CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 576-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

SCIENCE AND TECHNOLOGY COMMITTEE

 

 

STRATEGIC SCIENCE PROVISION IN ENGLISH UNIVERSITIES: FOLLOW-UP

 

 

WEDNesday 2 NOVEMber 2005

BILL RAMMELL MP and SIR HOWARD NEWBY

Evidence heard in Public Questions 1 - 73

 

 

USE OF THE TRANSCRIPT

USE OF THE TRANSCRIPT

 

1. This is a corrected 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. The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Science and Technology Committee

on Wednesday 2 November 2005

Members present

Mr Phil Willis, in the Chair

Adam Afriyie

Mr Robert Flello

Dr Evan Harris

Dr Brian Iddon

Mr Brooks Newmark

________________

Witnesses: Bill Rammell, a Member of the House, Minister of State for Lifelong Learning, Further and Higher Education, Department for Education and Skills, and Sir Howard Newby, Chief Executive, Higher Education Funding Council for England, examined.

Q1 Chairman: Can I welcome Bill Rammell, Minister of State for Lifelong Learning and Further and Higher Education, and Sir Howard Newby, the Chief Executive of HEFCE, and the members of the public. This is a key subject, to which we will no doubt return on many occasions during the lifetime of this Parliament. It is fair to say that although I was not on the Committee at the time, the Committee was very disappointed at the Government's response, and indeed HEFCE's response, to the Report on Strategic Science in English Universities. The purpose of this morning is to try and revisit the responses from HEFCE and the Government, and, rather than let the dust settle on the report on the shelves in the committee room, to return to it fairly briefly this morning. Can I start with you, Bill? The Government spends £6 billion in terms of higher education; the British economy is crying out for science, technology, engineering and maths graduates; and yet the Government does not believe that it should intervene in order to provide the British economy with that, despite the fact that it is spending all that money. How does that square?

Bill Rammell: Thank you, Chair. It depends what you mean by "intervention". If you are asking us to directly intervene in independent judgments that individual institutions take about what is happening in the market, what is the best way to respond, and what individual course provision they make, I do not think that is what we should be doing, except in exceptional circumstances - and perhaps we can talk about those. However, I think we are doing an awful lot in the most important areas, which is to stimulate demand. If you look at what has happened to teaching numbers within STEM subjects over the last eight years, they have risen significantly. If you look at the quality of all teachers that are coming through, perhaps one of the most significant pieces of research that I have identified in advance of this meeting is to look at what has happened to those students entering PGCE courses in maths, science and technology. The numbers that have a degree classification of 2:1 and above, in maths in 1998/1999 were 39 per cent and by 2003/2004 it had increased to 44 per cent; science from 44 per cent to 51 per cent; and technology from 35 per cent to 45 per cent. In terms of stimulating demand - and you can look at the science centres that we are developing in conjunction with the Wellcome Trust, there is an awful lot that is taking place to make that happen. The other thing is that although there has been a lot of controversy about this subject - and that is legitimate and genuine because people will have strong views - if you look at the latest admission figures through UCAS, there have been significant increases in maths and physics, general engineering and chemistry. That does not mean that I am complacent, but it does mean that some of the measures we have been putting in place may be beginning to bear fruit.

Q2 Chairman: We will come back to that, if we may. That is a very important issue that we should return to; we should not simply say that nothing is happening there, and I do not think that the Committee would say that. However, there was a perceived crisis with particularly a number of chemistry departments that were closing, which was sending out warning bells to the Science and Technology Committee; and the report was asking the Government to consider particularly a hub-and-spokes model, which the Committee felt very, very strongly would make sure that there was good regional provision as well as having national provision, and yet the Government just dismissed that. Why?

Bill Rammell: I do not think we dismissed it. We looked at it. When you talk about the perception of crisis, your own Committee, Chair, actually said that it was an exaggeration.

Q3 Chairman: Yes.

Bill Rammell: I think that that is absolutely right, and that has actually been confirmed by everybody who has looked at that issue. In terms of the specific proposition that you put forward of the hub-and-spokes model, having looked at it - and we not only looked at it originally but I then looked at it when I took responsibility for this area in May - I think it would be far too top-down as an initiative. It would restrict innovation and creativity and the market sensitivity that we rightly value within our institutions. Looking at the details of the proposition I do not think HEFCE, and I do not think that Howard, with the best will in the world, could legislate to ensure that there was one 5-star department in every STEM subject within every region. Similarly, if you are just choosing one, who is going to make the decision, for example, in London, about which department fulfils that hub role? In the way the proposition had been put forward, I think that you would restrict and limit the cross-subsidisation which at present takes place and allows institutions, through the Research Assessment Exercise process, to be able to provide additional support for four-rated departments that are developing and improving, or indeed to protect strategic subjects. We did not dismiss it out of hand, but there are a number of practical concerns about the hub-and-spokes model that was put forward.

Q4 Chairman: I do not think that the Committee was suggesting that there would be a single hub, and there could be more; in fact, London is a classic example. Indeed, in Yorkshire and the Humber, the white rose universities, there is a different set-up. I do not think the Committee was looking for a one-size-fits-all model. Do I take it from your response there that as far as the Government is concerned, you are happy for regions of Britain not to have - to see departments closed at universities in key subjects because you simply want to preserve the right of universities to manage the system rather than there be government intervention?

Bill Rammell: No, if there is a demand for it I do not want to see any department in a STEM subject closed; but what I cannot do is guarantee the number of potential students that are coming through the system. That is why the major focus of our activity is on stimulating demand. However, a number of the benefits that would come from a hub-and-spokes model, I think in the response that HEFCE has provided to the Secretary of State, actually address those issues. We most certainly do want institutions to have early discussions with HEFCE if they feel that there is a risk that a department is closing. We want to encourage the Council - and HEFCE are absolutely with us on this - in holding regional swap-shops with groups of vice chancellors to take informed decisions about priorities, and to be able to manage change. It is not my position to commit HEFCE resources in every circumstance, but if you look at HEFCE's submission to the Secretary of State, they have identified circumstances where they have intervened with bilateral resources to enable co-operation and collaboration, of the kind that you were looking for in the hub-and-spokes model, to take place. We did not dismiss it out of hand, but the particular proposal that you put forward would be impractical and would have counter-productive outcomes. What we have done is to encourage HEFCE to work in a particular kind of way to encourage the kind of collaboration that you want.

Q5 Chairman: This automatically leads on to HEFCE and its report. Sir Howard, you said you thought that there were some real benefits in having a hub-and-spokes model. I want to explore what those benefits are.

Sir Howard Newby: First of all, I am a bit concerned about the Committee's perception that we have "dismissed" it, in your words, because I do not think we have. Perhaps we could just unpack what you mean by hub-and-spokes. If we mean that we want to encourage universities to collaborate together to provide sustainable provision in STEM subjects, then that is what we want to achieve. If that involves some managed collaborations between institutions, so that we are using "hub-and-spokes" as a metaphor for that, then that is very much what we would like to achieve.

Q6 Chairman: But you will not intervene to achieve it!

Sir Howard Newby: We would intervene. It depends what you mean by "intervention" but we would certainly encourage universities to do that, and financially support them to enable them to do that. If we mean a top-down 'Gosplan' in which HEFCE assigned a hub role to certain universities and spokes to others, and we tell them they have to collaborate with each other no matter what, frankly I do not think that that is a practical proposition,. We do not have planning powers and we cannot force reluctant departments to collaborate effectively with each other. The way forward is to organise what I have called in the past a sensible division of labour between institutions, so that together they provide the breadth and depth of provision we are all looking for. If we call that a "hub-and-spokes model" so be it; but I think that around the country we will see rather different models emerging to cope with local circumstances, rather than a simple top-down hub and spokes.

Q7 Chairman: In your report you said: "Collaboration of this type requires trust and effective relationships between the partners." Basically, you are rejecting the hub-and-spokes model because you do not believe that there is trust between the universities to get together and provide what the nation needs and what £6 billion of taxpayers' money is going into to achieve.

