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22 Jan 2003 : Column 301—continued
Higher Education
12.31 pm
The Secretary of State for Education and Skills (Mr. Charles Clarke): With your permission, Mr. Speaker, I wish to present to the House this afternoon the Government's proposals for the future of higher education in England. I want to begin by thanking my colleague the Minister for Lifelong Learning and Higher Education and my officials at the Department for the excellent work they have done in preparing the White Paper.
I start by stating that our universities are a great success story. Their record on research, on provision of higher education opportunities for hundreds of thousands of young people and on linking university research to economic achievement is outstanding. That record of achievement is acknowledged in a financial settlement for the next three years, which is better than any in recent decades and which I announce today in my letter to the Higher Education Funding Council for England, a copy of which I am placing in the Library.
I want to express my appreciation to my right hon. Friend the Chancellor of the Exchequer for an excellent settlement that provides an average 6 per cent. a year increase in real-terms funding over the period of the settlement. I know that the settlement represents his personal commitment to this vital sector of the economy. Under the settlement, every part of the university world will be able to plan for the next three years in confidence, on the basis of a secure future funding stream that is substantial and generous.
However, as we would all acknowledge, our universities need to be able to generate still more resources, irrespective of whether they come from the state, individual students, alumni or employers. I shall address those points later on, but it is a central point of the White Paper to acknowledge that students' share of the overall costs of university education will increase. That said, however, the House needs to understand, as our universities do, that they exist in an increasingly dynamic and an increasingly competitive world.
In our White Paper, we set out the nature of that dynamism and the nature of the competitive challenges that we face. First, our universities have to make better progress in harnessing our knowledge to the process of creating wealth. Secondly, they have to extend the opportunities of higher education to all our population, irrespective of personal and economic background. The White Paper attempts to fulfil both ambitions.
Despite the attractions of inaction, which have perhaps too often led past Governments to avoid facing up to important challenges, the House needs to acknowledge that coasting along, basking in previous successes and shirking the need for reform offers no robust future for our universities. We need to acknowledge that a university system that caters for 43 per cent. of the age group now will be intrinsically different from one that provided for 20 per cent. of the age group as recently as 1990—only 13 years ago.
We need to face up to the fact that international competition from world-class universities in the United States and the growing competition from institutions in China and India changes the terms of trade for the
United Kingdom's great, historic universities and that the world of single employment from 16 or 18 to 60 or 65 is gone for ever. Our universities have the principal responsibility for helping our working population adjust to the future.In this increasingly competitive economic world, knowledge is all-powerful, and so effective working relationships between universities and both public and private sectors are increasingly significant.
In short, in a world of accelerating change, we all need to understand that our society's principal weapon in ensuring that we master change, rather than surrendering to it, is our education system, and principally our universities.
Mr. Desmond Swayne (New Forest, West): Get on with it!
Mr. Speaker: Order. Mr. Swayne, this is the second time this week that I have had to call you to order. I really think you need a dark room to sit in and wait until the feeling has gone away. You must behave yourself. I called on the Minister to give this statement. He is giving a statement to the House, and you will not shout in this Chamber.
Mr. Clarke: Thank you, Mr. Speaker.
As a result of this process of change, our universities have to identify more clearly than they do now the way in which they address the great missions on the basis of which they were created: the missions of research, knowledge transfer and, perhaps most important of all, teaching.
Those are the central themes of the White Paper. We start from the basis that over the years the emphasis on research has, for understandable reasons, been at the expense of teaching and knowledge transfer.
On research, we argue that we need still more focus on world-class research. We state that the funding regime should encourage research collaboration, should promote research concentration and should strengthen the highest world-class research in the country. The White Paper sets out how our research funding regime will meet those aspirations.
It means giving extra resources to our very best research departments and world-class universities as well as ensuring that new research will emerge and flourish. Although I have decided not to seek to remove research-degree awarding status from some universities, it does mean that research evaluations will be increasingly rigorous. And we will create a UK-wide Arts and Humanities Research Council to ensure that funding for arts and humanities is given the status that it deserves.
