Higher Education: Funding

Lord Sutherland of Houndwood Excerpts

Wednesday 27th October 2010 Lords Chamber

[Lord Sutherland of Houndwood]

My Lords, I begin by congratulating my noble friend Lord Boswell on an excellent maiden speech. It brought to mind years past when he was the gamekeeper as the Minister for Higher Education and I was the poacher as one of those wretched vice-chancellors who tried to wheedle money out of him. I suspect that we spent a large amount of time arguing over the terminological point of when an efficiency saving becomes a cut. I think we agreed that when it had gone on at 2 per cent per year for 10 years, it no longer constituted a series of efficiency savings. We are again discussing a financial gap. I congratulate the noble Lord, Lord Browne, and his colleagues on bringing this conversation to a sharp point—we need to make decisions. The report has been produced speedily and efficiently. I hope that the Minister will reassure us that the Government will make up their mind about what they are going to do with equal speed and efficiency. Given the sword of Damocles that is hanging over us—of a 40 per cent cut for a large number of universities—we need to know what the Government’s intentions are, and we need to know that quickly. That point has been well and often made in the debate.

The report is good in most parts and in a sufficient number of parts for it no longer to be the curate’s egg, but at least, perhaps, the bishop’s egg. It is a significant report which has much in it to commend it. What is good about it? First, it sets the right direction of travel. This is a route on which we are embarked. This is not a moment when we can turn back for all the reasons that have been well laid out in this evening’s discussion. The noble Lord and his colleagues recognised that this is not a start-from-first-principles moment but is a moment when the great tanker is sailing forward and has to be kept afloat. The future of millions of young people and, indeed, of our country, depends on the continuing viability of the university system. This is not a time to reopen the design of the boat. However, I take the point made by the noble Lord, Lord Willis, that a much broader discussion is needed. I shall come back to that in a moment.

The second good thing about the report is that it is pragmatic in its approach. It realises its place in contemporary social history. We have heard the figures—just after the war, 2.5 per cent of the population went to university; now the figure is 45 per cent. We are in a different world. For many of us, it is a much better world, but there are consequences and real costs. We have a university system that is mature, complex and, in places, very sophisticated. Parts of it have been 800 years in the making, other parts are of more recent manufacture.

The report also recognises the practical constraints of a funding system that is not able to sustain what we are doing. If my colleagues on the opposition Benches have better suggestions in this regard, I should like to know what they are, and why the previous Government allowed a gap to open up in the funding of universities. That is the reality. That is where we are. We must proceed from that point. Any better suggestions are clearly welcome. The report accepts that there are two financial constraints. The first is that we cannot afford to continue to fund universities in a way that was devised for a much smaller system. That is the reality. The second is that the financial die was cast four or five years ago when this House and the other place passed legislation to allow for the charging of fees. That is the context within which we are operating. It was inconceivable that we would turn back on that.

The great quality of this report is that is essentially a pragmatic response to that situation. Would that it were otherwise; I agree with all the visionary statements that have been made about providing free higher education at source for those who have the ability to benefit from it, but the reality is that we now have a mass system that we are not able to afford—even more so over the next four years than perhaps we had first guessed. Those who wish to reject its conclusions should come up with better proposals about where the money is to come from.

As I have suggested, however, and this was a wise decision, the report does not raise some of the big and continuing questions that drove the Robbins report and, to some extent, the Dearing report. It assumes, as I have said, that the ship has set sail and must be kept going. Priority number one is that the system has to be kept healthy, with no institutions going to the wall because of inadequate and inefficient government action, or the lack of it, over the next year or so.

None the less, the big questions remain. I appreciate the passionate speech of the noble Lord, Lord Willis, on this; I am not sure that we would end up going in the same direction but he is right to say that we need to discuss these questions. We are long past the discussion raised by Newman, which some of my academics colleagues would like: what is the idea of a university? That presupposes a small, one-size-fits-all operation. It is a 19th-century model, but we in Britain entered the 20th century and, eventually, the 21st century. However, there are fundamental questions that have to be asked. I put two of them to your Lordships now.

The first question is an obvious one: what are universities for? There is no single thing that they are for. I shall show off my humanities background because I am going to be controversial: as Wittgenstein would say, the word and the uses of the word “university” are attached not to a single meaning but to a whole family of meanings that have connections and resemblances to each other. That is the philosophy seminar over. That point is fundamental to how we conduct the discussion. We have diversity, although not enough, and not as much as we should have for the size of our operation. If we are going to cash in—sorry, I should not use expressions like that; I stand corrected—if we are going to make the most of that diversity and indeed enhance it in all the ways that have been laid out before us, we must look for variety in what is compatible with education at a higher level, and indeed at an excellent standard.