Sir Howard Newby: I am rejecting a top-down dirigiste hub-and-spokes model because it will not work. I am accepting a bottom-up negotiated sustainable provisioning, with institutions collaborating together - and if we call that "hub-and-spokes", so be it.

Q8 Chairman: I do accept, Howard, the difficulty of your role. In fact, you once said to the Education and Skills Select Committee that you would describe your role as a backseat driver. I thought that that was an interesting idea! Could you not backseat drive so that universities could work together in a hub-and-spokes type model in order to achieve what the Committee would like, and what clearly the nation needs?

Sir Howard Newby: That is what we intend to do. We have obviously been awaiting the Secretary of State's response, which we have now had, so we can now press the "go" button on this. As the Minister has said, we do intend to call together vice chancellors and heads of institutions at a regional level to explore with them first of all their perceptions of the level of vulnerability of STEM provision, and then what we can do, together with them, usefully to, in your words, intervene - but I would say probably support and enable them working together, to ensure that it is sustainable going forward to the future.

Q9 Chairman: Given that the Government is very keen to make sure that decisions are made in all aspects of government policy based on good research, what are you doing to continue to look at this issue and to make sure that you have the very best intelligence on which to act and to backseat drive universities into the solution which the Committee wants and which you now obviously want?

Sir Howard Newby: We have been working very hard with the learned societies already in this field. We have already granted just over £1 million to the Royal Society of Chemistry, to extend their scheme to working with employers, schools and higher education institutions to promote more demand for chemistry subjects. We have given £2.8 million to the Royal Academy of Engineering to do a similar scheme. We have given money to the various mathematics learned societies - and there are more than one of them - to promote mathematics in schools, following the Smith report; and we are just concluding discussions with the Institute of Physics, which will lead to a similar scheme being launched for physics. These are all interventions on the demand side, working schools, universities and employers to get them working together to bring students through. I remind the Committee that when we are talking about STEM subjects, we are really talking about physics; chemistry; most, but not all, branches of engineering; and mathematics. There are many other science subjects that are in a healthy state, and most notable is the biological sciences, medicine, most of IT and computing and electrical engineering, for example.

Q10 Mr Flello: This question is to both of you. Sir Howard, recently you said to the Education and Skills Select Committee that there had been "a very precipitous decline in student demand for undergraduate places in STEM subjects" - the issue that we started to talk about this morning. Bill, the Government's response stated that the overall number of young people studying for STEM degrees has been rising steadily. Why is HEFCE's interpretation a negative one, and the Government's interpretation that it is good news?

Sir Howard Newby: It is true that the overall numbers in all science subjects has gone up. I can supply a note on the detail but it is around 80,000 over the last decade. The precipitous declines to which I was referring were the ones I have just mentioned in physics, chemistry, mathematics, and most branches of engineering - although this year, as has already been said, this appears to be stabilising. We will wait to see whether or not that is a blip or a trend. Whilst the overall position with regard to the numbers of students studying science and technology subjects has gone up, there has been a big expansion in medical students, for example, and in biological sciences, there are real problems, which do concern us in the Funding Council for those subjects I mentioned.

Bill Rammell: To add to that, the latest figures that I outlined earlier are encouraging, but clearly you cannot take one year's figures in isolation, and we need to see whether the measures that have been put in place continue to provide an improvement, on a sustainable basis. If you look over the longer period and look at science subjects across the board, and look back to 1997 compared to today, subjects allied to medicine have increased by 54 per cent; computer sciences have increased by 78 per cent. Both of those are very connected with what has been happening in the market. We have been expanding capacity within the National Health Service, which has led to a substantially increased number of students undertaking medical studies; computer studies is in large part related to what has been happening in the IT industry. You cannot buck those kinds of trends. Overall, it means that we have 120,000 more students studying science-related subjects today, compared to eight years ago; but there have been changes between the kinds of study programmes that students are undertaking. That does not mean that I am complacent. The Department and HEFCE are putting an enormous amount of effort into stimulating demand in those subject areas that continue to have an enduring benefit for society as a whole. I do think that you need to look at the wider picture.

Q11 Mr Flello: In terms of that stimulation of interest in those subjects, is that being done with a view to what is current demand or very much to what is likely to be the demand in ten, twenty or thirty years' time?

Bill Rammell: We are looking both at present demand trends and looking to the future as well. If you look forward, say, to 2012, employers are estimating that 50 per cent of the jobs will require graduate level qualifications, and a significant number of those will need to be science-related. One of the things we do need to do within this process is better get across to young people the benefits of studying a science subject. When you look at the figures, the graduate premium in earnings for someone taking a physics, chemistry or engineering degree, is about 30 per cent compared to only 23 per cent for someone who does not take those subjects. If we are being very frank about where we are at the moment, that is one element of this where I do not think we are doing enough to get that message across. That is one of the things that I am going to be looking to take forward.

Q12 Mr Newmark: Sir Howard, are you finding that while people may be taking the sciences, even when they are doing biological sciences or chemistry, that what I would view as the definition of what used to be the core curriculum in those subjects is becoming a wider definition of what biological sciences are, for example?

Sir Howard Newby: There has been a notable trend towards more inter-disciplinary work in all the sciences, and certainly in research the most exciting advances in today's science span disciplinary boundaries, and are not lodged completely within physics, chemistry or biology. Indeed, I think I got myself into a certain amount of trouble on a previous occasion when I said that those disciplines reflected 19^th century boundaries of knowledge, which they do. We have to move with the times. Many universities have reorganised their science provision, both in research and in teaching, to reflect these new and very exciting inter-disciplinary areas. Increasingly, students are exposed to the boundaries between chemistry and biology or physics and biology, or engineering and chemistry. That is a good thing. My personal view, which is perhaps a slightly old-fashioned one, is that I believe students need to be grounded in a discipline before they can then be multi-disciplinary. I certainly do not foresee the future of science as being completely multi-disciplinary without some basic grounding in the key core disciplines you describe.

Q13 Mr Flello: I have a vision of applied alchemy or something! Picking up on your comments, Bill, you are saying that even if the percentage of total students taking STEM subjects is declining, and less demand in relative terms, that does not matter as long as the overall number of students is increased.

Bill Rammell: No, I am saying two separate things. One, it is a good that overall you have about 120,000 more students taking science-related subjects today, compared to eight years ago, but also we do need to be working to stimulate and increase the numbers of students taking STEM subjects. That is why we are investing as much effort, time and resources as we are on stimulating demand. One of the things we are doing in that regard is that myself and David Sainsbury from the DTI are conducting a fairly root-and-branch review of what we are doing in terms of our STEM initiatives. We are directly, from memory, spending about 80 million across the country on a whole plethora of schemes, something like 70 different schemes. We need to be looking at where the intersections are so that the impact is greater on the ground, and that teachers and young people are absolutely clear on where the support is coming from.

Q14 Mr Flello: Do you see the problem fundamentally as one of demand, or one of supply?

Bill Rammell: Principally I regard it as a problem of demand. That is the real issue, and that is what we are very much focusing on. What I mean by that is that if you have not got the supply of students coming through, ultimately you are not going to be able to legislate for universities and to say "you keep the department open even though there are not students to fill the places". The major thrust of what we are looking at is on the demand side. However, that does not mean we are neglecting the supply side. Coming back to your comments, Chairman, we can get into a bit of an artificial ideological debate about hub-and-spokes versus collaboration. We are clearly saying: do we want collaboration and co-operation between different departments on a regional and indeed cross-regional basis? Yes, we do. Are we going, in a very fixed way, to legislate for that through hub-and-spokes? No, we are not. We want HEFCE to be working with vice chancellors to share information at the earlier stages so that we can try to maintain provision.

Q15 Dr Harris: Minister, is it your policy ambition that the proportion of students studying in higher education who are studying STEM subjects should increase; or are you happy, as you have indicated you are, as far as you have gone, that the numbers are increasing without any reference to the proportion that are studying STEM subjects increasing? Would you clarify whether it is your policy to see an increase in the percentage?

