Select Committee on Education and Skills Minutes of Evidence

Examination of Witness(Questions 400-419)

MARGARET HODGE MBE, a Member of the House of Commons, Minister of State for Lifelong Learning and Higher Education, Department for Education and Skills, was examined.

Wednesday 12 December 2001

  400. The review of higher education.
  (Margaret Hodge) Let me just comment on the idea that there is conflict between us, the Treasury and No. 10. If we are to be effective in getting joined up working across Government, working across departments is absolutely essential. I find it slightly odd—if I dare say so, Chairman—that where one works across Government very well, immediately it is portrayed as somehow the DfES is being dominated by No. 10, No. 11 or whoever. It just is not like that.


  401. If you take student finance, and you take faith schools, both of them were fashions that came out of No. 10 and were bounced on your department.
  (Margaret Hodge) The finance review comes out of our commitment to a target of 50 per cent. It comes out of a realisation that there may be teething problems with the system in place. We have to ensure that we have the detail right. That is felt across Government. To be honest, the faith schools was an idea that emerged in the old DfEE when we started turning our minds to how we could raise the quality and standards in secondary schools and looking at the record of church schools in the league tables. Also the Church of England came to us saying that while they had a considerable number of primary schools as church schools, they wanted to expand their secondary schools. I come back to where the review came from. I think it is now a good time to sit back and reflect on what we want higher education to look like in 10 years' time. We have come through this generation of under-funding. We are at a point where the role of higher education in our society is emerging and changing. The purpose of the review is to enable us to sit back and to think where we want HE to be in 10 years' time and in the context of that wider review I hope that we can make a sensible bid for resources over the next spending review period and beyond it. We are looking extremely radically at the relationship between higher education institutions and the rest of the education sector. We know that in the past higher education institutions have been pretty independent of each other and the rest of the education sector. If we are serious about "cradle to grave" provision, raising skills standards, and so on, that is an important area at which to look. We are looking at the role of research and we where we want to be globally. We are also looking at the role we want research to play in regional communities and regional economies. We are looking at quality and how we can enhance that, not just in research but also in teaching. If we are to extend participation it will be a different cohort of students coming into higher education, and therefore excellence in teaching will become ever more important. We are looking at the governance issues. They have not been looked at since I do not know when. Are they an inhibitor to enabling innovation to take place? Institutions need to be well and efficiently managed. We are looking at the relationship between HE and FE and at the settlement around higher education institutions. That is quite interesting, Chairman. The settlement has not changed in the past 40 years. A couple of smaller institutions have been absorbed into larger ones, but we have the same university settlement that we have had for decades. Is that appropriate for regional demand and to meet customer demand? I believe that it is a good time to sit back and to reflect on where we want to go and with that overview we can make a sensible decision.

Mr Shaw

  402. Is the review cross-departmental?
  (Margaret Hodge) Is the review cross-departmental? Yes.

  403. Will you be consulting the stakeholders through this process?
  (Margaret Hodge) Yes.

  404. When do you expect to do that?
  (Margaret Hodge) As early as possible next year we shall produce a consultation report. Quite a lot of our thinking has already emerged into the public domain as we work through some of the issues; for example, in the letter that we put to HEFCE last week or the week before—the guidance letter for next year—we asked them to look at raising the cap on student numbers for two reasons. One is that it seems a bit perverse that we cap student numbers when we are trying to widen participation. Secondly, it will probably introduce a new form of competition, with learning at the centre, into higher education, and less planning than in the past. We want some thinking around that issue as to what that does in terms of the settlement of universities in the sector. We have to think about the regional offer to ensure that if we lift the cap and allow the market to flow rather more vigorously, that we retain some regional spread of universities.

Paul Holmes

  405. In the review you talk about looking, for example, at excellence in teaching, especially as you expand the number of students who go into higher education. There is a pressure from some quarters to create elite universities to carry out all the research and a wider group of universities to do all the teaching. What is your position on that?
  (Margaret Hodge) One of the interesting reflections for me has been that in the past we have tended to presume that every university does it all. The way in which we have funded universities has forced them into the same missions. They receive money per student and money for competing in the research assessment exercise. One of the issues that we are grappling with in the fundamental review is to see how we can recognise diversity of admission, some focussing very much on research, some focussing globally and some nationally and perhaps some focussing on regional regeneration. It does not mean that each will do just one; they may do a couple of those. Some may focus on teaching and some on widening participation. There are all sorts of mission focusses that universities may choose to have. If we have those different missions, we then have to decide how to incentivise the system through funding to ensure that missions are properly funded and that people do not try to do the same. We have to recognise that not every university is the same as another. In the past it may have been a mistake to try to build a uniform higher education sector. It just is not like that.

  406. There seems to be a suggestion there that we may see a concentration of research in certain institutions.
  (Margaret Hodge) We have a concentration of research at the moment. My officials will correct me if I am wrong, but I believe that a third of the funding goes to four institutions. Seventy-five per cent of funding goes to 26 institutions. A pretence that there is not a concentration of resources is just wrong. At the moment every university has only those two budgets against which they can compete and bid.

  407. There are two factors. The more you go down that road and concentrate on certain areas—Oxford, Cambridge and London—
  (Margaret Hodge) I have not said that.

  408. That is where the concentration is already.
  (Margaret Hodge) I have not said that. I have been very careful. I said that we have to ensure that there is diversity of mission, that each is valued and that we try to incentivise to enable universities to fulfil their own unique mission. It is not putting more money into one at the expense of another.

  409. In the system there is a fear that there is already some concentration on the Oxford/Cambridge/London axis.
  (Margaret Hodge) What is the theory behind that?