For knowledge transfer this approach means an increasingly close relationship between my Department and the Department of Trade and Industry. Both my right hon. Friend the Secretary of State for Trade and Industry and I know that we cannot address innovation without addressing skills, and that we cannot address enterprise without improving the relationship between universities and business. That is why my right hon. Friend the Chancellor of the Exchequer established Richard Lambert's review of the university-business
relationship, and that is why the White Paper commits the Government to setting up a network of knowledge exchanges, primarily focused in universities which are not research-intensive, to develop this relationship.We have to crack the real British disease—which is that our world-class intellectual research is exploited by competitors from other countries but not ourselves—and we have to make sure that we lead the process of knowledge transfer from research to business both nationally and regionally. A far closer relationship between universities, the regional development agencies and the new sector skills councils is necessary, and the White Paper sets out ways in which this can be achieved.
But the main function of universities must be what it always should have been—high-quality teaching. Today I am pleased to announce that the Government are giving a far stronger focus to teaching, a focus that is reflected in a significant stream of resources within the funding settlement.
We will publish an annual comprehensive student survey of university teaching standards, overseen by HEFCE and the National Union of Students. We will establish new national professional teaching standards, establish new centres of teaching excellence and target pay resources to those universities which reward high- quality teaching. And in addition we will recognise excellent teaching as a university mission in its own right by making the award of university title dependent on undergraduate teaching and degree awarding powers only.
Let there be no mistake: all universities will in future be judged by their teaching achievement as much as by their research attainment. The days of great research accompanied by shoddy teaching are gone.
So it is research, knowledge transfer and teaching which are our universities' historic missions.
Every single university has to make a frank assessment—and publicise it—of its own strengths in addressing each of these missions. Drift will not be acceptable.
The real truth is—and let us acknowledge it—that some universities are strong in research, others in teaching and still others in knowledge transfer, and some in two or all three. Let us not pretend that all universities are somehow the same. Let us tell the truth to the people of this country who pay for universities and want their children to benefit from them. We already have a multi-tiered university system.
On the basis of that assessment, we need to decide what proportion of the age group we wish to encourage into university education. I want to confirm today that the Government's target remains, as we set out in the Department's public service agreement published in 2000 and reaffirmed in last summer's spending review settlement, to increase participation in higher education towards 50 per cent. of those aged 18 to 30 by the end of the decade.
That target is essential because the country's economic future depends on that level of education and training. We live in an increasingly competitive world, within the European Union and outside. I do not understand those who claim to speak in the national interest but do not acknowledge the importance of this target.
However, such a level of participation requires us to re-examine the nature and range of degree courses that we offer. We believe that the bulk of the increase in degree student numbers, from its current proportion of 43 per cent. of the cohort, should come from two-year vocational foundation degree courses—a major contribution to the skills and productivity agenda of this country. The further education colleges, which now provide 11 per cent. of this country's higher education, have a major contribution to make here.
I am pleased to tell the House that a range of employers including, in the public sector, my right hon. Friends the Secretaries of State for Health and for the Home Department, as well as myself, are ready to make such a commitment in principle as employers. I also believe that major private sector employers will welcome and participate in this initiative.
The guts of my proposals today come in the field of access, however. The social class gap among those entering higher education is a national disgrace. Thirty years ago students received full grants and there were no tuition fees. Despite that, students from middle-class backgrounds were three times more likely to go to university than those from poorer backgrounds. During the past 30 years the numbers going to university have more than trebled, but the gulf in access has remained the same.
That vicious statistic has to be reversed. We should in truth acknowledge that that is a long and difficult process, but the elements are clear. We have to improve dramatically the quality of school and college level education in our most disadvantaged areas. That is the centre of the strategy for 14-to-19 education announced by my hon. Friend the Minister for School Standards yesterday. We have to transform university access and admissions criteria so that universities make a genuine and balanced assessment of the potential of every candidate.
