UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 647-ii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

EDUCATION AND SKILLS COMMITTEE

 

 

INTERNATIONAL EDUCATION

 

 

Wednesday 23 June 2004

MR DAVID YOUNG and SIR HOWARD NEWBY

Evidence heard in Public Questions 109 - 135

 

 

USE OF THE TRANSCRIPT

1.	This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2.	Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.
3.	Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.
4.	Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.

 

Oral Evidence

Taken before the Education and Skills Committee

on Wednesday 23 June 2004

Members present

Mr Barry Sheerman, in the Chair

Valerie Davey

Mr Nick Gibb

Paul Holmes

Jonathan Shaw

Mr Andrew Turner

________________

Memorandum submitted by Higher Education Funding Council for England (IE 1)

 

Examination of Witnesses

 

Witnesses: Mr David Young, Chairman, and Sir Howard Newby, Chief Executive, Higher Education Funding Council for England, examined.

Chairman: Val, would you like to lead us into this?

Q109 Valerie Davey: The one organisation that we have not mentioned yet this morning is the British Council, who in fact came and gave evidence and showed themselves to be a remarkably proficient international marketing board amongst students. Were they part of the consultation in the whole process that you have described?

Sir Howard Newby: Yes, they were. As you rightly say, the British Council has run a very successful marketing scheme following the Prime Minister's initiative. Indeed, one that has been so successful it has met its target early.

Q110 Valerie Davey: I am sure they did not get bonuses.

Sir Howard Newby: I think you would have to refer that question to David Green.

Q111 Valerie Davey: What they are saying and what we ought to take note of, I think - and I say "we", I mean the DfES and HEFCE - is that students want to travel; they want to come here to study, and the blending we are talking about is, therefore, so important. Just on the basis of these numbers who want to come, and the number varies - and they are quite open about that - they have given us three projections, the highest of which could bring in to this country, eventually, by 2020, up to 870,000 overseas students. Leaving aside the blending and e-university at the moment, how far have HEFCE started planning for these numbers?

Sir Howard Newby: We are not a planning body but in the spirit of the question we have certainly looked at, and we have always done this, the risks that might be attached to some institutions, at least, who might become over-dependent upon overseas students recruitment. It is a risky market; political circumstances can change very rapidly in some of these markets that we are recruiting from very successfully at the moment. We have also looked at whether recruitment of students at that sort of volume from overseas would have any either distorting effects or produce strains on the UK HE system which would disadvantage home and EU students. We are quite confident that overall that number of students could be absorbed without creating undue strains, although of course one would expect them to be distributed rather non-randomly around the country. There is a very big London effect, as I am sure you are aware, and in London we are not just talking about the strains on, if you like, the higher education estate, one would have to think about where these students would live and so on. I do not want to sound too complacent about this because this is something we do keep an eye on, but we do believe the sector, at the moment, could absorb those numbers, as a whole, given they are paying full-cost fees, without causing too many unnecessary distortions, but we would worry if some universities or colleges became over-dependent upon that market.

Q112 Valerie Davey: Given the unforeseen difficulties, as you say, in a global market, how much time and effort is being given by either Universities UK or HEFCE, or both, to anticipate some of the potential variations on a theme which we are talking about now?

Sir Howard Newby: I think this is our responsibility more than Universities UK's, I have to say. I can assure you we are giving quite a lot of attention to this as we look forward, because I do not need to remind this Committee we are about to move into a variable fees environment from 2006 onwards, which is also going to increase - that word again - the risks to institutions in planning their own affairs going forward. One might expect a reasonable degree of volatility, therefore, at least during the transitional phase, until all the institutions become accustomed to operating in a rather wider marketplace than they have been so far. So one has to put alongside the risks you are referring to, in terms of overseas student recruitment, the risks that individual institutions will also face from home student recruitment as well. I have said publicly quite recently that we are trying to prepare the sector for this; institutions need to pay particular attention between now and 2006 on their branding, their marketing, their institutional positioning, they need to know a lot more about where their markets are and they need to be much more attuned and develop the capacity internally to operate in those markets - whether home or overseas.

Q113 Valerie Davey: So who, at the moment, is doing the big think of bringing together the two aspects we have been talking about this morning? Who is beginning to think, "These students might very well have one year in Britain and two years' e-learning at a university in their own country which is directly linked"? Who is doing the big think internationally? There is a suspicion, certainly from my perspective, that this would fill the coffers of the universities and their financial problems quite nicely, thank you, without having looked longer term at the values around higher education in the international sector, and indeed at the needs of those countries who, at the moment, cannot afford for their students to get into this international higher education market.

