Universities: Impact of Government Policy

Baroness Verma Excerpts

Thursday 13th October 2011 Lords Chamber

[Baroness Verma]

My Lords, I am grateful to the noble Lord, Lord Giddens, for giving this House the opportunity to discuss higher education once again. I feel quite a sense of trepidation, being surrounded by so many learned and well versed noble Lords. Clearly, the contributions that we have heard today from our colleagues, and the universities where they serve, serve this House incredibly well.

The first thing that I emphasise is that the Government value the autonomy and excellence of all our higher education sector. Allow me to quote my right honourable friend the Minister for Universities from last week. He said that universities were,

“amongst our greatest national assets”,

and said how we value how they change people’s lives. He went on to say:

“Our universities must always have space for the free spirit, the eccentric, the blue skies researcher … Without that our national life, however prosperous, would be grey and diminished”.

Universities are not just places of teaching and learning. I agree completely with the noble Lord, Lord Giddens. They are world leaders in innovation and research. Their breakthroughs regularly dominate the news. You may have seen the recent announcement on Beneforte broccoli, where research funded by the Government’s Biotechnology and Biological Sciences Research Council has led to the development of a highly commercial food product that will be both grown and sold in the UK. It will give a real boost to our agriculture, our personal health and, of course, the economy. Then there is graphene, the world’s toughest and thinnest substance, which was developed at Manchester University. To help to capitalise on its discovery, the Government announced earlier this month an investment of £50 million to develop a graphene global research and technology hub to translate this discovery into wealth and job creation for the UK.

Such achievements are vital to the reputation of our universities and the investment that they attract. Indeed, they represent a key export sector, worth around £8 billion, which lures business to the UK as well as the world’s most gifted researchers. According to the most recent international rankings, only the United States has more universities in the top 200, as has already been mentioned, but the UK has a greater impact relative to its investment. For all these reasons, the Government could not allow the financial crisis and the urgency of reducing the deficit to imperil these essential institutions. That is why we are introducing a different funding system.

The universities that we have today are teaching more than 2.4 million students, a substantial increase over the 171,000 students of 1962. From the next academic year, funding and more of it will flow into universities according to the choices made by students. Universities can go a long way to maintaining their incomes, provided that they remain attractive to prospective students—a point to which I shall return in a moment. Some talk as if the shift to student fees and loans will mean a loss of Exchequer support for our universities and, indeed, for beloved subject areas, but that is wrong. Even after 2012, the contribution from the taxpayer to the higher education sector will be very substantial. For one thing, it will cover the upfront fees for the vast majority of domestic students, as well as providing grants and loans. We are looking at around £6.5 billion in tuition loans on top of the £2 billion of remaining teaching grant going to subjects that are costly to deliver. We estimate that the cash going to universities in grants and fee loans combined could be 10 per cent higher by 2014-15 than it is now. We can afford this only because we will get a lot of it back, eventually, from higher paid graduates who will repay their loans.

In addition, the Government will spend £4.6 billion on research programmes every year until 2015 within a ring-fenced budget. We will spend over £600 million on capital for research in 2011-12. Shortly, we will also publish an innovation and research strategy to ensure that we maintain and strengthen our position as one of the most forward-thinking countries in the world. The strategy will set out how the UK can build on its existing strengths to become the most productive research base, globally, and high levels of investment in intangible assets to underpin sustainable private sector-led economic growth.

I return to the teaching mission of colleges and universities, which is sometimes overshadowed by the national interest in research. As we ask students to invest more in their personal futures, universities must focus even harder on the quality of the educational experience that they provide. The Government are introducing reform so that students can select the best institution for them from a sector which offers a greater range of provision, in which institutions are competing for applicants on both quality and cost. It will be vibrant, efficient and responsive—a sector with students at its heart. We want university to be available to the brightest, including those who can demonstrate that they have the potential to succeed. It has always been the case that not every applicant can secure a place. Going to university must remain a competitive process, with institutions retaining their autonomy and continuing to decide who they admit.

At the same time, the Government will always have to control the amount of public funding spent on higher education. In the past, they have done this by restricting the numbers of students each university can recruit annually. This has meant that there are lots of students every year who achieve the highest grades but cannot secure a place at the university of their choice. We want to change that, while ensuring that the overall cost to the public purse remains affordable. For university entry in autumn 2012, institutions will be able to recruit as many students as they can with the AAB grades or better at A-level, or the equivalent in other exams. This will allow more high-achieving students to attend the institution of their choice, and will allow institutions which can attract more of those students to expand. It will not prevent students with lower grades or alternative qualifications getting a place at university. This is simply the first step in freeing up student number controls.