Bill Rammell: I would like both the numbers and the percentage to increase. If you look at what has happened to STEM subjects over recent years, there has been a downturn and we want to reverse that. There are the initial indications this year that that may be beginning to happen.

Q16 Dr Harris: So it is your aim to increase the proportion studying STEM subjects; you recognise that that is not happening at the moment, but you are optimistic that the one-year figures you have just referred to may change.

Bill Rammell: I am not naively optimistic, no.

Q17 Dr Harris: You have said you are not complacent twice, and you can add a third time, but the message has been understood. You are right, if I may say, not to be complacent, because you will be aware of what the science community thinks about taking snapshot figures and pronouncing a trend on one year. Would you agree that you should be judged by trend, since you have had eight years, rather than picking a start point and an end point almost at random - probably not at random, sadly, or picking the last year?

Bill Rammell: It is not at random; it is where we are. They are the latest figures, so I think there is some validity and justification in looking at those figures. Of course you have to look at these issues over the longer term, and if you look at what happened particularly in stimulating demand over the last eight years, I think it has been very substantial. I know your Committee has looked at this issue and acknowledged the increased teaching numbers and increased quality that is coming forward, and a whole range of STEM activities. Yes, we should be judged over the longer term; but you cannot be judged in isolation to what else is happening within society and is happening within the sector.

Q18 Dr Harris: I do not have the figures, but I am trying to confirm whether you are happy to be judged on the regression, on the trend, because you have just hit the data points and made the best guess of which way it is going. You accept that that is the most appropriate way, particularly in the science area, to judge performance.

Bill Rammell: Over the longer term, yes I do. In terms of the proportions - and this is not exclusively related to STEM but across the wider science subjects - the proportions of students studying science-related subjects has increased from 38 to 41 per cent over the last eight years. While that is not exclusively within STEM subjects, I think it is a cause for modest encouragement.

Q19 Dr Harris: You said in your answer to the Chairman in question 1 that you would not want to see any STEM department close; so you are saying it is not desirable that such departments may close; they may close, but it is not a desirable outcome.

Bill Rammell: I think it is the problem of taking quotes out of context. My recollection of what I said is that I do not want to see a STEM department close if there is the demand for that department. Certainly, if the demand is there, all other things being equal I do want those departments to continue, and that is why it is important that HEFCE at an early stage has discussions with departments that are fearful they may have to close.

Q20 Dr Harris: A great deal of taxpayers' money, as the Chairman says, is being spent by the Government on the higher education system, and the Government has, under its ten-year strategy, clear policies to increase our scientific capacity. Do you therefore think it is reasonable that the Government should be expected to manage the demand as best it can in order to achieve the aims of increasing science capacity and getting a return on its investment, or is it a hands-off approach as far as the demand is concerned?

Bill Rammell: No, of course we should try to manage demand, but I think through a whole range of initiatives that is what we are trying to do. However, that falls short of saying that you can legislate for the number of people who are going to take a particular subject. My son at the moment is going through his A Level choices for next year, and all other things being equal I would like him to look at science subjects. He is choosing not to do that. As a parent, I cannot force him to do that, let along as a Government Minister.

Q21 Dr Harris: Do you remember ever voting in Parliament for higher education to be a free market in terms of demand and supply? Is this a policy that has emerged? Is it not the policy, or was there some vote I missed? I do not have a 100 per cent record but I do not remember a question saying, "let us leave it to students to decide and we will not try and direct it".

Bill Rammell: I do not think that is what I am saying. Firstly, in higher education in this country we have had independent institutions for all the time that I have actively been involved in politics.

Q22 Dr Harris: They are not independently funded, are they? They are independently run.

Bill Rammell: They are independently run, and we have levers and mechanisms to try and influence, and indeed to influence what is happening. I am not saying that we completely leave it to the institutions; that is why we are encouraging, on the supply side, HEFCE to be engaging in those early discussions. It is why, for example, we encourage the transfer of research teaching to non-research intensive institutions, it is why we encourage the Promising Researcher Fellowship Scheme so that those researchers in non-research intensive institutions can go and work in research-intensive institutions. We are doing things.

Q23 Dr Harris: But the man sitting next to you says, "It is both inevitable and desirable that universities should close more pure science departments as they updated 19^th century subject categories and as demand for the new hybrid disciplines grew." Putting those two bits, that it is inevitable and desirable as demand grows, suggests that if demand happens, then this will happen; and that is inevitable and desirable. Is that your policy as well?

Bill Rammell: No. I have just heard Howard say that he does want to intervene in certain ways to ensure the continuation of STEM subject provision.

Q24 Dr Harris: Perhaps I should ask Sir Howard to respond to that because you are quoted in the Financial Times in an article by Miranda Green on 29 June - and I do not think you demurred from that statement, but would you now qualify that and say that it is not; that if demand for new hybrid disciplines grows with those consequences, it might not be a good thing, and there might be something that can be done?

Sir Howard Newby: What we are talking about here is, again, the way science itself is developing and the role of traditional disciplines. For the sake of this argument, within that, what we should not do is somehow artificially constrain the way in which science, both teaching and research, is organised in our universities by putting in aspic certain kinds of organisational structures such as departments of this and departments of that. It is really a matter for universities to determine how they can best organise, in this case their scientific activity, both teaching and research. I do not think HEFCE really should intervene in that process, except where, we all agree, we are concerned that over the short to medium term there are real problems of sustaining provision in areas which we would wish to keep going.

Q25 Dr Harris: The next sector is on this question of these other subjects. Looking at your interview with the Education Select Committee, there was a discussion of forensic science. Is it your view that the Forensic Science Service wants people to study forensic chemistry?

Sir Howard Newby: My view is that at the moment in all probability there are more graduates in forensic chemistry being produced than can be absorbed by the Home Office Forensic Science Service.

Q26 Dr Harris: That was not quite the point I was making.

Sir Howard Newby: I know it was not, but that was the point I was making to the Select Committee. Therefore, the issue is two-fold. Are we about to produce a glut of forensic chemistry graduates who cannot find suitable employment - and by "suitable" I mean those that exercise competences which were earned through their degrees. I do not know, is the honest answer to that, because I do not know what other employment opportunities might be available to them. I have my suspicions, but I do not know what other employment opportunities are available to them. If there is a glut, should HEFCE intervene in some way to restore that position? I do not think so because I do not think we should be in the business of constantly second-guessing individual decisions taken by students or by institutions over the provision or the demand for particular subjects.

Q27 Dr Harris: It is worse than that because the forensic science people told us in evidence - and we will send you the report - that they want chemistry graduates; that these forensic chemistry graduates are no use to them. Here we have chemistry departments closing and demand for these cuddly-sounding TV-related subjects. It is not even a question of a glut; they are no good to the needs of the country.

Sir Howard Newby: I am sorry, I would disagree with that. I think that is an exaggeration, with respect. I have always accepted that there is a need to encourage more high-quality students to study chemistry, and we have to deliver chemistry provision in a high-quality way. I do not believe it is the role of the Funding Council to tell students what subjects they can and cannot study; nor is it the role of the Funding Council to tell universities what kinds of provision they can or cannot make in response to a market demand.

Q28 Chairman: With the greatest respect, surely yourselves, both as a funding arm of the Government, and the Government, have a job to stimulate demand.

Sir Howard Newby: I agree that is what we are doing.

Q29 Chairman: That is one of the key tasks. Here, we have a market within higher education where students are being attracted to so-called "softer subjects" whatever that is, rather than trying to fulfil the clear objectives in the Government's ten-year science and technology strategy, where we have to produce more scientists in particular, more engineers; and yet there seems to be a complacency on the side of HEFCE, and indeed in the Government, that we do not interfere in this market, and that we will wait to see what happens. It seems incredible to me. Is that unfair?

Bill Rammell: With respect, I think it is unfair because we talked about a number of ways in which I am advocating, and HEFCE is intervening.

