CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 187-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

INNOVATION, UNIVERSITIES AND SKILLS

 

 

FUNDING FOR EQUIVALENT OR LOWER LEVEL QUALIFICATIONS

 

 

Thursday 17 January 2008

PROFESSOR BRENDA GOURLEY, PROFESSOR DAVID LATCHMAN,

MS SALLY HUNT and MS GEMMA TUMELTY

BILL RAMMELL MP and PROFESSOR DAVID EASTWOOD

Evidence heard in Public Questions 1 - 151

 

 

USE OF THE TRANSCRIPT

1.	This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2.	The transcript is an approved formal record of these proceedings. It will be printed in due course.

 

Oral Evidence

Taken before the Innovation, Universities and Skills Committee

on Thursday 17 January 2008

Members present

Mr Phil Willis, in the Chair

Mr Tim Boswell

Mr Ian Cawsey

Dr Ian Gibson

Dr Evan Harris

Dr Brian Iddon

Mr Gordon Marsden

Ian Stewart

________________

 

Examination of Witnesses

 

Witnesses: Professor Brenda Gourley, Vice-Chancellor, Open University; Professor David Latchman, Master, Birkbeck College, University of London; Ms Gemma Tumelty, National President, National Union of Students, and Ms Sally Hunt, General Secretary, University and College Union, gave evidence.

Chairman: Good morning, and could I welcome our witnesses to this, the first session of a short inquiry looking at the Government's policy on equivalent and lower qualifications. It has produced quite a lot of interest and a huge amount of evidence which I actually have in front of me today, which is a pile members have to carry around with them wherever they go. Our first session, which is a tight session with roughly 40 minutes, is Professor Brenda Gourley, Vice‑Chancellor of the Open University, welcome to you; Professor David Latchman, Master of Birkbeck College, University of London, welcome to you, David; Gemma Tumelty, the National President of the NUS, National Union of Students, welcome again, Gemma; and, last but by no means least, Sally Hunt, the General Secretary of the University and College Union, the UCU. Could I say at this moment that I do apologise to all the literally hundreds of people who have written to us asking to be oral witnesses this morning, it just would not have been possible to take evidence from everyone, and I am just going to call for any declarations of interest from my Committee before we start.

Dr Iddon: I am a member of the University College Union and I have another registered interest.

Q1 Chairman: Thank you. Could I start with you, Professor Latchman? The Government has claimed that it is public policy to give priority to students who have not had the opportunity to study for a first degree. That is perfectly reasonable, is it not?

Professor Latchman: I think it sounds perfectly reasonable and it is a nice simple line. The problems are twofold. First of all, that by doing that, we will restrict support for a number of people who are re-skilling in order to take advantage of changes in the labour market - women returning to work, people who have had disabilities and so on, and people who simply want to change careers. So on that level we will be disadvantaging those people. Secondly, if we do disadvantage those people and we gain money by doing that, Government says that money will go into recruiting new first time students. I do not think we or the Government believes there is a huge demand for more full-time students.

Q2 Chairman: We will just come back to that but the actual principle of the Government's policy you are saying that you do not agree with, that in a limited pot of money, and I think you would accept that there is a limited pot of money, and you have to have priorities, the priority for you would be for students with degrees to get a second degree rather than a first one?

Professor Latchman: No. What I am saying is there are reasons for people wanting to do second degrees, and the second part of the answer was going to be that the extra students we might be able to teach for the first time, that you are and the Government is referring to, will be predominantly part‑time students. There is no evidence of huge demand there. What we need to do is take the time to resource the part‑time sector properly so that it can actually recruit those hard‑to‑reach students into part‑time studies, as the Secretary of State repeatedly said we should, and that is not going to be achieved by removing large numbers of resources from the part‑time sector, so it is an argument about the part‑time students currently studying for ELQs and an argument about where the other students are coming from in a sector where the part‑time sector has had its legs cut off.

Q3 Chairman: Just for clarity, as far as Birkbeck is concerned, the majority of ELQs that you offer are at the lower level, are they? Graduates gaining other skills? You target mainly re-skilling ‑‑

Professor Latchman: Yes, graduates gaining further skills, either people doing further Bachelor degrees, or people who are doing further Masters.

Q4 Chairman: As a rough proportion, how many of the total number of students are actually doing a lower qualification?

Professor Latchman: It depends on your definition of lower qualification.

Q5 Chairman: Not at Level 4?

Professor Latchman: All our qualifications will be level 4 and above.

Q6 Chairman: Professor Gourley, the basic policy of the Government which is firstness, applies at level 2, level 3, level 4. Why is that not right?

Professor Gourley: I think what you have to do is put it in perspective. We are talking about £100 million here and in the context of the higher education budget that is not a lot of money. It is a lot of money to individual institutions, of course, and to the part‑time sector but it is not a lot of money, and the risk that you are entertaining ‑

Q7 Chairman: I am trying to deal with the principle.

Professor Gourley: Yes. I am saying that there is a risk of moving money from the one group to the other. Both groups should be supported because the amount of money is too small against such a large risk, and you are risking the skill sets that you need for a first world economy.

Q8 Chairman: The Government has a laudable objective following the Leitch report of actually growing the number of students with a first level 4 qualification. Do you accept that is a laudable objective for Government to have?