We have to ensure that all universities address the access issue. I therefore propose to establish an access regulator, working with HEFCE, who will ensure that any university that wants to increase its tuition fee has rigorous admissions procedures, provides bursaries and other financial support and works directly with schools in every part of the country to promote the aspiration of a university education. The regulation will be tough and I believe that most universities will welcome this initiative.
We have to create a diverse university sector that welcomes applicants from all parts of the community, by a range of different routes. That is one of the arguments for a sensitive fees regime, and that is why we are raising the "postcode premium", which gives extra money to universities that teach and support students from disadvantaged backgrounds.
Finally, we have to create a financial regime that encourages access, and that brings me to the final chapter of my White Paper, which deals with student finance. First, we should face up to the truth that genuine university freedom comes through building endowment, rather than any other device. Universities in this country need to build up endowments. There are already substantial incentives for both individuals and corporate bodies to donate to universities, but they are
not sufficiently understood and used. The White Paper sets out how, as a matter of priority, we will promote this for graduates, institutions and Government.Promoting endowments is the right long-term strategy, but it will inevitably take many years to build up substantial funds. The spending settlement addresses the short-term needs but universities must have funding streams that are sustained. The Government will remain the major funder of higher education, but the history of the past 50 years or more, under Governments of all colours, shows the problems when universities have to compete with other priorities, from nursery schools to health. If they have to rely solely or mainly on public sector resources, the result is pressure on staff-student ratios, capital investment and innovation. We cannot risk slipping into that sort of decline.
As countries throughout the world have discovered, requiring students to contribute to the cost of their education is the only realistic alternative. I believe, in addition, that that has the merit of justice. On average, graduates earn 50 per cent. more than non-graduates during their lifetime. It is only fair for students to make some contribution to the costs of the education that gives them significant economic benefits. The alternative funder, the general taxpayer, is entitled to ask in comparison what financial support they have received from the Government to assist their personal educational ambitions. That is why the White Paper that I am presenting follows this approach.
First, my student finance proposals allow universities to vary their fees between £0 and £3,000 a year from September 2006 onwards. I remind colleagues that the figures I propose are significantly lower than some of the early suggestions. The £3,000 cap will be in place for the whole of the next Parliament, rising only in line with inflation. Only those universities that have satisfied the access regulator will be allowed to increase their fee.
Secondly, we will restore a grant for students from the poorest backgrounds. From September 2004, students whose families earn under £10,000 will receive a £1,000 grant, with a proportion of that paid up to family income of £20,000. Altogether, 30 per cent. of students will get the full £1,000 grant.
Thirdly, we will abolish from 2006 the requirement for any student or their family to pay a fee before or while they are studying. Deferred fees will be paid after students graduate, through the tax system, linked to a student's earnings and ability to pay. As with the existing student maintenance loan, no interest will be charged on deferred fees. Any sums outstanding will only be adjusted for inflation so students only pay back the real value of their fee and maintenance loan.
Fourthly, we will continue to exempt around 60 per cent. of students from some or all of the first £1,100 of fees, in the same way as we do now.
Fifthly, we will raise from April 2005 the threshold at which graduates start to repay their fees and loans from £10,000 to £15,000. That change delivers a saving of £450 per year of the minimum payment, which will particularly help graduates when their earnings are lower in the early part of their lives. Finally, we will review the level of the maintenance loan and operation of the parental means test for loans as part of the next spending review.
Those student finance proposals will affect different students, potential students and their families in different ways. It remains the case that the British system of student support will be among the most generous in the world. The fact that we are asking individual students to contribute, albeit after they have graduated, does mean that their potential debt is increased, which, without the wider package of reforms that I have introduced, could act as a disincentive. Taken as a whole, however, my student finance package is positive for access to universities and will reinforce the other measures on access to which I referred earlier.
As I said at the outset, the White Paper that I published today represents a massive step forward in equipping our universities to meet the challenges of the future. They will take their rightful place as the dynamo of both economic progress and social justice. We need now to take the necessary action to put these proposals into effect. I commend them to the House.
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