UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 114-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

INNOVATION, UNIVERSITIES AND SKILLS COMMITTEE

 

 

HIGHER EDUCATION ISSUES

 

 

Wednesday 28 November 2007

BILL RAMMELL MP and PROFESSOR DAVID EASTWOOD

Evidence heard in Public Questions 1 - 94

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Innovation, Universities and Skills Committee

on Wednesday 28 November 2007

Members present

Mr Phil Willis, in the Chair

Dr Roberta Blackman-Woods

Mr Ian Cawsey

Dr Ian Gibson

Dr Evan Harris

Dr Brian Iddon

Mr Gordon Marsden

Ian Stewart

Graham Stringer

Dr Desmond Turner

________________

Witnesses: Bill Rammell MP, Minister of State, Lifelong Learning, Further and Higher Education, Department for Innovation, Universities and Skills; and Professor David Eastwood, Chief Executive, Higher Education Funding Council for England (HEFCE), gave evidence.

Q1 Chairman: If I could say good morning to the Minister for Higher Education, Bill Rammell, and the Chief Executive for the Higher Education Funding Council for England, Professor David Eastwood. Welcome to you both and thank you for coming at relatively short notice. The Committee at this stage is a newly formed Committee and we are trying to get to know the major players within the new department of DIUS. I wonder if I could start with you, Minister, and just ask you first of all what difference will the creation of DIUS actually make to higher education in England? What will be different?

Bill Rammell: I think importantly for the first time we will have a powerful voice at the Cabinet table. I have spent two years handling this job of further and higher education in the former DfES. That was a very large department and although higher education punched its weight, clearly we were part of a much larger entity, particularly given the importance of schools where schools in a sense were pre-eminent. Actually having a department that brings together science, innovation, technology and further and higher education gives us a very powerful impetus. It is about recognising in terms of the future competitiveness of this country that innovation is going to be key. We therefore need a world-class research and science base and we need very, very positively to be pursuing a skills strategy at all levels and bringing those things together in one department, and I think having a voice at the Cabinet table gives us the maximum opportunity.

Q2 Chairman: But crucial to a successful higher education system is a sustainable higher education system in the 21st century, given the demands that you have clearly outlined. I am just trying to get a feel for what is your vision for that sector? What is your vision for a sustainable higher education sector in the 21st century?

Bill Rammell: I think we need to continue with the significant progress that we have made in improving the quality and the performance of our research activities within the higher education sector. I think that has been backed up very strongly by the very significant increase in funding that has been given both through the research councils and through my Department. I think we need to continue to widen and increase participation in higher education. I have often argued that that is not just a social imperative - and I do not apologise for talking about it in social terms - but it is also fundamentally an economic imperative. If we are to compete with the major economies and the newly emerging developing economies, we have got to get many more people educated to the highest levels. I think we need a much stronger focus on the needs of business in terms of continuing professional development, in terms of developing the kind of programmes that will help businesses to take their employees to the highest levels. If you look at Sandy Leitch's analysis, he was saying of the working age population we need to move from some 29 per cent today to 40 per cent and, arguably, we need to go beyond that if we are to be competitive. I think it is about the research base, it is about ensuring that we use that research and we actually apply it. If you look at it historically, we have always been good at research but we have not always applied it in the most effective way. We need to increase and widen participation and we need that high-level skills dimension.

Q3 Chairman: You have got an issue, which we have come to before and I am pretty sure the former Education Committee came to before, which is who drives that agenda? Is it the Government that drives it - and remember these are autonomous institutions - or is it HEFCE that drives it? Perhaps each of you could respond to that. Who is going to drive this agenda?

Bill Rammell: David will no doubt want to comment. There is in a sense a separation of powers, and that has got some advantages, between the Government and the Higher Education Funding Council and the institutions, and when I look at the model that exists for higher education elsewhere within the European Union, I am much more attracted to our model. I think actually having strong, independent institutions that can analyse their strengths and weaknesses and develop their operations according to that actually gives us some significant advantages. If you micro manage from a government department I do not think you actually get the best outcomes and all forms of international comparisons demonstrate that that model does give us some real impetus. That does not absolve Government from taking a very strong lead in setting out the framework of the way that we want to go forward. (i) that means we need to secure the funding base (and I would say that, would I not) and I think what we have achieved over the last ten years has been very significant, but (ii) we need to set out the policy framework and policy direction, and we do that very strongly and we then ask HEFCE to implement that on our behalf.

Q4 Chairman: Just before you respond, David, we have come across this issue before, the Government has got for instance a very, very strong innovation, science, technology and STEM agenda, and yet HEFCE in the past has been pretty powerless to actually influence that agenda. Do you feel there is a change in implementing this new vision the Minister has outlined or are you still a toothless tiger?

Professor Eastwood: We are certainly not a toothless tiger. I think the vision that the Minister outlined a moment ago for the sector of a very strong research base with high-quality teaching with a commitment to widening participating and a willingness to step up to the skills agenda is widely shared within the sector. We have a diverse sector. We have institutions which, as you say Chairman, are autonomous but which have distinct and complementary strands. There is not a division between the Government, the Funding Council and the sector around that wide vision. At any point in the higher education agenda there will always be challenges and I think you are right that two years ago there was a challenge and that was around STEM. I think since then, on a number of fronts, through the work we have done in HEFCE, through the work done in schools, we have seen a transformation of that position so that applications for all the STEM disciplines are now up. I think there is a new excitement both in schools and in universities around STEM disciplines and I think what that demonstrates when we identify an important but complex issue is the importance of partnership. Actually in this landscape no one agency and no one government department of itself would have the capacity to turn that around. Identifying the priority and putting together, as it were, a package of interventions does I think offer us a way forward.

Q5 Chairman: You said in your statement that HEFCE has a role and I quote here "to develop and implement higher education policy based on research and consultation". Where does the division lie between HEFCE and the Government as far as that agenda is concerned?

Professor Eastwood: I think we are very clear that the Government establishes the broad policy parameters and it does that in a variety of ways. It does it through White Papers, it does it through legislative interventions, and of course it does it annually in the grant letter that we receive in January. That rarely comes as a surprise because we have good working relationships both at ministerial level and with officials. That establishes the broad framework. I think we understand that, I think the sector understands that, but also I think the Government understands the importance of both refining policy through consultation and the importance of, wherever we can achieve it, achieving a high degree of consensus, particularly where there are areas of high challenge.

Q6 Chairman: Minister, DIUS now brings together two major funding streams into higher education which come under your direct remit - HEFCE within the dual support system and then the research council funding as well. Why do we need two organisations? Why not streamline that and use the resources within the sector?

Bill Rammell: Because I think it does bring a quality and a plurality of funding. I know international rankings are not everything but I think that system has brought us a very powerful research base. Through our Department, the on-going capacity-building, looking at how you undertake blue-skies thinking, doing that on a retrospective basis, up until now through the Research Assessment Exercise, and getting that on-going mainstream funding is important, but then I think having the project-based funding for particular purposes through the research councils does bring real benefits. One should not always just take what universities say but if we through the creation of a new Department had said that we are not going to have dual funding any more, I think we would have had a real problem on our hands of taking the sector with us, and I think on that account they would have been right.

Q7 Chairman: So, David, you do not see the prospect of a Higher Education Funding and Research Council?

Professor Eastwood: What is interesting about the dual support debate is the system over the last generation has been palpably successful. It does underwrite what on most international comparators is the second strongest research base in the world, and I think there is something curiously English about agonising over something that is successful.

Q8 Chairman: So the dual funding system is here to stay?

Bill Rammell: Yes.

Professor Eastwood: I think the dual funding system as a system has demonstrated that it is fit for purpose. If you talk to me about QR and Research Assessment or if you were to talk to Sir Keith O'Nions about the way in which the mission of the research councils is constantly being refined, then within dual support there is constant improvement and some element of repositioning but I think the broad architecture is right, yes.

Bill Rammell: Can I add one thing to that. For the first time having the two strands in global policy terms together within one department so we can see clearly the crossover and we can make sure that we are maximising the output I think does give us a new strategic advantage.

Professor Eastwood: If I could just gloss what the Minister has said. If you look in a couple of areas, if you look at the Higher Education Innovation Fund, which the research councils and HEFCE co-fund, and if you look at the way in which we are now funding capital investment in the research base (again a partnership between the research councils and the funding councils) what we see is within this overarching structure of the new Department those two sides of the dual support system complementing one another very effectively.

Chairman: Okay, thank you very much indeed. Ian Gibson?

Dr Gibson: I wanted to raise the issue of equivalent or lower qualification (ELQ) students which has the Vice Chancellor of Buckingham smiling all over the Guardian yesterday welcoming this new initiative/innovation. I will read very quickly from one of the many letters which I am sure you have had too, where a university teaching school says that they provide courses for transport and general workers, shop stewards, safety reps, learner reps and others from within their constituency and they go on at King's Lynn, Peterborough and other places too. It goes on to say that the Government is speaking in a very strange way because it talks about fairness, and this is their second degree, their second chance in life and we encourage that, and decisions are being made which are going to not help the widening participation which we want from this lifelong learning, developing new skills in a world where we agree that people can change jobs and change their interests at different stages of life. It is a remarkable decision to take people away from people and discourage the whole process which we are about. Many people may give up and may not go to university second time around. You would not really want to discourage that.