Professor Gourley: I think it is an important objective, and there is a lot to fulfil that.

Q9 Chairman: Given a finite sum of money in the higher education sector, and it is a huge amount of money going into the higher education sector, where else would they find £100 million in order to grow the level 4 first qualifications, in your view? Where could they find it?

Professor Gourley: I do not think that £100 million is a very large sum of money to squeeze out of the sector.

Q10 Chairman: Where would you find it?

Professor Gourley: Well, they are finding it in the first three years effectively by eliminating the inflation adjustment across the institutions, so if you want to squeeze the institutions it is £100 million across the whole sector, but what you have done is take it out of the part‑time sector which has made it very burdensome.

Q11 Chairman: Gemma, why are you concerned about people who have a graduate qualification having another qualification when so many young people in particular are not even getting access to a first qualification?

Ms Tumelty: The issue is there is no evidence to suggest at the minute that those people who do not have degrees are being pushed out by people who are furthering and re-skilling. I have not seen any of that, and certainly I have not seen that element of competition or that demand is being unmet. I am worried particularly ‑‑

Q12 Chairman: That is not the issue, though, is it?

Ms Tumelty: I am worried about the impact on equality as well, particularly with women who have had career breaks, who maybe need to re-skill or up-skill before going back into the workplace, which is a really important issue seeing as women students make up 62% of part‑time students, so they are going to be massively disproportionately affected by this decision.

Q13 Chairman: Should you not be worrying about women who have not got a degree in the first place, so many of whom drop out of school at 16?

Ms Tumelty: Absolutely, but obviously the Government has said that there will be an additional 50,000 students allowed for in the Comprehensive Spending Review and in the run‑up to 2011. Is this 20,000 additional to those 50,000? What evidence is there that ELQ students are pushing first-time students out of having that opportunity to go? The issue is I have not really seen that, and there seems to be some urgency but no rationale behind that.

Q14 Chairman: Sally, it does not matter to you and your members who you teach provided they have got jobs and students. Why is this important?

Ms Hunt: What is important is not setting one group of students against another, because certainly any member of the UCU who teaches in higher education is looking to make sure that there is access according to what the Government asks us to do. What I am finding interesting in this debate is we are asking to set one group of students against another and what is quite interesting is for once I could actually say there is a General Secretary who completely agrees with the Prime Minister. He spoke at Greenwich in October and said: We do not have one chance; we have 1, 2 and 3 chances; it is lifelong learning and we have to unlock the door throughout people's lives. What he did not say is: But you have to carry on paying more and more if you want to achieve what I have asked you do in terms of re-skilling population and the working force. What we have to do is recognise there are definitely going to be cuts. It is not our imagination that this is going to impact on student access, or that that will bluntly mean that the members I represent are more at risk in terms of their jobs. It also means we are sitting looking at a policy that there is one Vice Chancellor in the whole country who agrees with it, he happens to run a private university, and I am in total agreement with the Prime Minister and the Chairman of the CBI. I think we have to ask some serious questions. In this consultation, in that huge pile of documentation you have there, which one says: Yes, Bill Rammell, I agree, thank you very much for making sure that second chance students, those who are trying to get back into the sector and re‑skill, are not going to be able to afford it? That cannot be right.

Q15 Ian Stewart: Is the opposition that you have to this an opposition to the principle, or is it opposition to the timing and lack of consultation in your eyes?

Professor Latchman: I think it is both. The principle certainly in simple terms sounds good but is far too simplistic, but the problem is it is being compounded by complete lack of consultation. We have not had consultation about what other possible sources of this hundred million pounds there are, we have not had clear evidence of student demand, and most importantly, as your predecessor Committee investigated, we have not had proper resourcing of the part‑time sector and the students who want to study part‑time in terms of grants so that we can achieve these hard‑to‑reach students, and that is what the predecessor Committee found.

Ms Tumelty: Also, there is going to be a review into the size, structure, nature, make‑up and funding of higher education in 2009 as was allowed for in the 2004 Education Act. It seems somewhat putting the cart before the horse to unilaterally withdraw funding from one particular group of students as we run up into that review when really, in my view, and I think in all of our views, if we are going to have this question around whether we should fund second degree or second chance learners at all, it should be deferred to the 2009 review when we can look at how the whole sector is funded, and what support we give to individual groups of students.

Ms Hunt: I completely agree with that. It is a really important principle that if you have access it has to be on an even level. If you have a sector that has to be open it has to recognise that no policy initiatives should impact in the way this has. We are not talking just one group of universities, either those that specialise in research or those that specialise in developing better access for working class students. It is going across the board. I have members in Oxford University, and in Westminster, and throughout the country who are telling me that continuing learning is going to be hit across the piece. It is the principle. If we believe that we ought to be supporting and broadening the base of higher education, what we must not do is cherry pick in terms of funding between the sectors.

Q16 Chairman: Should it be the principle throughout at level 2, 3, as well as 4? It should be a principle?

Ms Hunt: Yes.

Q17 Chairman: Because you cannot just pick and choose.

