Higher Education: Funding

Lord Luce Excerpts

Wednesday 27th October 2010 Lords Chamber

[Lord Luce]

My Lords, at this stage in the debate I cannot help feeling pretty mesmerised by the extraordinary range of knowledge and expertise that we have heard from a large number of the contributions today. In particular, I identify the noble Lord, Lord Boswell, who is a very welcome newcomer to the House and who has a great knowledge of higher education. I enjoyed his speech and I have noticed that he has been sitting here throughout, listening to everyone.

Like others, I ought to declare an interest as a former vice-chancellor of the independent University of Buckingham and as an honorary fellow of Christ’s College, Cambridge. Those are two very different universities but they are part of the 130 or more extremely diverse universities. To my mind, every institution ought to be judged by comparing it not with its neighbours but with its own mission and objectives. Every university is different.

I welcome the thrust of the report by my noble friend Lord Browne—namely, that if there is, in the face of an economic crisis, a diminution in the amount of taxpayers’ money available, the student must come to the fore. I regard myself as having been very privileged to have been to university at a time when I did not have to pay fees. I am very conscious of that. Students, not the state, have to become the real customers of universities where they pay more but, at the same time, do not pay fees up front; where they have a progressive repayment system that gives greater help to the less well off or to those who earn less later in life; where the threshold is increased to £21,000 over a 30-year period; where we work towards a level playing field of access for all; where part-timers are now treated the same as full-timers, which I welcome; where there are fewer controls imposed on universities; and, therefore, where there is more autonomy for universities. All that must be welcomed, although I have reservations in a number of areas.

I would like to draw on two experiences, which are relevant to the debate, concerning the University of Buckingham. First, I preface my remarks by saying that I am not in favour of no taxpayer support whatever for the university world, but I am in favour of diversity and having a range of universities, some of which should be wholly independent. By paying the true cost, what is the effect? The student comes first; the student is highly motivated, works extremely hard and gets a lot of personal attention. What is the outcome? For the past five years, the University of Buckingham has come top of the national student survey for student satisfaction. That tells you quite a lot. At the same time, the record on employability of those students is immensely good.

The second point about the University of Buckingham is that I want to stress that my noble friend has recommended in his report that the fast-track, two-year bachelor’s degree should be taken seriously and has a contribution to make in the whole pattern of ranges of degrees that we have in our system. The late Lord Beloff pioneered the two-year degree at Buckingham, beginning in the 1970s. We are talking about 40 weeks in the academic year, instead of roughly 30 weeks—the same number of weeks in two years as, for example, students at Cambridge or Oxford would do in three years, with the same quality and standard of degree achieved in two years. Staffordshire University and other universities have been doing pilot projects and evaluations on that. Of course a two-year degree does not suit every student, but it suits some students. It may particularly suit the mature students, while it may not suit others who could do better and flourish better on a three-year or four-year degree. Nevertheless, it plays an important role in the whole system. It requires sustained hard work and four terms in the year but it also saves one year of fees. Therefore, the student is released one year earlier, either to go to work or to assume postgraduate studies or whatever. We need to recognise that the financial viability of such short courses would be strengthened or enhanced if it were possible to charge tuition fees that are 25 per cent or 50 per cent higher per annum, say, than those for the three-year courses, in order to treat the two-year and the three-year degree with parity. I hope that that will be seriously considered by the Government if there is to be a cap at all.

Many of my noble friends and others have mentioned Cambridge, with which I am also identified—a centre of excellence, without any shadow of doubt—where the combination of tuition and maintenance fees is £18,000 a year and where the university fills the deficit of £9,000 from its own resources. I repeat the point made by my noble friend Lord Butler and others: it would be much better to start by having no cap at all but, if we must have a cap, it must be flexible. There must be differential fees recognising the different roles of universities. Some universities are already considering adopting their own student loan schemes. If we are to retain a common approach, it needs to be highly flexible.

We should be concerned, and I am sure that every noble Lord is, that there is real growth in the resources of our universities—not simply replacement funding, but real growth, notwithstanding the toughness of the present climate—recognising that we pay a far lower sum as a proportion of GDP than a large number of other countries, not just the United States. To my mind, as taxpayer support diminishes, so the private sector has to be encouraged in every way that one can conceive to fill that gap to increase resources for universities—in addition, of course, to tuition fees.

The precondition for the success of this new policy is to create a climate where there is a wide range or battery of incentives for raising more resources privately, much more than we see today, from challenge funding, matching funding, which I know that the previous Government introduced, to better charitable giving. We have to give credit here to the Labour Government for the introduction of gift aid, but we need to go far further than that now. We should provide incentives to increase endowment funds for universities. I do not favour the view that it is impossible to do that in this country. I agree that we are not like the United States and that the culture of giving is not so strong here as in the United States, but we should not be negative about this; we should be positive. In the United States, there are lifetime legacies and planned giving schemes. There are all sorts of ideas from other countries that we ought to be picking up.

As has been mentioned, Cambridge has the largest endowment fund of any European university—I think that it is now £7 billion, thanks to its having raised £1 billion recently in its appeal. Cambridge provides support on a sliding scale for all students with parental income below £50,000. It is giving support on a needs-blind basis. Harvard, we know about: it has much bigger endowment funds. Princeton has far bigger endowment funds. That is what we must fight for. It will be a very big challenge for the Chancellor to meet that point. Otherwise, we have a negative atmosphere of simply talking about replacement funding. We want growth and we look to the Chancellor to fuel that and help it along—in addition to collaboration in resources raised for research in universities and business in the local community. That is my main message and the main point that I ask the Government to take seriously. If we are to meet the challenge to maintain our place as a country with a reputation for really high-quality universities that are centres of excellence, that is the way we must go.