Q9 Chairman: Would you?

Bill Rammell: You are talking about people who have already got an under-graduate qualification and want to take their second one?

Q10 Dr Gibson: Yes, like some of us have. Some of us have two or three degrees.

Bill Rammell: Sure, absolutely. Let me firstly make it clear that we are not cutting funding to higher education. If you look at what has happened to funding performance we have increased funding by 23 per cent in real terms over the last ten years. We are shortly announcing the next CSR allocation and that will be further improvement. That is a very significant step forward. What we are saying is that over three years we want to redistribute and redirect £100 million from people who already have an under-graduate qualification to those who are not even at the first base of getting their first degree. I have to say that I believe strongly that is the right priority. I need to be clear on this. This is not a change where John Denham and I have been dragged kicking and screaming by officials (not that we are ever dragged kicking and screaming by officials!); we believe strongly that if you look at the higher skills needs analysis within this country, the fact that if we are to be competitive we need to get beyond 40 per cent of the working age population to first degree level, then this is the right priority. However, this is not a sudden change that we are bringing in overnight. We are currently consulting through HEFCE. There is going to be a three-year phrased transition. In the first year this change will only amount to 0.2 per cent of the overall higher education budget. To look at some of the letters that I am receiving and some of the articles that were written, you would think that there is a massive change taking place. It is 0.2 per cent of the budget in the first year. Even at the end of three years no higher education institution will lose in cash terms.

Q11 Chairman: Including the Open University?

Bill Rammell: Yes and we have made that explicitly clear. There is a whole series of strategically important subjects that will be exempted. Foundation degrees will be exempted. This is by no means the whole of the amount of money that we are spending on second degree provision. It is £100 million out of £350 million at the moment. All the anguish I am hearing has failed to factor in that, okay, if you see a reduction in your allocation for second degrees, what about the increased opportunities, particularly working on a co-finance basis with employers, to actually upskill people to their first degree level qualification? If there is one thing that I do think is important - and HEFCE are currently conducting the consultation which will finish on 7 December - it is that we do need to work with institutions to help them to get from A to B, from where they are today where a number of them are catering for people who are undertaking their second degree to where they can reoriente the organisation to actually target those people who are not even at first base. The final point I would make on this is that you can argue that we are wrong but if you do that you actually have to acknowledge the consequence, and that is that even with the increased funding budget that we are going to be putting forward there would after three years be 20,000 less people getting their first degree than would otherwise be the case. Faced with that choice and given the needs of those people, given their requirements and given the requirements to upskill within our economy, I think it is, rightly, the highest priority.

Q12 Dr Gibson: Thank you. We could argue about how you get to the number 20,000 and all the evidence you have got for all these other things happening, but what I really want to ask is: why are you doing it now when there is going to be a Research Assessment Exercise coming up, when there is going to be a peer review, allegedly, in 2009 when we are going to be looking at the whole system and how we might get money distributed around it and the priorities and so on. Why pick on this group of people to begin with? What is the gain?

Bill Rammell: If you look at our need to up-skill I do not think you can afford to hang about. If you look at the evidence ---

Q13 Dr Gibson: --- One year?

Bill Rammell: Hold on. We are actually behind the game in terms of our competitors in terms of the proportion of both under 30-year-olds and also of working age population who are educated to degree level. We collectively will pay a price economically, quite apart from the social equation, unless we address that issue. I do not think we can afford to stand still. I certainly do not think we can afford to wait for the 2009 Commission which may then lead to changes at a later stage. I reiterate my point, if this was a dramatic, large-scale change where overnight institutions were going to have significant reductions to their budget, then I could understand the concern. That is not what we are putting forward. It is a small but important change and in part it is about culture change. It is saying to university institutions look at the needs of those people within the workforce because they are actually a real priority for us.

Q14 Dr Gibson: You can also argue because it is a small change that it does not really matter in the big game that is going to be played in the next year in terms of university funding. Why make a big issue of it and annoy a lot of people and demoralise them? Why not wait the year because you are only going to start this in 2008 and 2009 is when the big debate finally hits?

Bill Rammell: I will tell you this: I have been doing this job for two and a half years and I have the highest regard for our university institutions, but I know that collectively and individually they are very assiduous in asserting their self-interest and their self-interest is not always synonymous with the collective national economic interest. They do tremendous work but I think the Government does have a right and responsibility to look at the funding levers and to try and move over time the system in the right direction. This is not a dramatic change. David will no doubt want to comment. Through the discussions that take place, certainly the discussions I am having with vice-chancellors, whilst I would not say that everybody is delirious about this change, I think people recognise and understand the underlying importance and actually are prepared to work with us on this.

Chairman: Just before I bring you in, David, I want to bring my two colleagues in here.

Q15 Mr Marsden: Bill, I hope no-one here, and I certainly would not, doubts your commitment in the Department to widening participation in any shape or form, and that has been shown abundantly by the announcements that have been made since the formation of the new Department. However, at the risk of rattling off clichés there are maxims that you should perhaps be aware of. One is the law of unintended consequences and the other one is that "the devil in the detail" so I want to pursue some detail with you. You talk, quite rightly, about competitiveness and upskilling but there is surely also the issue of reskilling and that is an issue which many organisations - NIUS and various others - have raised with considerable concern in regard to the sort of time gap that might elapse between someone who had done a first degree and wants to come back and do an ERQ subsequently. If you take, for example, a woman who is perhaps in her late 40s who did a university degree 20-odd years ago which is now totally obsolete and not fit for purpose for her coming back into the workforce, and you will have that woman coming back into the workforce under your proposals as I understand them (and I accept there are exemptions), that person would not be eligible for funding. If you have a situation like that, not only are you disadvantaging a particular potential part of the workforce but you are also having a situation where adults are going to be locked out of in many cases the potential to retrain because we are talking about people who do not necessarily have current employment who are coming back into a potential employment situation, perhaps having reared children for ten or 15 years or done other things, not just children, they could have had carer responsibilities. Could I ask you whether the Department and whether the HEFCE review will look sympathetically at some form of end by/expiry date by which time you will then consider people for refunding for ELQs?

Bill Rammell: I understand the point that you are making but what I would say is in the midst of consultation which I have asked the Higher Education Funding Council to undertake, where there are detailed conversations taking place between the sector and David, I am not going to pre-empt the announcement of the outcome of that consultation. We did not say this is going to happen overnight. We did not say this is it; take it or leave it. We did say we want to talk to people about phasing and about exemptions in detail. That is the process that is taking place at the moment. That finishes on 7 December and I think it is important that continues. I think David may well want to comment on that. However, I do think there is a point of principle. I understand the concerns but however much money you put into the budget - and I bow to nobody in terms of what this Government has done to increase the higher education budget - there are choices that have to be made. I hear that example but there are also examples - millions of them - of people who are only educated to level three and they are a priority as well.

Q16 Mr Marsden: I would not disagree with that at all but I press you on the point that part of the Government strategy and part of the strategy of Leitch, as you well know, with the demographic gap, is to put an emphasis on reskilling as well as upskilling. Do you see the argument being advanced by many people that if you do not get this right, particularly if you do not get the sequencing and time-frame of phasing out right, you will inadvertently do very serious and severe damage to the reskilling project as well as to the upskilling project?

Professor Eastwood: If you take that particular learner there is a range of options. You are right of course to say that there is an option which is closed. I do not think anything the Minister has said or anything our consultation has said would try to occlude that, but if that learner wanted to come back and reskill through a foundation degree - and by 2010 there will be 100,000 degree numbers out there - that route is open, that route is funded. You are quite right to say that the learner might not yet be in employment, but if an employer was co-funding then there would be HEFCE funding flowing. If they wanted to reskill in an area of a strategic and vulnerable subject, public funding would flow and, quite importantly, we are through the consultation proposing to increase the part-time premium because a lot of those learners would seek a route back in through part-time learning and we are seeking to enhance our support for that. Also for learners who wish to return and to take a higher level qualification, again that is unaffected by the proposal. So there is a range of routes back in, there is a range of routes to reskilling, there is a range of Leitch-compliance options which are all open and which are all publicly funded. The Minister is quite right to say that we are coming to the end of the consultation. We will review the outcomes after the 7th and then some final decisions will have to be determined.

Q17 Mr Marsden: Can I make a final brief point then; so far, that message is not getting out very well and you need to do a lot more to convince those people out there who have written to us that there is not a real problem. I also make the point that if you look at the figures that Universities UK have supplied us with on the proportion of funding for students that would be phased out, as understood at present under the implementation programme you are looking at, it is 38 per cent of the students at Birkbeck and I think the figure that is quoted for the OU is nearly 23 per cent. If those figures are at all correct they do demand the most serious sequencing programme because although Keynes said "in the long term, we're all dead", we do not want to have a situation where with too short a term implementation of those proposals you end up with serious and possible terminal damage to institutions like the OU and Birkbeck.

