Memorandum submitted by the Department
for Education and Skills (DfES)
INTRODUCTION
1. This paper sets out the Government's
views on the matters raised by the Select Committee. It covers:
— the Government's view on the key
principles that should lie behind the shape and structure of higher
education in this country;
— an assessment of the strengths of
our higher education system, and of the current funding system;
and
— an assessment of the priority areas
for further development of higher education.
PRINCIPLES
2. In our 2003 White Paper The Future
of Higher Education we said:
"Higher education is a great national asset.
Its contribution to the economic and social well-being of the
nation is of vital importance. Its research pushes back the frontiers
of human knowledge and is the foundation of human progress. Its
teaching educates and skills the nation for a knowledge-dominated
age. It gives graduates both personal and intellectual fulfilment.
Working with business, it powers the economy, and its graduates
are crucial to the public services. And wide access to higher
education makes for a more enlightened and socially just society".—(The
Future of Higher Education, p14).
3. This remains a valid statement not only
of the central importance of higher education to the well-being
of our society, but also of the different ways in which the contribution
of higher education is made. The Committee has said that it will
look at "questions of first principle" in higher education,
including the fundamental question of what should be the role
of universities. The Government's clear view is that there can
be no one single role for our higher education institutions (HEIs),
or for the higher education sector as a whole. Higher education
serves a number of diverse and distinct purposes, and it is important
that policy should not focus on one to the exclusion of others.
4. We need to nurture a higher education
system which:
— undertakes world class pure research
that pushes back the frontiers of knowledge and understanding;
— collaborates with businesses at national,
regional and local level to support successful innovation, deployment
of technologies and entrepreneurship; and equips the public and
voluntary sectors for the challenges of tomorrow; and
— helps society recognise and find
solutions to the great problems of the twenty first century: climate
change; shortages of national resources; migration; the ageing
population; dizzying changes in technology.
5. We need, too, a higher education system
that teaches an increasingly diverse group of learners in different
ways and for different purposes. What has traditionally been the
core group of HE learners, those leaving school or college with
good qualifications at age 18, will remain important. But we need
a higher education system that builds further on recent successes
to reach out to increasingly diverse groups of students—students
who differ from each other and from the traditional conception
of a student in all kinds of ways:
— by socioeconomic background; and
also by gender, ethnicity and disability;
— by level of study, ranging from certificates
through to doctorate level;
— by relationship to employer, with
an increasingly important role for work-based learners studying
options designed in partnership with employers and aimed at boosting
skills directly relevant to employment; and
— by mode of study—catering for
those who choose to commit full time and those who are fitting
their higher education studies around busy work and domestic programmes.
6. We have a very diverse range of institutions—diverse
in terms of such indicators as size; the split between undergraduate
and postgraduate student; the proportion of students recruited
from overseas; relative sizes of part-time and full-time provision;
the amount of income taken from research; and the proportions
of income drawn from funding councils.
7. There is also an impressive diversity
in student mix and subjects studied, and again the hard evidence
bears out such impressions:
— 56% of undergraduate enrolments in
English HEIs on 2004-05 were aged 21 and above; 32% were aged
25 and above; 23% were aged 31 and above;
— part-time undergraduate enrolments
rose by 12% between 2000-01 and 2004-05; in 2004-05 they represented
27% of total undergraduate enrolments; and
— there has been progress since 1997
in increasing the proportion of people from disadvantaged backgrounds
entering HE. Between 1997-98 and 2004-05 there has been an increase
in the numbers of full-time first degree entrants to HEIs from
state schools (81.0% to 85.9%) and from low participation areas
(11.4% to 13.1%). The overall BME participation rate of 18.4%
for 2004-05 compares favourably with the overall 11.2% of the
general working population from minority ethnic backgrounds and
14.9% of the under 30s age group of the working population.