Ms Hunt: No. I think for the members I represent what is important to us is that if we are asked to develop and launch programmes that encourage students in, and support the economy, we expect the policies and government to enable us to do that, and I think unless we actually look at this across the piece, as Gemma has said from NUS, in terms of the overall funding review, we are in danger of doing something that is going to be putting the cart before the horse.

Professor Gourley: I agree completely.

Q18 Mr Boswell: First on the principle, I wonder if our witnesses can just comment on whether or not any minister can make any changes without an element of risk ie, special risk, picking up slightly what Professor Gourley said, and, secondly, whether you would equally accept that resources, even when you say they are small change, are limited and therefore one has at least to set out the agenda for the priorities? Could I follow that by returning to the issue of retrospection? I was interested in something specifically in the Birkbeck evidence, I think that is the only place I saw it, about the use of the student reference frame retrospectively, and I wonder if the witnesses can draw out a bit the different effects of actually funding with reference to something when this was unknown to our witnesses as a decision, as against something which is going forward and requires an on‑going adjustment? Should I put it crudely, HEFCE might be wanting to hear from your lawyers on that matter, for example.

Professor Latchman: I could not possibly comment on that but we are having a debate here about the principle which is very interesting, it is a debate we should have had nationwide before this was brought in, and the speed of implementation has led to the use of this retrospective data. So that members of the Committee are clear, we will be fined from our grant on the basis of ELQ students that were recruited in 2005‑6 in a situation where there was no question of whether that was equally valid to non ELQ.

Q19 Mr Boswell: And no debate, I suppose?

Professor Latchman: And no debate, so that is the situation because that is the only way that this can be implemented, and as we go forward the question that has not been answered, if this policy comes in and is maintained until 2050, is will we still be using 2005 data, or will we be asking students to register whether they have an ELQ or not? If that is the case, universities will spend huge amounts of money on policing this system on behalf of the government because we will have to investigate qualifications, we will have to find out whether those things have been properly recorded, and there will be a huge incentive to students who graduated a number of years ago to lie because there is no national database that you have to check it with.

Q20 Mr Boswell: I suppose there is a distinction here between students who come to you with claims of qualification, where you can ask to see their certificates, and students who are burying those claims of qualification and nobody would know?

Professor Latchman: That is precisely the point, because to do the ELQ you will not have to prove you have the previous degree because it is, by definition, at the same level in a different subject. So it is not about progression.

Q21 Chairman: Just before we finish on this, can I have roughly a one or two word answer, starting again with you, Professor Latchman, to this question? In terms of the principle, any student with a current level 4 qualification who wishes to study for another qualification should be funded, as far as you are concerned, end of story?

Professor Latchman: Yes. I believe in open access, but I also believe we should debate this issue properly before we change the funding system.

Q22 Chairman: But that is the position. Is that your position too?

Professor Gourley: Yes.

Ms Tumelty: Yes.

Ms Hunt: Yes.

Q23 Mr Boswell: Terribly briefly, because I am conscious of time, sometimes there are unspoken assumptions in these sorts of decisions. The words "academic tourism" have not featured in anybody's literature on this and I am drawing an analogy sometimes used in benefits tourism. Is there any view in the minds of our witnesses that this decision is driven by some fear of perpetual students hanging on without being able to make a career decision or not?

Ms Tumelty: I would say maybe once, when we got free education or grants or whatever, that would be an absolute issue but now, where students are having to pay top‑up fees and having to pay back their loans and having rising living costs, I would really like to see the evidence that there are perpetual students out there.

Q24 Chairman: Professor Gourley? Perpetual students?

Professor Gourley: Well, ELQ students do not get funded in the same way anyway as first time students, but we have done a survey of our ELQ students and 75% of them are studying for vocational reasons, and only 8% of them are studying for personal enrichment.

Q25 Dr Gibson: I am studying the Secretary of State's every word and every speech he is making in the first three months and one he made at the Open University was interesting in which he said, "We have asked HEFCE to redistribute ‑ not cut ‑ £100m of core teaching grant over three years. This is under a third of the money we currently spend on ELQs". So he is not going for the whole pot, is that true?

Professor Gourley: I think so.

Q26 Dr Gibson: Why not?

Professor Gourley: I think there is the question of being able to fund the exemptions and the question of putting some of the savings back into the system to fund particular priorities with respect to employer engagement.

Q27 Dr Gibson: So it sounds like there is a cunning plan somewhere being worked out by numbers, or is it guesswork, do you think?

Professor Gourley: I do not know what it is at the moment.

Q28 Dr Gibson: Why is the Minister isolated on this?

Ms Hunt: Because he is wrong!

Q29 Dr Gibson: That is a Newsnight answer, not a Select Committee answer!

Ms Hunt: You can ask it three times; I will still say he is wrong.

Q30 Dr Gibson: Is there any reason why you think the Minister comes over as getting very little support in this, because usually the smart government gets the support of the professionals before they institute some new policy change. Why do you think has that not happened?

Ms Tumelty: I think it is interesting that there is such a broad coalition against these proposals from students to lecturers to Vice‑Chancellors to the CBI ‑ not someone we often share values with ‑ and actually I cannot find anybody that agrees with this decision. I think the issue is consultation, there was not enough of it, and I also think that there has been no clear rationale published around exactly what that money is going to be used for. Certainly HEFCE have said that it is going to be found for priorities not yet set.

