Select Committee on Education and Skills Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)



  Q1  Chairman: Professor Eastwood, it is nice to see you again. You were helping us with our inquiry when we were looking at the Research Assessment Exercise and the proposals to change that, but this is really the beginning of a major inquiry into higher education. I think you have seen the terms of reference, and you know as well as we do that this is coming up to the tenth anniversary of Lord Dearing's report on higher and further education. If you recall, he wanted at that time to see an independent inquiry into progress after 10 years. I do not know if the Department is going to grant that; I have not heard any rumblings from the Department. Perhaps we can ask the Minister for Higher Education when he is in front of this Committee on Wednesday. Meanwhile, the Select Committee will be looking, root and branch, at the higher education sector, which is a changing one, as you and I have agreed on a previous occasion. Professor Eastwood, is there anything you would like to say to kick us off or would you like to go straight into questions?

  Professor Eastwood: I am perfectly happy, Chairman, to go straight into questions.

  Q2  Chairman: Can I start by trying to embarrass you a little: what on earth is going on where the Russell Group has appointed a Director General to head up their organisation with quite a staff, I understand. Are we seeing a realignment in UK higher education?

  Professor Eastwood: The inner workings of the Russell Group are something I am not privy to, and you will no doubt want to speak with them in due course. What we are seeing right across the sector is a number of so-called mission groups which are taking their own roles increasingly seriously, and it probably represents two things. One is that within the sector there is ever greater seriousness about the challenges that we face, not just nationally but internationally, and seeking to equip groups of universities to meet those. Secondly, it would be true to say that within the sector there is increasing differentiation of institutional mission and the way in which some of the so-called mission groups are developing I think reflects that.

  Q3  Chairman: If you were going to go back, as we have been doing in preparation for this meeting, to Dearing and look at his aims and purposes in higher education, would you change those today? It is 10 years on, a lot has happened; would you change the kind of vision that Dearing had of the sector?

  Professor Eastwood: I was looking at Dearing again over the last two or three days and my impression is that Dearing has worn rather well over a period of 10 years and some of the central statements and aims are ones that not just the Funding Council but many in higher education would continue to endorse, and to endorse wholeheartedly. A number of the directions of travel that Dearing charted I think are directions that the sector has moved down, some more rapidly than others but, nevertheless, looking back on Dearing, much of what Dearing recommended was timely and appropriate and has helped to shape the sector over the last decade.

  Q4  Chairman: We have a tradition in this country of probably having the most devolved, autonomous universities, certainly in Europe, and now work on Bologna has reaffirmed our belief that that is the case, that they are autonomous institutions in many ways, apart from their funding, which, again, is through you and your organisation, much of it. In terms of that ten-year span, do you think central government is trying to change its attitude? Is it getting impatient? Is it trying to push higher education, these autonomous universities, irritating as they sometimes may be because of their autonomy? Is the Government shaping up to be a bit tougher, getting its own way with the higher education sector, would you say?

  Professor Eastwood: Looking back to Dearing, Dearing was very clear that higher education would be pivotal to the kind of knowledge societies which were being built, it would be pivotal to the way in which the British economy would develop in the 21st century. If anything, over the last 10 years the importance of higher education has been further accentuated and the Government is well aware of that and of the absolutely central role that higher education plays, not just economically but socially. I think that has made the Government ever more keen to ensure that British higher education remains strong, remains globally competitive and remains in many ways second only to the US in terms of its success.

  Q5  Chairman: Just recently, out of the blue, we have had the Chancellor's decision to look again at the way we fund research, with what a lot of people thought was not a great deal of consultation. Putting that to one side, we had a recent debate on the Further Education Bill in the House of Lords, and a number of chancellors and vice-chancellors were jumping up and down, very angry about the clause in the Bill, clause 19, which will give the FE sector colleges the ability to award degrees. There is a lack of consultation, a surprising lack of consultation, is there not?

  Professor Eastwood: If we separate the two things out and take first the Chancellor's announcement in the Budget last year about research, that was in the context of the Government's ten-year framework for investment in research and it was also, as I said on a previous occasion in this Committee, in the context of a commitment on the part of not just the English Funding Council but all the funding councils to review the RAE before 2008. It was certainly consonant with the direction in which the sector was travelling. If we look at the FE Bill, clearly, it is trying to do a number of things as far as FE pure and simple is concerned but also there is a joint commitment on the part of Government, of us as a funder and of institutions both in further and higher education to make the foundation degree work, and I think that is a shared objective. The clause to which you refer is cast in the context of trying to ensure that foundation degrees continue to grow but remain robust.

  Q6  Chairman: It would be unthinkable in terms of competition policy to introduce a major piece of legislation, or even a significant piece of legislation, without consulting the CBI. You can see that Universities UK and other people in the sector are a bit cross that they were not consulted as much as they think they should have been, or consulted at all. Would you have sympathy with that view?

  Professor Eastwood: Certainly, to my knowledge, a range of bodies have now been consulted, including ourselves.

  Q7  Chairman: If you remember, it was a bolt from the blue; everyone said that until the Bill was printed they did not know that that right to confer degrees was in the Bill.

  Professor Eastwood: Some were certainly in that position, yes.

  Q8  Chairman: In that 10 years what are the biggest landmarks? What have been the biggest changes?