8. In order to shore up and extend the diversity
of mission that increasingly exists in our higher education system,
we need to see diversity in the way society measures excellence
and celebrates success; and diversity in the funding streams that
are available to higher education. It is also important that institutions
are able to take risks and to innovate, rather than deliver services
to a template. That is why the 2003 White Paper placed institutional
autonomy along with diversity of mission at the heart of the Government's
strategy for higher education. Institutional autonomy and diversity
of mission are, indeed, connected. If institutions are autonomous
and able to set direction on the basis of what they can excel
at and what their customers demand, then they are more likely
to develop distinctive missions, innovate and take risks. The
role for Government then becomes to set the right legal and funding
frameworks that allow the energy of successful institutions to
be harnessed.
THE PERFORMANCE
OF HIGHER
EDUCATION
9. Here, there is a good story to tell.
Higher education in this country is a success. In research, we
punch well above our weight in the international ring. Universities
deliver a high quality of teaching. Employers value the abilities
that graduates bring to the workplace, and show this in the wages
they pay. The global reputation of the UK as a place to come and
study is high.
10. Key indicators of this success are:
— Research quality is high and
improving. Over the last 20 years, the proportion of active researchers
working in departments which achieve the highest excellence ratings
in the Research Assessment Exercise (RAE) has risen steadily.
The last such exercise, in 2001, revealed that over half were
employed in departments which gained 5 or 5* ratings. An independent
study undertaken in 2006 identified the UK as the second strongest
research base in the world, behind only the US. In terms of outputs
the UK leads in terms of papers published and citations per researcher.
The widely-respected Shanghai Jiao Tong academic ranking of world
universities for 2006 showed two UK universities in the top ten,
the only non-US institutions to figure. The same index shows five
UK universities in the top fifty, more than the rest of Europe
put together. Although league tables of this sort attract many
caveats and criticisms these results are a clear reflection of
the esteem in which UK university research is held internationally.
— Student satisfaction levels
are high. The National Student Survey for 2005 showed that that
81% of students were satisfied overall with their courses. The
most recent MORI/Unite student experience survey (2006) showed
that 90% of students are very or fairly satisfied with the quality
of teaching. The Class of 99 study indicated that just
3.5% of graduates would, with hindsight, have chosen not to enter
higher education; and also that around 85% of graduates are in
jobs using their university-acquired skills, four years after
leaving university.
— Student retention performance
is good, even though an expanding student base and reaching out
to non-traditional students has brought pressures. The drop-out
rate is one of the lowest in the OECD. Non-completion rates in
tertiary education in UK are under 20% (around 16-17%) compared
with around 35% in the US and over 40% in France.[1]
— Returns to graduates remain
strong. The rate of return to a degree for a student is very high
in the UK by international standards, comfortably above the OECD
average and the US.[2]
Recent survey evidence suggests average starting salaries for
graduate-level vacancies of around £18,000 pa, and on average,
graduates earn around 20-25% more than similar non-graduates.[3]
Over the working life, we believe that the average graduate premium
remains comfortably over £100,000 in today's valuation, compared
to what a similar individual would have earned if they just had
A levels.[4]
We estimate that an average student will earn around £4 back
in higher pay—in today's values—for each £1 they
have invested or foregone in their higher education[5].
— Employer satisfaction is demonstrated
in these wages premiums, and also in attitude surveys. 81% of
employer recruiting graduates thought them very well or well prepared
for work, compared with 60% of employers recruiting 16-year-old
school leavers, and 69% of those recruiting 17 or 18-year-old
school leavers.[6]
Where employers were able to isolate the impact graduates had
on the business, they commonly mentioned that graduates were more
likely to:[7]
— challenge how things are done;
— assimilate things quicker;
— be flexible;
— come at things from a different
perspective;
— are problem solvers;
— bring new ideas and energy; and
— use their initiative and act without
waiting for instruction.
— International market performance
is strong. The UK is second only to the US as a destination for
overseas students, and overseas (non-EU) student numbers rose
by 84% in the five years to 2004-05. Within this overall picture
there is a welcome degree of specialisation: thirteen institutions
have more than 5,000 students from outside the UK. Trans-national
education—the delivery of British qualifications outside
the UK—is becoming more important. The British Council has
estimated that over 200,000 students are studying UK HE qualifications
abroad (2004-05).