Sir Howard Newby: At our instigation we have brought together a high level policy forum, it is called, which is an informal grouping of those institutions which have an interest in this area, namely ourselves, the other funding councils - Scotland, Wales and Northern Ireland funding bodies - UK, SCOP, the Department for Education and Skills and the British Council, and we meet regularly. I have to say this has been rather successful. We are now beginning to develop between ourselves a much more coherent approach to those two markets - UK and higher education overseas - but also, as I put it earlier, to prepare the sector, to offer guidance (which is really our role in this, we are not a planning body) to the sector - a list of dos and don'ts, if you like, of the things they do need to think about as they move into this world. We recognise the need for that.

Q114 Valerie Davey: When will any of that material be available? When will this Committee, for example, be made aware of the way in which you are thinking that group is thinking?

Sir Howard Newby: Of course, as part of the previous round of overseas marketing that you referred to, the very successful venture led by the British Council, a lot of material was produced at that time by the British Council itself and by us too, in collaboration with them. We are just about to publish next month an international student mobility project - it is now in its final draft form and we will be publishing it in the next three to four weeks - which will give a lot of information about student mobility worldwide, the UK's position within it and attached to that, again, to use this phrase, offering guidance and preparing the sector for the opportunities and the risks going forward in this marketplace.

Q115 Valerie Davey: I think the Government gave them £5 million to do the work that they have done.

Sir Howard Newby: The British Council received a grant of £5 million, I understand, yes.

Q116 Valerie Davey: A last comment, really. We have been highly critical of HEFCE this morning, in many aspects. The one thing that has not come forward, which I would like to congratulate you on, is the learning and teaching support network, which you mentioned in your report. That area of work, it seems to me, ought to be underpinning everything else that is happening. Can you just assure me that that work is progressing satisfactorily?

Sir Howard Newby: Yes, I can. Thank you for those kind comments. I think one of the things we feel that has been a success in the last year is bringing together the learning and teaching support network with the Institute of Learning and Teaching in higher education with elements of the higher education staff development agency into the new higher education academy. We have now got a board and a chief executive (not yet in post but will be arriving very shortly) that will really strengthen not only the capacity of ourselves and the sector to develop pedagogy, as you suggest, but, also, to professionalise the skills element in teaching in the sector. I can assure you on that. Also, alongside that, can I remind the Committee that we announced last year and we have now had the first round of bids in for centres of excellence in teaching and learning, and some of these cover some of the issues you have just raised. These will be located in institutions in the sector as designated centres of excellence in certain aspects of teaching and learning, including I might add, quite possibly, e-learning and distance learning as well. So we are working hard to raise the profile of excellence in teaching, to put alongside research - we have had this discussion in previous appearances I have made before this Committee - to do what we can to, what I would call, reinvent the vocation of teaching within the university and college world, and we are making progress on that.

Q117 Chairman: Reinvented?

Sir Howard Newby: Yes, reinvented. If I may say, Chairman, when you and I went to university the forms of teaching and learning of which we were on the receiving end were very different to those we see today.

Q118 Chairman: There are thousands of excellent professionals in our universities. Would they not feel insulted by saying you are going to "reinvent"? Are they not doing ----

Sir Howard Newby: It was not meant in a pejorative way, Chairman, it was simply meant that in the very fast-changing world that we are in - in higher education no more than in schools elsewhere - we need to modernise the way in which we teach our students and the way in which they learn from that.

Q119 Chairman: Do they not do that all the time?

Sir Howard Newby: They do it all the time, Chairman, but we have not, as you know, had nationally recognised, professional teacher standards in higher education. The higher education academy will introduce those for the first time; it will be a major step forward for higher education in this country.

Q120 Chairman: As spreading good practice is vital in all forms of teaching, are you aware of the pilot of the teachers' channel that has been commissioned by the DfES? It is a teachers' channel for schoolteachers, but I have looked at some of the programmes and been very impressed about the way in which that could be used. If it is rolled out - and I do hope it will be - it is a wonderful medium for spreading good practice and improving the skills of the teaching profession. If you do not know about that ----

Sir Howard Newby: I do know about it and I agree with that assessment.

Q121 Chairman: Would you think about that?

Sir Howard Newby: Indeed. We keep a careful eye on initiatives being taken in schools and in the FE sectors as well, which we can learn from. As an example of that I would take our leadership foundation, which we have recently launched, which builds upon the kind of work that has been done in both the FE and the schools sector in developing the national colleges there. We have also looked at their good practice in terms of developing continuing professional development for FE and schoolteachers and imported those into the higher education sector as well.