Q31 Dr Gibson: I thought there were going to be 20,000 new students?

Ms Tumelty: How they do that, who they are going to be, whether full-time, part time, how they are going to get through the door - we have not seen any of that.

Q32 Mr Cawsey: Who speaks for them? You give a list of all the people in the system now. What about the ones who are not getting into the system?

Ms Tumelty: NUS obviously speaks for students who are pre application as well, and actually we have concerns about the whole education sector from further through to higher, and want to see the most students we possibly can in the sector gaining from education and skills. Yes, we would want more students in the system, so of course we want those 20,000 extra students in place but, as Sally said, why should we pick those students against students who are re-skilling and up-skilling and actually serving the economy well.

Professor Gourley: Could I add something to that? The Open University does an enormous amount of marketing, as you know; it has all sorts of outreach programmes to get students in, it is one of our core missions getting people into higher education that would not have seen themselves as higher education candidates. At the moment we have no unmet demand at all; we are taking all the students who apply to us.

Q33 Dr Gibson: But the Government has said quite clearly to you that you only need 3,000 to make up the shortfall? That was in the speech, I seem to remember. What did you do when you heard that?

Professor Gourley: I have to say I am rather mystified by that figure. I am not sure how you lose 29,000 students and gain 3,000 and come out square. I suspect the 3,000 students are probably full-time equivalents, which in part‑time terms would be at least two to three times the number, and it is not easy to simply add seven, eight, nine thousand students overnight. We already do very heavy marketing and outreach programmes to achieve the student numbers we have.

Q34 Dr Gibson: But the insinuation was that the money lost would be regained by having these students. Do you accept that or do you think it is pie in the sky and just putting a finger up in the air and guessing?

Professor Gourley: The Government has a hope that a lot of the students that we try and encourage back into the system will be co‑funded by employers. We do not share that hope and we certainly have not got evidence of it. In the same survey of ELQ students, 12% of our ELQ students got some support from their employers and 9% got full support. That does not change a pattern we have seen over many years.

Q35 Dr Gibson: But it is a fair argument an employer should play a greater role in higher education. What are you doing to try and achieve that?

Professor Gourley: We do a lot with respect to employer engagement and we have some very substantial programmes with employers - Microsoft, Cisco, all sorts of employers - but we have to accept the fact that a lot of students are actually studying to escape present employers not necessarily stay with present employers, and we also have to accept that most people nowadays do not have one employer and one career, they have four, five, six different careers over a lifetime, and the economy is offering them all sorts of different kinds of careers and they have to up-skill and re-skill to take advantage of that. Employers have no particular interest in supporting that.

Q36 Ian Stewart: Do you think, Professor Gourley, that this debate is a surrogate for a wider debate about employer involvement in higher education?

Professor Gourley: Yes.

Q37 Ian Stewart: Why?

Professor Gourley: Why should there be a surrogate?

Q38 Ian Stewart: Yes.

Professor Gourley: Well, I suppose people think that incentives are a way of getting people out of the woodwork, and if you put incentives in place all will be right.

Q39 Ian Stewart: Is there a necessity for higher involvement of employers in higher education?

Professor Gourley: I would think it could be improved.

Professor Latchman: I think certainly one would support the idea that employers should provide more support, and that is a laudable government aim. The problem is this is being rushed in with relatively little consultation with employers. It is exactly the same at Birkbeck - many students will not tell us who their employer is because they are studying to move on, and in London, where I have obviously a particular interest, many employers say: "We can hire people with the appropriate skills. They may not be Londoners or British citizens, we can hire them from abroad, so why should we pay to fulfil the government priority that Londoners should be employed or UK citizens?"

Q40 Mr Cawsey: I want to talk a little bit about this whole issue about re-skilling people that are coming back for training because of that. The Government has said that people will be able to update and broaden their knowledge and skills through foundation degrees. For those wishing to top up their qualification, for example, from a higher national diploma to an honours degree, ELQ funding is protected as well as courses that employers co‑fund. Do you think that these exemptions provide enough safeguards for people looking to retrain and re-skill, and if not why not?

Professor Latchman: No. We have to remember these are proposed exemptions and we are awaiting the outcome of the consultation, but at the present they do not and the reason they do not is they have been designed to add up to a certain saving. So there was a bottom line saving of £100 million. The exemptions that have been put in are designed to make sure that, without the other things that are not exempted, we save £100 million. So why is pharmacy not exempted when veterinary medicine is? Why are we in a situation where psychology which leads to lots of medically relevant qualifications is not exempted? Because they cannot make the saving if they exempt psychology because psychology is the biggest ELQ subject nationwide. So these things are not logical. I am sure we will find in your pile of papers people who argue that the entire part‑time sector should be exempted and we would certainly support that; I do not think it is realistic if the policy comes in but certainly something that says people who are returning five years after initial study should be exempt, five years or more, because that will get at these mythical serial learners who have to be got rid of at all costs, but would not affect people trying to re-skill. So subject‑based exemptions, unless you have a logical debate, without having the bottom line having to be £100 million, are nonsensical.

Q41 Mr Cawsey: We do not have to argue that it has a bottom line at all, and we might argue that the principle is sound if the exemptions are right. What would you say to that and what do you think those exemptions should therefore be?