Professor Eastwood: I think that point is well taken. Can I just make two comment. The first is that when the DIUS grant letter is published, probably in early January, it will be clear that there are additional student numbers being released, as the Minister says, from the transfer from ELQ funding to widening participation funding, and a number of the institutions which at the moment have headline hits will be institutions that benefit from the allocation of those additional student numbers, so another part of the equation will become clear in January. The second thing to say is that we have made it clear that we will cash protect all institutions and that is precisely, as you say, to ensure first that there is no significant damage to those institutions and, secondly, to enable us to work with those institutions to ensure that they can reposition themselves, and the institutions which are most severely affected in headline terms will be the institutions that we work most closely with.

Q18 Dr Gibson: How many people will not come to do courses because of this initiative you are taking? The institutes may be protected but what about the large number of individuals who will not get that second training?

Professor Eastwood: It is very hard to say because what we do not know what different choices learners will make because there is a whole series of options which will be available to them. We will clearly monitor that as it goes forward.

Q19 Chairman: Can I ask you, David, finally because I want to move off this question, when you will publish your final proposals following the consultation? What is the timescale for it?

Professor Eastwood: We will need to take the outcomes of the consultation to our January board because we will have to determine our funding allocations for 2008-09 in February.

Q20 Chairman: When will they come into the public domain?

Professor Eastwood: All our board papers are published so it will be clear in January where we are on the outcome of the consultation.

Q21 Chairman: So in January you will know?

Bill Rammell: Chairman, can I very briefly respond to Gordon: (i) the process of engagement is on-going. Obviously there is a consultation through HEFCE. I am meeting personally, virtually on a weekly basis, with providers; (ii) I have the absolute highest regard for the work that people like the Open University and Birkbeck have done. I regard the Open University as the finest creation of a previous Labour Government. However, some of the claims that have been put forward are simply wrong. At the start of this debate I was told that the Open University was going to lose £30 million. It is simply not true. I would urge people to focus on the detail of the proposal and engage in the conversation. I make the point again, what we have to do through HEFCE is demonstrate that this policy is correct but then help institutions to move from where they are today to actually meeting that need of people who are not yet at the first base of getting a degree.

Chairman: I am going to leave that there because we have a lot of business to get through and if I could ask us all to try and be as brief as we can with our questions and perhaps encourage our guests to be as brief in their answers. Over to you, Des.

Q22 Dr Turner: I cannot resist one very quick one before I ask a series of questions. Very rightly and very gratifyingly, you put a great deal of emphasis in your opening remarks, Bill, on science and research, but it does not figure in the Department's title; can you tell us why? Is there any truth in the apocryphal story about the focus group?

Bill Rammell: I have never heard the story about the focus group. There is all sorts of debate and I have to say that I do not think the agonising debates that go on in Whitehall about titles for departments is the most productive use of time. I think that Innovation, Universities and Skills encapsulates the whole of the science area, the need for research, the need for innovation and further and higher education, and I think we get that message across. At the end of the day it is not going to be a title that changes practices and culture, it is going to be what we actually do.

Q23 Dr Turner: I know but people do look at titles. Anyway we have been discussing, in terms of getting views, Government policy as enacted through funding, but of course, in practice, teaching for funding is allocated by block grant and institutions have a great deal of autonomy in how they actually use their block grant, so there is going to be a conflict there. How can you be sure that institutions are actually going to do exactly what you want and indeed should they have to given that the Government pays at least lip service to academic autonomy?

Bill Rammell: I would say we do a bit more than pay lip service. In fact, for the Fabian Society last night I was giving a major lecture on the importance of the concept of academic freedom which I think helps our institutions to develop. There is a balance to be struck. We spend £10 or £11 billion a year on higher education directly through the Department. That is a substantial sum of money and I think taxpayers would not thank us if we did not set out the broad framework and the steers of the things that we value that money being spent on. There is all the difference in the world between having that view and then actually intervening to micro manage institutions. We do not do that and I think we would be wrong to do that because we would not actually get the best outcome. It is also the case - and David will correct me - that in global terms only 40 per cent of funding to the universities actually comes from the Government on average, so there are other funding avenues that they can pursue. It is about getting that balance right between the national imperative but actually wanting strong autonomous institutions to deliver on the ground.

Q24 Dr Turner: Does it follow then that when you change the funding system as you are advertising, you will not be doing it through targeted grants or ring-fenced monies?

Bill Rammell: There are some targeted grants. Funding for foundation degrees, funding for strategic development funds for hot-spots in the country where there is no higher education institution and we think, for educational reasons and the regeneration of that area, that there is a need for funding, then of course you specifically earmark funding for that purpose, but there is still a very, very strong degree of autonomy of institutions analysing what they are good at, what they are less good at, and playing to their strengths.

Professor Eastwood: Can I add two things. Firstly, I do think that the block grant principle for teaching enables institutions to operate a high-quality teaching environment and to invest flexibly and appropriately. Having said that, we do a number of things which are strictly targeted. For example last year when we decided to invest a further £70 million in the high-cost science subjects, we did that for a three-year period because that is the funding time horizon we can work with, but if any institution were to discontinue provision in those areas then they would return the funding. I think that is a significant incentive. Secondly, with the additional student numbers that we invest in the system, again we invest those strategically as Bill says. Some of those are in areas such as foundation degrees to engender new kinds of provision. Some of those are in universities which can demonstrate that they can recruit in some of the strategic and vulnerable subject areas and we invest additional student numbers there so within the block grant envelope there are a number of things that are quite strategic and a number of steers which are quite powerful.

Q25 Dr Turner: Since 2005 the Government has carried out two reviews of teaching funding "to ensure that it remains fit for purpose in a changing higher education environment". Are you satisfied that you have got the answers now? Can you tell us in outline how these reviews have informed your decisions, and are you satisfied or will there be yet another review?

Bill Rammell: I think the process of looking at the system, reviewing it periodically and making sure that it is where you want it to be in terms of meeting the needs of society is an on-going process. I am not going to say to you that there will not be further reviews. There is for example next year a review of the teaching weightings between different subjects.

Q26 Dr Turner: Can I just ask why that was not incorporated in the present review because it is a subject which has been raised by our predecessor Committee on a number of occasions?

Professor Eastwood: The answer to that is that through the transparent approach to costing we will have new and, we believe, robust data on costs and relative costs and we will have that in 2008, so it was an evidence-based timing.

Bill Rammell: I think the other thing on the subject of weightings however is that given that there is going to be a certain sum of money in the pot, however much you are increasing that by, if you are saying one set of subjects needs a higher weighting then ipso facto you are saying another set of subjects needs less funding. We always hear the arguments about those subjects that need more spent and we need people to say credibly where the reductions in funding should come from.

Q27 Chairman: Medieval history?

Bill Rammell: That is your view is it, Chairman?

Dr Turner: Our favourite is media studies. That is just an aside.

Q28 Chairman: That is not a view of the Committee.

Bill Rammell: Media studies actually have very good outcomes in term of employability and if we are going to enter into a debate about which subjects ---

Q29 Chairman: Minister, do not go down that route!

Bill Rammell: All right.

Q30 Dr Turner: You have already referred to TRAC(T) with the object of arriving at some sort of evidence base for a sustainable system. Can you tell us what you think a sustainable teaching system will look like?

Professor Eastwood: I think a sustainable teaching system will be premised on universities themselves having a clear understanding of where their costs lie. That will then translate back into the way in which we structure our teaching funding algorithm. It will then also feed back into the advice that we give to ministers and the advice ministers take into subsequent spending reviews, so that is how I envisage it working. We have on a number of fronts been working to ensure that what we achieve is a sustainable sector. We are making real progress there in terms of the capital base of the sector and by about 2012 on current projections we will arrive in capital terms at a sector that looks broadly sustainable. And as far as teaching is concerned, we have not yet seen the full financial benefit of the change towards the new fee regime. We will get that in 2009 and I think at that point, which is why it is wise to have a review in 2009, we will have an evidence base to judge both the way in which the funding regime has impacted and secondly whether or not there remains a significant deficit.

Q31 Dr Turner: In 2008 hopefully you will know the full economic costs of teaching and of teaching in different subjects. You have already referred to that and this is clearly going to have a major impact on total funding and on the distribution of funding. Have you started to measure that impact? Can you be sure that there will be not be any kind of feedback between having looked at the impact and felt, "That is going to be tough, perhaps we should alter the figures"?

Professor Eastwood: I think there is a difference in understanding costing for research and costing for teaching. With full economic cost for research ---

Q32 Dr Turner: I am talking about teaching.