In some ways, the second question is more difficult and has raised questions in the minds of many of my colleagues here: what should society reasonably expect of universities that it funds or part-funds? That is a perfectly fair question. By “society” I do not just mean the Government, although they are included; I mean those who pay taxes and those who have never been to university. They are paying for this system. What might they reasonably expect, and what is the case that we put to them for that funding continuing in some form or another? If we had asked in 1992—although that was not the moment to ask this—what society expected of our university then, we would have a rather different system from the one that we have now. There would have been some clarification about the directions in which society thought it reasonable for universities, en masse and individually, to go with the funding that backed them.

That is the high-flown stuff. I shall make one or two specific comments and suggestions about the report in a moment, but I make the point that there is no better time than a recession to get on with the discussion about what society expects from universities and what they are for. Do it now; do not let it wait until we have the next funding crisis. The settlement proposed by the noble Lord, Lord Browne, and his colleagues is an interim one—have no doubt that we will return to this question.

I have one specific suggestion to make as a result of what I read in the report, and I would be interested to know whether the Government are contemplating such a possibility. If I were still in the business of helping to manage, direct and lead universities, I would look very carefully at the possibility of privatising parts of them—not least in the arts faculties, some of the social science faculties, certainly the law faculties and probably some of the business studies areas. I say privatising in the sense that if the proposal goes ahead, and some version of it will, the funds that were originally available for those areas will not be coming in through government grant, but through fees paid by whatever system we agree to. If you are bringing in £7,000, £8,000 or whatever, why not take the extra step and say, “We will free ourselves from direct government interference and use that money to plan and develop in these areas which we think are important”? I do not think those subjects are not important—quite the reverse. In that way we may be able to civilise the relationship between humanities, for example, and government departments, and never again have a Secretary of State who implied that he thought the study of medieval history was pointless—a crass error that happily will not be repeated, I hope. That was a year or two ago—not this year.

The universities should be planning such an option and the smart ones will be. What would it be? Let’s have a business plan and let’s see how cost-effective it would be and how we can protect the quality of those subjects that have been so well expounded by my colleagues along these Benches. Such an option is possible. If you think that it is not, what about the USA? Harvard, Yale, Stamford, Princeton and New York universities all have excellent humanities faculties. They have used their resources to employ some of the best people as teachers. Chicago still provides the basic course that every student must take covering western civilisation. I have seen that happening. I have been there in classes, watching it. It is fascinating. These private institutions have not trashed the humanities and they have not trashed those areas of social science that can contribute so much to our country and the quality of life here. I go with all the stuff about civil society and what you need from the humanities area. I make a serious suggestion. Government cannot compel this, they cannot drive it, but they can make sure that there are no obstacles in the way, because there will be civil servants who suck their teeth at such a radical suggestion. If that suggestion is worth pursuing, please give encouragement to those universities which can pursue it—and a number of them could very well do that.

I have two or three points of quick reflection on the report. There has been a lot of discussion about the market and whether this is an appropriate way to talk about universities. Look at what we are doing with overseas students. It is a market in which universities have developed a presence, capacity and ability, while some have developed bad habits. Go out to Hong Kong or Singapore. Some have developed bad habits—markets are like that; but so are centrally planned states, as we have noticed. But it can be done and it has been done. There have been some losses. Look for the undergraduates coming from sub-Saharan Africa, for example. They are not coming here, and that is what the market has done. There have to be other ways of dealing with that. There are other ways, and there are good people trying to do something about it. However, I accept that there are costs to a market, but it can work—and it is working in the area of overseas students.

On a point of irony, we have come almost full circle. Keith Joseph must be twitching with delight in his grave. He was the one who suggested that we might have student vouchers whereby the money follows the student and goes to the university, and the stimulus that that would produce would be beneficial. He was ridiculed and reviled for that by the university system. However, by a miracle—this is the genius of the Browne report—instead of having student vouchers when you turn up at university to demand your pound of education or whatever, you will have a student IOU. Not only will we have the drive of the independence of the student input, the state is not paying for it—the student is. Keith Joseph will be giving three cheers from the nether regions.

I will make one point about the graduate premium. We overplay the graduate premium of £100,000 on average. It is there, but not for a large number of graduates whom I taught, because of the kind of jobs they do in schoolteaching, social work, nursing and so on; and if it is there, it is £100,000 on average over 40 years. We can all do the sums. That means £2,500 a year on average, or about £50 a week before tax and national insurance. That means, if you are lucky, you would get a moderate West End theatre ticket but would not be able to afford an ice cream in the interval. It is not a huge sum of money when you lay it out in those terms—if that is the average figure. I know that there are many more who earn much more as a result of a university education, and they, too, should help to pay for it.

My last point is that the market being proposed wants to move students toward certain areas of national importance—STEM subjects and languages. Universities cannot do this on their own. Government policies have created a situation in schools where student choice has been leading students in droves away from those subjects. The consequence will be that you may create a market, but unless something is done about what is happening in schools, and the quality and volume of teaching in science and languages, you will not have a market in which to operate. Are the Government tying up, in the way that joined-up government should, this element of potential policy with the way in which schools are being organised? I look forward to the Minister's response.