Select Committee on Education and Employment Minutes of Evidence



Examination of witnesses (Questions 100 - 119)

TUESDAY 16 MAY 2000

SIR MICHAEL BICHARD, MR PETER SHAW and MS HELEN WILLIAMS

  100. Sir Michael, are you saying that the spending in the last year of this parliament will be 16 per cent higher than the spending in the first year? Is that how you are measuring it when you say 16 per cent increase, or are you saying the total amount spent cumulatively over the five years will be 16 per cent more? Clearly, if you hold down the spending in the first three years of this parliament, it is much easier then to have a sudden increase that is measured as a 16 per cent increase in spending by the end of the parliament, but the cumulative spend during the course of the parliament is much less impressive than your figures suggest.
  (Mr Shaw) My understanding is that in real terms expenditure will be 16 per cent higher in the last year compared to the base, which was the expenditure level when this Government came into play, and with a lot of that being towards the end of the period.

  101. It is obviously much easier to achieve that headline figure of 16 per cent if in the first few years you deliberately keep down the level of spending on education, because in cash terms you can accumulate all the spending at the end and make it look much more impressive, but the impact on schools in those first few years is that, as a share of GDP, teachers' salaries and other factors that make that figure very important have been squeezed.
  (Sir Michael Bichard) Let us look at the position year on year factually, which rather gives the lie to your suggestion. In 1998-99 there was an additional £1.5 billion invested. £1 billion of that went to the local authorities, the current account. £300 million went to the New Deal for Schools and £200 million on various other things. So in 1998-99 there was a £1.5 billion increase. In 1999-2000 there is a £3 billion increase. In 2000-01 there is another £3.5 billion increase, complemented by the £1 billion additional money which was announced in the recent Budget. In 2001-02 there is another £3.1 billion increase. That, I think, does not suggest that you are merely investing in the final year to try and ensure you have a better figure for the run of the parliament. The average annual increase in real terms during the course of the Spending Review three years was 5.2 per cent -not in the final year but in each year.

  102. But those £3 billion, as a percentage of GDP, that is only a 0.1 or 0.2 per cent increase. That is a tiny fractional increase in the scheme of things, is it not?
  (Sir Michael Bichard) It is very difficult to make a large increase set against GDP, particularly at a time when the economy is so buoyant, because you are setting yourself a higher mark, which is why in the early Nineties it was very much easier for education to have a higher percentage spend of GDP. Nonetheless, it will increase from 4.7 per cent to 4.9 per cent.

  103. People will find it rather extraordinary that you say at a time when the economy is buoyant and tax revenues go up faster than the economy generally that it is harder to maintain shares as a percentage of GDP.
  (Sir Michael Bichard) Education expenditure is only one part of public sector expenditure. If GDP is increasing at a dramatic rate, then clearly education expenditure will have to increase even more quickly in order to maintain its position as against the GDP figure.

  104. You say education is only one part. The implication of your remark is that education has been set as a lower priority of this Government reflected in the share of GDP.
  (Sir Michael Bichard) That is an interesting point, because this year the increase, as we have already said, is 8 per cent in real terms for education. The increase for health in real terms this year is 7.4 per cent. So I think at the moment education remains the highest priority, but I do not think necessarily one should always indulge in a debate around priorities solely on the basis of who gets what money, when and how much money goes to a particular service. If you look at the priorities for the next three years' Spending Review, I think you will see that they are very much biased towards education and employment, building a knowledge society, building an inclusive society. So I think as far as we are concerned education remains the highest priority. It does actually happen to be reflected in the expenditure figures for the current year.

  Chairman: Sir Michael, I think we all feel better for that.

Mr Michael Foster

  105. I know statistics leave most people cold, and very few people, it seems, have a real understanding of what they mean. A very simple question, and hopefully a very simple and straightforward answer: in the last financial year, 1999-2000, is it true to say that education spending in real terms is at its highest level in the last decade?
  (Sir Michael Bichard) I am looking at the table. It must be right, yes.

Chairman

  106. Sir Michael, one of the things that worries members of this Committee—and we do get out and about quite a bit, looking at schools, colleges and universities—is that in terms of trend, there is no doubt that the view from outside, and this Committee tries to reflect that, is that yes, there is a lot of money and a lot of attention being paid to pre-school and to schools, but there is a real concern that the Cinderellas are FE and HE, that there is a declining unit cost predicted for both FE and for HE. One does wonder how long the Department can carry on squeezing greater activity and in fact achieving results out of a sector without fundamentally damaging the HE sector and the FE sector. What is your comment on that?
  (Sir Michael Bichard) I am surprised to hear you say that about FE, because that is not the message that I am getting from the FE sector at the moment, who seem—unusually, some might say—to be fairly cheerful, and I can understand why. The expenditure on FE was some £3.22 billion last year, £3.54 billion this year and £3.9 billion next year. So they have seen a very substantial increase in their level of expenditure over a three-year period. As I say, I find that they are fairly buoyant about that.