Q122 Chairman: Going back to Val Davey's original question, about these numbers for the potential overseas students coming here, all paying for their courses at market rates, the whole discussion that came out of Universities UK was the big £8 billion funding gap (and we would be interested to know your opinion today because we are imminently getting the Higher Education Bill in the House of Lords), and it was argued at the time that that was going through the House of Commons originally that variable fees would plug the gap to the level of £1.5-£2 billion, leaving £6-£6.5 billion. Do you still think there will be a contribution to that gap of £1.5-£2 billion? Which would you say it would be?

Sir Howard Newby: Closer to £1.5 than £2 billion, I think. It depends on how the access agreements shape up and how much will have to be netted off the total fee income to cover the cost of bursaries and other forms of student support.

Q123 Chairman: Is there a potential for finding the other £6-£6.5 billion from these overseas students? Is there a possibility of getting that kind of investment through overseas students coming in?

Sir Howard Newby: I think one could find a contribution to that, but certainly not as much as £6-£6.5 billion, no. We know that overseas student income does make a modest contribution to university finances, and we know that through the costing and pricing work that we have initiated at the centre. Whilst I think, on the most optimistic of the British Council's projections (the figures that Val Davey was talking about), that will bring in additional profits to universities it will not be sufficient to close that gap.

Q124 Chairman: Have you any evaluation of how much - if all of that number come, paying full fees?

Sir Howard Newby: At the moment, and we are in a rather different world now to the one we will be in post-2006, on the basis of what we call the track methodology (that is the method used for looking at costs in the sector at the moment) overseas student income makes a modest profit of round about 7 per cent of that turnover. Of course, I think we are all aware, when it comes to pricing as opposed to costing fees at the present time, the present flat rate undergraduate fee is a bit of a drag on the market, so to speak. That drag may be lessened as we go into a variable fees environment, although it will not be removed entirely because, as this Committee well knows, my view is that the cap on the fee, the £3,000, is less than many institutions could charge in a completely free market. However, we shall see. It may well be that the rate of return could go up in a variable fees environment, but I think even on the calculations I have described the sector will not come anywhere near plugging that funding gap through increased overseas student numbers.

Q125 Chairman: The British Council said that the real money was in masters' and postgraduate courses and short courses, which were not undergraduate courses.

Sir Howard Newby: I agree with that.

Q126 Chairman: What is fascinating, given the first session we have just had and when you talked about the importance of blended learning, is that in a sense we knew all along that that expertise was out there; a lot of people knew that what people really wanted was blended learning - there were many people within the British Council, and elsewhere in universities. I have been, recently, in New Delhi, where 46 universities were selling their wares through the British Council. They knew about blended learning and would have been rather sceptical, a lot of the professionals in marketing, of a pure e-learning experience.

Sir Howard Newby: Chairman, I think, as I said earlier, there were a lot of opinions around at the time. There was, equally, a large number of people within the sector who were very enthusiastic indeed about the potentiality of e-learning. If you go back to the Dearing Report, you will find from then on a lot of enthusiasm for the belief - I happen to believe a mistaken belief - that e-learning would provide the solution to some of the funding problems that you have just referred to, namely that using the new technology would enable us to expand participation in higher education at a lower unit cost and that the more it was pure e-learning, the lower the unit cost that would apply. That was a very widely held view at that time.

Q127 Chairman: I would agree with that. We live in fashions, do we not, and there was a very great fashion for that whole sector.

Sir Howard Newby: I also agree with you that there were other people around, including in the Open University (since this has come up several times) where I would acknowledge a contrary view was taken.

Q128 Mr Turner: On international students, what is the income foregone as a result of treating non-British EU students as home rather than overseas students? Are they the most deserving of that subsidy?

Sir Howard Newby: I think, Chairman, we would need to provide you with a note on that. The current numbers, from memory, are around 25,000 additional from the accession states, to which we need to add, from memory, I think, another 50-75,000. We will get the proper figures to you and cost that out. What I have in my head, because I often use this in speeches, is that we currently fund the equivalent of around about three average-sized universities to accommodate the net inflow into this country of EU students compared with the outflow from this country to the EU of our students. That would mean in the order of, I suppose, 45-50,000 net student places which, costed out in terms of HEFCE funding, would mean you have to multiply that by 6,000, so we are probably talking about a substantial sum.

Q129 Mr Turner: Of all the international students from across the world, are they the most deserving?