Alongside this, we plan to create a flexible margin of 20,000 places in 2012-13, which will enable FE colleges and other providers to combine good quality with value for money. We know that there are providers which can offer a good learning experience for less than £7,500, and this will offer a wider choice for students.

Before concluding, I turn to some of the points that have been raised by noble Lords. I am mindful of the time, so if I curtail this I will write to noble Lords to whom I have not managed to respond.

In response to the opening remarks of the noble Lord, Lord Giddens, I agree that some things are yet to be seen through, reviewed and monitored. However, I dispute his point that the universities are becoming marketplaces for the sake of marketplaces. We are trying to ensure that, at long last, students have greater opportunity and choice in the sort of subject matters that higher education institutions are able to produce, and to enable those who have never thought of going into higher education to see it as a conduit to going in with those choices, knowing that their loans and student fees will be paid up front. The noble Lord failed to accept this in his speech. He is stuck with the concept that he has over the years. I am not trying to downgrade the noble Lord’s point. I am just trying to say that the world has moved on. The way in which institutions respond must also be more responsive.

My noble friend Lady Brinton reminded me and the House that I will arrange for her to meet my right honourable friend David Willetts to discuss the repayment of loans and fees for part-time students. I extend that invitation to noble Lords who have taken part in the debate today. My right honourable friend is very happy to meet people to discuss part-time students’ repayments.

A number of noble Lords mentioned social mobility. I accept that social mobility has stalled, as I know do most noble Lords. It had also stalled over the 12 to 13 years that the previous Government were in place. That is why we have to introduce this important programme of widening participation. We want to ensure that everybody is able to benefit from the great lifetime benefits that graduates can enjoy once they have participated in further education. The participation rate of disadvantaged young people at institutions requiring higher entry tariffs has remained almost flat over recent years. We need to see progress on fair access, especially at our most selective institutions. That is why the Government have introduced a new framework which places increased responsibility on universities to widen participation. It is extremely important to ensure that no person who has the ability and the potential should be deterred from going to university simply because they feel that they would not be able to afford it. The Office for Fair Access will be strengthened. Annual access agreements have been put in place and there will be tougher sanctions on universities that fail to meet the access targets that they have agreed with OFFA. From the first round of new access agreements for 2012-13, OFFA estimates that by 2015-16 universities will be spending around £600 million on supporting fair access and widening participation.

Noble Lords spoke about overseas lecturers and overseas students. My officials and I are working very closely with the Home Office and the UK Border Agency to ensure that the needs of both the public and private education sectors are fully articulated and their interests are properly represented in all immigration policy-making decisions. We have made good progress on tackling the hurdles that institutions can face in bringing foreign academics over as guest lecturers and external examiners by expanding the terms of the tier 5 government-authorised exchange scheme. We have had success in raising the status of scientists and researchers, many of whom will take jobs in universities. Exceptional academics can apply via the new tier 1 exceptional talent route—a route that takes account of the expert views of the national academies. Ministers will continue to work with the UK Border Agency and with universities on removing obstacles to the essential business of the global intellectual exchange.

The noble Lord, Lord Faulkner, asked about the numbers of midwives and nursing graduates. This is an issue for the Department of Health but I will take it back to that department for him.

Noble Lords talked about postgraduate study. We will continue to monitor the impact of our student finance reforms on postgraduate studies. In cash terms, HEFC is maintaining its research degree programme supervision funding, which will support the next generation of researchers, at £205 million for 2011-12. HEFC has recently consulted on its proposals for reforming the allocation method for postgraduate research funding from 2012-13 and aims to publish its response by the end of 2011.

A number of noble Lords, including the noble Baroness, Lady Coussins, spoke about modern languages. I will take back to my right honourable friend the Secretary of State her concerns about languages in schools. However, I can tell her that since 2005 in higher education modern foreign languages have been classified as strategically important and vulnerable subjects, which means that via the Higher Education Funding Council the Government have provided additional support to ensure the continued availability of language places. The European Commission’s Erasmus programme and fee waiver provided by HEFC will continue for 2012-13 but we are working on options beyond that. That discussion is still going on and if I hear any further progress I shall inform the noble Baroness.

