Higher Education: Funding

Lord Broers Excerpts

Wednesday 27th October 2010 Lords Chamber

[Lord Broers]

My Lords, I warmly congratulate the noble Lord, Lord Boswell, on his outstanding maiden speech. I know him well through his active and effective membership of the Science and Technology Committee in the other place. The Science and Technology Committee in this place works closely with the committee in the Commons—hence our relationship—and so I had expected a clear and eloquent speech. However, I think that he has excelled himself.

The noble Lord’s interests and experience in Parliament are exceptionally broad. By profession he is a farmer and an economist, but down the Corridor he has been government Whip; Parliamentary Under-Secretary of State for Education and Parliamentary Secretary for Agriculture, Fisheries and Food; and an opposition spokesman for what seems almost everything over the years. I know that we all welcome him enthusiastically to his place in the House and are confident that he will make very valuable contributions to our activities.

I congratulate the noble Baroness, Lady Wilcox, and the noble Lord, Lord Browne, on his review. I just hope the fact that the noble Baroness has in effect called this debate on behalf of the Government is symptomatic of a new era when the Government want genuinely to listen to others before making the final decisions themselves.

Academics are famous for their dislike of change, and yet most of our universities have continuously adapted to changing circumstances and some are among the longest lived of our social institutions. Universities are slow to act because scholars’ timescales are long and their interests diverse. They are complex societies, but wise. They recognise the inherent complexity of their organisations and have the intellect to cope with that complexity. The Government should be reminded of this before they start imposing change upon them.

I have started in this way because it is not possible, especially in dealing with our leading universities—and I declare my interest as a past vice-chancellor of the University of Cambridge—to tamper with some of the funding streams without looking at the totality of their funding. All of their income streams, whether addressing teaching or research, or meeting ongoing costs, capital enhancements or student support, are closely intertwined and interdependent. In my experience it is almost impossible when allocating resources to distinguish between the various activities of academics, to decide what is scholarship, what is research or teaching, or even what is administration.

As an engineer, I ran from my laboratory to the lecture theatre where I found that the best way to capture the interest of the students was to talk about my research and what others were doing that was new, and after the lecture I met my colleagues to decide how we could finance the redevelopment of our teaching laboratory before spending the hour before lunch reviewing a new textbook for a publisher. I remember during my time we were asked by the funding council to tell them how much time we spent on teaching and how much on research. We complied, because it does not pay to bite the hand that feeds you, but there was no accurate way to do this. At the time—and I think it is probably still the case in most of our leading universities—to the best of our ability to estimate it, the money received for teaching was insufficient and we were in effect subsidising teaching with research money, and yet at others universities I was told by their vice-chancellors that they had to use teaching money to seed research. Government and councils of higher education should leave these matters to universities themselves and not try to be prescriptive. There are large differences between our universities, but in the vast majority of cases they will make the best decisions.

So how does this relate to the review of higher education funding and student finance? I hope it illustrates why the coalition must not make decisions about teaching and student finance without also deciding what is to happen to all the other sources of funding. The first is research funding, especially QR—the stream that used to flow according to the research assessment exercise and now depends on the research excellence framework and which in our leading research universities is much larger than the amount they receive for teaching. The coalition must also decide about CIF—the Capital Investment Fund—which is capital for learning and teaching, research and infrastructure. Universities have come to rely on this money to maintain their equipment and infrastructure, and it has been essential in maintaining their capabilities in research at a level that encouraged investment from the private sector, from industry, which incidentally seems, depressingly, to be declining. This stream from the private sector is of crucial importance and has to be carefully monitored. Then, closely connected with industrial involvement, there is the third stream of funding aimed at encouraging enterprise. Finally, of great importance to universities, there are the research councils. Fortunately, as the Minister said, there is good news here. As an aside, I must express my appreciation, as the chairman of the board of the Diamond Light Source, that the money has been provided for the very exciting final phase of that project.

If the Government or the funding council—or councils—intend to change any of these streams, they should be aware that the changes may conflict with what is planned for teaching and student finance. If the other streams are to be stable, it is possible to assess the adequacy of the proposals set out in the broad-ranging Browne review, which, with the exception of the levy that is proposed if universities decide to charge fees above £6,000, I strongly support. The levy is regressive and will, in effect, put the universities in the role of tax collectors, which is not appropriate. The money provided by universities for bursaries at fee levels above £6,000 would also presumably be, in effect, taxed, which is even more inappropriate. I would like to see flexibility in the cap if it is to be imposed, but I regret that this may not be politically acceptable.

If the reduction in the funding of BIS is to feed through to the teaching money passed on to the universities, then—to the extent that estimates can be made—the student fee will have to increase to £7,000 to maintain present levels of overall funding; that is, to keep the situation much as it is today. According to the estimates I have recently been given, this still leaves expenditure exceeding income. To balance these would require a fee of £8,000.

As a final comment, I observe only that as the money provided by the funding council declines, so do the reasons for our leading universities to go on accepting government regulation. We might reach a level where independence becomes feasible and too attractive to resist. The noble Lord, Lord Giddens, has mentioned the US universities. I think it is well known that the top US private universities, through their success as research institutions, receive up to a third of their funding from government—in their case from federal and state sources. There is no reason why our leading universities should not gain similar support for their research. I conclude by asking the Minister to reassure us that the Government will take the totality of university funding into account before making their final decisions about teaching funding.