Professor Latchman: We have said already that we all do not accept the principle, and obviously it is for the Committee to make up its mind, but if one did accept the principle the exemptions should be exemptions along the lines of either everyone studying part‑time, or people studying a certain number of years after their initial qualification. We should not try and second‑guess the value. You might say there is no value in a philosophy degree. Actually, in a survey of employers, they reported that philosophy degrees are one of the degrees they most want because people have the ability to think logically with a philosophy degree.

Chairman: I am delighted to hear that!

Q42 Mr Cawsey: We are just looking for the evidence of the Chairman thinking logically!

Ms Hunt: If I could just comment on that, I think you will probably find in some of your evidence examples of where people are giving you different ways of doing that. One of the ones we have looked at quite carefully is from the University of Sunderland and that shows exactly why the exemptions will not work because a lot of their investment is working in the cultural field with the local community. It is not going to be something that says it is health or pharmacy or one of those key areas that I think we would expect to have put in front of us if we were looking to justify that. I think David is right, we have to look at this in a more organic way. We are not against it for the principle's sake. We simply think you have to take a stand that says either you are saying access or not and the moment we start going down the road of judgment as to which subject we are in danger because we are judging the outcome, and I do not think any of us believe that is possible. We strongly believe that the principle is one that should be accessible and that what we should do is refer this back into the funding review, because that is the only way, credibly, we can advise you and the Government in terms of fulfilling the objectives that we all want.

Q43 Chairman: May I just come in with a rider? Sally, there are so many inequities within the education system in the way in which FE students are treated, both full and part‑time, the way in which full-time HE students are treated as opposed to part‑time, why pick on this as the inequity which has got to be fought at all costs rather than some of those massive inequities which appear elsewhere?

Ms Hunt: I will come back and argue the corner on all of those areas any time you ask me to, with pleasure. What we have been asked to do today, though, is give you a view cross sector from the employers, from students and from staff, as to whether we think this consultation is credible and the recommendations coming out of it are ones that are logical in terms of government policy. We are telling you as clearly as we can that we do not know what happened in this consultation and we ideally hope you will be able to elicit from HEFCE the other options they possibly put to Government; and we would like to know how this fits in with the Leitch agenda because we will support that - I am hearing a deafening silence from those I might think might support. We are here to help with that but we are not going to put one group against another. Come General Election time we will give you a view on the whole lot but at the moment let's concentrate on this. I do not think this is right.

Q44 Mr Cawsey: On the exemption issue it could look, from the debate this morning, that it is a more comfortable life to allow people to clock a second and third lap than try and encourage people on to the track for the first time, and what the Government is trying to do is open up those opportunities. Is there a principle where you could have exemptions to free up extra capacity for that, or are you just against the exemptions as a principle full stop?

Ms Hunt: I am.

Ms Tumelty: Again, it is the lack of evidence that I have seen and that colleagues have seen that says that those who are wanting to go into university for the first time are being turned away because there are people doing second degrees. Getting first time degree students into university, into higher education, has to be a priority as with the wider participation particularly but also those who need a second, third, fourth chance should be given that opportunity to do so, and the Leitch agenda and the wider participation agenda should not be at odds with each other but should be about making sure we have the graduates and the second life chancers.

Q45 Mr Cawsey: I do not disagree but, more simply, it may well be that there is not the demand at the moment, but if the Government does not do something to try and create the demand we will all just stop in the comfort zone and the comfort zone keeps a lot of people out for ever.

Ms Hunt: No, no.

Professor Latchman: The very important point here, including unmet demand or whatever, is that if there is demand it will be demand for more part‑time places. That is not going to be achieved in a system where you cut off the legs of the part‑time sector by doing this ELQ, and continue to have far worse resourcing for part‑time students in terms of the support they get even if they have very low incomes than full-time students. That is not the way to attract more people. We need debate and more resourcing for those part‑time students.

Q46 Mr Cawsey: That is more an argument about how you make this proposal work.

Professor Latchman: I think it is an argument that we should have had a debate about this proposal.

Q47 Mr Cawsey: About the principle of what we are trying to do?

Professor Latchman: Absolutely. We should have debated the principle and the way the money could be used if it was released.

Ms Tumelty: The other concern is the viability of courses. It is ridiculous to think that ELQ students are taught somehow in different lecture theatres to other groups of students, and if this funding is cut then what it could do is damage the viability of other courses and therefore have an impact across the sector of those first time students as well.

Q48 Mr Boswell: Do you have any specific evidence of that? Specific evidence of course is likely to be at risk because of the higher proportion of ELQ.

Professor Latchman: Yes. Every single course in Birkbeck has a mixture of ELQ and non‑ELQ students.

Q49 Mr Boswell: Are they all equally vulnerable?

Professor Latchman: It depends on the proportions and how students react to changes in the fee regime we may have to introduce.

Q50 Chairman: We have received some evidence on that and we will obviously publish that with our report. Gemma, yourself and Professor Latchman have both prayed in aid of Leitch. Leitch was quite clear in his recommendations that as far as level 2 and 3 were concerned the State should provide the bulk of funding but for most of level 3 and level 4, but specifically 4, it should be the employer and the individual, so is not the Government just simply following the Leitch principle?