Q30 Chairman: Let me just put one question to you, Bill.

Bill Rammell: Can I just make this point about forensic science because we really can go down a cul-de-sac. Chemistry applications this year increased by 12 per cent, and forensic science by 5 per cent. There is double the number of students studying chemistry than there are for forensic science. Let us just get it into context.

Q31 Chairman: Would you accept that the one way likely to stimulate demand is, particularly in terms of 16 to 19-year olds, to have within our school and college set-up high-quality laboratories and high-quality teaching staff? The government to my knowledge has no knowledge whatsoever as to how many science teachers are teaching children in our secondary schools with the appropriate qualifications. Surely that is one area where the Government could do the appropriate research and then set out to fill that void?

Bill Rammell: It is fascinating - that was the subject I debated with officials in advance of this Select Committee.

Q32 Chairman: We are glad to oblige!

Bill Rammell: First, it is exceedingly difficult to do; but, second I think there is an arguable case that we need to do better in that regard. That is an issue that we may need to come back to. In terms of looking at the number of graduates who are coming through the system through teacher training into schools, there has been a substantial increase. I exemplified that earlier. The quality of those, particularly the numbers getting 2:1 and above, is increasing substantially as well. In terms of the laboratory expenditure, if you look at the commitments we are making on schools rebuilding, particularly in the secondary sector, I would defy anybody to say that that is not a fundamental generational shift in the quality of provision.

Q33 Chairman: But you do need inspirational teachers in front of youngsters, in order to stimulate that demand for them to carry on with it, particularly studying the hard sciences, physics and chemistry, and also mathematics post 16.

Bill Rammell: Absolutely. That is where, for example, the continuous professional development through the network of science centres is particularly important in ensuring that we have not just got inspirational teachers going in at the beginning, but that we are refreshing them throughout their career.

Q34 Chairman: When the Committee made its report, one of its recommendations was that the Government should carry out far more research, a comprehensive survey on existing research and supply and demand for STEM skills, including international comparisons; and yet the Government, and to some extent HEFCE, quite dismiss that, saying the position is always changing and the research will tend inevitably to lag behind it. Now we find that within your own department you set up a STEM mapping review. I understand there is also one in the DTI and I do not know how those two work together, but can you say whether in terms of your own mapping review that goes right down into schools or whether it simply starts with universities?

Bill Rammell: I will answer that, but let me say that in terms of pulling together the research, that is something we asked the Teacher Training Agency to do when the Secretary of State asked it to conduct a review of the golden hellos and bursaries that were necessary to attract graduate students into teaching. We have increased the bursary to £9,000 for key science subjects. On STEM rationalisation, there are two exercises taking place. There is one that is being led by myself and David Sainsbury, from the DTI, looking across universities and further education and the schools sector. It is about trying to bring coherence to the very large number of individual schemes that are grouped under three main categories: teacher supply and support, activities for students, CPD and resources. We have done that mapping exercise and we are now working with stakeholders both within government and on the outside, to look at what works and what does not work, and how delivery can be improved, and make it easier for everyone to access the resources that they need. Overall the aim is to refocus spending to improve the impact. I hope that early in the New Year we will be able to come forward with proposals to implement in 2006/07.

Q35 Chairman: Will those be presented to Parliament so that we can debate them? How will people be able to interact with that?

Bill Rammell: I have not given consideration yet to exactly how we take that forward, but I take on board your comment that there ought to be opportunities for scrutiny for what is coming up.

Q36 Mr Newmark: I would like to ask a couple of questions on regional provision. My first question is to the Minister, and then I would be interested to hear Sir Howard's response. Is there sufficient funding available to support a good research capability in as many university departments as there are now? Should there be more focus on other strengths, for example knowledge transfer or teaching?

Q37 Bill Rammell: If you look at what has happened in terms of funding for research over the last six to seven years, there has been a substantial increase. I think the move to full economic costs in terms of the provision of research will help, in that the full costs of the research will be coming through to the institution and they are not having to cross-subsidise. Also, through the HEIF initiative, the focus on a regional basis of setting up examinations of the potential for knowledge transfer is indeed taking place. I was chairing yesterday the Thames Gateway Further and Higher Education Committee, which pulls together all the key partners across that area, and we had a presentation from Knowledge East, who were talking in practical terms about the number of opportunities to ensure in a very meaningful way that knowledge transfer does take place. I think there are some positives that happen.

Sir Howard Newby: We have been giving quite detailed consideration at the Funding Council to what we can do to invest in, support and incentivise those universities that are very good at knowledge transfer, including those that do not have a track record of research excellence in the way in which that is measured through Research Assessment Exercise. We are very aware that there are a considerable number of universities in England which have an important role to play regionally and nationally in taking the existing knowledge base and then making it available to users in the private sector and the public sector to their benefit. My board, at its last meeting, considered in outline terms what we might do to incentivise excellence in knowledge transfer across the sector, and I expect that we will be bringing proposals back to HEFCE early in the New Year. I am sure we will be very happy to share our thoughts at that point with the Committee. We do recognise that this is an important issue.

Q38 Mr Newmark: The first part of my question was whether you think there is sufficient funding across the board.

Sir Howard Newby: I have to say "no" because there is never sufficient funding for science, as we all know. I would make two points. Science in particular, but research more generally, is these days a global game. The competition we are facing is not national; it is international, and probably has been for the last twenty years. Our policy, as I have said on many occasions, is to ensure as far as we can that the very best research by international standards is properly supported; and then we work our way down until the money runs out. I wish we could work our way a little further down than we are currently able to, because there is still a lot of excellent research that could be supported if the resources were available. As we enter into a spending review, you probably would expect us to say that, but it is something that I genuinely believe.

Bill Rammell: Can I add to that? I endorse the point that there will never be enough resources to do everything we want, but if you look at what has happened to science spending over the last eight years, where we have gone from £2.5 billion to £4.7 billion today, moving at the end of this spending period to £5.3 billion, and over the current three-year spending framework we are increasing by 5.7 per cent above inflation - historically that is a significant increase. Is it as much as ideally we would want? Arguably that is not the case, but in terms of the trend it is a positive move in the right direction.

Q39 Dr Iddon: Sir Howard, I have raised before on this Committee the change of ratio for science from 2 to 1.7. I am getting the feeling now that perhaps HEFCE has accepted that that might have been a wrong move, and that there are now discussions to change it again. However that will only be in 2008, which is quite a way down the road unfortunately for science departments. Can you say whether there has been an admission that that move from 2.0 to 1.7 was perhaps wrong in the first place?

Sir Howard Newby: No, it was not wrong. However, I accept the general point, as I have said to this Committee before, that I do not need to be convinced that science teaching is under-funded in universities. All teaching is under-funded in our universities in some respects. Let me explain what is happening. First, to remind the Committee, the change in that ratio was in proportional terms, not in absolute terms. We still put in more money per student for teaching science subjects after we looked at the funding model. In absolute terms the money went up. What happened was that the increase in expenditure in the classroom-based subjects had gone up more than the increase in expenditure in the laboratory-based subjects. That is largely due to the much greater use of IT in classroom-based subjects than was the case when we had previously looked at it. I should also say that we do not sit down in Bristol and make these numbers up; those ratios were based on the expenditure returns of the universities themselves. I have said to this Committee before, and Dr Iddon has referred to this; that we nevertheless intend fully to move the basis of our teaching funding over to an examination of real costs. We are now undertaking that, and the data will be available for us to do that in 2008. In the meantime, however, we have recognised the need to support both medical and laboratory-based subjects before 2008 for the following reason, if you will allow me to say a few words about this, because it gets rather technical and we can send a note. We are very aware that with the introduction of fees capped at £3,000, the fee income which universities will start to receive from next year forms a lower proportion of the overall costs of teaching medical and science-based students than the proportion for teaching classroom-based subjects. If we did nothing to recognise that, as fees are phased in, we would be inadvertently giving universities an incentive to scale down their provision in laboratory-based subjects and transfer it into classroom-based subjects because, if you have the HEFCE grant plus the fee, that adds up to a much higher proportion of the cost of teaching classroom-based subjects than lab-based subjects. As the fees come in, we are going to adjust the amounts of money going into the laboratory-based subjects and medicine, but we are not doing it through changing the price weightings, which will have to wait until 2008, because then we will have the evidence. We will do it in other ways.