Professor Eastwood: I realise that. For full economic cost of research what we had was the costing of a research project, the direct and the on-costs of that. When we look at the costs of teaching, there are a number of assumptions that you have to build into the model. They have to do with the number of contact hours, the size of teaching groups, the frequency of lab sessions and so forth. What TRAC(T) will give us is a better way of understanding current costs and a better way of costing enhancement of the teaching provision, for example more contact time. It would be wrong for me to suggest that TRAC(T) of itself will give us straightforward the answer "what should the cost of teaching be?" but what I think it does do is it gives us a sensible evidence base to have that debate quite widely about what constitutes appropriate funding, what subjects we should go for.

Chairman: We will come on to funding of research and I will bring in Gordon Marsden.

Q33 Mr Marsden: David, we are aware obviously that the process of determining what I think is called the single overarching framework as the replacement to traditional RAE is still continuing, but can I ask you initially, are you happy that we have got the split right between the STEM subjects which are going to be dealt with on the basis of quantitative indications of research quality and outputs and the light-touch peer-review based assessment for everybody else? Are there any subject areas which are in a grey area between the two?

Professor Eastwood: I think broadly we have got it right but you are quite right, there are some subject areas.

Q34 Mr Marsden: Would you like to identify them?

Professor Eastwood: The non-medical health related disciplines is one quite important area and I think we will get greater clarity on that as a result of this consultation.

Q35 Mr Marsden: When do you expect the consultation to finish?

Professor Eastwood: The consultation finishes in the middle of February. We launched it last week.

Q36 Mr Marsden: Will you then be in a position to announce the funding formula?

Professor Eastwood: After the consultation we will take stock of the outcomes of the consultation. Then what we have said we need to do is to run a pilot of the new methodology because it does involve gathering data in different ways. When we have done that - which will take us into the autumn of 2008 - that is the point where we will be able to come to some final decisions about the evaluation structure and begin to look at the funding implications.

Q37 Mr Marsden: That may be all well and good and well understood but there is going to be a significant period of uncertainty for universities and institutions as to how the new funding formula is going to be based then, is there not?

Professor Eastwood: We will conclude the Research Assessment Exercise of 2008 in the December of 2008 so the funding allocations of that will be announced in February 2009. The agreement with Government is that the new regime, what we are currently calling the REF - the Reference Excellence Framework, so we will be able to blame the REF in future! - will start to inform funding from 2010. I think the sector does understand that and in terms of the funding changes that the new system might drive, until we know what the outcomes of our RAE 2008 will be, we do not know how significant the changes will be that the REF might drive.

Q38 Mr Marsden: Can I bring you back briefly to what might be seen outside as the continuation of RAE by other means, the non-metric element, because one of the things that is curious about the controversy that followed the announcement of going down the matrix route and the subsequent response of Government and indeed of HEFCE is that in that process some of the fundamental criticisms that were voiced previously of the RAE seem to have got lost. I refer specifically to the arguments that it ossifies research funding in a small number of institutions - to those that have more will be given - but more particularly that some of the issues previously about people buying in research on the basis of their books to boost their university do not seem to be being addressed in any shape or form in the light-touch peer review that you are now taking forward.

Professor Eastwood: What we have said about the light-touch peer review is that we will be doing the work for the science-based evaluation. When we have completed that we will then move to reworking the light-touch RAE and we will consult on that, so it would be wrong at this stage to anticipate what the outcomes might be. We are expecting to learn some relevant things for light-touch RAE from the bibliometrics-based approach that we are applying to the science-based subjects.

Q39 Mr Marsden: Do you then accept that some of the criticisms that were made of the old RAE along the lines that I describe remain valid criticisms to be answered?

Professor Eastwood: We will seek to answer them when we devise the non-STEM light-touch RAE.

Mr Marsden: We will await that with interest.

Chairman: You sounded like a politician there.

Q40 Dr Gibson: He is a politician! How much is this RAE going to cost? Is it going to cost more than the last one in your estimate?

Professor Eastwood: The new system?

Q41 Dr Gibson: Yes.

Professor Eastwood: We have made a commitment to both lightening the burden on institutions and to reducing the overall cost.

Q42 Dr Gibson: So why do you still do the RAE? There was a time when you wanted to sharpen up departments and get rid of those few slouches that are around. That was the original idea. Why do we still do it? We have separated the institutions; we have almost got two tables now in terms of RAE as those who do heavy Nobel Prize winning research and the others. What else could you find out? Why do you do it? Why do you spend this money on it? Why do you spend all your time doing it? What does it gain?

Professor Eastwood: From the point of view of HEFCE as a research funding body, our commitment is to fund research excellence where it can be found and we need a method to inform that funding distribution. We certainly would not want our funding to ossify the research base, so we do think that a periodic assessment of research quality does drive dynamism. One of the things we are also trying to do through the new methodology is ensure that there is appropriate data both for research users and for the international marketing of UK HE which is important, and for institutional management in themselves understanding research quality and determining where they are going to make their own research investments.

Q43 Dr Gibson: Do you not think that the top-flight universities have got an inherent, inbuilt jump ahead of all the others, like UEA for example, they are in different leagues in a sense because they have had the money in the early days, they have recruited the stars and will continue to do so?

Professor Eastwood: I think I would agree with quite a lot of that, which is why I think this is the right time for the system to evolve significantly. What I do not think I would be confident of would be that the kind of dynamism that we have driven into the research base post-1986 would continue if there were not these forms of assessment. After all, the research councils operate a very rigorous system of peer review around all their grant allocations for precisely this reason. One needs to have that kind of torsioning in the system in order to drive quality and in order to ensure that funding is appropriately given.

Q44 Dr Gibson: Two quick ones, David. The first point is that you know in the sciences if you want to do a good research assessment you produce dumb work really. You do not take great risks that might take five years or whatever. Watson and Crick would never have got an RAE score either. People do very safe research in which they are going to get some result and which will be published in Nature or some journal, depending on how lucky you are. What do you say to that, that it inhibits innovation?

Professor Eastwood: Given that we are out to consultation on the REF at the moment, my answer is that that is actually a very real question and one of the issues for the consultation is the window you should use for the bibliometric evaluation in order to capture what one of our experts calls the "Sleeping Beauties", the research which is ahead of its time. I think when we have had the conversation in the context of this consultation we will have an answer which will be able to pick up those Sleeping Beauties and which will not discourage people from that bold kind of research.

Q45 Dr Gibson: Last point; charity funding. Charities always feel they get a bad deal when putting money into universities. Do you feel that the costs and so on are different from the research funding that comes in from research councils, that there is a differentiation? Are they treated the same? Is it a level playing field? Are the full costs met by charities and should they be?

Professor Eastwood: The agreement that we have at the moment with Treasury is that there is a charity factor in our QR allocation which means that a research team which takes research charity income with a combination of charity overhead and our own research charity funding would be in the same position as they would be if they had taken research council grant, and that seems to me to be a sensible accommodation.

Q46 Dr Gibson: The Cancer Research Campaign does not agree with that; they think they get a bad deal.

Professor Eastwood: I think if you look at the quality of research which emerges and the value for money both on value-for-money and on intellectual grounds it is a good deal.

Q47 Dr Iddon: What do you say to the criticism that the present system inhibits the newer universities from becoming centres of excellence?

Professor Eastwood: If you look for example at the distribution of high quality, if you look at the distribution of five and five stars, you will see that the distribution is actually quite broad across the sector. It is undoubtedly the case that that kind of comprehensive research quality and capacity is now concentrated in a modest number of institutions. I think that has been a settled policy of more than one Government and it seems to me broadly that it is the right policy given the cost of big science and the importance of competing internationally. One of the reasons why we think it is right to continue with some sort of Research Evaluation Framework is precisely to enable some centres of excellence to flourish right across the sector and that is broadly what has happened.

Q48 Chairman: Just before I move on here, in terms of the Sainsbury Report, Lord Sainsbury's view on research-intensive universities and business-facing universities, do you see that being a driver for change or can that in fact be encapsulated with the proposed funding model of the bibliometrics in conjunction with RAE?

Bill Rammell: I would not draw the distinction between research-intensive and business-facing universities. I know there are a number of universities who are doing tremendously good work engaging with businesses on higher level skills who are attempting to promote themselves with a business-facing label and that is fine but business engagement is something maybe not to the same extent but I think is there and should be there for all institutions. I do not think we should go down this road of research intensives blue-skies thinking and a whole set of other universities who are doing the skills agenda. I think it has got to be across the board.

Q49 Chairman: So you reject that definition that Sainsbury made?

Bill Rammell: It is not the terminology that I would use. I actually want all universities to be business facing.

Q50 Dr Turner: Brian has already alluded to the problem that there is from the present funding allocation. There is a cliff face from grade five downwards and it not only makes it very difficult for newer institutions or regenerating institutions to bring departments through to a higher quality but also has led to the death of several departments, particularly in STEM subjects like chemistry, so what steps will you take in devising the new formula to avoid those sorts of consequences?

Professor Eastwood: In fact, the 2008 RAE will take away the cliff edge which is why we have moved to graded profiles for the 2008 RAE. Bibliometrics again would enable you to have a continuing, variable quality assessment which would then feed through to the funding assessment so that point about the cliff edge has been well made and it has been well taken, and in fact we have already addressed it in the 2008 RAE.

