Select Committee on Education and Skills Appendices to the Minutes of Evidence


Memorandum from Universities UK (SS 05)


  The Education and Skills Select Committee will take oral evidence on 12 December 2001 from Margaret Hodge MBE MP, the Minister of State for Higher Education and Lifelong Learning, on the DfES's higher education priorities for the next four to five years. This note sets out what Universities UK, which speaks on behalf of the country's university sector, believes should be the priorities for the coming term and suggests some questions, which the Committee might like to ask.


    —  You will have seen Universities UK's submission for the 2002 Spending Review. You obviously cannot pre-empt any decisions of the spending review. But do you agree that there is a real need for greater investment in our universities?

    —  Does the minister agree that substantial investment is needed from government if universities are to provide a "high quality experience of higher education" for 50 per cent 18-30 year olds?

    —  Retention of students is as important as recruitment. Does the Minister agree that providing a high quality experience of education is vital to retaining students in higher education?

    —  Recruiting and retaining students from non traditional groups is expensive. Will universities receive funding for these students which reflects the true costs of recruiting and retaining them?

    —  Universities UK believes that the current review of student finance should lead to more support which is targeted at those from lower socio-economic groups. Do you agree?

    —  Do you agree that any additional financial help for students should not be at the expense of higher education institutions?

    —  Universities receive an income of around £350 million from tuition fees. Will the Government commit itself to making good this income stream if the review of student finance leads to their abolition?

    —  Does HM Treasury share a desire to increase investment in higher education to sustain a world-class higher education sector? Have recent events changed the Government's willingness and ability to meet the sector's funding needs?

    —  With relation to the 50 per cent participation rate, what definition can the Minister give of an "experience" of higher education?

    —  Does the Minister agree that the current review of quality assurance should ensure that the burden of audit and regulation on universities is reduced substantially?

    —  Is the Minister aware that universities experiencing difficulties in attracting PhD students in sufficient numbers to replenish the academic profession, especially given the proportion of current academic staff who are approaching retirement. What plans does she have to address this?

    —  Does the Minister accept that, despite a genuine commitment within the sector, universities will struggle to address the issues raised by the Bett report without additional financial help from government in terms of an increase in core funding?


  UK spends no more than 1.1 per cent of GDP on higher education institutions compared with an OECD average of 1.3 per cent. The United States spends more than double the UK figure (2.3 per cent). After Japan, the UK has the lowest proportion amongst OECD countries of Government funded R&D and, of the G7 countries, spends the third lowest proportion on research as a percentage of GDP.

  Current public funding for the higher education sector stands at £8 billion per annum. In our recent submission to the Government's Spending Review, Universities UK has identified the need for an extra £9.94 billion over the next three years. This includes:

    —  £5.52 billion for recurrent expenditure. That is £1.84 billion a year, or an increase above current spending levels of 23 per cent by 2005-06; and

    —  £4.42 billion is for one-off capital investment to address the remedial needs in teaching and research infrastructure to address the problems caused by a lack of investment for many years.

  The Government has, quite rightly, identified the economic importance of a world-class higher education sector, and has set universities tough targets. The higher education sector has demonstrated its firm commitment to these public policy objectives. But Universities UK believes that such targets must be matched by an appropriate level of public investment.


  In answer to a recent Parliamentary Question tabled by Alistair Burt MP (Hansard, 26 November 2001: Column 595) Margaret Hodge said "This is the first time any Government have set a long-term participation target in Higher Education, so we are currently examining the data to ensure we provide a proper and appropriate base from which to consider progress. We shall shortly announce the results". Our current understanding is that the figure which will be used will be an average of the number of individuals in each age group between 18 to 30 who have been to university for at least one year.

  The process of widening participation in higher education is expensive. The costs of universities efforts to recruit and retain students from non-traditional backgrounds are high and has not been reflected in the funding made available by government. Therefore, Universities UK supported the recommendation of the Education and Employment Select Committee that the participation premium should be increased to 20 per cent. We also believe that this means that universities should receive a full unit of for each new student rather than receiving it at the current marginal rate.