THE FUNDING
SYSTEM
11. Public expenditure on higher education
increased by 23% in real terms from 1997-98 to 2005-06 with total
funding per planned student increasing by five percent over the
same period. While significant, the overall increase was lower
than in other sectors of education. This reflects the government's
policy to share higher education costs fairly between the state,
parents and graduates given the clear evidence that the latter
benefit financially from their higher education. The introduction
of variable fees from 2006 will bring much needed additional revenue
to higher education. Government expenditure on loans for variable
fees will enable institutions to charge up to £3,000 per
year without deterring entrants to higher education on financial
grounds. Under steady state conditions, the additional income
from variable fees is expected to be around £1.35 billion
per annum.
12. We consider that the structure of government
funding is broadly sound. The role of the Higher Education Funding
Council for England (HEFCE) as a buffer body between Government
and institutions as set out in the Further and Higher Education
Act 1992 provides institutions with the right degree of security
from political intervention in the curriculum or in research,
and so enshrines the academic freedom that is a core value for
a modern civilised society. The Council funds higher education
in accordance with the policy and priorities that are decided
by Ministers, and these are summarised and updated in the annual
grant letter issued by the Secretary of State. The Council's strategic
plan and its key performance targets are approved by the Secretary
of State.
13. The Council allocates the greater proportion
of funding to institutions via a block grant system. The process
for determining the amount of block grant each institution should
receive models how an institution might spend the resources allocated,
but there is no requirement that actual spend should fit this
model. Institutions can determine how best to use the resources
available to support their missions and fit their services to
meet user needs. Block grant is supplemented by special funding
streams that allow funding outside of the block grant to be directed
to achieving specific policy objectives. This allows explicit
interventions through public funding to achieve public policy
outcomes that would not otherwise be met. The fact that a particular
outcome or activity is important does not of itself provide a
justification for a dedicated funding stream. A large number of
special funding streams creates confusion about priorities and
an undue accounting burden.
14. The importance of higher education in
equipping key public sector workforces is properly reflected in
the funding system. Funding of medical and dental education and
research is distributed through a partnership between HEFCE and
the NHS. HEFCE-allocated funds underpin teaching and research
in university medical schools, while NHS funds support the clinical
facilities needed to carry out these activities in hospitals and
other parts of the health service. Funding for students in health-related
subjects such a nursing and midwifery generally comes from the
NHS. The Training and Development Agency for Schools (TDA) provides
funding for education and training courses aimed at school teachers.
In particular, it funds initial teacher training courses and in-service
professional development.
15. Higher education institutions derive
revenue for their teaching activities through a combination of
grant and fees. Whether the cap on the higher fee that can be
charged to full-time undergraduates should be lifted will be for
Parliament to decide in 2009, in the light of the report from
the independent commission that will review the first three years
of operation of variable fees. The terms of reference for the
independent commission were published in January 2004.
16. In the decade since 1997, government
funding for the UK research base has risen from £1.3 billion
to £3.4 billion. Funding is provided under a dual support
system. HEFCE provides funding to support the research infrastructure.
The Research Councils provide funding for specific programmes
and projects. The Government has repeatedly affirmed its commitment
to this approach and continues to seek more effective and efficient
ways of recognising and rewarding research excellence through
both the funding councils and the research councils.
17. On 6 December 2006, following consultation,
the Government announced its intention to replace the RAE after
the 2008 exercise with less bureaucratic arrangements based to
an important extent on the use of research metrics. Broadly, this
will involve the use of a common basket of research income and
volume measures across all subjects. To this will be added, for
science, engineering, technology and medicine, a quality measure
derived by bibliometric analysis. For other subjects, the quality
measure will be provided by light-touch peer assessment. HEFCE
has been requested to design the detail of the new system, including
a bibliometric indicator and light-touch peer assessment arrangements,
in close collaboration with the university sector and to report
to the Secretary of State on progress by 30 September 2007. Parliament
will be informed of progress in the 2007 Pre-Budget Report. The
Government has made clear that these developments must not prejudice
the smooth running of the 2008 RAE, whose results will continue
to inform an element of HEIs' research funding until 2014-15.