  107. They are squeezing more out per unit, are they not? The unit cost is going down.
  (Sir Michael Bichard) We are always looking for efficiency out of the sector, and we are looking for an increase of 700,000 students in 2001-02, but again, I really do not get a sense when I visit colleges and talk to principals that they feel that is unreasonable. We actually have an issue at the moment about how we can achieve the 700,000. We are still optimistic that we will do that, but generally I think they accept it.

  108. Let us pull stumps on FE and go to HE then.
  (Sir Michael Bichard) HE is a different matter in that they are not happy, and there is clearly a concern in HE around issues of global competitiveness and whether they continue to compete—particularly with American colleges, but not just American colleges—without additional investment. The point does need to be made that from 1998-99 to 2001-02 HE will have seen an increase of some 11 per cent in real terms. It goes up from £9.3 billion to £10.3 billion over that period, a 22 per cent cash terms increase, so they are not exactly being starved of resources.

  109. How many more students?
  (Sir Michael Bichard) We have asked for 100,000 places by 2001-02. The full-time equivalent increase in 2000-01 is 22,000 and in 2001-02 21,000. But we have also given them an understanding that we are not looking or have not been looking for an increase in efficiency beyond the one per cent. I hear the complaints, but there has been a substantial investment. I think the issue is whether that is sufficient as we move into a more global marketplace, which I take very seriously, and that is why the issue of top-up fees has come about. If I may say so, it seems to me that what the higher education sector itself needs to do, and we need to do too, is to just step back and say, "What are the real objectives of higher education over the next ten years?" and then consider what funding regime could best achieve those objectives. That is precisely why the Secretary of State said he wanted a rigorous intellectual debate about not just top-up fees but the funding regime, and why I am sometimes saying to the sector that that seems to me exactly what we are not currently having.

  110. Even the most creative debate can sometimes look like fiddling while Rome burns, when you are in a sector where you are trying to be globally competitive, if you can see staff being poached by American universities, and what is needed is pretty fast action if we are going to retain a competitive edge, which is so important not just to higher education. It is not a question of just having some elite universities we can point to and say are the best in the world; it is the relationship that has to our competitive position in trade and industry and so much else.
  (Sir Michael Bichard) I agree it is urgent that we look at these issues, but on the other hand, there is a difference between urgently looking at something and having a knee-jerk reaction. The advocacy of top-up fees has been something of a knee-jerk reaction. If you look at average academic salaries across the world, the UK does not actually do that badly. What we need to be having a look at is whether or not the spread of those salaries is greater in other countries than it is here, whether it is more the case in the elite universities that we have talked about, whether it is more the case where there is international competition for particular disciplines. We need to have a quick look at what is actually happening on a global basis before we start coming to conclusions about what the remedy is. But the remedy in HE is not just funding. The remedy is also about our universities responding to the challenge which IT is certainly going to bring in the delivery of higher education on a global basis, which is why the Secretary of State has launched this idea of the e-university, trying to bring together some of our universities to ensure they are globally competitive, because on a world basis, whatever we do on salaries, our universities are quite small compared to the American universities. We have to ensure that we can compete, and the e-university is a way of doing that. The Secretary of State would also like to see the sector facing up to issues of leadership and management and asking serious questions about how effective some of the decision-making processes are within our institutions. Are all of our higher education institutions organised at the moment to take advantage of opportunities quickly and to deal with the kind of threats you have been talking about quickly? Some of them, I would suggest, are still not equipped to do that expeditiously. There are also other issues in the management of universities. Equal opportunities may seem a peripheral issue but the fact that only 10 per cent of professorial staff in British universities are women suggests to me at least that we are not necessarily making the best use of the talent and resources we have. It is no good just saying that we want higher salaries without looking at whether we are making the best use of the resource that we already have. There are a wide range of issues. All I would ask is that we address them all and do not knee-jerk on top-up fees.

  111. I am merely flagging up that the Committee would like to see a greater sense of urgency.
  (Sir Michael Bichard) I hope I have conveyed a sense of urgency.

Dr Harris

  112. I want to come back to spending, but while we are on higher education, can I ask whether you consider the issue of equal opportunities in higher education and equal pay to be a matter for your Department?
  (Sir Michael Bichard) Our relationship to higher education of course is always an unusual one in that higher education institutions are autonomous. Nonetheless, we do have an overall responsibility for the quality of education and learning in this country, and it is entirely proper that we should be challenging the sector on some of these issues. We are not alone in this; others are doing it too. But I think we have a role in terms of just being a critical friend and sometimes a bit of a challenger on issues like that.