Sir Howard Newby: "Deserving" is an interesting word. What is one's definition of "deserving" here? They are certainly high-quality, in terms of their previous educational performance, because you never see admissions teacher apply the same criteria to admitting them that they would to home and EU students. Are they most deserving in terms of social equity, I very much doubt.

Mr Turner: I meant are the EU students who are treated as home students the most deserving of all those from outside the UK to receive this subsidy?

Q130 Chairman: I thought that was what Sir Howard was saying.

Sir Howard Newby: I think I would, doubtless, give the same reply. They are certainly deserving in terms of their academic performance. I think in terms of their social background both they and other international students would probably come from the higher echelons of those societies because, by definition, they tend to be the most mobile. I think we would be hard-pressed to find large numbers of students from poor backgrounds from overseas or from the EU studying in this country.

Q131 Chairman: Are we going to get resentment building up from UK students? That is three average-sized universities. It has come across my desk recently that some of our more very specialised institutions could, actually, if you judge on pure talent, fill - perhaps something like, to take at random - the Royal Academy of Music with students all from the newly accessed parts of Europe and there would be no room at all for UK students. There would be nothing we could do about that. One of our finest institutions would be totally full with non-UK students. That is a possibility, is it not?

Sir Howard Newby: It is a theoretical possibility.

Q132 Chairman: No, no, it is not a theoretical possibility. A member of staff has told me that in terms of sheer quality of applications the musical talent in these countries is so outstanding, that is the reality.

Sir Howard Newby: I am sure that small institutions like the Royal Academy of Music or the Royal College of Music could, indeed, fill all their places many times over with both home and EU students. What I was about to say was that in relation to the original question - is this a source of resentment - my answer is "not yet". There have been other countries in the world where this has become a source of resentment; I think of Australia here, where that has happened and it has become an issue about whether or not overseas students in Australia are displacing home students. That is not the case here. Can I also put, if I may Chairman, the other side of this coin, which is that there is a real opportunity here for UK higher education institutions to attract to this country highly talented students from the rest of the EU and, indeed, overseas to fill places in our universities and to contribute to the UK economy after graduation in the so-called shortest subjects (?), which we would recognise as being vital to the national interest, in particular, science, technology, engineering and mathematics subjects.

Q133 Chairman: You know that this Committee would agree with that, but what this Committee might also say back to you - certainly its Chair would - is that we have invested in our higher education and maintained, especially at undergraduate level, very high-quality undergraduate institutions. Some of our European neighbours have not such a good reputation. If we are going to maintain that reputation ought we, perhaps, have some compensation for that from Europe?

Sir Howard Newby: I think that is a very important point, Chairman. There is, of course, a European process, the Bologna process, which involves the sector itself as well as national governments and the Commission, which we do need to keep a watchful eye on. I have to say, though, that I do believe the Quality Assurance Agency has driven out the worst practices in terms of alleged lowering of standards with regard to overseas student recruitment. I am quite confident now that the students who are being admitted to our universities are of an equivalent standard to home students, whether they are from the EU or elsewhere.

Q134 Chairman: There is a voice out there that says there is such a wonderful opportunity, and that if it was any other industry - if it was the car industry or the pharmaceutical industry - we would be investing rapidly in terms of excellence and expanding this sector, and the voice then says "But an unco-ordinated response across 123, or whatever institutions it is, is not good enough. There needs to be real focus and leadership."

Sir Howard Newby: I understand that concern and I certainly would not believe - and I do not think even individual vice-chancellors would believe - that an unco-ordinated response is the way to go. We are coming round here, again, to one of the issues which came up in our earlier conversation, namely we need to ensure that our universities are sufficiently entrepreneurial to take advantage of these opportunities unfettered by bureaucracies like funding councils who might otherwise get in the way. However, on the other hand, we cannot allow total laissez faire because there are important quality issues and there are important educational issues involved here as well. I have to get it on the record that I do not see the advantages of recruiting more overseas students to this country as being purely financial, important though that is. I think a certain level of students from other cultures in this country, mixing with home students, is of enormous educational benefit; what we must not do is allow the kind of resentments that you were referring to as a possibility to fester and grow. That would be against everything I stand for, as an educationist.

Q135 Chairman: Sir Howard, David Young, that is a good note to end on. It has been a good session; we have learnt a lot. Thank you for your co-operation. This does not substitute our regular meetings, so we will be seeing you again in the not-too-distant future. Thank you very much for your attendance and for your answers to our questions.

Sir Howard Newby: Thank you, Chairman.