CHALLENGES FOR
THE FUTURE
18. We have a strong and diverse system
of higher education. But while it is important to acknowledge
and celebrate this, we cannot be complacent, and there are a number
of key challenges that face higher education in years ahead. Specifically
we need to do more in:
— developing higher education that
can meet employers' specific skills needs, offering both the content
and structure (smaller unit etc) that are needed;
— continuing to reach out to groups
that are underrepresented in higher education;
— providing more flexibility in what
providers can offer to learners and ensuring that services are
fitted around the user, not around what is easiest for institutional
custom and practice;
— ensuring that higher education is
able to adapt to change elsewhere in society and in the education
system through use of ICT and e-learning;
— opening up progression through vocational
pathways;
— boosting the extent, quality and
prestige of knowledge transfer as a key component of higher education;
— shoring up UK higher education as
an supplier of choice in the global marketplace;
— bearing down on costs in higher education
through efficiencies so that public funders and private customers
can be sure of value for money;
— increasing the amount of money provided
by philanthropic donors in support of higher education; and
— removing supply side rigidities through
a more clearly defined role for further education colleges, and
more market entry for private providers.
These are discussed in turn below.
DEVELOPING HE THAT
CAN MEET
EMPLOYERS' SPECIFIC
SKILLS NEEDS
19. The recently published Leitch Review
of Skills has highlighted the need for the UK to improve its skills
profile if the nation is to maximise economic productivity to
2020 and achieve a truly world-class standing. Higher level skills
are a crucial ingredient in the overall mix. Of the eighteen million
jobs that will become available between 2004 and 2020, nine million
will be in occupations most likely to employ graduates. The Leitch
Report includes the following main recommendations in relation
to higher education:
— to exceed 40% of the adult population
qualified to Level 4 and above, by 2020;
— to widen the drive to improve the
UK's high skills to encompass the whole working age population,
changing targets for teaching away from away from the sole focus
on young people aged 18-30; and
— to deliver a portion of higher education
funding through a similar demand-led mechanism to Train to Gain
in England.
20. A significant expansion of higher education
above and beyond current targets will be required if we are to
deliver the requisite number of qualifications at higher levels
(ie, Level four and above).
21. Foundation degrees have an important
part to play in this strategy. Early figures suggest that their
numbers will have risen to more than 60,000 from their inception
five years ago and, if these are verified, this will have significantly
exceeded the Government's target of 50,000. This represents a
strong endorsement of the work based HE learning model by employers
and HE institutions. Our aim is for this growth to continue and
we would hope to exceed 100,000 by 2010-11. Foundation Degrees
are also proving popular with a diverse group of learners, and
contribute to our widening participation objective, as well to
higher skills.
22. But Foundation Degrees can only form
part of our armoury. Lord Leitch's report therefore rightly makes
clear the importance of higher education engaging with learners
who are already in employment, especially older learners. Some
1.8 million full-time workers aged between 25-50 are already qualified
to Level 3; higher education's potential target audience of adults
in the workplace is sizeable. Reaching this target group through
employers will require a business focused approach offering a
range of relevant, responsive and flexible courses, capable of
being delivered in or near the workplace. Consonant with Leitch's
recommendation of shared responsibilities, the cost of growing
this approach to meeting higher skills needs in the workplace
should be distributed fairly and effectively between employers,
learners and the taxpayer.
23. We are not starting from scratch. Employer
engagement activity is already widespread in different ways throughout
the sector (88% of HEls offer short bespoke courses for business
on campus; 80% offer similar courses on companies' premises; almost
90% provide a single point of contact for external partners to
approach). There are also some excellent examples of institutional
transformation within a group of HEIs that are keen to develop
radically new approaches to provision around employers' higher
level skills needs. We are keen to build on these existing examples,
and to disseminate good practice and encourage wider innovation
within the sector. It is entirely feasible that the "business
focused" university will become established as a new model
to complement the existing teaching and research-led institutions.