Bill Rammell: Just to add for the record - and I know within this Committee we have debated physics and chemistry in the past - if you look at the procedures we now have in place through an early warning system even where some institutions have closed their chemistry departments regionally the numbers and the capacity have been maintained.

Q51 Mr Cawsey: I would like to move on to knowledge transfer and the Higher Education Innovation Fund. You have already announced details of round four of the fund saying it will go from £110 million to £150 million by 2010-11 with a number of rule changes as well. Would you like to tell us a bit about why you have made these changes and what difficulties you are trying to address with them.

Bill Rammell: Certainly I think the increase in funding where the vast majority of institutions will see an increase - I think two-thirds of them will see an increase of something like 50 per cent - is very welcome. If you look at the level of activity and the 30 spin-off companies that this has generated, I think it has been a very solid initiative, but there has been a debate for example about the balance between the bidding process and actually seeing it allocated by formula and I think we have seen a change in the operating practices of universities. We are now moving to a situation of 100 per cent formula allocation. One of the reasons that we want to see that happen is that you do want some guarantee and solidity of the funding stream because if you want individuals within institutions to see their future careers in the knowledge transfer business, they need some degree of security that that funding stream is going to continue. With the announcement that we have made I think we are actually able to deliver on it.

Q52 Mr Cawsey: So you do not think that the competitive element has worked? Is that why you are doing it?

Bill Rammell: No I think it has driven change but if you look across government, if you look in education at the balance between competitive bidding and formula allocation, I think you initially do look for a strong, competitive bidding element to get people to look at the way they are operating and to get them to change their business practices. You reach a certain change where you have embedded some of that change and you want some on-going security. If you want individuals to restructure their careers and move in that direction, I think you need to give a stronger degree of guarantee.

Professor Eastwood: This is an activity that Government wants all institutions to be involved in. We needed to build capacity and we needed to drive change - the Minister has been talking about that - and bidding in a competitive process was an element of that culture change. We believe now it has matured and all universities and colleges have their transfer platforms, have their IP specialisms and so forth, so I think the challenge now for us is to embed that and to ensure that we have an appropriate distribution so that we appropriately fund all kinds of institution, and that is why we have moved towards a funding matrix which uses staff numbers as the measure of capacity, uses business income as a measure of activity; and doubly weights engagement with SMEs, because we recognise that that is challenging and we want to incentivise it. We capped the allocations at 1.9 million to drive an appropriate distribution and, as I have said from public platforms, if you look at our HEIF funding formula it is a work of algorithmic genius.

Q53 Chairman: Did you say that?

Professor Eastwood: I said that.

Q54 Mr Cawsey: You spoke about the importance of on-going security for the institutions around round four, which has just been announced, so is it your intention now that this funding will become permanent?

Bill Rammell: You do not make commitments beyond three-year spending periods and we are going to be announcing the full CSR settlement in a few weeks' time, but certainly for the forthcoming CSR we are strongly committed to HEIF, we think it has worked; it has delivered; it has brought about the culture change, and I see no reason to change that.

Q55 Mr Cawsey: The double weight SMEs which you mentioned I think is to be welcomed. Clearly there have been issues with small and medium-sized businesses in previous rounds. Is there anything else that you are doing other than double weighting to support that particular part of the scheme?

Professor Eastwood: In the context of HEIF, no, that has been our response through HEIF. More generally in the Funding Council we are using our Strategic Development Fund to incentivise engagements with SMEs, and that has notably been the case in the way in which we have been responding to the priorities that drive employer engagement. HEIF is not the only instrument that we have but it is an important one and I think we have sent the right kind of signal through the funding formula this time around.

Q56 Mr Cawsey: HEIF cannot itself be the answer to everything. Do you plan any additional schemes to assist knowledge transfer or exchange between universities and businesses?

Professor Eastwood: Three weeks ago we announced a pilot on Beacons of Public Understanding, a £9.2 million scheme jointly between us and the research councils and Wellcome. That is a different kind of engagement, an engagement around a real dialogue and engagement with the public. We see that as something which is complementary to the kinds of activity that HEIF is facilitating.

Q57 Dr Iddon: I want to turn now to the strategically important and vulnerable subjects, gentlemen. I have a registered relevant interest in this question in that I am a Fellow of the Royal Society of Chemistry. HEFCE has commissioned Evidence Limited to conduct an evaluation into the use of the £160 million that your organisation has made available to raise the aspirations of young people to study strategically important and vulnerable subjects. We are not just talking of course about STEM subjects but languages and other subjects as well. Are you able to give us this morning any evidence that is emerging from that review?

Professor Eastwood: Not at this stage from the review, no. I think I can indicate that in a number of strategically vulnerable subject areas, but not all, the position looks as if it is turning around.

Q58 Dr Iddon: Lord Sainsbury said in his report: "HEFCE should transform the Strategically Important and Vulnerable Subject Advisory Group into an Advisory Group on Graduate Supply and Demand and extend its remit to include responsibility for publishing an annual report." Are you able to tell us how that recommendation is likely to be implemented?

Professor Eastwood: Following David Sainsbury's report we are now commissioning advice on the way in which we will put that annual report together; we are committed to producing it and we will be in a position to publish our proposals for doing it in February.

Q59 Dr Iddon: If I could address this question to Bill, it is one I have raised before in question times. I am very disappointed at the careers advice that is being given to young people in schools, particularly with a view to directing them into STEM subjects. Since Connexions was set up, they seem to be concentrating on children at the lower end of the academic achievement ladder rather than at the higher end, and some of the very brightest people are not being directed, I do not think, into the subjects that matter. Are you in any conversations with your colleagues in the sister department to try and correct this?

Bill Rammell: Yes although I think that there are real advantages to the new departmental structure, we also need to work across the departmental boundary with DCSF, and certainly I have regular meetings with Jim Knight, and Ian Pearson. Jim and I also meet to look specifically at the science agenda. I think, like you, the advice that is given to young people is really important. One of the factors that I always use when I am talking at universities is the graduate earnings premium, which for example in a STEM subject is about a third more than it is for a non-STEM subject. Not everyone who takes a STEM degree will end up working specifically in a scientific area. Actually getting those facts across and positively promoting science is really important. I also think in this debate it is important that we do have some context because we did go through a period when there was a downturn in STEM applications. Certainly at the university level for the last three years in chemistry, physics, mathematics and engineering we have seen some robust improvements, but even in the years when we were seeing a downturn, if you look at the overall picture in science subjects we have got 150,000 more students studying science today than we had ten years ago. They are not exclusively within the STEM areas but they are getting good outcomes from that and they are feeding into the science base.

Q60 Dr Iddon: You are right that the figures look encouraging for the take of under-graduates into chemistry, physics, combined maths and computer studies and other subjects this year in the universities, but since I have mentioned that careers advice is not all it could be, to what do you attribute the success of those departments?

Bill Rammell: I think because we have worked damn hard across government with the Funding Council and the learned societies to really promote this agenda and there are a whole range of initiatives that have been undertaken. We have also reviewed the STEM advisory approach so we have got greater coherence and I think we are having some success. It is not a one-year trend. If you look at those subjects that I outlined, you have now got something like a three-year trend at university level. However I am not complacent. If we want longer term success in this country then we need people to be studying the science subjects. I have said this before - I think one of the challenges we face is, frankly, the fairly poor way that science is presented and depicted too often in our media where it is presented as something that is done to people and has adverse consequences rather than something that is productive and positive, and I think some of the changes within the schools system at Key Stage 3 and Key Stage 4 where they are looking to actually develop an understanding of the underlying principles of science instead of just rote learning but also linking that to some of the common day controversial topics within the media and getting a commitment and enthusiasm on the part of young people is part of the way we go forward as well.

Q61 Chairman: That was the whole purpose of 21st Century Science and yet we had leading academics likes Professor Sykes who just rubbished it straight away and we did not get a robust defence from the Government at that time. I think the Government should do more to actually defend what it is promulgating through its programmes.

Bill Rammell: I think we did do that. But something I have learned in Government is Government ministers can say things and it is not always given the highest currency. I know that will come as shock to you, Ian! I think if you can get others to do it as well as Government ministers that is the most effective way and we certainly have got a lot of the learned societies coming out and saying this is exactly the right way forward.

Q62 Dr Iddon: I have one last question before I hand over to my colleague, Graham Stringer, and that is which subjects continue to give cause for concern?

Professor Eastwood: Actually I think there are probably two areas: modern languages where, as is well-known, the take-up of modern languages at GCSE is continuing to fall, and that is a challenge for higher education.

Q63 Dr Iddon: Why do you think that is?