Ms Tumelty: I do not think that Lord Leitch suggested or considered that withdrawing funding for ELQ students is an appropriate response to the challenge he set out, and it was a very laudable challenge around meeting the skills agenda going forward, but certainly I would like to know whether Leitch supports this as a policy because I do not think it is actually in line with what his proposals laid out.

Q51 Chairman: He specifically said at level 3 and level 4 it was the responsibility of the student and the employer.

Ms Tumelty: Absolutely.

Professor Latchman: The point is that Lord Leitch has not been asked his view on whether this ELQ policy is in accordance with his agenda.

Chairman: We might just do that.

Q52 Dr Harris: Gemma Tumelty said in a previous answer to Ian Cawsey that it was right that there should be priority given to first time students, and my old public health boss said whenever there is a priority there has to be a posterity to compensate because nothing can be a priority unless, relatively speaking, something is deprioritised. Can any of the Panel say what they think could be deprioritised that is currently funded in order to give the priority to encourage wider access to first time students?

Ms Tumelty: That is not a fair representation of what I said at all. I said it is absolutely vital that we are getting more first time students in but that should not come at the expense of another group of students. I do not think we should have that priority.

Q53 Dr Harris: What should it be at the expense of?

Ms Tumelty: We do not believe that you should pick one group of students against another group of students in terms of funding.

Q54 Dr Harris: I do not want to push this too much but if you say that there must be more of something and there is a limited pot, and I am not in favour of a limited pot but there we are, it is where we are, what could be cut or economised to provide for that part?

Professor Latchman: First, as we have said before, there is no clear evidence that there are huge numbers of students banging on the doors given the current regime and the current support for part‑time students. Secondly, we would say if there is a need to release this 100 million, which is a small part of the budget as the Minister himself has said, then there should have been a proper debate about what the options are and that is the key. I do not think it is for the sector itself to suggest those savings; it is for things to be put forward and debated against one another.

Q55 Dr Harris: There is the cushioning arrangement and the phasing arrangements which mean that for three years there will not be any, it is argued, net loss of income for institutions. Do you agree that three years is enough time for you to make other arrangements to protect your 2010/11 or 2011/12 position, or do you not accept the arrangements as you understand them, that there is going to be protection?

Professor Latchman: I am glad you asked that last part of the question because there is a protection and of course we welcome that, but if one takes Birkbeck's situation the safety netting, of which we will need £4 million a year in 2010/11 according to HEFCE's figures, is in cash terms, so that means we lose our inflationary uplift which on our inflation figures would be around £600,000 year‑on‑year. We have not heard whether there will be safety netting for the aspect of the grant dependent on student numbers. So the core grant is safety netted but is the widening participation element? That goes on total fundable student numbers. We could lose another million pounds in that. Is the capital allocation that we get for buildings going to be maintained even though that has an element of student numbers in it? So there are all those issues. Leaving that aside, during this three year period when we are safety netted, we are asked to respond with no guarantee of safety netting, and we will respond. We are already in dialogue with HEFCE about ways we could do things we want to do anyway about employer engagement and so on. The problem is that any additional resource we attract in by bringing in 500 co‑funded students, a thousand students from East London as we have done, and we bring in all those, HEFCE will say: "That is very nice, your safety netting is reduced down because you have it on the this other line of your budget now", but we will not get any new resource to then go forward to build on those initiatives for further initiatives, because all we are doing is reducing the safety netting.

Q56 Dr Harris: This widening participation funding which may not be safety‑netted, would you say that if that is not safety‑netted that will particularly impact on those institutions in terms of a reduction in funding that they suffer, who are doing most to widen participation?

Professor Latchman: Absolutely.

Q57 Dr Harris: And that would run counter to government policy and stated policy in this area?

Professor Latchman: Absolutely.

Professor Gourley: I wanted to respond to the question whether the three year safety netting is enough to get the institution realigned. I have to say that it will cause damage but we will manage the first three years with the safety netting. What particularly concerns us is what happens after the safety netting because the Open University, as you well know, creates courses over a longer period of time than ordinary institutions where you can walk into the classroom and be a week ahead of the students, perhaps - of course that does not happen! ‑ but we have longer lead times. Not only that, of course, but if you are going to take 29,000 students out of our system that is a serious chunk of our business and a serious realignment of our resources, and we have to start planning how that is to be done right now, so we are most concerned about what happens after the three years rather than what has happened during the three years.

Q58 Dr Harris: It was raised, I think, by Ian in an earlier question, but it falls within this category, what happens to courses which may not be sustainable if lots of ELQ students are no longer able to do them? The Government say they are allocating another £20 million in order to cushion that. Have you any idea in terms of data as to whether that would be sufficient? I am always troubled by round figures, rather like 50% targets for participation but do you have any data to suggest whether that is adequate or not?

Professor Latchman: It is inadequate and we know from HEFCE's own figures that it is. Several years ago they commissioned a report from JM Consulting which reported that on a full-time equivalent basis the costs of part‑time students to the institution could be up to 40% more.

Q59 Dr Harris: 44%.

