Examination of Witnesses (Questions 20
MONDAY 10 DECEMBER 2001
20. That is going to be difficult when you have
the perception of debt in front of you, is it not?
(Sir Howard Newby) Well, we then get into the technical
issues about how one wants to fund higher education, not only
in the balance between the tax payer and the student but also
whether the money is paid up front or subsequently. In Scotland
the system there is that the money is not paid up front, it is
paid subsequently. I think one has to improve the confidence of
16 to 18 year old's, that they are not going to be faced with
a lifetime debt that puts them off going into higher education.
As I said earlier, that is only half the battle. Last year you
will all recall the Laura Spence affair, and I am always reminded
of the headline in the Sun which said, "It is not
cool to be clever". I think that also captures a very deep
and cultural issue. In the playground at 13 or 14 it is not cool
to be clever, especially amongst boys as opposed to girls from
lower socioeconomic backgrounds. We have to address that issue
as well. We have to raise the level of achievement and aspiration
in schools, and that is something that we cannot do on our own,
we have to do that in conjunction with schools and colleges. I
would like to see us go back to a rather old fashioned model,
more of a civic university, in which the universities were operating
very much in partnership with the schools and colleges in their
area to manage, if I can it put this way, the progression through.
There is much more seamlessness between schools, colleges and
universities, both ways people in the university helping, where
necessary, the schools and colleges, this is how many of us began
in the 19th century and that we all attack this together. I think
we have to run this more or less like a campaign, a real campaign
to win over the hearts and minds of young people as well as ensuring
that when we have done that there are no disincentives in place
for them coming through. A corollary may be, this is, I think,
politically the most difficult, that those who can afford to contribute
more may have to share some of this additional cost. I am happy
to say that is not my decision and not my business.
21. It is your decision, you will have a very
large role in this, it is all very well talking about seamlessness
and supply chain, all of this brings joy to my heart, I am surprised
you mentioned the name that I banned from the last Committee,
the fact of the matter is, though you are not playing with one
hand, are there certain universities that you are going to exclude
from that partnership with their local community? There are rumours
that the bulk of research money is going to go to the top 10 universities,
even if it is the top 15 or 20, are they not going to be excluded
from that community role?
(Sir Howard Newby) The simple answer to that question
is no. I do not believe that any university should abrogate its
responsibilities to widening participation. As all of the figures
we have been talking about indicate there is plenty of business
out there to go round, it is not a zero sum game in which some
universities by increasing their role in this will somehow diminish
the role of others, and nor do I think that the aspirations we
are holding out to students should be, well you can aspire to
go to some institutions, but not to others. I do not think that
is right either. So, yes, the outcome of the present research
assessment exercise may well turn out to be more selective than
the previous one, but I do not think that in itself is sufficient
reason to let institutions off the hook in terms of their fully
participating in what I call this campaign to widen participation.
22. It does seem that the bulk of the money
is flowing to a few institutions who do the interesting research
and less money flows to those universities that are more teaching
universities than pure research universities?
(Sir Howard Newby) I certainly accept that moving
forward we will not be able to do this this year, I have only
been in this post for over two months, I fully accept that we
have to incentivise universities and reward their excellence in
things other than just basic strategic research.
Chairman: We will come back to that later.
23. You said earlier that students, taxpayers,
parents and employers all benefit and you pointed to social benefits
and some other benefits which I assume are not social, concentrating
on the latter, could you just illustrate how much they benefit
by and do they all benefit?
(Sir Howard Newby) The last time I looked at this,
that is at the figures on return to lifetime earnings of taking
a degree, then, from memory, but I do stand to be corrected on
certain of the figures, the return was in the order of roundabout
12 per cent per annum compound. Interestingly, the return on the
masters is about zero, the return on a PhD is negative.
Mr Shaw: That is encouraging.
Chairman: Are you thinking of taking up a PhD?
