Examination of Witnesses (Questions 1
MONDAY 29 JANUARY 2007
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
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
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
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
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
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.
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.
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