Professor Latchman: So what do we get now? We get a 10% premium for that under the current system and your round figure of £20 million will raise that to 13.1%, so that is 13.1% against existing extra costs of 44%, or around there depending on the level of the course, and so that is entirely inadequate. We have been arguing for better support for part‑time for umpteen years. It is ironic that it is only coming at this moment to the background of huge damage to the part‑time sector.

Q60 Ian Stewart: The OU and Birkbeck have both proposed that for returners after five years or more there should be a subsidy. How do you identify which of those returners or re-skillers will be for employment purposes and which are not? In addition to that, what percentage of those studying for an ELQ would benefit from such a change? And, of course, have you made any estimate of how much such an exemption would cost?

Professor Gourley: 75% of our ELQ students are studying five years after their last qualification, but can I just say that there is no question that part‑time students are in effect a marginal activity in most institutions because they do not attract top‑up fees and the kind of income that are attracted by full-time students, so the kind of courses that are offered to part‑time students are a much more marginal activity. Take out the ELQ students and it is possible that a whole lot of courses will become uneconomic and not capable of being offered. There is no question at the OU that the number of course offerings, the number of options, will be reduced.

Q61 Chairman: Sally, just putting aside Birkbeck and the OU, because you are dealing with the Sunderlands and the Middlesbroughs ‑‑

Ms Hunt: The key to remember is if you start from the premise of continuing education across the piece, and it does not matter whether it is pre‑'92, post '92, whether it is Ruskin or not, whether it is Oxford, Oxford Brooks ‑ I have a list as long as my arm that tells me this is across the country. What is also important is remembering that when we say continuing education we have to say these are not just percentages but students sitting in a room, next to each other; some will be coming back, yes, after five years, some will be coming back to re-skill, sitting next to someone else doing that same course - teaching is not organised according to funding streams but according to disciplines, and this is going to impact. Whilst I am very pleased that we can sit here and talk together, employers and unions together, what I am not willing to say to you is that there is not going to come a point where we are going to be sitting arguing with each other and I resent that frankly, because it should not be for us as trade unions to be saying that in order to defend our jobs we have to attack the people that I know three years ago once this goes through stood here in front of you saying: This is a policy that will impact not just on students and the economy but the people I represent. And it is across the country and it is coursewide, which is why we are so concerned about it.

Q62 Ian Stewart: When Professor Gourley explained that the OU would still try to provide the same number of, maybe even more, courses, what about the universities like Manchester Metropolitan University, which is in the Manchester area the university that concentrates on part‑timers. What is the implication there, Sally?

Ms Hunt: Looking at my figures here, Manchester Metropolitan we are looking at and what we can see, if I take an FT, it is going to be the equivalent of 666, and FT is quite important because if you multiply that up, in terms of a whole range of institutions, whilst you can say it is marginal, and I do understand the use of language, Brenda, what that does not mean is it is something that is not going to affect people. It is. What I have is data. You have it in your evidence; you can pick any one of your cities. Frankly, you can sit in any one of your constituencies and say: Which of the population I represent am I going to say is not going to be funded? I am afraid there are real concerns. Just as matter of interest myself I looked at what would happen in Hull because I thought OK, that is probably one of the areas where Alan Johnson will be quite interested because he is the Minister for the NHS and he will want to have a look. When I look at that we are talking 1,500 odd places from that area and when I ratchet that in terms of real figures it is going to impact. Why your question was important, sir, was this: you cannot cherry pick. You cannot pick a strategic direction that is not going to exclude people who are going to go back into the job market. I say again, I genuinely think on this one is Government is right, I think it is cross‑party. It is right, we all know, to have lifelong learning; we all know that Leitch was right; we all agree that learning is not something that stops at 21 or we are all in deep trouble, but this is really going to cause difficulties, and it is something we genuinely ask the Minister to think again on because we know that cannot possibly be the outcome they expected. I do not think they realise the range.

Q63 Dr Iddon: What is the key question we should be asking the Minister from each of you?

Ms Hunt: What were the options considered? Who supports this? I would like to know what Sandy Leitch has said to him.

Ms Tumelty: Why should this group of students be considered in separation from other groups of students and why are we not deferring the decision about the entire funding of the sector, which is going to be happening next year, '09?

Professor Latchman: What is the urgency to rush this through now before the review, and what were the other options that were considered for saving the money? What are they going to do with the money saved?

Professor Gourley: Bringing more people into higher education is much more complex than just providing the places. It is to do with the same thing that keeps young people from higher education, leaving school too early and all that sort of thing. There is a complex set of social and cultural factors. What is the Minister doing to address those kinds of factors and prompt the demand, because at the moment the demand is not necessarily there.

Chairman: We will try and put most of those questions to him. Can I just say finally we have received 478 submissions to this inquiry; 470 of them have been critical of the Government's proposals, and 7‑8 - one is a bit dodgy! - are in favour. But could I, in summary, say you seem to have, if I have got you right, the issue, first of all, about the lack of evidence to make the decision; there is the issue of timing, why now; there is the issue of lack of consultation on the proposals; but, above all, all of you have emphasised that this is a principle for which you are fighting. Can I thank each of you coming this morning; you have been splendid witnesses. Thank you very much indeed.