Noble Lords mentioned the impact on ethnic minority groups and here the Government have a good story to tell. There is a higher proportion of students from minority ethnic communities going into higher education than is represented in the working population. Research indicates that coming from a minority ethnic group seems to have a positive impact on a young person’s aspiration to enter higher education, even compared with those with the same prior attainment. Minority ethnic young people are also more likely to enter higher education than their white peers.

BIS undertook an equality impact assessment of the higher education funding reforms and changes to student finance in November 2010. The overall assessment was that the proposals would not have an adverse effect on minority ethnic groups. Another finding was that we expected the changes to the maintenance packages to benefit those in low-income households. Therefore people from minority ethnic backgrounds were more likely to benefit from the more generous packages that we were proposing.

As for how much students will pay and access agreements, the Government have already agreed a £6,000 threshold from 2012, but we have also insisted that institutions do more to promote fair access and widen participation. Those universities wishing to charge up to the maximum threshold of £9,000 will have to work under some stringent and strict frameworks and ensure that they are doing everything possible not to exclude people from poorer backgrounds. We know that OFFA is going to be rigorous in ensuring that this happens, but the Government, as always, will monitor the outcomes and respond if we feel that progress is not being made.

I know there is some concern about arts and humanities. Humanities and social sciences are, in some cases, losing their teaching grant, but funding will flow into arts and humanities courses via student tuition fees and the Government-subsidised student loan. So even when there will be no teaching grant for a discipline, it does not mean that there will be no Exchequer contribution. There are some disciplines that are officially recognised as strategically important and vulnerable and HEFCE is consulting on how the remaining teaching grant should be allocated. We will present final proposals for this in autumn 2012-13.

I would like to congratulate the noble Lord, Lord Sawyer, on his university being awarded the university of the year title for 2010. I will read carefully the questions that he put to me, but I absolutely agree with him that universities change the shape the cultures of communities, and Teesside has shown that. It is a good model for universities to look at when they feel they are under threat. Teesside has changed to meet the evolving needs of the student population, but also that of the community of Teesside.

I say to the noble Lord, Lord Bew, that I am new to this department, so in some of my responses I might need to beg the patience of the House in taking away some of his questions. However, I agree that rigid equality assessments are needed and if they have been done, I will make sure that the information is passed through to the noble Lord. If they have not, I will make sure that I relay the question to my right honourable friend.

The noble Baroness, Lady Howells, asked about degree-awarding powers and university titles. The White Paper said that we would review the use of the title “university” so there are no barriers to smaller institutions being classified as a university. The White Paper also undertook to decouple degree-awarding powers from teaching in order to facilitate externally assessed degrees by non-teaching bodies. These proposals are currently being consulted on via a new fit-for-purpose regulatory framework for the higher education sector which will be due to close on 27 October. We will then consider the responses.

I say to my noble friend Lord Smith of Clifton that the Government will still achieve savings of £36 billion by 2014-15 from the HE budget to contribute to lowering the deficit. The long-term cost to Government of student loans depends on the average amount borrowed by students rather than the fees charged, and additional contributions by graduates who benefit from higher education will result in a long-term saving to the Government.

I have run out of time. I have several responses to get through, but I would like to finish with my conclusion, so I shall read Hansard and respond in writing to the points that I have not answered. Although our reforms are often presented in the context of serious financial challenges, they nevertheless represent a significant opportunity—the opportunity for the student to have a stronger voice. Over the years, universities have had such strong incentives to focus on research that we believe that the role of teaching has been undervalued. That has got to change. Putting financial power in the hands of students will help to put them at the heart of the system. I am sure that no one would disagree with that. It is our ambition to lift the burden of centrally imposed bureaucracy on the higher education system. Freeing up student numbers, for example, will give institutions more flexibility. We are also looking at other ways of removing impositions over time.

This has been a really important debate. Your Lordships have brought real wisdom, expertise and, of course, challenges to the discussion. That is right and necessary. I did not go to university because I was not allowed to. I have fought a lifetime to ensure that those who want to and are able to should be able to go. I hope that we will have constructive discussions in the future so that no one has to be in my position, where culture and not potential stops someone going to university. I thank the noble Lord, Lord Giddens, for this debate.