24. Not now, I cannot afford to.
(Sir Howard Newby) What economists would call the
externalities, the other returns to society rather than the individual
taking a degree lie in such areas as graduates on hold, they commit
less crime, they tend to be healthier, they are less of a claim
on the National Health Service. They tend, on the whole, to exhibit
lower levels of social dislocation, however you define that. These
are not the sort of arguments I would necessarily want to deploy
going into a Spending Review with the Treasury but they do, nevertheless,
25. You suggest it is cause and effect, which
way does it work?
(Sir Howard Newby) On the social dislocation, before
my time we did undertake a study on this, it was a study on cause
26. Which way?
(Sir Howard Newby) From taking a degree to committing
less crime or being healthier or having lower divorce rates.
27. Graduates have lower divorce rates than
(Sir Howard Newby) Lower divorce rates. I stand corrected
(Mr Bekhradnia) That was not one of them, there were
others. They are more likely to be engaged in social activity,
in charitable work, these were causal effects.
28. Being a graduate means you are more likely
to be engaged in social activity?
(Mr Bekhradnia) Than a non-graduate from an equivalent
background, class, wealth, etc.
29. One of my colleagues said you are better
at not being caught?
(Mr Bekhradnia) The crime you engage in is probably
30. One of my concerns is that we have a rapidly
expanding higher education system?
(Sir Howard Newby) With respect, not at the present
time. We have had one, it has been flat for four or five years.
31. The premium calculation, therefore, depends
substantially on there being a large cohort of people with A-levels
or equivalent who did not have degrees who achieved their highest
academic qualification some time before 1988/1989 and only recently
has that group gone down to almost nil?
(Sir Howard Newby) Yes.
32. Are you confident that if those people had
not acquired degrees the premium would still be at the same level?
(Sir Howard Newby) My personal view is that I am confident
because what has happened over the accompanying period is the
structure of the economy has changed radically as well. My suspicion
is that the reason for this premium having been maintained is
the employment slots into which young people need to move, or
the only slots available are such that they tend to be in the
higher paid knowledge based businesses rather than in the traditional
businesses where graduate employment was not necessary. This comes
back to my previous point, a long time ago now, where I said that
we need to keep investing. I do believe that moving forward that
the growth in those slots, as I call them, that is the growth
in employment opportunities, is likely to be disproportionate
to those for which graduate qualifications are required rather
than those where no graduate qualifications are accepted. I would
be the first to accept that there are other slots that do not
require graduate qualifications which are both vital to the economy
and there may well be labour shortages at the present time. I
am sure in our own domestic lives we can all think of a few of
those. Nevertheless, moving forward, if we are to maintain our
international competitiveness we will need to produce graduates
with the requisite skills that can fill those slots. There are
still, in certain areas, shortages of such people.
33. I would like to explore further the point
about maintaining international competitiveness, we all know graduates
that find it hard to get a graduate level job and are doing jobs
which in the past would have been occupied perfectly well by non-graduates.
(Sir Howard Newby) Would they have been occupied perfectly
well under today's conditions by non-graduates? That is a question
you have to ask yourself. Let us take a nurse of 20 or 30 years
ago, did he or she require the same skills that a nurse would
require today, given that 20 or 30 years ago nursing, in general,
was not a graduate profession and today it is and for a range
of other professions what have recently come into higher education?
34. It is you who are asking us to spend a hell
of a lot of money. You have the responsibility to make the case
and provide the evidence that it is doing something for our international
competitors. I am not aware of that case or evidence.
(Sir Howard Newby) I think in the past we have provided
that evidence. I think a recent OECD report which compared I think
11 of the leading advanced industrial nations which looked at
these issues would also support our view. I do not see, at the
moment, as I said, any reduction in the premium for graduates
for what I call the graduate premium. I do not see any reduction
in the lifetime earnings for graduates nor do I see evidence of
an across the board reduction in demand for graduates from employers?
