Higher Education: Funding

Debate between Lord Norton of Louth and Lord St John of Fawsley

Wednesday 27th October 2010 Lords Chamber

[Lord Norton of Louth]

My Lords, I, too, welcome the opportunity to debate—

[Lord St John of Fawsley]

What is the essential point of a university? The currency of the word has been successively devalued, but a university is a body that engages in research. It is not a glorified high school, technical school or polytechnic, but an institution of higher learning. Successive Governments have offered people at universities courses that are not university courses at all. That is what we should be looking at. I speak as a former Minister in charge of higher education.

[Lord Norton of Louth]

My Lords, I will resume where I left off. I very much welcome the opportunity to debate the Browne review. It is a great pleasure to follow the right reverend Prelate and I endorse every word that he said. I declare an interest as a university professor of politics. I am also co-chair of the Parliamentary University Group and chairman of the Conservative Academic Group. I am therefore not short of advice, although the advice that I miss on occasions such as this—as, I know, does the House—is that of the late Lord Dearing.

My starting point is to reiterate what the report notes about the quality of higher education in the United Kingdom and about its contribution to the wealth and—following the right reverend Prelate—development of society. We have one of the best—certainly one of the most cost-effective—systems of higher education in the world. We are second only to the US in research ranking, we continue to be to the fore in attracting overseas students and we outstrip many of our competitors despite spending less as a percentage of GDP on higher education. As has been said, spending on higher education should not be seen as a drain on public spending, but as a necessary investment for our future economic growth. There is a private gain for students in higher education, but a massive public gain in terms of the contribution to the wealth of this country. As the right reverend Prelate said, this is not just the economic but also the spiritual wealth of the nation.

The noble Lord, Lord Browne, and his team, have produced a seminal report. It derives from a fundamental question: can the state afford to pay for a massive expansion in the provision of higher education? When I went to university, I was in a minority of my age cohort. Once we move to a situation where more than 40 per cent of the age cohort is in tertiary education, cost becomes a critical issue. How are we to fund expansion? We have in effect conceded that the cost cannot be met solely from the public purse, and I do not see how, with continued expansion, we can turn the clock back.

Over the past decade, undergraduate enrolment in HE institutions has increased overall by 28 per cent. If we are to expect students to make a contribution, then I accept that the arguments favour loans, with no up-front payments by students, and a repayment system largely along the lines proposed by the Browne report. The case for a graduate tax appears superficially attractive—I have just been reading the arguments advanced by million+—but when one looks at the arguments, the case against it is more than persuasive, not only in terms of administration but in terms of principle. It skews the balance between the centre and universities in favour of the former. I am therefore persuaded by the arguments advanced by the Browne report.

Although I have seen a number of alternatives, I have not yet seen one that improves upon the case made in the report. For the student, the commitment should be seen as an investment package. I believe that it constitutes a worthwhile investment in terms of the difference that it makes not just to income—in effect, the material side of life—but to what may be deemed the spiritual side. It contributes to the growth of the person. The graduate premium is measured in money, but there is much more to it in terms of personal development. The student benefits from the investment but, as the noble Lord, Lord Giddens, stressed, we should not lose sight of the fact that so too does society. There is a correlation between the proportion of young people receiving university education and the economic growth of a society. Students benefit and society benefits.

The Browne report makes a cogent case and I congratulate the noble Lord, Lord Browne, and his colleagues on the work that they have done. Like others, I very much welcome the recommendations on part-time students. There are, though, three aspects of the report with which I take issue, and perhaps I may deal with those before coming to one or two questions for my noble friend.

First, I share the doubts expressed about the creation of a super-quango in the form of an HE council. My fear is that there would be too great a concentration of regulatory capacity in one body and I am not altogether sure that the functions would cohere well in such a body. One thing that I think the Browne report has not taken into account is that the QAA has a UK-wide function. The council will be responsible for ensuring the accountability of HE institutions but I am not clear to what extent the council itself will be accountable. The review mentions only an annual report to Parliament. I appreciate the need to reduce the number of quangos but I am not sure that simply merging four into one is appropriate.

Secondly, it has been mentioned that it appears that funding for the arts, humanities and social sciences will cease. It is not clear why these sectors should in effect be penalised for their success. The intention is to create a market, but if there is a cap then no market may develop in the way that is intended, and the proposals, for reasons I understand, in any event skew the market in terms of preferential treatment. Removing the funding for the arts, humanities and social sciences may undermine the diversity in the provision of courses that characterises higher education in this country, with the effects that the noble Lord, Lord Giddens, mentioned.

Thirdly, although I very much welcome what is recommended in terms of part-time students, I am not sure that the review has it right in respect of postgraduate teaching. That the socio-economic profile one finds at undergraduate level is replicated at postgraduate level is not necessarily a persuasive argument for leaving the situation as it stands.

I turn to the position of government. Clearly, as we have heard, we cannot discuss the review in a vacuum. As the Browne review recognises, we need to maintain investment in higher education, not least in order to maintain our international competitiveness. However, given the cuts in HE, what is being proposed for the foreseeable future is a means of reducing the gap between what is needed and the funding that is available. Crucially, cuts take effect before universities receive increased income from fees.

The cuts have to be seen in context. Funding at the end of the last century and the beginning of this one did not keep pace with the increase in student numbers. The unit of resource fell significantly in the 1990s and is still below the figure of the early 1990s. Universities will be expected to do more as a result of the increase in fees, not least because students will demand more, yet they will find that they receive no overall increase in income. They will have to prepare for the new system at the same time as having to cope with a surge in applications for places next year—a consequence of demography and applicants wanting to avoid the new fee level.

Universities thus need as much certainty as possible and as soon as possible, if they are to plan effectively. Given that, I have three questions for my noble friend. First, can she explain, more than she did in opening, the rationale for the scale of the cuts in higher education? Higher education institutions recognise that, along with others in the public sector, they face a reduction in funding over the next four years. However, over the period of the spending review, the higher education budget faces a cut of 40 per cent. It is perhaps important to stress that the cuts come on top of cuts. One can argue that the Browne proposals are the best way to help make up for much of the shortfall but, as we have heard, the danger is that the Government will impose a cap that will not only limit the scope for market forces to operate but leave institutions short of what is needed to invest and to maintain their international competitiveness. How does my noble friend see universities being able to compete with competitor countries that are investing heavily in universities?

Secondly, can my noble friend say more about the Government's thinking on imposing a cap on fees? The Government appear unwilling to embrace what the Browne review proposes, preferring instead a higher cap. This not only militates against creating the market recommended in the review but, if set at the wrong level, may leave universities notably short of the funds necessary to contribute to future economic growth.

Thirdly, could my noble friend say more about the timescale? This is a fundamental point. Universities have to move quickly to plan for 2012. Prospective students need to know not only what fees will be levied but also what support will be available to them. The danger is that they may know the first but have to wait to know the second. As she said, an increase in the fee level can be achieved quickly by secondary legislation, but everything else requires primary legislation. A White Paper is promised by the end of the year to be followed by a higher education Bill. That obviously will need to be achieved within the present long Session. Time is of the essence.

Implementing Browne and managing a reduction in income, at the same time as having to cope with an upsurge in student applications, places an enormous burden on HE institutions. It is vital that the Government are prepared to act quickly in terms of legislation. There needs, of course, to be thorough parliamentary examination. That means, therefore, not a rushed passage through Parliament but an early introduction, not least to ensure proper consultation. Perhaps my noble friend can enlighten us a little further as to the Government's thinking and, if not, can she at least tell us when we can expect to have the Government’s response?