24. In order to establish and sustain such
a model, HEIs will need to consider how the range of "products"
they offer might be made relevant and adaptable to the evolving
needs of employers in different sectors. Extending the provision
of work-based, employer-led qualifications such as Foundation
Degrees, in collaboration with Sector Skills Councils, represents
one possible route for expansion. By further involving employers
with the design and delivery of HE-level courses, and making those
courses responsive to business needs, we hope that employers will
be persuaded of the value of investing in that provision, and
will be willing to contribute towards co-funded courses. Although
it is difficult to assess the amount of annual employer expenditure
on training that higher education could potentially capture, the
market has been estimated at some £5 billion, of which the
higher education sector currently secures no more than £300
million. But the challenge of creating a new model should not
be underestimated. We shall be developing the Government's response
to this challenge and the higher education focused recommendations
of the Leitch Report over the course of the Comprehensive Spending
Review period.
REACHING OUT
TO UNDERREPRESENTED
GROUPS
25. The Government is committed to widening
participation in higher education, and to promoting fair access.
Higher education offers significant benefits to individuals, yet
despite 50 years of growth these opportunities are still not available
equally to all. Reaching out to groups which have not traditionally
benefited from HE is also critical if we are to achieve our objectives
to upskill the workforce and maximise productivity.
26. Gradual progress has been made in broadening
the social mix of the student population, but progress has been
slow and there are signs that it may be starting to level off.
We are undertaking research on how best to measure progress in
widening participation, and will publish the results early in
2007.
27. The social class gap in participation
remains the biggest single issue, although we are increasingly
concerned about male participation. There are also issues about
the representation of disabled students and some minority ethnic
groups, and their patterns of participation across the sector.
28. Raising educational attainment is the
best long term way to widen participation. Around nine out of
ten students who achieve two A levels go on to higher education,
but only about a quarter of 18-19 year olds from low socio-economic
groups achieve this threshold, compared to just over 50% of those
from high socio-economic groups. We are making concerted improvements
throughout the education system, starting with the earliest years.
Our focus on literacy and numeracy, raising school standards,
the Academies programme, the personalisation agenda, Education
Maintenance Allowances, our reforms to the 14-19 phase of learning
and the new Level 3 entitlement for 19-25 year olds will all contribute.
The Department is also taking an in-depth look at what more we
can do to improve social mobility by narrowing the social class
attainment gaps.
29. Raising aspirations and promoting applications
are also important. The Aimhigher programme provides a range of
activities, reaching people of all ages but focusing mainly to
13-19-year-olds. Activities such as university visits and taster
days, summer schools, mentoring and masterclasses are designed
to raise pupils' aspirations and help them to see that higher
education is a realistic and achievable goal. Evidence shows that
Aimhigher is already starting to make a difference, increasing
aspirations to higher education by 3.9 percentage points in participating
schools in the first 18 months. Our booklet Widening Participation
in Higher Education (November 2006) sets out what is being
done already to widen participation and some further steps that
will be taken.
MORE FLEXIBILITY
FROM PROVIDERS
30. Today's higher education system is very
different from the one that many commentators experienced, with
the most striking example of flexible and student-oriented provision
being the Open University. Whereas in the past universities tended
to provide courses with the same basic structure, now increasingly
institutions recognise that there is a need to provide education
that fits around the student. This may mean an increasingly diverse
set of part-time options; distance learning; learning delivered
outside of the university's own buildings; evening and weekend
provision; courses starting at different times of the year, or
running through traditional holiday periods. It may mean learners
being able to complete courses more slowly or more quickly than
has been the case in the past. All such developments are to be
welcomed, and it is important to encourage a culture of flexibility
in the higher education system.
31. The 2003 White Paper called for "more
flexibility in course design, to meet the needs of a more diverse
student body" and committed Government to piloting fast track
degrees as a means of increasing flexibility in the supply of
higher education and so the personalisation of the student learning
experience. The University of Buckingham, a private higher education
institution, has been delivering accelerated undergraduate honours
degrees over two calendar years since the 1970s, albeit on a small
scale.