Q40 Dr Iddon: Do you think it is right that universities should charge on the grounds of the space that they occupy, because one of the things I have found crippled science is that laboratory provision occupies a considerable amount of space. What you describe as classroom-based subjects can be taught in a much smaller area of space. I put it to you that the thing that has crippled science departments is the charging to most universities now for space, including laboratory, engineering and workshop space, in the engineering sciences. Will that change?

Sir Howard Newby: That is a matter for vice chancellors. All I can say is that as a former vice chancellor of a very science-based university, namely Southampton, we certainly did charge for space because we wanted space to be utilised efficiently. But there is then quite a delicate issue about how you weight the charging for space between high-maintenance and low-maintenance space in a way which covers costs but does not, as you put it, cripple the engineering and science-based subjects. I would expect any well-run university not to do that. It would be unfortunate, if rather inadvertently, through a rather unsophisticated application of a space-funding model that science departments found themselves unable to operate effectively.

Q41 Mr Newmark: Minister, in February of this year Sir Howard said that in some parts of the country good-quality degree schemes in science subjects were not very thick on the ground. Do you think this is a problem?

Bill Rammell: Where that is the case, arguably it is. I think it comes back to the point that you need to be stimulating demand to ensure that institutions can respond to that demand. Overall there has been an increase of quality, but we need to keep monitoring that to ensure that it continues.

Sir Howard Newby: Can I come in on this, because I still hold to that position, I have to say. It is for that reason that now we have the Secretary of State's response to our advice that we will want to work very speedily and very hard to see what can be done about that problem. I can say that we have been opening up discussions with the Open University to create a national grid of learning, which might provide the kind of high-quality teaching provision in all parts of the country, including those where students might like geographical access to courses that we are concerned about. We are looking to possibly pilot this in the field of chemistry and modern languages. We have not yet reached agreement with the Open University but we would like to see what could be done, and perhaps with the Open University in collaboration with other higher education institutions, providing a kind of ubiquitous access route for students, wherever they live, rather than relying on accidents of geography, which can be a bit of a problem at the moment.

Q42 Mr Newmark: Studies such as the Dearing Report suggest and Lambert Review argue that regional links between universities and business strengthen the economy and that high-tech "clusters" benefit from a local supply of STEM graduates. Do you see these arguments as a convincing reason for maintaining a good regional spread of STEM provision or are current levels of social mobility sufficient to meet these demands?

Bill Rammell: High-tech clusters are very significant in driving regional economic development within this country. There is very interesting work being done on the role of universities in leading the kind of city region phenomenon that we are talking about across government; and, clearly, to enable that to happen you do need a good supply of STEM graduates. The kind that Howard has been talking about with the Open University will help in that regard. I also think you can overstate the degree to which the graduates that you need will have to come from the locality. There still is significant mobility in terms of where a student comes from, where they study, and where they end up working in their first job. Frankly, that is a good thing; it enables people to do cross-fertilising and move across the country.

Sir Howard Newby: I agree with the point you are making in your question; I simply extend it to a wider group of graduates than just STEM graduates. I think there are other clusters of disciplines which can have an equally important effect. We should take the impact of higher education on local and regional regeneration very seriously. There is some evidence to demonstrate that if you can attract graduates into an area, they tend to hang around and have the kind of stimulation effect that you describe.

Bill Rammell: In terms of mobility, we can have a great debate about the new variable fee system and student financial support system; however, I think it is very clearly the case that the new system of student financial support is a better deal for students than the existing one and will enable the kind of mobility we are talking about to better take place.

Q43 Chairman: I cannot really let you get away with that!

Bill Rammell: I did not think you would.

Q44 Chairman: Heavens above! You actually think that next year when you are charging students £9,000 - and they are going to have very, very significant additional costs in terms of their accommodation with an estimate by Barclays Bank of £33,000-35,000 at the end of the three years - that that is not going to affect mobility? That is not credible.

Bill Rammell: I was comparing the existing system to the new system, and I have said this publicly on a number of occasions. I think there were two principal things we got wrong with the introduction of tuition fees in 1998. One was asking the students to pay before they went to university, and secondly with the abolition of student grants. Both of those issues are being rectified. If we can get the facts across to young people, the fact that you will not start repaying a penny until you are in work and earning more than £15,000 a year, and then you will be paying as little as £5.19 a week - and, frankly, most graduates starting work on about £18,000 a year are probably spending more than that on CDs a week than they are on paying back some of the money. It becomes a much better deal, a much more manageable deal. Interestingly, there are all sorts of individual financial lenders, who have said an awful lot of things; and frankly a lot of them have got vested interests in saying those kinds of things. I was very struck by a statement that the Council of Mortgage Lenders made recently, saying that they will make their judgment about what money they lend to a student, not on the basis of their overall debt, but their weekly outgoings as a proportion of their income; and the outgoings under the new system are less than they are under the existing one. In that context, I think it will make mobility. I am sure you will not agree.

Chairman: Now is not the place. I am sorry, Brooks, but I just had to put something on the record.

Q45 Mr Newmark: Your point addressed the second part of my question. The only point on my first question is that, having spent six years in Cambridge, Massachusetts and seen the benefits of the link between business and students and building up the high-tech corridor along Route 28, it has tremendous benefits in attracting students to areas and seeing them benefit financially from their education.

Sir Howard Newby: I agree with that, and that is why, as a funding council, we have become aware over the last year or more now that we need to do much more to stimulate and incentivise universities to take on a transfer activity, even more seriously than they do.

Q46 Adam Afriyie: My first question is to Bill. Should the Government prop up ailing science departments of any description, and, if so, under what circumstances and in what way?

Bill Rammell: It depends what you mean by "prop up". I am not saying that there should be a carte blanche or an open cheque to any institution that is failing to recruit sufficient numbers of students to say that the Government will step in and intervene in those circumstances. Frankly, if you gave that kind of open-ended blanket commitment I do not think you would be getting value for money. However, we are asking HEFCE to intervene early with vice chancellors to create this kind of regional swap-shop approach where they look at problems that might be experienced. Although I cannot give a cast-iron commitment on what financial support HEFCE would be able to deliver, if you look at the evidence that HEFCE gave to the Secretary of State there were a number of case studies of where HEFCE had intervened at an early stage and provided financial support to institutions. I think that is the appropriate kind of intervention.

Q47 Adam Afriyie: Do you have a set policy on how and when you intervene? What would you consider to be an ailing science department?

Bill Rammell: There are not hard and fast rules in these circumstances, because it is too complicated for that, but it will be triggered by an institution saying in confidence to HEFCE, "we have a particular problem and think we are running into difficulties". HEFCE will then sit down and analyse with that department and that university, and with surrounding partners, if that is possible, to see if there is a way of managing provision either so that it continues or it does it on a co-operative basis. For example, we might be looking at the Scottish experience, where because of the high level of costs involved in STEM subjects there is some collaboration across institutions.

Q48 Adam Afriyie: Sir Howard, obviously you are there to implement these interventions. At one point you mentioned it was on a case-by-case basis, which is what the Minister has just said. But if you are also concerned about the autonomy of higher education institutions and science departments, how do you intervene and when do you intervene? Do you just sit back and wait for these departments to get in contact with you, as the Minister has just suggested, when they are in desperate need?

