remit or terms of reference, but it is important for Her Majesty’s Government, when considering the review’s recommendations, to understand how they might have an impact on the capacity of higher education institutions to conduct research. Clearly, those institutions are complex ecosystems where potentially affecting one funding source will have knock-on implications on universities’ ability to perform other functions, such as research.

As a country, we recognise the importance of research for our future national interests. Of course, we have a newly identified target to devote 2.4% of GDP to research and development expenditure in our country by 2027. That is important, but many people have argued that it does not go far enough to secure an innovation economy that will be able to compete globally in the decades to come. Nevertheless, that is the target. To achieve that expenditure, we will need to produce by 2027 at least 150,000 graduates capable of contributing to that research and development effort in both the public and private sectors.

Yet when we look at our universities, the research base is vulnerable, as things stand. We know that, despite the objective of achieving full economic cost recovery for research in our universities, this is currently not being achieved. On research expenditure for Research Council projects, universities have to find some 28% of the cost from other sources. If one looks at research supported by the European Union, universities have to find 35% of that cost from sources other than the funding source for that particular research. From UK charities, they have to find some 40% of the cost, and even for industry-supported studies, some 22% shortfall is identified in the funding provided for those research projects. Overall, in the year 2010-11, some 78% of full economic cost was recovered from the funding source. In 2016-17, that had fallen to 69.4% of the full funding requirement. This cost universities in that particular financial year some £3.7 billion of funding that they had to find beyond the support provided from research. Clearly, that is an unstable situation. Bearing in mind the importance of that research to our broader national interest, that is something that needs to be considered.

Your Lordships’ Science and Technology Committee has recently been receiving evidence for its inquiry into the funding of the research base in universities and heard from members of the independent Augar review at a session last week. Members of the review rightly identified that this was not a question for them but doubted that there was a very significant cross-subsidy between the tuition or teaching income and research activity in universities. However, evidence provided by the universities themselves to that same inquiry indicates that there is a very substantial cross-subsidy between teaching and research, some of it from domestic tuition fees and a substantial amount from international tuition fees. Therefore, when the Government consider the important and justifiable recommendations on increased support for further education and lifelong learning, they must consider how they are going to address the question of stabilising the research base in our universities.

As we heard from my noble friend Lord Patel, on the one hand there is an important move towards greater equity for our fellow citizens, as demanded by the education establishment, but on the other hand we must be clear about how we secure a research base to drive broader economic benefits. In this regard, do Her Majesty’s Government believe that it is appropriate to undertake some kind of formal evaluation of potential cross-subsidies in our universities, understand what the extent of those are and then determine how best to address them? Do they believe that there should be cross-subsidy between teaching—whatever the source of that teaching income—and the research base? If they do not, how would they propose to address that question going forward in a more transparent fashion?

The other issue about which I am concerned in respect of securing the research base in our universities is the future disposition of the teaching grant and the particular emphasis on the teaching grant being set in some way with regard to either the social or economic value of the taught subject. This is an interesting concept. Will it apply purely at the national level, where the subjects being identified in that fashion would then have a teaching grant equally distributed across institutions, or will that assessment be made for individual institutions in terms of the economic and social value derived from an individual subject? Which institution or body will undertake that evaluation and what metrics will be used to determine that? This is an important question because, if teaching income is in some way going to continue to cross-subsidise research, will research metrics also inform that particular evaluation?

Then we must consider other government policy, such as the industrial strategy that has a place or geographical emphasis, for instance on the development of the northern powerhouse. That could equally be affected if the teaching grant for subjects undermines the capacity and sustainability in universities. It might undermine the capacity to deliver that broader geographical agenda with regard to the industrial strategy and drive a research base for economic development in different regions of our country.