  It is important that universities are equipped to offer a high level of education to students once they have been attracted into higher education. In particular, Universities UK believes that there is a need for investment in the teaching infrastructure of our universities.

  In our submission to the Spending Review, Universities UK has set out the need for funds to allow universities to increase capacity, repair, maintain and modernise buildings so that they are fit for the purpose and capable of accommodating increased student numbers.

  As the student body becomes more diverse, so the physical infrastructure, facilities and support services must provide for the different study patterns and needs of more mature students and increased numbers of part-time students, and to the particular needs of post-graduate students.


  Universities UK welcomes the Government's decision to look at the problem of student finance. However, we are anxious that any changes to student finance arrangements should not be at the expense of institutions. Funding for students and funding for institutions must be regarded as separate issues. It is also important that additional help is focused on those who need it: those form lower socio-economic groups who are currently being put off entering higher education, possibly because of their perceptions of the costs.

  Options floated in the media have included the abolition of the tuition fee. Universities UK is not convinced that this would solve the problems it has highlighted. First, tuition fees are means tested and 50 per cent of those currently going to university do not contribute anything to the costs of their education. Second, tuition fees have provided an indispensable income stream to universities amounting to nearly £350 million per annum. This additional income has played a crucial part on securing a small real terms increase in funding per student. Any changes to the system of student finance should take this into account. Universities UK is concerned that universities should be compensated fully if this income stream is withdrawn.

  In answer to a recent question asked by Lord Hannay (Hansard 29 November 2001: Column 448), Baroness Ashton of Upholland said:

    "Lord Hannay was searching for an assurance that the Government are aware of the £343 million and its relationship to the overall strategy that universities are pursuing in terms of their funding. I believe that I have given that assurance."

  Universities UK is seeking something more than an assurance that the Government is "aware" of the importance of this funding stream. Universities UK is seeking a guarantee that universities will be compensated for its loss should that occur.


  The HEFCE-commissioned report Better Accountability for Higher Education (August 2000) concluded that the accountability cost burdens were £250 million per annum and that this represents poor value for money. At HEFCE's initiative, there has been intense work this year on ways of reducing the burden of accountability for teaching in higher education. This has focused on the production and assurance of information for external users and for institutions' own internal purposes. It has also looked at a consistent and economical means of assuring external stakeholders about quality and standards in higher education. This work, which involves consultation, is well advanced. But it is too early to estimate the extent of savings which might result.

  Work is also in progress to examine other areas of the accountability arrangements including statistical returns, biding exercises and the RAE.


  Universities are experiencing difficulties attracting PhD students in sufficient numbers to replenish the academic profession and to provide an adequate supply of trained researchers for other areas of the economy and society. Debt and perceptions of the academic profession as unattractive have been identified as particular problems. More PhD students might be attracted if there were better incentives for the recruitment and retention of PhD students. Improved financial stability for universities to enable them to offer more attractive contracts to academic staff might also help.


  The Minister said in response to a recent Parliamentary Question that "the Government play no part in setting pay levels for the higher education sector". However, an increase in universities, core funding from government is vital. Otherwise, universities will find it difficult to improve the pay and conditions that the higher for their staff, both academic and non-academic.

  One particular area where additional core funs are needed is in addressing the issues highlighted by the Bett Report. Without additional core funds, it will be extremely difficult to address equal pay issues, provide more secure contracts of employment for staff as well as recruiting and retaining the additional staff who will be needed to teach increasing student numbers.

  One of the major problems is that universities depend on a wide variety of funding streams, many of them variable and insecure. In particular, funding for research is generally on a project-by-project basis and therefore time-limited. The cumulative effect of declining core funding is that universities lack the financial security to underwrite the risks of longer-term employment contracts in project funded areas. This is one of the reasons why, in Universities UK's spending review submission, we make clear that extra resources are needed to invest in university staff. And, just as importantly, any increases in funding needs to be core funding, to allow universities the flexibility to offer good terms to the staff they employ and value.

Universities UK

December 2001

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