  113. I am not sure you have answered the question I meant to ask, which is, if you accept that there is a pay gap between women academics and men—and the Government has a policy of deploring pay gaps presumably—and that this is generally speaking a publicly funded sector, should your Department not be quite directed in terms of trying to close that pay gap in some way, presumably relating to identifying funds or making it a priority?
  (Sir Michael Bichard) I think that is an interesting question, and when I said I think we should step back and say, "What are the priorities and objectives?" and then think about the funding regime most likely to deliver those, that is an issue which I think we should consider. Do we use the funding mechanisms that we have well enough at the moment to ensure that the priorities are delivered? It is not just a funding gap between men and women; it is actually the fact that there are hardly any women in senior positions in higher education—as I say, 10 per cent of professorial staff. This is something that really should be faced up to.

  114. Do you understand the worry of the higher education sector that it is faced with this pay gap which it ought to do something about, which has financial implications, but it is also challenged to meet targets of both efficiency and student expansion, and it cannot do all of them, it maintains, within the money it is given? Presumably the Department has a view as to whether it is prepared to tolerate that pay gap and get the expansion that it wants, or whether it would rein back on expansion and try and use some of the funding to, for example, reduce the pay gap or indeed try and raise the quality of teaching that already exists.
  (Sir Michael Bichard) We have to keep this in proportion. As I have said, there has been an 11 per cent real terms increase in expenditure in HE over the last four years.

  115. Is that per student?
  (Sir Michael Bichard) No. There has been an increase in places, but an 11 per cent real term increase and a one per cent efficiency saving. I entirely accept that is on top of substantial efficiency savings in the early part of the 1990s through to 1995-96. The point I am making is that that is quite a substantial input. With only ten per cent of your professorial staff being women, we would not actually be talking about a very significant investment to ensure that they were paid at the same level as the male professors. I do not think you can always say the answer is yet further investment. It is sometimes a question of a sector looking at its priorities within the resource that it has.

Chairman

  116. Are you attracting us down a beguiling path? I think all of us would agree with you, but I am looking at your DfEE organisation chart. I can hardly see a woman mentioned in a leading position. I wonder how many women are in senior positions in your Department?
  (Sir Michael Bichard) There are nowhere near enough.

  117. More than ten per cent or less than ten per cent?
  (Sir Michael Bichard) Our aim is to increase the number of women in the Senior Civil Service within the Department from I think 23 per cent at the moment to 34 per cent in 2004-05. We believe that we will achieve that, and if we achieve that, I think it is a pretty significant and decent figure. There are not enough women. A number of our senior women did retire at the time of the merger, and it was a huge embarrassment to me to find that after the merger I had no women in senior positions within the Department. We have made real progress and real attempts to tackle that. Twenty-three per cent of our senior civil servants are women at the moment. Ten per cent of professorial staff are women. If you have £10.4 billion coming into your sector I do not think you should plead a lack of resource as a reason for not tackling that.

  118. I want to get on to Public Service Agreements. We agreed earlier on what we wanted to cover and, much as I would love to continue questioning on that area, do you mind if we move on to Public Service Agreements? I really want to start by saying to you, Sir Michael, that you are known to be a champion of Public Service Agreements. It is something you very much believe in. There is word on the street that says Whitehall has to very quickly make sure that they devise these Public Service Agreements in such a way that the targets are going to be easily met, with hoops that can be easily jumped through. Are Public Service Agreements working out to the benefit of our constituents?
  (Sir Michael Bichard) I think they are, but let us just revert to something I said earlier. Public Service Agreements for us are a subset of our business plan. They are our key priorities and we draw them out of the business plan which sets out all of our priorities. I believe they are stretching. If you look at the targets for increasing the number of 19 year olds to get to Level 2, that is very stretching by any standards. If you look at the increase of nursery places for three year olds, I defy anyone to say these are easily achievable. That is what targets should be. They should be stretching but achievable, and I believe that if you do design targets in that way, they will provide a focus for the energy of people, and they will provide an incentive to deliver a better service. So I am a great believer in targets in every walk of life, as long as you do not allow the targets to distort the behaviour of the people delivering the service. You have to keep a close watch on that.

  119. There is also a view that PSAs actually increasingly deliver control of education away from your Department and into the hands of the Treasury, and you are going to end up with most of your targets and most of your direction being Treasury-driven.
  (Sir Michael Bichard) That is, in a way, why I drone on about Public Service Agreements being a subset of our business plan. We control our business plan; we own our business plan. I believe it has an impact on the way people work within the Department. Public Service targets drop out of the business plan. I believe that we have control of our priorities, not the Treasury. The Treasury has a healthy interest, as they ought to, but I do not believe they are driving our strategy or our business plan. That is within our own hands. If that happens, that is no-one's fault but ours.
  (Mr Shaw) Many of the PSA targets came out of the manifesto or out of early statements by the Secretary of State, the literacy statement being one of the earlier ones that was built in as a centrepiece to the PSA.


 
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