Professor Eastwood: I think there are a variety of reasons and I think most people would say ceasing to be compulsory at Key Stage 4 had an impact, and that is almost certainly true. I think we need to persuade people of the importance of languages in different ways. Following what Bill said, I think we are further down the road with science than we are with languages because to say to young people "you need to learn French in order to go abroad" is palpably untrue and they know it to be untrue. To have a linguistic capacity to operate in a global environment is something which I think resonates with young people, so I think the presentation of languages to young people is important. I think for higher education modern languages almost certainly we will have to do what we did in classical languages some time ago which is teach them ab initio from first year at universities. I do not see any problem with our doing that. I think there are some challenges around modern languages and we have to couple those with the challenges of developing capacity in the languages of the emerging economies notably, but not exclusively, China. The other area which is actually quite interesting is computer science. The computer science numbers are going down and we need to ask ourselves why that might be. I think it is partly because it is an area that has been demystified for young people and also what the industry wants now is probably rather different, so we are working with e-skills, the relevant sector skills council, in order to try to refresh and revive the curriculum in science because I am also sure it remains a pivotally important area but I am sure it does need that kind of refreshment if it is to recruit. There would be some other areas but those are my headline areas.

Bill Rammell: Just very briefly on modern languages - and as a French graduate I declare an interest - I do not actually think the decision at 14 is fundamental. I think the idea of getting youngsters who have got no aptitude for a language and forcing them to stay in a classroom from 14 to 16 is the issue. The really important change we have got to make is the commitment which is in place that every primary school teacher has a modern foreign language by 2010 and we are well on the road to achieving that.

Q64 Graham Stringer: The first question I was going to ask you was to give some statistics on institutions teaching French and German declining and ask whether that was important and what you were going to do about it, and you have partially answered what you are going to do about it, you are going to teach languages later, but you have not really expanded on why is it important that we have more graduates in French and German and Chinese and Finnish?

Bill Rammell: Even with the ubiquity of the English language, ultimately, whether it is in politics, whether it is in business, whether it is in the world of academia, you lose an advantage in certain situations if you cannot converse with people. I have certainly seen that at all different levels. I also think that in order to get a better understanding of the world in which we live you need those language skills. I also think from a competitiveness point of view, young people who have gone and spent some time studying abroad learning different cultures, different customs and different ways of working bring about a greater degree of flexibility in the way that they think and learn and they bring something very productive to our economy and to our country. Part of the work that I am involved in at the moment is trying to incentivise that more. Part of the way we do that, in discussions with the CBI, is actually to get business to send a much stronger message to young people that even if you are not studying exclusively a foreign language but if you spend some time as part of your degree studying abroad you are going to be more employable.

Q65 Graham Stringer: I would be interested in the evidence base for that, if you could tell us what the evidence is for what you have just said. Secondly, if what you are saying is right, would it not argue for languages as auxiliary subjects to science subjects and other subjects rather than as a specialism in their own right?

Bill Rammell: I think there is a balance there. Firstly, there is some detailed research. For example, there has been some research undertaken on the Erasmus Programme and I am happy to provide the detail of that, and it does back up what I know is my own instinctive view. I think you are right, that actually we should not see this exclusively as you have to go away for three or four years to university and study a modern language, but it can be a module, it can in some cases even be a term or three terms, but of course auxiliary subjects do not survive unless of course they have got a strong base to them and that does mean that you need graduates coming through the system who have studied those subjects in depth.

Q66 Graham Stringer: You mentioned previously as well the decline and then improvement in science subjects at universities. When you look at the regional breakdown where it is getting better and getting worse, the North West and the West Midlands seem to be doing well in re-establishing or improving on the number of students taking courses and the number of courses, whereas the eastern region and the South East do not seem to be doing as well. Have you any thoughts on why that is the case and, if you have, is it important and are you going to do anything about it?

Professor Eastwood: Can I just comment on those two regions. In the eastern region, there has been a re-establishment of physics provision, in fact in my old university and Dr Gibson's old university, so the position is not as bleak as it is sometimes painted. If we look at the South East and we look at physics, we have a number of quite distinguished, but small physics departments. What we are doing is we are bringing that together in the South East Physics Initiative in order to strengthen and to underpin that provision, so in both those regions there are actually some quite important, good-news stories to tell in areas of the physical sciences.

Q67 Graham Stringer: Nonetheless, it does not quite answer the question I was asking of whether you have thought of why that is happening and what, if anything, are you doing about it? Is it important?

Professor Eastwood: I think we would say that, if you look at those two regions, there is significant provision in the physical sciences. The other rather important geographical issue is the role of London and there are 42 HEIs in London and that has an impact on provision in the South East and East in the way that it does not in, as you say, the West Midlands and the North West, so I think for some purposes it is not inappropriate to think of the greater South East as the unit for looking at provision. However, again, and I will not talk further about my experiences as Vice Chancellor of East Anglia, but one of the great strengths of chemistry and routes into chemistry was in Great Yarmouth and Lowestoft because there was a foundation programme there which meant that actually, when I was Vice Chancellor of UEA, our best statistics on social inclusion were in chemistry.

Q68 Graham Stringer: I have a final question, and it is a big question really. A previous editor of The Times who writes regularly in The Guardian and The Sunday Times, he makes the point that there is no real evidence that training scientists helps the economy and he points to the old Soviet Union having more scientists than anywhere else and that the Japanese economy slowed down as they increased the number of graduates going through, that when they had a poor education basis, they grew extremely well. What would you say to him, and he makes the point regularly in the quality press? What would you say to him? I do not agree with him, but I would be interested in your answer to that profound point.

Bill Rammell: With the number of scientists sitting on this Committee, this is what I would describe as an 'open goal'!

Q69 Graham Stringer: Well, it is, but it is worth stating the case though.

Bill Rammell: Absolutely. I think he is wrong. You can look at all sorts of indices and I think there is a link between the number of people who are educated to the highest level within the sciences and economic outcomes. If you look, for example, at our proportion of young people within the OECD who have got a science degree and then you link that with our relative economic performance, but you then look at the other countries which similarly did well according to that criterion, there is, I think, a very clear link. I think, however, it is not sufficient just to say that you need people to be trained and educated in the sciences. If you look at it historically, this country has a superb track record of actually promoting science virtually since the year dot. We have not always been as good at actually applying that science and seeing the business outcomes which should come from it and that is one of the major priorities for the new Department.

Q70 Dr Gibson: Do you think that government departments would be advantaged by having scientists in them, if all their civil servants had scientific training?

Bill Rammell: I actually had this conversation with some of my civil servants recently where I suppose I was in a fairly rude way asking them what degrees they did, and there is actually more of a representation of science graduates within the Civil Service than, I think, is sometimes appreciated.

Chairman: What is interesting, Bill, is that the Government's Chief Scientific Adviser said to the former Science and Technology Select Committee that civil servants hid their science qualifications for fear that it would hinder their promotion. Hopefully it will not do in this.

Q71 Dr Harris: Just on this question of science subjects, you provided a memorandum to the Science and Technology Committee and the figures have been discussed where you said that physics was up 12 per cent, chemistry was up nine per cent, maths up nine per cent and combined maths and computer studies up 16 per cent, and I have the actual memorandum here, but what was the baseline for that? Is that since 1997?

Bill Rammell: No, those figures, I think I am right in saying and I will write to you to correct this if I am wrong, I think those are for last year and we have now had, and I acknowledged this earlier when you were out of the room, that actually we did go through a period where there was a reduction in numbers from the STEM subjects. We have now actually got something like a three-year trend of applications at university level for maths, combined maths, physics, chemistry and engineering.

Q72 Dr Harris: The problem is that, unless you agree in advance prospectively a baseline and then say, "We are going to refer all our data to that baseline", then any commentator can just say, "Well, compared to 1998, it is up", or, "In the last three years it dips a bit", and then say, "Well, we'll include that and say that over a four-year period it is still up", so would it be possible, as I asked the Science Minister at the last science questions, just for the Department to say, "From now on, in order to avoid unfair allegations of spinning, we're going to stick to a baseline and say that all progress is going to be measured against that baseline", and 1997 would be a decent one because you cannot really be blamed for what happened before then, even if "blame" is the right word?

Bill Rammell: To be perfectly honest, I do not think it is. All our figures are open, they are published, they are available for people to scrutinise, but just saying for every question that we will make a baseline comparison to 1997, often you will be engaged in a debate about, as has just been asked of me, "What has happened to STEM subjects since you recognised there was an issue here and you've done something about it?" If we simply gave the baseline comparison compared to 1997, that would not actually answer the question.

Q73 Dr Harris: I think you have to answer the question, but you could always include the baseline figure because, otherwise, you can always find a year compared to which something has gone up, and I can show you that the Government has used at least seven different baselines over its time in office and always shown percentage increases, whereas, if they are asked and probed on a specific thing from 1997, sometimes the picture is not so rosy. It is important obviously that you do not lull yourself into a false sense of security, is it not, by only ever seeing positive increases by choosing the data points that fit that positive picture?

Bill Rammell: Well, my style and practice, as a politician and a Minister, is to actually answer a straight question with a straight answer and I have said before to this Committee that actually we have 150,000 more people studying science subjects today compared to ten years ago, but I have also acknowledged that in the STEM subjects in the years running up to three years ago we did see some reductions and very welcomely, as a result of a whole series of initiatives that not just government has taken, we have seen in the major STEM subjects a turnaround. We are not by any means complacent, but I do think that is an improvement. That is not ducking and diving with the figures, that is trying to give people a straight answer.