32. To find out more about how fast track
degrees and other approaches to flexible provision can best work,
HEFCE has provided financial support through its Strategic Development
Fund to a small number of institutions to run pathfinder projects
flexibility into course design. Some one hundred students are
now enrolled on these pathfinders, and more fast track courses
are planned for 2007-08.
33. Fast track degrees may well be suitable
for students who have a clear idea of what they want to achieve
academically at university and after graduation, and demand appears
to be strongest in subject areas linked to specific career paths:
notably law, accountancy and business. We will need to have a
close look at tuition fee regulations and institutional funding
mechanisms, learning from the HEFCE-funded pilots, to better understand
how ensure that those institutions which are most determined to
extend student choice are not penalised by the funding system.
Flexible Learning pathfinder courses are delivered within institution-wide
quality assurance mechanisms as assessed by the Quality Assurance
Agency through institutional audit. Three professional bodies
currently accredit fast track degrees: the Law Society (courses
at Staffordshire and Buckingham), ACCA and CIMA (both Buckingham).
ADAPTING TO
CHANGE
34. UK higher education and research has
benefited from its investment in ICT over many years and remains
globally at the forefront of the innovative use of technologies.
ICT and e-learning allow a personalised learning experience, providing
the student with means of adjusting the pace and intensity of
study, of overcoming physical disabilities, of enabling access
to a limitless array of learning resources. E-learning can bring
together of cutting edge technology with innovative pedagogy to
deliver creative new approaches to learning.
35. The ability of HEls to access an infrastructure
allowing the exchange of vast amounts of digital information,
securely, reliably and at low cost is fundamental to effective
e-learning. This is a core responsibility of the Joint Information
Services Committee (JISC). The SuperJANET5 network provides a
dedicated, constant network for universities, colleges and research
institutes. JISC has successfully delivered a first-class network
infrastructure, and with it measures that maximise the benefits
the network offers: supporting technical collaboration between
HEIs; national digital repositories; and a range of other services
to radically increase access to, and exchange of, digital information.
JISC is recognised as a world-leader in providing technological
solutions to academic problems. A recent study has concluded that
for every £1 of the JISC services budget, the education and
research community receives £9 of demonstrable value. For
each £1 spent by JISC on the provision of e-resources, the
return to the community in value of time saved in information
gathering, is at least in the order of £18 and for every
£1 JISC spent on e-resources the saving to the community
was at least £26.58.
36. The higher education element within
the DfES e-strategy Harnessing Technology: transforming learning
and children's services is overseen by HEFCE. The HEFCE
strategy for e-learning was published alongside the DfES strategy
in March 2005. The e-learning strategy for higher education sets
out a series of activities that help higher institutions develop
and embed e-learning over the ten year period to 2015. Naturally
the strategy must be subject to regular review as new technologies
develop, and student demand and aptitudes change. Consequently,
the Department looks to HEFCE, JISC and the Higher Education Academy
to ensure that strategies remain live documents, adapting to meet
the changing needs of academic and administrative staff and senior
management teams from every type of institution.
VOCATIONAL PATHWAYS
37. A Joint Progression Strategy (JPS) between
DfES, HEFCE and the Learning and Skills Council (LSC) aims to
develop flexible learning innovation and improve progression from
further education to higher education. One initiative is the development
of Lifelong Learning Networks (LLNs) which bring together higher
and further institutions across a city, area or region to offer
new progression routes into higher education. LLNs will be a key
driver for improving progression opportunities for learners on
vocational programmes, including those currently in employment,
putting them on the same footing as those following more traditional
academic pathways. They will do this through formal agreements
that they put in place to ensure progression; support for learners
within the participating institutions; and appropriate curriculum
adjustments. HEFCE has to date provided over £90 million
to support 27 LLNs, spanning 113 higher education institutions
and more than 260 further education colleges. Others are in the
pipeline.