(Mr Bekhradnia) One other relevant fact, in graduate
unemployment the rate has been consistently lower and not increasing
at all when the rest of the unemployment rate has increased compared
with non-graduates, which is another indication that graduates
remain in strong demand.
(Sir Howard Newby) The OECD report showed we had the
highest level of employability of graduates than any country looked
35. Given this 12.5 per cent premium is not
evenly spread across the board what information would you say
a potential undergraduate needs to help them discriminate between
institutions and courses to ensure the best possible return on
their and our investment?
(Sir Howard Newby) That is running a little bit beyond
the questions you have been just been asking, first of all I would
say they need much more meaningful information than they traditionally
had about the learning outcome of the courses they are proposing
to take. In terms of meaningful for them, what could they expect
to achieve in such a course. Secondly, I think they would need
more informationit is available, it is difficult to find,
more readily available informationon the employability
of recent graduates that have undertaken such a course. Personally
all this needs to be made much more available these days through,
for example, a website address which is published on a course
by course basis in the university perspective so that perspective
student can click straight on to a site which will give them this
and a whole lot of other information they need about this.
36. Can I press you again, you commented earlier
that we have gaps and we are not finding the right people to fill
these gaps, how would you remedy that? Coming back to an earlier
point, perhaps the perception of the debt with lower income students
going off to university and further education generally, where
does the perception of debt fit, if at all?
(Sir Howard Newby) One has to remember, this may be
behind Mr Turner's question, many of our graduates go into, despite
the issue of premium on earnings, relatively low paid employment,
especially in the public sector. I think, Professor Rees may be
able to comment on this more later. For those students who come
into university already having a vocation to move on in to rather
low paid public service, and we have plenty of those around, of
course, then I would expect at least for them to feel this problem
particularly, whereas other students who come into university
with a view to go into other parts of employment, especially the
private sector, may feel less concerned about it because these
days especially they know in certain parts of the private sector
where skills are particularly scarce prospective employers often
offer to write off part or even all of their debt.
37. If I could just press you further. If there
are areas where we know we are going to have shortages of skilled
workers, so to speak, filling the slots, and this seems to be
the perennial problem in certain industries, not just for one
year but we get different skill gaps in different areas, is there
something to be said for taking debt out of the equation altogether
in order to attract more highly qualified students in certain
(Sir Howard Newby) I think debt is being taken out
of the equation by a number of employers in the private sector
already, but of course this has not affected students' perceptions
because they are probably not aware this is happening at the time
they are having to make up their minds whether to enter into higher
education. My experience as a Vice Chancellor was that many large
employers had forsaken what used to be called the milk round,
had targeted specific universities where they knew they could
obtain students from the kinds of courses they wanted, and were
looking for a much closer relationship with those departments
in those universities, which included offering golden hellos and
other means of writing off debt to get the right kind of student.
In certain so-called "shortage areas" that was quite
common, and is quite common.
38. Is it working?
(Sir Howard Newby) In those areas I think it is, yes,
and it works in the sense that the students are going disproportionately
towards those companies and their debts are being written off,
but I do not think this is widely known about, certainly not at
the age of 16 to 18.
39. So, again, it comes back to the point of
better communication, that there are lessons we can learn from
that across the board, that, one, it does seem to be that the
perception of debt has an impact on whether one goes into higher
education, two, if you are looking at certain skill set areas
it would be particularly useful if the Government was to consider
that option rather than just private industry and, three, it reinforces
the case that universities and business perhaps need to get into
schools rather than just having discussions between themselves,
ie between universities and private business?
(Sir Howard Newby) I would agree with quite a lot
of that. First of all, as I hope I hinted at earlier, the way
forward is indeed to encourage greater partnerships between universities,
colleges and schools in which the other stakeholders, whether
it is Government or employers, ought to have a part. We need to
encourage widening participation through those partnerships. I
also referred earlier to the fact that young people act on their
perceptions, not on the reality, and the perception of incurring
very large debts amongst young people has been prevalent, although
I think it has often been very much exaggerated in their minds.