  Professor Eastwood: As far as funding is concerned, two major changes have been the commitment post 2000 to increase investment in the research base, now codified in the ten-year framework, and also, through particularly the 2003 White Paper and the 2004 Act, a transformation in the way in which teaching is being and will be funded in English universities and that, coupled with the decisions in the late Nineties, has reversed what had then been a 15-20 year diminution in the investment in teaching. So the story in terms of the investment both in teaching and research post-Dearing has been a strong one and one that Dearing, I am sure, would endorse, but no doubt you may be speaking to him in due course. In a number of ways we have continued to grow the sector, perhaps grow the sector more quickly than the Dearing Report had anticipated, and that growth has been consonant with the maintenance of quality and an increasing commitment to widening participation. So I would cite investment in higher education, I would cite further growth and I would cite significant progress in a widening social base of higher education.

  Q9  Chairman: What about the balance of who should pay for higher education? That was really at the heart of the report as well, was it not?

  Professor Eastwood: It was, and I think we are in the middle of an interesting experiment in terms of higher education funding as we move into the post-2006 environment. I think there is a consensus that those who benefit from higher education should pay for it. The benefits are to the individual, the benefits are social and the benefits are economic, so a triangulation between contributions from the individual, from the public through taxation and from employers seems to me to be right and I think that is now commonly accepted. 2006 represents a particular balance between those three sources of funding and so far the evidence is that the move towards a new funding regime has been largely stable and largely successful.

  Q10  Chairman: Successful in terms of protecting those more vulnerable individuals who come from poorer homes? Do you think they have been protected during that process?

  Professor Eastwood: As we moved towards 2006 there were two areas of considerable anxiety; one is the one to which you have just referred and the other is whether or not particular institutions would find themselves vulnerable in the new market. It is too early to give authoritative data on what is happening around social inclusion and those will be published in June/July of this year but the early data do suggest that the story might actually be quite encouraging, that is to say, a move towards the reintroduction of grants supplemented by bursaries may well have been rather positive in terms of social inclusion. Certainly, it does not look as if the impact has been negative. Secondly, we at HEFCE have monitored carefully the impact at institutional level and there is no institution which is in crisis as a result of the move towards the new fee regime. Indeed, the sector has managed this transition with considerable maturity.

  Q11  Chairman: What do you think is going to happen with variable fees?

  Professor Eastwood: The formal answer, of course, is that there is going to be a review in 2009 and that will inform any decisions made by Parliament subsequently.

  Q12  Chairman: Is that timely or is it too early for a proper assessment?

  Professor Eastwood: I think it is timely. It will be at the point where we will have had three years of experience of the new funding regime and the sector will have the full benefit of the additional funding flowing from fees, and by then we will have gathered significant data on the impact of the new funding regime on students, on the institutions and on key indicators such as widening participation and social inclusion. So I think there will be a sensible evidence base from which that review can evaluate the new regime and make whatever recommendations it chooses for the next decade.

  Q13  Chairman: So if the evaluation is right, if people from socially deprived backgrounds have not been deterred, inclusion has increased, you would see the cap being lifted?

  Professor Eastwood: I do not think one should immediately jump to that conclusion, because it may be that all of those things hold, but the present fee regime would not hold if the cap was raised or removed. I think there remains a question going forward, looking to the next decade, around the extent to which new attempts to draw employers into funding higher education will have started to succeed and that will be a new element. That is an area of considerable uncertainty at the moment.

  Q14  Chairman: Because employers have not contributed much in the last 10 years ?

  Professor Eastwood: It depends how you evaluate employer contributions. My view is that employers do contribute substantially by paying a salary premium to graduates, and that is a market response, and the extent to which students are carrying debt may well influence graduate starting salaries and the way in which employers contribute through paying that graduate premium but we are working with the Department, as I am sure the Committee knows, around exploring the possibility of employer co-funding of particular students and particular programmes. I think that raises some exciting and very interesting opportunities and that will be a new element in the funding mix which clearly was not there in 2004, when the Bill was being debated.

  Q15  Chairman: I do not quite follow you in terms of the employer contribution. I would have expected when I read Dearing 10 years ago that that would have flowed through to a more positive contribution from employers actually into the institutions themselves.

  Professor Eastwood: I was referring narrowly to payments for individual students. Clearly, if we are looking more widely at the question of employer engagement, then since Dearing employer engagement by the sector has expanded enormously. One can see that in terms of spin-out, one can see that in terms of the business investment in universities, and one can see that in terms of the whole stream of activity that we brand third stream. I was referring particularly to the way in which the costs of undergraduate education are met, and there I think we are seeing employers contributing through the way in which they reward graduates on the one hand, but we should expect to see an increased direct contribution through the kind of co-funding initiatives I was referring to a moment ago.

  Q16  Chairman: If you look at the pie chart you supplied, it gives sources of finance for universities and colleges 2004-2005. We can clearly see public finance, 38% and so on, but where does the business contribution come in that pie chart?

  Professor Eastwood: Chairman, I do not have it in front of me but if you could refresh my memory, I will happily speak about it.

  Q17  Chairman: We will get a copy of it to you. When the big debate on variable fees took place, Professor Eastwood, do you remember Ministers made claims that it was such a good thing to invest in higher education because the lifetime earnings of a graduate were so much greater? The sums that were bandied around were in the region of £400,000. Have they stood up over time?

  Professor Eastwood: That is a difficult question to answer authoritatively. There is certainly a considerable premium over a lifetime. The figure which is widely cited now is of the order of £150,000.

  Q18  Chairman: Ministers used £400,000 at one stage, did they not?

  Professor Eastwood: A number of figures were used, yes.

  Q19  Chairman: Where can we get the most authoritative source for that?

  Professor Eastwood: We will draw drop you a line to that effect.[45]

  Chairman: Excellent. It would be very nice if someone could find out who gave us the £400,000 figure originally. We will move on and dig a little more deeply into the aims and purposes of higher education.

45   Ev 35. Back

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