Q74 Dr Harris: Okay, I will not deal with anything on engineering now, other than to say that the Chief Scientific Adviser expressed continued concern last night. In terms of access to universities from schools, we read in The Times that students from independent schools are now five times more likely than the national average to be offered a place at one of the 20 lead Russell Group universities. Do you think that is the fault of universities or action for the universities to take mainly or for the schools, or it is obviously both, but where do you think the prime responsibility lies for that figure which, I think you would agree, is not really satisfactory?

Bill Rammell: Well, firstly, my understanding is that the Independent Schools Association have actually repudiated the way that those figures were presented. Nevertheless, I am the first to admit that actually we have a challenge to both increase and widen participation for every area of society and it is one of the strongest imperatives both of the former Department and of this Department, and there is no magic bullet about how you do this. Student financial support is part of the answer and I think the very significant increases in non-repayable grants that we are bringing in for next year are meeting part of that solution. Aspiration is critical and that is where the announcement of the continuation of the Aim Higher Programme, I think, is particularly important, although at the same time ensuring that we target that effectively so that it is really getting to the young people who most need that support. It is about continued increases in attainment in the school system, but is it the responsibility of schools, is it the responsibility of universities or is it the responsibility of both? The prospectus that we recently launched between our Department and DCSF about part-improving on the very strong degree of partnership initiatives between the universities and schools, I think, is part of the way forward. It is no good universities saying, "Well, there aren't suitably qualified applicants", but they have actually got to go and work with schools to turn that situation round, and I also think it is about advice and guidance.

Q75 Dr Harris: Well, I have two separate approaches that come from that answer. Firstly, what evidence do you have that your proposals to ameliorate the problems that you suggest occur from student finance are the right solutions? For example, do you have any evidence or have you done any research on the impact of overall debt on the likelihood of people from the socioeconomic groups who are not applying in sufficient numbers, so have you commissioned research to look at whether the likely debt is a factor that deters or is it just your hunch?

Bill Rammell: I think you actually have to look at the evidence and, even before those changes next year, under the new system, which many people said would be a disaster and that it would impact upon access, actually that has not proven to be the case. Applications are up by six per cent for this year and they are also proportionately up for students from poorer backgrounds.

Q76 Dr Harris: What is your baseline there? Is it just last year or before you did anything to the student finance system the first time round?

Bill Rammell: Sorry, I was talking about applications for this year. When we introduced the new variable fee system, and we predicted this would happen, just as happened in 1998 when tuition fees first came in, in the first year there was a dip in applications. Thereafter, applications have gone up very strongly and they are up by six per cent for this year. In proportionate terms, they are up by about half per cent for students from the bottom four socioeconomic groups and I think that does give us a strong indication that the progressive nature of the student financial support system is working, but actually it is important that we go beyond that and that is why we sent out a very strong message.

Q77 Dr Harris: Can you say that? If it fell proportionately by more than half per cent because of previous policy changes, which you say it may well have done, saying that there has been a half per cent increase, firstly, is not solving that problem and you are just choosing the baseline year that shows a significant increase without talking about the drops that have occurred beforehand. Secondly, if you had not done what you have done, maybe it would have been a two per cent proportionate increase and maybe one needs to have an over-proportionate increase in the students from disadvantaged backgrounds in order to get anywhere near their allocation in higher education.

Bill Rammell: With respect, I think that was taking words out of my mouth and misconstruing them. I did not say that there had been a previous downturn and that actually this has not caught up with it. If you look in both global terms at applications and also at proportions in terms of low socioeconomic groups, we have our best set of applications that we have ever had, the highest level of applications for university. I think that is a strong indication that the system is fair and progressive, but we need to do more. I do not actually think that student financial support is the biggest determinant of whether or not someone from a disadvantaged background goes on to university. I think it is a prerequisite, that you actually have to have a strong system of student financial support, but you need to do much more.

Q78 Dr Harris: I understand that is your view, but I am asking what research have you done to underpin your opinion that you have just stated that you, Mr Rammell, do not think that students in that position are deterred by debt as the major factor. I am asking you, can you do, have you done or why do you not do some research to look into that and maybe comparing with the Scottish system which has had a whole series of better percentages in terms of proportionate increases from those sorts of groups?

Bill Rammell: I would urge the Committee to look at those figures and that is simply not true. If you look at applications for Scottish universities for this year, they are nowhere near as robust as they are for the system in England.

Q79 Dr Harris: I am not talking about this year, am I? I am talking about over a period of time because you can always choose a year, can you not? It comes back to my point that it is just not science to retrospectively pick a baseline once you have seen the figures, but you have got to prospectively say or over a time period, "Look at the overall trend".

Bill Rammell: Look, I know there is a critique going on here that we pick particular years in isolation to make a point, but actually that is not the case. If you go back over the way we have presented these figures year on year, our system is working, the applications are up and they are up for students from poorer backgrounds. I would also refute the notion that the Scottish system, which I know was supported by the Liberal Democrats when they were in government, is any different in principle from the system that we have in England. It is a postgraduate system of repayment that is no different from the system we have in England.

Q80 Chairman: I do not want to go into the Scottish system, but I would like an answer to Dr Harris's basic question, it seems to be perfectly reasonable, that the Government have put a very significant amount of resource into student support both in 1998 and of course particularly in terms of the new fee structure. Is it not reasonable that a piece of research is carried out to see whether in fact that is actually achieving the objectives which the Government have set which are about widening participation and indeed to find out whether in fact it is deterring another cohort of students from going? Does that not seem reasonable?

Bill Rammell: Yes, it does and we do regularly, for example, commission and fund the student income and expenditure survey which gives us all sorts of detailed information, and we do also look at the independent surveys that are undertaken by a whole host of other organisations to monitor the impact of the system. Having done that, and we do not reach a baseline and stop, it happens on an ongoing basis, I am convinced from all the evidence that I have seen that a lack of student finance is not acting as a deterrent for young people applying to university, but we need to go further.

Professor Eastwood: The comment I wanted to make is that, if you look at the trend data on applications from 2002 onwards, with the exception of 2005 when there was a spike, there is basically a linear increase, and we can provide the Committee with the data. Now, Dr Harris is quite right to say that counterfactually, had the 2006 change not occurred, a different pattern might have prevailed, but actually what is suggested about the data is that it is broadly linear. What is interesting, but again amenable to a number of explanations, is that since 2006 applications in England have increased, they flatlined in Scotland and they have fallen in Wales. One of the things I take away from that is that applicants are quite discriminating and one of the things they are looking at is quality of provision and they do see a link between quality and funding and they do recognise that what is emerging in England is a mixed economy for funding.

Q81 Dr Harris: But I want to see hard research, not surveys, not other people's surveys, but commissioned, independent, published and peer-reviewed research to back up your opinion which you have just given again, that they are looking at quality. You may be right, I do not know, I do not know the answer, but the stakes are so high here that I would urge you to consider commissioning research and, if you do not, the allegation might be that you do not want to know what the research shows.

Bill Rammell: With respect, I would dispute that. I have already said for the record that there is research regularly undertaken. There is, for example, the recent Class of '99 Study which gives a whole host of information based on graduate experience, based on their experience of going through the system, and there is a whole host of other studies which are undertaken that we look at regularly.

Chairman: It would be very useful if you could let us have a note in terms of the research which is carried out to actually respond to that particular point and then at least we have it on our record.

Q82 Dr Harris: My final question in this area is to ask you about the situation where a student from an inner-city comprehensive which has never sent anyone to a top university gets three Bs and someone from a so-called top private school, say, Eton, gets two Bs and an A. Is it fair to give the place on the basis of UCCA scores? Is it anywhere near fair to the person with the huge advantages that they have had from resources, educational background and extra resources rather than to recognise that probably the brightest student there and the one that is most likely to benefit is the one that, despite all the disadvantages, has managed to get those sorts of results? If you think there is a question there, would it not be good to do research to see who gets the better degree comparing those two because, if you do not do that, you are just allowing discrimination to take place by this similar qualification requirement for all students?

Bill Rammell: Let me say a couple of things to that and, firstly, to make clear that the admissions process is historically, and remains, a matter for the universities and not for government. Secondly, universities have always, and I think this is a positive thing, made judgments about an application based upon their attainment to date, but also their potential to succeed on a particular university course, and they use contextual information to reach those judgments. I think that is properly a matter for universities and I think that does help ensure that you measure and see people develop their potential, but I also think there is an issue around advice and guidance. One of the things we need to do very strongly is ensure, through the school system, through the connection system, that young people are given as much advice and support as possible to apply to university, to apply as early as possible and to apply to the university that will best suit the individual's talents.

Chairman: I am pretty sure we will come back to this in the years to come.

Q83 Dr Blackman-Woods: I am going to ask a couple of questions about public engagement. We know from the Strategic Plan that HEFCE is piloting an initiative, Beacons for Public Engagement, with, I think, the aim of getting better co-ordination that will reward, recognise and indeed build capacity for public engagement. Has there been any success so far from this initiative?