Sir Howard Newby: We have a long history, as the Minister said, of making these interventions in a rather low-key way, because often that is what leads to effective and successful outcomes. We have also to remind the Committee that for many years we have supported what we have called minority subjects, where we accept that there is a need to sustain national capacity, even in the absence of sufficient students studying the subject and making it economically viable. We have not really got on to supply-side interventions in our conversation but we will continue to do that as well. We receive regular reports from universities in terms of their financial health and their strategic planning, which they have an obligation to send us in terms of their annual monitoring statements, which are statements about their various activities. It is through that and through our regional teams that we quite quickly, frankly, pick up early intelligence about where a particular department or a particular institution is becoming vulnerable. That is why we wanted to insert the word "vulnerability" into the notion of "important" subjects.

Q49 Adam Afriyie: Can you give us an example of what factors you are looking at; and then say how you would go about intervening precisely?

Sir Howard Newby: Vulnerability could come from trends in student demand for a particular department, which we would pick up in the normal way through the university's returns and would lead us through our normal round of discussions with the university to say, "We have noticed that you have a declining number in heraldic studies; are you concerned about the future of heraldic studies in your university?" That would normally lead to -----

Q50 Chairman: Or mediaeval studies!

Sir Howard Newby: Indeed. That would led to some confidential discussions between the university and ourselves about how they can turn this around, and we would see what we could do to help. It could also come through a university department losing a significant number of staff simultaneously, which has left that department very vulnerable. At least one of the chemistry department closures in recent months, which achieved a lot of headlines, came about through that process. If it helps, since the whole issue came up we have kept our ear fairly closely to the ground with universities, and there are now one or two but no more instances which we are keeping a very close eye on, where we do not expect any imminent announcements. Now we have the Secretary of State's response, we might well want to follow up some discussions with those one or two institutions to discuss with them their future strategy for those particular departments that certainly look ostensibly from the outside rather vulnerable.

Q51 Adam Afriyie: I am still not entirely clear about the dividing line between autonomy for a university and then your intervention on the other hand.

Sir Howard Newby: The honest answer is that there is not a clear dividing line. I have said to this Committee before that whilst we must respect the autonomy and independence of our institutions, because that is what has made our education system such high quality by world standards, it is nevertheless the case - and vice chancellors understand this - that the individual interests of 130 independent HEIs in England do not necessarily add up to an overall national interest. They have always understood that, hence our intervention on what I called "special subjects" earlier. Even now we are intervening on the supply side in various niche areas of science with the research councils. We are putting in support for chemical engineering. We are putting in support to ensure that the statistics research is healthier. More proposals will be coming forward over the next year. It depends, first, on our having good intelligence, and secondly on having the trust of vice chancellors to have an open and frank dialogue with them at an early stage; and thirdly to intervene in ways which are effective but which nevertheless recognise and respect in the end the judgments of senior managements in our universities.

Q52 Chairman: Do you involve the learned societies in that respect? I am finding difficulty in getting a handle on how you get this intelligence together. It seems to be a mystifying process. You sit in a darkened room, do you?

Sir Howard Newby: That is why I used the word "intelligence", Chairman; it is not just looking at quantitative measures, but it is also holding conversations, as we do from time to time with all universities and HEIs, about their immediate and longer-term futures. It is a mixture of soft and hard information. We do involve the learned societies in that from time to time, although I have to be a little careful here: the learned societies do not always see eye to eye with the senior managements of universities in each and every case at least. We certainly take their views into account.

Bill Rammell: It is also worth saying, Chairman, to take the implication of your question, that this is not a process that you necessarily broadcast from the rooftops because if you did, you would are you the real risk of self-fulfilling prophesy that lecturers, support staff and indeed students vote both with their feet and make a potentially vulnerable situation even worse.

Q53 Chairman: I am finding it very difficult to get the connection between the economy and the demand that it is making and how you then interface with the universities in order to make sure that that demand is met, and that you maintain a level of provision that is appropriate. That is very difficult to understand.

Sir Howard Newby: It is difficult, and we all share the difficulty. We do have to steer this line, which is not a clear line, between respecting autonomy of institutions on the one hand, and respecting that there is a national interest that needs to be secured in the end on the other. Frankly, I can only say that it is a judgment call, if I am perfectly honest with you. Whether and how we should intervene in particular circumstances in a particular university in a particular part of the country in a particular subject comes down to a judgment call by both myself and my colleagues at the Funding Council and the senior management and governing bodies of the universities.

Chairman: We might return to that at some future date.

Q54 Dr Iddon: Can I look at the question of international students and their role in British universities, Sir Howard. We are told that 15 universities rely on overseas students for more than 15 per cent of their income. Do you think you ought to encourage not only those universities but also the others to top up their income from this Government and other sources by attracting more foreign students?

Sir Howard Newby: I think the fact that so many foreign students come to this country, and have come in increasing numbers in recent years, is a real vote of confidence in the British higher education system, and in principle this is something that we should celebrate. It is one of the demonstrators of the fact that we do have such a high-quality vibrant, dynamic system that so many overseas students want to come here and share in it. Let me say that straight away. It has all sorts of other beneficial consequences, and I am not thinking of financial consequences when I say that; it is concerning tolerance, multi-culturalism and celebration of diversity. All of that is very welcome. Where we get nervous, as a funding council, is where some institutions might be becoming over-dependent on a volatile overseas student market. Some of those institutions that you are referring to in the quote I gave to the Education and Skills Select Committee are institutions that are extremely strong financially with very high academic reputations. In their cases, that figure does not worry me, but there are some institutions on that list that are much weaker financially and which would be very vulnerable to any sudden downturns in the overseas student market. We are keeping this situation very closely monitored in terms of the risks that an over-dependence on overseas students might present to some institutions. As I say, we judge that risk in relation to the overall financial and indeed academic strengths of the organisation. Overall, to have more overseas students in our universities is a good thing.

Q55 Dr Iddon: Has your organisation or any other organisation done any research to determine the future of the foreign students that are educated here? Do the majority of them return to their home countries, or do a substantial number of them stay on to develop the British economy?

Sir Howard Newby: There has been some work done on this on international mobility, not by us at the Funding Council but by academic researchers, which shows that whilst the majority do go back to their home countries, a significant minority stay in the UK and contribute very substantially over their lifetimes to the UK economy. Rather like we were saying earlier about internal mobility within the UK, with students going to university away from home, and as they graduate a significant number of them tending to stay around and stimulate the local economy as a result, this is also true on an international level.

Q56 Dr Iddon: I have a worry about research and development exiting this country and going abroad. There are rumours circulating at the moment in industry that another pharmaceutical company might pull out of research and development, because as you know some have already gone. If we are educating foreign students to a very high level and they are returning to their own country and we are not attracting enough STEM students to study those important subjects in our own country, is this not encouraging foreign industry in particular that is already based in Britain just to transfer their operations to another country?

Sir Howard Newby: That is indeed a real danger. Increasingly, globally-organised research-intensive multinational companies will continue to site their investments in research and development not only where the overall economic environment is one they can work in, but also where they can gain access to the best talent. We have to make sure that we have more than our fair share of the best talent here in this country.

Bill Rammell: In response to Dr Iddon, I do think that it is two-way traffic. There are numbers of overseas students who come here who then work in British industry. Frankly, if you look at the longer-term trends, in order to maintain the level of highly-qualified people we need to sustain our economic viability, and we need those overseas students to come here. However, we need to get the STEM debate into context. It is only about 6 per cent of overseas students that are actually studying STEM subjects. Sometimes, some of the discussions create the impression that it is substantively more than that. Returning to your original point about whether there is a vulnerability for those institutions that recruit a high number of overseas students, one word of caution that I would give is this. While I think it is a very positive thing that we are getting those numbers of overseas students, there is a danger of having all your eggs in one basket on a country-by-country basis. To take an example, China is very current as a topic, and there has been a 20 per cent downturn this year in the number of Chinese students coming to this country. The major reason is that the Chinese Government has taken a strategic decision to grow more of its students at home. There is nothing whatsoever that we or any other country can do about that. If you are focusing exclusively almost on one country, you do run that kind of risk; so in terms of attracting overseas students it is far better to go for a broad mix.