  410. They tend to receive the concentration of research status at the moment. You appear to be talking about a system that formalises that more. As a graduate of two northern universities—York and Sheffield—I feel that there should be some redressing of that. There is also a fear in part of the university sector about the effect on academic staff. If you create that kind of situation, there is the argument that the better academic staff will want to go to the prestige research institutions and, therefore, they will not be in the teaching universities.
  (Margaret Hodge) Perhaps I may engage in a form of conversation on this point. I am not sure what you are suggesting is wrong. It must be right for UK plc that we fund appropriately research and that we fund well those research institutions that can compete globally so that they can compete on the international market, not just because we want the status but because of the economic growth and prosperity that emerges from excellent basic research. It must be right that we should fund that. Equally, it must be right in terms of our desire to raise the level of skills and promote inclusion that we should fund appropriately and well those institutions that excel in teaching. Some institutions will excel in both; some may choose to focus more particularly on one or two missions than another two. I would have thought that that diversity would be at the heart of Liberal Democrat thinking anyway. It is something that we need to support. We are thinking how to incentivise missions rather than presuming an uniformity of mission.

  411. If the diversity arises naturally within the system, that is fair enough. If, as people fear—a couple of years ago there was fear—
  (Margaret Hodge) I do not understand the question. I really do not understand. There was fear of what? There was fear because four of the universities received a third of the funding for research. Where is the fear? What are we supposed to do about that? Are we not to fund properly the excellent world-class research that exists in those four institutions?

  412. If you go down the road of putting all the research funding into the areas that are already successful—mostly in the Oxford/Cambridge/London axis in the south of England—then you are denying other areas the chance to expand into research.
  (Margaret Hodge) The whole purpose of the research assessment exercise has been to assess right across the institutions. I probably have the figure here. Something in excess of 25,000 submissions went into the current RAE; 50,000 staff and 173 institutions. They have all competed on it. Interestingly, the last time around, all that competition still meant that a third of the money went to four institutions. Twenty-six institutions received 75 per cent of the money. It is right that the money should follow excellence in research. That must be right. We now have to find ways in which to fund excellence in teaching. Taking another element, there is what we may call applied research, which is knowledge transfer, developing spin-offs, taking ideas and developing them into products which lie behind the HEROBC and higher education innovation fund streams. There are all kinds of ways in which we can incentivise universities to do what they are good at. It is crazy to fund them all equally to do what some are good at and some are not so good at.


  413. Members of this Committee may be worried that the system becomes more frozen. Over the past 20 years we have seen universities that one would not expect to start ratcheting up the research league if things had been left as they were. Off the top of my head I am thinking of Nottingham and Warwick which have made enormous strides in research. They are very entrepreneurial universities. Some of the more established in global brands have been seen as a bit lax in terms of management, drive, innovation and quality of research. In a sense, we are saying that there must be room for people to move up the league in research rather than feel that they are stuck in some middle league.
  (Margaret Hodge) I could not agree more. It is like football. You want the teams to go up and down in divisions one, two and three. I agree with that. I shall say two things about that. First, we have the dual funding streams: one through the research councils and the other through the research assessment exercise, which is one mechanism that enables one to do that. The second point is another way of looking at the fundamental review: that is how you can get better collaboration across institutions, which they have not been very good at, so that you can broaden the research capacity across the country by academics working together across institutions rather than working inside their own universities.

Paul Holmes

  414. You mentioned the research assessment exercise that is published this week. When that was last done in 1996, one-third of the academics were judged as producing world-class research that would attract appropriate funding. This week, we understand that is to be 50 per cent. There are fears that there is not enough money in the pot to give all the people reaching the level the research funding that they would have received in 1996. Is there enough money in the pot to give everyone who has reached the standard that research funding, or will some have to be rationed?
  (Margaret Hodge) As you know, this is being considered, in the first instance, later this week by the Higher Education Funding Council. That organisation has its budget and it will have to live within that budget. We shall see what they decide over the coming weeks and months. We shall need to reflect on that in our research. Perhaps I can say something about research that is quite interesting. It is another area of under-funding. We spent 0.8 per cent of our GDP on publicly funded higher education research compared with an OECD average of 1.1 per cent. Just to catch up with France and Germany in terms of public funding of higher education research, we think it would cost somewhere in the region of £300 million. It would not all come out of the "penny" either.

  415. The budget for this year is fixed. If the number of academics achieving world-class research standards has gone up from one-third to one-half, the budget will not reflect that, so there will be some form of rationing and some people will miss out this time who would have got the money five years ago.
  (Margaret Hodge) The decision is one for the Higher Education Funding Council. The document will not be available until later this week. If there has been an improvement in the quality of research, hooray. People are managing the system better. We have to consider that and reflect on whether or not the right research assessment exercise is working appropriately. It is supposed to assess the relative quality of research. We shall have to reflect on that over the coming months.


  416. How much bigger is the HEFCE research budget compared with last time?
  (Margaret Hodge) This comprehensive spending review is something like £880 million. It is just under £1 billion.

  417. My colleague is asking whether it is a bigger pie than 50 per cent.
  (Margaret Hodge) We shall have to wait and see what is decided.

  418. I am referring to the overall budget. You allocate money to HEFCE. How much of a percentage increase is there? This is your chance to show that you are doing better than the previous administration.
  (Margaret Hodge) To be absolutely honest, I cannot remember. I think we are now about £858 million or £880 million. That is what the HEFCE document says. What it was before this spending review I cannot recall.

  419. Can you give us a note on that?
  (Margaret Hodge) I shall certainly give you a note.[1]

1   See Ev. p. 117. Back

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