38. The new Specialised Diplomas being developed
as part of the 14-19 reforms are a mix of practical and theoretical
learning and will appeal to students preparing to enter the workforce
at 18 and to those planning to continue their studies in higher
education. Potentially significant numbers of students could be
applying to higher education with this new qualification in the
future, which has implications for higher education curricula
and prospectuses. It is vital that the development of the Diplomas
involves the higher education sector and that their purpose and
content are communicated widely across the sector. DfES has established
a higher education engagement board with representation from across
the sector. A series of five regional events is planned in December,
January and February to raise awareness of the 14-19 reforms and
to discuss issues of relevance to higher education; and higher
education representatives will continue to participate in the
Sector Skills Councils-led Diploma Development Partnerships. We
anticipate a significant role for the LLNs in developing and promoting
progression routes for Diploma students, within their wider remit
to develop local progression opportunities.
KNOWLEDGE TRANSFER
39. The DfES, the DTI and HM Treasury are
continuing to work closely with other partners to help HEls to
maximise their economic impact. The total value of the sector's
knowledge transfer activities in 2003-04, the latest year for
which figures are available, was around £2 billion, around
£1 billion of which was delivered through contract and collaborative
research for business and industry.
40. The 2006 Higher Education Business and
Community Interaction Survey showed that, between 2000-01 and
2003-04, universities' consultancy income rose by 88% in real
terms, while collaborative research income rose by 21% in real
terms. Over the same period, there was a 198% increase in the
number of licenses and options granted to universities.
41. Supported by over £100 million
a year of government funding provided through the Higher Education
Innovation Fund (HEIF), 90% of UK universities have established
a dedicated enquiry point for small businesses, compared with
83% in 2000-01. Over the same period, the proportion of universities
offering distance learning provision for business has also risen,
from 52% to 66%.
42. In December 2006, HEFCE announced that
it would be allocating an additional £60 million of funding
in 2007-08 to support user-led research in English universities.
This step is part of the transition to the new research assessment
and funding arrangements described in paragraph 19 above, which
are designed to give greater recognition to excellence in user-led
research than has been possible through successive RAEs.
UK HIGHER EDUCATION
IN THE
INTERNATIONAL MARKETPLACE
43. International students in higher education
generate £3 billion annually for the UK economy including
over £1 billion in fees for HEIs. They contribute in many
less tangible ways too. In 1999 the Prime Minister launched a
five-year initiative to recruit more international students to
the UK. It produced major marketing campaigns under a new Education
UK brand, helped to streamline entry clearance procedures, improved
the work rules for international students and increased the number
of Chevening scholarships available to support the brightest and
the best students from around the world. The initiative was very
successful, achieving an extra 93,000 students in HEIs in 2004-05
against the target of an extra 50,000. But since the launch of
the first phase, the global market for international education
has become more competitive. In spite of the overall increase
in international student numbers we have seen our market share
decline from 12% in 2000 to 11% in 2004. These factors were taken
into account in deciding on the direction of phase two of the
initiative, which was launched on 18 April 2006.
44. The principal objectives of phase two
of the Prime Minister's Initiative (PMI2) are to secure the UK's
position as a leader in international education and sustain the
managed growth of UK international education delivered both in
the UK and overseas. Student recruitment remains an important
element, with a target of an additional 100,000 non-EU students
in the UK by 2011. However, the UK's ability to continue to attract
international students will increasingly depend on the quality
and value of our education and the strength of the partnerships
we build. The new strategy involves the promotion of UK education
delivered overseas, and encourages and supports more of our universities
and colleges in engaging in collaborative partnerships with their
counterparts overseas. We are working with governments, education
providers and industry to build bi-lateral co-operation and partnerships.
We are developing a range of initiatives to support and drive
these forward, for instance international networking forums, inward
and outward visits, academic and student exchanges. A vital part
of the initiative is to improve the UK education experience of
international students by identifying and sharing best practice
in order to support their particular needs, from the application
and visa processes through to the end of their studies.
The majority of the UK's current international
activities focus on a small number of countries. Under PMI2 the
number of "priority countries"" with which UK education
engages is being widened to reduce dependence on a small number
of countries that send high numbers of students to the UK.
MORE EFFICIENT
DELIVERY
45. The higher education sector has actively
engaged with the efficiency and value for money agendas. Throughout
the current spending review period up to and including 2007-08,
we expect the sector to achieve some £280 million worth of
efficiency savings through activities such as improved procurement
practices, better use of ICT, reduced bureaucracy, improved management
of assets and savings arising from the implementation of new student
finance systems.