Q57 Adam Afriyie: Does the Government have a limit on the maximum number of overseas students studying here, both in terms of whether it is economically sensible, or to be dependent in that way, but secondly in terms of the crowding out of those science and technology places for British undergraduates?

Bill Rammell: First, there is not a limit. Second - and this is a Daily Mail/Daily Express issue that is in danger of completing misrepresenting the situation - they do not crowd out British students. They actually add £5 billion a year to British universities. If you want to look at it in global terms, you could argue that they are subsidising British undergraduates with the very substantial fees they pay by coming to this country. I do think that it is in our education and cultural and business interests that we get those overseas students coming to this country.

Q58 Adam Afriyie: But if the UK is not able to meet its own needs for home-grown scientists, as a Minister of Government, are you comfortable that we might need to rely on overseas scientists to provide our needs here?

Bill Rammell: No, and that is why this Government is doing an immense amount to stimulate demand, particularly in STEM science subjects, from British students. Even if we succeeded to our ultimate expectation, if you look at the demographics and our economic need as a country, it is in our material interests that on top of that expanded number of British students you get some highly qualified overseas students who contribute to our economic viability.

Q59 Adam Afriyie: Sir Howard, has there been an example so far where overseas demand for a STEM place in Britain has dropped off and has caused a problem in the finance of a university or a science department?

Sir Howard Newby: Yes, there has been. Certainly at departmental level and also the university level, I can think of one or two universities' finances where there has been a sharp deterioration because of the drop in overseas student demand. That is what I was saying earlier; we monitor these risks very closely.

Q60 Adam Afriyie: That is one of those vulnerability factors.

Sir Howard Newby: It is indeed.

Q61 Mr Newmark: Is part of the problem of drop-off - and I am only using the analogy of the United States, where there has been a significant drop-off - caused by not a lack of demand from the overseas students, but the new stringent immigration controls and the ability to get access to visas; and do you see that as part of a block that has been detracting overseas students from coming here recently?

Bill Rammell: No, I do not. If you look at the visa changes that came in in April or May, I do not think they had such an impact on this year's applications. Indeed, overall, marginally, overseas student numbers are up this year. There has been some fluctuation between different countries. I am a higher education minister, but I am also a member of a government that is rightly concerned to ensure that we have robust asylum and immigration controls in this country; and overseas students cannot be outwith that process. However, as I said before, each of the separate changes that we have made is justifiable. The danger is that it creates an impression that Britain is not as welcoming to overseas students as previously it has been. I think the best thing we can do to respond to that situation is move forward very quickly to try and have a successor Prime Minister's Initiative Phase 2 Scheme, where, jointly funded by the British Council, institutions and the Government, we very proactively go out and get across overseas the message of the benefits and advantages of British higher education.

Sir Howard Newby: I do not think the visa issues help with the marketing, but nevertheless I do not think it is a primary cause. In addition to the issues the Minister mentioned about China, which I endorse, it is also true that the UK at the moment looks rather expensive in currencies that are tied to the dollar, and the Chinese currency is of course tied to the dollar. We all know what has happened to the pound/dollar exchange rate over the last couple of years. Suddenly, the UK, for a Chinese student at the margin, so to speak, looks rather expensive, in fact very expensive if you take the total package, compared to going to the United States.

Q62 Mr Newmark: I would slightly disagree with that because unless you have mobility, there are very few institutions that would give full - unless it is like Harvard or Stanford, and most of the education on a like-for-like basis is still cheaper here than going to the United States. The United States is very expensive to get a university education.

Sir Howard Newby: We can take this offline, but I have been in China recently, and I can assure you that at least that is their perception; that the UK is expensive compared to the United States, at the margin. We are only talking about marginal declines, but at the margin it has choked off that 10 per cent of the market.

Chairman: We are obviously going to slightly disagree on that, but we will leave it and bring Brian in.

Q63 Dr Iddon: Minister, if the quality of our higher education is good enough to attract foreign students to study stem subjects in our universities, why are we not attracting our own students to study the same subjects in those very universities?

Bill Rammell: One, because - and I am not complacent, and I hope everything I have said this morning indicates that we are concerned about this and that we do want to stimulate the market - but if you wanted an objective analysis of what has happened say over the last eight years, you cannot insulate demand for STEM subjects and what has happened in the other science subjects, there has been a significant expansion of medical studies and computer studies. Undoubtedly it has taken some of those students who, in different circumstances in previous times, might have studied STEM subjects. However, I do think we need to do more to get the benefits across of studying STEM subjects. I think that the media has a role to play. I forget the name of the group, but there is a group that works to advise TV drama producers on presenting a positive image of scientists in this country. That is the kind of positive development that we want to see. We also need to get across those very basic and graphic financial incentives to undertake a STEM degree. There is a 30 per cent graduate premium, compared to 23 per cent for non-STEM subjects. We need to get more of that across, and we need to look at the way we are teaching science within the curriculum within schools - that we make it more practical, related to everyday life, to try and encourage some of those young people. The evidence appears to be that until the age of 14 youngsters by and large tend to be switched on to science subjects; and something happens around 14, 15 or 16, where it moves in a different direction. Some of the changes that we are bringing forward in the curriculum, particularly at GCSE level will help in that regard.

Q64 Dr Iddon: Can I switch track and look at funding for universities. The current funding mechanisms have obviously concentrated research and development in a very small number of universities in the STEM area, obviously concentrating on that area. Do you think that concentration is desirable, and, if so, why?

Bill Rammell: While I know, in your response to the evidence we gave we do not agree on this, we do not have a policy of concentration. What we do, I think rightly in the face of international competition, is to fund selectively on the basis of excellence. That has led to a degree of concentration, but you can overstate it. There are still over half of institutions in this country that have at least one 5-star rated department. If you look at the latest figures, taking maths as an example, of those departments that have got more than 50 students 25 of the 56 do not have 5-star ratings; in chemistry 25 of 42 do not have 5-star ratings, and in physics 13 of 34 do not have 5-star ratings. Through the RAE process there has been a degree of concentration, but I think you can overstate it.

Sir Howard Newby: Talking about the STEM subjects specifically, the arguments about concentration have to do with economies of scale. For example, if we take particle physics we know that you need international collaboration as well as national collaboration to do world-class research in particle physics, and the same is increasingly true of other areas of science. Coming from Southampton University, I can only point to oceanographic science, which requires a similar degree of concentration. The issue is whether bigger automatically means better: not automatically, but in many of the areas of truly groundbreaking science, scale is an issue. You need big clusters of researchers working on big issues, using expensive equipment very often to produce the kind of break-throughs that we are all looking for now in the globally competitive scientific arena. It is not only we who have come to that conclusion, but many other countries have. Indeed, even in this country other partners in the research field, such as the research councils and the Department of Health, have come to a similar conclusion. That then leads, from a Funding Council point of view, to a whole set of issues about how, if that is indeed the case, we can ensure that in the teaching of these subjects students still have access to high-quality academic staff who are working at the forefront of their subjects. That, indeed, is a dilemma we still continue to struggle with.

Q65 Dr Iddon: What you are saying, Sir Howard, is that international competitiveness is what is driving this concentration to a degree.

Sir Howard Newby: I am saying that. I think that to be good is no longer good enough. We have to be internationally excellent, especially in all these internationally competitive areas. Obviously, my arguments weaken the more you move towards the arts and humanities, where the arguments in favour of concentration are not quite the same, although they still need really good libraries. If we are talking about the STEM subjects, which is where I started off on this, there are, you can see all over the world, arguments in favour in many, not all, of the STEM subjects of concentration because of the nature of the science that is being undertaken.

Q66 Dr Iddon: When we brought you as a witness on 7 February 2005 you told us the money runs out at about two-thirds of the way down grade 4 departments, and there is another research exercise in the offing. This Committee, as you well know, is very concerned about not all the 4-star departments being funded properly. Can you tell us what HEFCE has done about that and what kind of response you have had from the Government, or is it early days?