Professor Eastwood: We in fact announced the beacons two weeks ago, so it is early days, but what is actually very interesting is that we funded six beacons in a co-ordinating centre, we had 82 applications and many of the unsuccessful bidders are in fact taking forward public engagement-type activities and one of the key criteria for the scheme was that there had to be formal recognition for public engagement activities, so it was not just an investment that we might make, but that the institutions would themselves have to reward it through appraisal and through capturing public engagement as part of the whole initiative criteria. All the successful beacons will do that, but what is interesting is that a number of those who bid and were unsuccessful are doing precisely that, so yes, I think we are getting some benefit. This is, as you rightly say, a pilot and we will evaluate the pilot through the National Co-ordinating Centre located at Bristol and then we will determine, resources permitting, how far we can roll out the scheme subsequently.

Q84 Dr Blackman-Woods: Is one aim of this to improve public engagement in research and to get greater understanding amongst the public of research that is undertaken in the universities?

Professor Eastwood: Absolutely, and when we launched it at the press conference, with me was Nancy Rothwell from Manchester and Cathy Sykes from Bristol and they both actually instanced precisely the way in which those dialogues had actually reshaped some aspects of the research agenda, so it is something that sits very passionately at the heart of the scheme. This is not public understanding in the old sense of academics simply telling people what they needed to know, but it is conversationally based, so there is listening as well as speaking in this formal way.

Q85 Dr Gibson: Would it help if all universities developed an academy in their area?

Professor Eastwood: I think from the point of view of a public engagement scheme, that sits outwith the way in which universities are engaging with schools, but a recent survey has demonstrated that all universities engage with schools and a number have multiple partnerships.

Q86 Dr Gibson: But you have to put a lot more money in to get universities to come out of their ivory towers and go in there - and you hear of £1.2 million recently - to engage with the public. How are they going to do that?

Professor Eastwood: Well, in the case of the UEA, they are going to build on the very successful public engagement that they had around their Festival of Science in 2006. In the case of the University of Manchester and its partners at Manchester Met and Salford, they are going to build on dialogues they are already having in East Manchester and Moss Side with difficult-to-reach communities in part actually around some rather interesting science questions, but in part around questions of social inclusion and social depravation.

Bill Rammell: If I can just pick up the point, universities do have good links and we want them to reinforce those links with schools, and academies is part of the way forward. We have got 25 universities pursuing those initiatives at the moment and also trust schools where there are a further 25 engaged in that process, and I do think that link between universities and schools is really important.

Q87 Dr Blackman-Woods: Can I just come back briefly to the issue of research. Are you gathering evidence that this dialogue between the public and academics is actually shaping research differently or is it just ensuring that what is carried out already in the universities is communicated more effectively to the public or is it both?

Professor Eastwood: It is both actually and the National Co-ordinating Centre in Bristol is charged with, as it were, advising on best practice, but also on, in real time, reviewing the effectiveness and impact of the public engagement initiatives and, if they are not achieving those aims, then we will make interventions to ensure that they do.

Q88 Mr Marsden: David, the Government has accepted the thrust of the Leitch Report, and the Minister has made the points already this morning that we obviously need to focus on economically valuable skills, that all those providers need to have a new learning culture and that it needs to have a significantly greater demand-led element. What evidence is there so far, given that Leitch came out nearly a year ago now, that some of the traditional higher education institutions, particularly the Russell Group of institutions, understand the challenges and the implications of Leitch for changing their own governance and teaching cultures?

Professor Eastwood: I think I would make two comments. Firstly, I see the Leitch agenda as a broad-ranging agenda. If we are talking about higher-level skills, we are talking about skills which comprise Masters-level qualifications, and what is the MBA if it is not an employer-facing skill, and it reaches right across the PhDs as well. There are, however, in Leitch and in our grant letter(?) new challenges, including the challenge of securing co-funded provision jointly between higher education institutions and employers. That was widely thought to be a hard ask, that was widely thought to be something that the sector would not be able to step up to. As of yesterday, we have funded 15 institutions around employer co-funded numbers, there are a further six major projects in the pipeline and by 2009/10 I confidently expect about 40 institutions at least to be involved in that and that will actually cover the range of universities.

Q89 Mr Marsden: You are talking there about actual projects and funding, but of course there is a subtler implication to Leitch and that is the culture of teaching and learning. Again I repeat my question: what evidence have you got that some of the implications of that are feeding through to the Russell Group, but not to other universities?

Professor Eastwood: I think what we are seeing are two things. We are already seeing universities having a fresh impetus to delivering learning in different ways and in different locations, including in the workplace, and there are some quite surprising institutions coming forward ----

Q90 Mr Marsden: Do you want to name one or two?

Professor Eastwood: Well, for example, we have just funded the University of Leicester and, interestingly, at the same meeting we will fund the University of Leicester and Leicester de Montfort both in employer engagement initiatives and I think what that demonstrates is the kind of sector-wide commitment that we are beginning to see to this agenda.

Q91 Mr Marsden: Bill, can I turn to you now again on this issue of changing culture and everything that goes with it. One of the things that is also clear, I think, from the discussion that has followed Leitch is the observation that higher education and further education are melding closer together, and that is an observation not least on the amount of HE that is now delivered by FE colleges, but it actually seems to be a very strong objective of government, that there should be much closer links between HE and FE. Do you think, therefore, that we are doing enough structurally to assist the connections between HE and FE, and I am thinking particularly of the issue of portability between HE institutions and portability of courses between HE and FE institutions?

Bill Rammell: Well, the review of credit arrangements that Professor Burgess led for the sector, which will mean by the end of the decade that every institution, if they are signed up to it, has to have a credit rating for their courses that can enable that degree of interchangeability, I think, will be important. I think there are greater links between the two sectors and we have got about 11 per cent of students being educated to degree level in the FE sector at the moment, but, as we look at our options of what we do, and we are going back to consultation in the New Year about the new structure, 14 to 19 funding will be routed through local authorities, post-19, what structures do we look at, one of the issues that we are reflecting upon is what are the best ways that we can actually maximise the output from both sectors. At this stage, and this is genuinely the case because we are looking at this on a week-to-week basis, I do not want to rule anything in or anything out, but I do think we need to see the best fit between the two sectors.

Q92 Dr Gibson: How can they ever be equal when one is doing top-flight research and you are funding them and the others are not? There is always going to be that kind of inherent snobbery in higher education, or they would have joined together in one institute.

Bill Rammell: Well, I think if you look, for example, at foundation degree level and you measure the outcomes, and in any degree programme, if you look at the QAA framework, there has to be a research input, but I think the outcome in many FE colleges at the moment, and their provision is delivered by the higher education sector, is very, very positive. One of the changes that we made during the FE and Training Bill which has just secured Royal Assent is the ability for highly performing FE colleges to be able to award their own - and I have probably anticipated the next question - foundation degrees and I think that is about ensuring that there is as much flexibility and innovation within the system to respond to the needs of business while maintaining an absolutely rigorous focus on quality.

Dr Gibson: But the research is so expensive.

Q93 Mr Marsden: You have indeed pre-empted my next question, but, given that we are all singing from the same hymn sheet about co-operation and collaboration between FE and HE, do you think the spat over the validation process of FE colleges doing their own foundation degrees, has that helped or harmed the prospect of the collaboration between HE and FE because, and I am not making a value judgment, there is no doubt that a large number of university vice chancellors, not least those in the House of Lords, got themselves very exercised on the issue?

Bill Rammell: I made the point earlier that I have got the highest admiration for the university sector, but they defend their territory whatever change comes forward. My very strong sense, from talking to people, is that they have now accepted this and they are working at it. For example, one of the commitments that we made within that Bill is that you have to have an articulation agreement to demonstrate, if you have got a foundation degree, how, if that suits you, you can go on to get a full honours programme, and that inevitably involves significant co-operation with a higher education institution. It is also the case that, even for those high-performing FE colleges, they may for a variety of reasons choose not to break their relationship in terms of accreditation and validation with the university because they are happy with it, fine, but this is about maximising the flexibility and innovation in the system and I do think it was an important change.

Q94 Mr Marsden: And not too much blood on the floor?

Bill Rammell: No.

Professor Eastwood: Indeed before that debate took place, HEFCE had already consulted on revising its approach to the funding of HE and further education, and we have agreement to that being strategic, that further education colleges which provide higher education will provide now strategic statements of the way in which they do it and the issue you raised a moment ago, Mr Marsden, about progression and portability will be a part of that as will issues around quality of provision and so forth. I think what we can see from the way in which we take that forward is strong collaboration, irrespective of whether an FEC is itself seeking a foundation degree or not.

Chairman: On that note, we will bring this session to an end. Can we thank Bill Rammell, the Minister for Lifelong Learning, and Professor David Eastwood, the Chief Executive of the Higher Education Funding Council, for their evidence this morning. Thank you both very, very much indeed.