Examination of witnesses (Questions 100
TUESDAY 16 MAY 2000
and MS HELEN
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
(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
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.
106. Sir Michael, one of the things that worries
members of this Committeeand we do get out and about quite
a bit, looking at schools, colleges and universitiesis
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 seemunusually, some
might sayto 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 competeparticularly with American colleges, but not
just American collegeswithout 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
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
(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
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
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
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 menand the Government has a
policy of deploring pay gaps presumablyand 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 educationas 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
(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.
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
(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
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
(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.