Sir Howard Newby: We identified some subjects in universities, six of them, which we continue to fund down to level 3A in the old RAE terminology, because we recognised that these were subjects that had recently arrived in higher education and did not have a strong research base and so needed to be given what we call some capability funding. They were areas like art and design on the one hand, health studies on the other, and so on. That money continues until the next research assessment exercise. As far as what happens in 2008/09 is concerned, we are just entering into a spending review and we will be arguing strongly for further investment in the research base, not only so that we can continue to fund the truly world-class research of today, but arguably the world-class research of tomorrow as well, which in many cases will be up and coming through the grade 4s. That is a big argument for funding the grade 4s; that for many of them the direction of travel is towards 5 and 5-star. If it is towards a 3, we should not be funding it. Finally, I would say that there is also a need to remind ourselves that even now, and certainly in the foreseeable future, universities will not be receiving the full economic costs of research activity in certain significant areas, namely those funded by the charities - although we have made some progress in that direction, and that is very important for university research in this country - and also through European Union funding - the European Research Council, for example, which we would expect this country to do very well. It is very important that it is fully funded in some fashion.

Q67 Dr Iddon: Minister, is it not a bit fruitless, having a research assessment exercise or an equivalent of that, whatever it may be, in the future, and determining that there are some excellent departments and then not being prepared to fund them as a government?

Bill Rammell: I make the point again about what has particularly happened to science funding over the last seven or eight years, which historically has been a very positive development. If you are asking me, "are you in all circumstances going to have as much money as you would like to fund everywhere?", I do not think that is going to be the case. You therefore do have to choose priorities. When we are looking at the research assessment exercise, I hear particular criticisms of it from all sorts of quarters, but what I do not see anywhere is a consensus as to what we might replace it with. Moving forward to 2008, we said we will run a metrics exercise alongside it, and we need to see how and in what way that might improve things. We do need to learn some of the lessons from previous RAE rounds as well, and the fact that this time we are going to be looking at quality profiles instead of just average scores. That will help to give some support to the pockets of excellence that might exist within a department that otherwise is not performing at a very high level. That will help to ameliorate somewhat the kind of cliff-edge problems that your Committee has previously identified, and that will be a step in the right direction. We have substantively increased the funding going through to research. We are coming up to a spending review; people will have their views, and I am sure that they will push us to make a strong case.

Q68 Dr Iddon: Our predecessor chairman, the Member for Norwich North, was very keen on his football analogies; and if I can put it to you, there is a team called Wigan, which has gone through three divisions to almost the top of the Premier League. Is it possible for a Wigan in academia to have a spectacular rise like that; or does the current funding mechanism prohibit that?

Sir Howard Newby: I am a Derby County supporter so I am a little biased here, but if you look back over the last twenty years then this has undoubtedly been the case. Who would have guessed twenty years ago that universities like Warwick, York and so on would be where they are now, both in terms of research and in terms of teaching excellence? As always in higher education, I am afraid, these things take time, but it is indeed the case that universities rise and fall. The question is, looking to the future: is it possible for another Wigan or another Wimbledon to come through? I think it is very important for the health of British higher education to allow the Wigans or Wimbledons or their analogies to come through, and that we do not create a kind of ossified university sector in which certain universities that have historically been excellent regard that as a kind of privilege to which they are entitled and that no-one else must be allowed in. I completely reject that view.

Q69 Chairman: As the current Chairman, who is also a football fan and who is also a Leeds United supporter, can I say that the opposite applies; that you can spend literally millions and millions on a club and it goes down, heading towards the Second Division at the moment. There is a very serious issue here, and the previous Secretary of State indicated very strongly that we were going to see teaching and research universities or perhaps even research-only universities and teaching-only universities. With regard to STEM subjects, Minister, do you envisage there being universities that are teaching-only universities but in fact also engage in teaching STEM subjects? If we are going to see a trend towards research-concentration in fewer universities, there is also a view, which Charles Clark held, that we would have teaching-only universities as well. Do you think it is possible to teach STEM subjects in teaching-only universities because they are not engaged in any research?

Bill Rammell: I do not think that is accurately what the former Secretary of State said -----

Q70 Chairman: I am sure it was not, but you have the gist!

Bill Rammell: I will deal with the point, and I will not make a cheap shot about the sustainability of Wigan's position.

Q71 Chairman: They have a very rich chairman!

Bill Rammell: There are a number of institutions that are predominantly teaching as opposed to being driven by research. I wholly agree with Howard that we do need to ensure that we do not get a cementation of those institutions that are research-intensive and those that are not, and we need to enable people to come through the system and to improve and develop them. Going back to one of the arguments about hub-and-spoke, if you stop the cross-subsidisation that currently takes place under the existing approach to enable institutions to say, "we have a good 4-rated department here, and we want to give them a bit more money to encourage them to move in that direction", that would be a loss from that particular way forward. However, for those institutions that are predominantly teaching, it is crucial that we do enable them to get some of the benefits from the research-intensive institutions; and that is why the 25 million that HEFCE is committing over the coming two years, to ensure that those institutions that are predominantly teaching get some access to some of the research materials and some of the visiting lecturers, is a very positive development. We also need, where you have promising researchers in predominantly teaching institutions, to enable them to go and work for a period of time within a research-intensive institution. I see that very much as the way forward, but I do not want a system that is set in tablets of stone and where you never see change within the system. If you created that kind of system, actually UK plc in the longer run would lose out.

Sir Howard Newby: Can I go on the record on this as well, please? Let me just state that the references you were making, Chair, to the 2003 White Paper - it was never the view of the Secretary of State in my experience, and it is certainly not the view of the Funding Council, that we should have teaching-only universities. Let me state that very clearly. What was the view of the Secretary of State, and is the view of the Funding Council, is that universities should play to their strengths; and therefore there will naturally some universities that do and should focus more on teaching than research, and others that might focus more on research than teaching. Some might focus on knowledge transfer more than research as well, for example. It is more an issue of focus; it is not one of exclusivity. I find it difficult to believe that a university worthy of its name would be a teaching-only institution.

Q72 Dr Iddon: To what extent is it a coincidence that those universities that receive the bulk of the research funding from the research councils also receive the bulk of the QR funds from yourselves?

Sir Howard Newby: That is true, and -----

Q73 Dr Iddon: Does that not make it difficult for the Wigans to rise to the top of the Premier Division?

Sir Howard Newby: Yes, it does, and that is where the football analogy is rather apt. One could argue that it is getting increasingly difficult in the university world, as it is indeed in football. We have a Premier League in football, financed in rather different ways to the Football League. I worry a lot about the gap that is growing between the Premier League and the Football League in football, and I would worry a lot if the gap between a premier league of universities and the rest of the sector had got so wide that it was impossible to cross. Having said that, the coincidence between the two figures you mentioned, namely the QR allocations from us and the research council allocations is not a coincidence because they are both driven on an assessment of excellence by academic peers. What I will say is that the research council allocations are more concentrated than ours, and that shows that what we are doing with our QR money is indeed casting some bread on the waters. The QR money that we give to universities, which is largely discretionary income, to invest in new areas of activity, is being used for that purpose, not just to mimic the funding that is coming through from the research councils.

Bill Rammell: Can I add to that because this is a key area? One of the things that I have learned in politics and government is that you cannot have everything in life. Even within an overall budget that is increasing, if we were simply, to take the implication of Dr Iddon's question - and I am not quite sure this is where you are going, but some people advocate this - to level it down and spread it right the way across the system, in terms of the demands of international competitiveness that Howard outlined earlier, I think we would lose out as a country in those circumstances. We need to be concerned about this, but we also need to recognise the international pressures that we are responding to.

Chairman: Minister, that brings us full circle, and it was one of the reasons that the Committee recommended the hub-and-spokes model; it was to try and overcome some of those difficulties of being able to marry the emerging universities and emerging research with the very research-intensive universities. We have come to the end of our questions. Can we thank you, Sir Howard, very much for coming. Thank you very much indeed, Minister. It has been helpful to agree where we have agreed and disagree where we have disagreed. I am sure we will return to this in due course.