46. For 2005-06 we have so far `verified
achievement of savings of £136 million; and we expect to
be able to confirm achievement of the target figure of £196
million once the final data has been received from statistical
returns made by the sector towards the beginning of 2007.
47. We continue to seek out further efficiencies
within the sector and our Non-Departmental Public Bodies by stressing
the importance of these activities in Ministerial statements of
requirement. One area where we intend to pay particular attention
in the near future is that of the provision of shared services
with the HE sector. We will be undertaking this in conjunction
with the Centre for Procurement Performance and HEFCE.
VOLUNTARY GIVING
48. The Voluntary Giving Task Force was
commissioned in July 2003 by the Department with a remit to advise
the Government on how to promote increased giving to higher education.
The task force was chaired by Professor Eric Thomas, Vice-Chancellor,
University of Bristol. The report of the task force was published
in May 2004.
49. The Department welcomed the report and,
in response to its recommendations, announced in December 2004
that it would be making available £7.5 million over three
years for a matched-funding scheme in England to build the capacity
of institutions without a history of fund-raising. Universities
UK (UUK) was invited to make proposals for the administration
of the scheme. Universities and other higher education providers
were invited to submit proposals for inclusion in the pilot. 78
proposals were
submitted, with the successful 27 selected by a UUK
Panel. The income raised through donations provides the sector
with an additional source of income on top of the resources we
are already making available through variable fees.
REMOVING SUPPLY
SIDE RIGIDITIES
50. The White Paper on further education
published in March 2006 set out an important role for some further
education colleges as providers of higher education. Further education
colleges are often well placed to deliver skills-focused higher
education, consistently with the overall skills-based mission
that the Government has ascribed to the further education sector.
Further education colleges often have well developed links with
local employers which allow them to design specific programmes
to meet local labour market needs, and this is no less important
for higher level skills than for lower level ones. Colleges can
offer community based provision, and provide clear progression
routes into higher education for students. These characteristics
are by no means unique to further education colleges—many
higher education institutions can also lay claim to them—but
unquestionably they show that further education colleges can play
an important role in the fields both of employer engagement in
higher education, and widening participation.
51. There is no one single model of successful
higher education provision in further education colleges. Some
of the larger colleges take funding directly from the HEFCE: others
provide under a franchise arrangement with a local higher education
institution; and there are a number of examples of collaborative
networks which we would want to see develop. The Further Education
Bill currently before Parliament would provide a freedom for larger
colleges with strong experience in higher education provision
to obtain powers to award their own Foundation Degrees. This will
make it easier to bring to market innovative courses designed
in partnership with business. We have made clear the importance
of working with providers in both sectors to ensure that the quality
assurance arrangements underpinning this change are effective:
it is essential that students studying in one class of institution
do not experience a lower quality of provision than those studying
elsewhere.
52. Reforms to the system of degree awarding
powers in 2004 made it possible for private providers to be accredited
to award their own degrees, and in May 2006 following rigorous
scrutiny by the Quality Assurance Agency the College of Law succeeded
in taking up this new opportunity. The ability for new providers
of higher education to emerge in this way opens the possibility
of innovative approaches to provision and to engaging with employers,
and has potential to increase the capacity of the higher education
sector.
CONCLUSION
53. It is often asserted that our higher
education system is a success story. This note has pulled together
some of the reasons why that assertion is correct. There is much
to be proud of and to celebrate. But we make no apologies for
having focused also on the challenges ahead for higher education.
We cannot stand still. We look forward to discussing these issues
with the Committee.
January 2007
1 OECD, Education at a glance, 2005. Back
2
Ibid. Back
3
Analysis of vacancies in Graduate Prospects in the year
to April 2005. Back
4
Internal DfES analysis of the Labour Force Survey. Back
5
Internal DfES analysis. Back
6
National Employer Skills Survey, 2005. Back
7
Forthcoming DfES report on employer and university engagement
in using graduate level skills. Back
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