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

 

Q64 Chairman: We now welcome our second panel this morning to our short inquiry on equivalent or lower qualifications, and we welcome and apologise to you, Minister, Bill Rammell, Minister for Lifelong Learning, Further and Higher education at the Department for Innovation, University and Skills, but you will appreciate there was quite a heated discussion earlier, and welcome also and apologise to you, Professor David Eastwood, Chief Executive of the Higher Education Funding Council for England. Minister, we asked for a memorandum on ELQs from DIUS. What we got was a short letter dated 14 January enclosing John Denham's letter of the 17 September, which was the letter to HEFCE, and HEFCE's consultation document of September 2007, both of which have been publicly available for four months, plus a two‑page internal analysis of the responses to consultation. Can I say that that was neither helpful to the Committee nor to the Government's case, bearing in mind that, of the 478 consultations that we have got here, less than eight, roughly seven, were supportive of Government policies. Why did you feel it was not worthwhile to send us, given the sensitivity of this issue, a full memorandum in order to support the Government's policy?

Bill Rammell: I apologise if that is the way that it has been received. HEFCE was in the midst of the consultation that it was conducting. Both I and Professor Eastwood had had an opportunity to discuss it with you at our recent appearance at the Select Committee. We knew as well that Professor Eastwood and I were coming along this morning to discuss it in detail with you, and we took the view that that would be the best way for you to be able to question us, to challenge us, to scrutinise us, on the proposals that were being put forward. I would wish to make clear that throughout this process, if we separate it out because Professor Eastwood quite naturally and responsibly has gone to great lengths during the consultation period to talk to a whole range of concerned individuals and institutions, but similarly, even though the consultation is with HEFCE, I and the Secretary of State have met a whole range of individuals and concerned institutions to discuss the detail of this - indeed we have done that now on numerous occasions across the floor of the House. So if what we presented with you was unhelpful, I apologise. There was certainly no intention not to give as full an explanation as possible.

Q65 Chairman: Well, can I ask you then a very straightforward question? Who took the decision to withdraw the £100 million of support for ELQ student fees? Was it HEFCE? Was it your Department? Or was it the Treasury?

Bill Rammell: It was Ministers, and that was clear in John Denham's letter to Professor Eastwood last September and it may help if I go through for you some of the deliberation that took place before we took that decision to re‑direct the funding, and it was within a context where we are most certainly not cutting funding to higher education - I have said this previously at this Committee, and all the facts bear that out. By the end of this CSR period funding will have increased to higher education in real terms by 30% since 1997.

Q66 Chairman: I do not think we are debating that; we are debating prioritisation, and where did this come about?

Bill Rammell: It followed on from the Leitch analysis of where we need to be, as a country and an economy, with our workforce by the end of the next decade. Sandy Leitch put forward this analysis and nobody within this House has challenged that analysis, but, in order to be internationally competitive, we need to move from today with 29% of adults educated to Level 4 to at least 40% by 2020 and, arguably, we need to go significantly beyond; 40% will allow us just to creep into the upper quartile of OECD countries. The whole thrust of Sandy's analysis was the higher you regard the qualification chain, the more you have to pursue an approach of co-financing where, yes, the State makes a contribution, but the individual and the employer make a contribution. We looked at the evidence and the fact is that there are 20 million adults within the workforce who are not yet at first degree level. Six million of those actually have A Level-equivalent qualifications and yet have not gone on to degree level, so we took the view that we wanted some further levers within the system to enable, and to ensure, that universities prioritised the recruitment of those students within the workforce who are not yet at first-degree level. In addition to that, within the CSR process, we had set ourselves a number of objectives. We wanted to maintain the unit of resource, we wanted to maintain, and improve, the student financial support package, we wanted to increase growth in student numbers and we wanted to improve the research base further. Given that policy impetus, but alongside it, the need to maximise our opportunities for growth, we took the decision that the best way to achieve that was to redirect that £100 million.

Q67 Chairman: I have spoken to a significant number of people from a variety of universities, and I am up to Middlesbrough next week to the North East to meet people there. What you are saying is that the Open University, Birkbeck and a variety of universities offering ELQs have not been simultaneously going out to seek to recruit the very people that Leitch identified in his report. What evidence is there that they are not doing that and what evidence is there that they can do it in the future?

Bill Rammell: The evidence that is there is that there are 20 million people ----

Q68 Chairman: No, I accept that, but what is the evidence that the universities are not doing it because it is a dereliction of their duty?

Bill Rammell: Well, I think they are doing it, but universities, in my experience, always respond to the financial levers within the system and universities have been very proficient and successful at doing that. Within what is a modest stimulation within the overall higher-education budget, and we were not going to bring it in overnight, there was a three-year transition phase, there was cash protection for institutions, it was on the back of an expansion of the higher-education budget, we certainly felt that this additional lever would lead over a period of time to a greater focus on that.

Q69 Chairman: Would you accept that a very significant number of the people in employment that Sandy Leitch identified, quite rightly, in his report are in jobs where the employer has no incentive whatsoever to actually fund an equivalent or lower qualification for those people because it is of no use to their business and that they are the very people who in fact will be affected by this decision? Do you accept that as a premise?

Bill Rammell: Well, in some cases with some employers that is the reality today, but, if we, however, accept that that is the status quo for ever, we are simply not going to achieve our higher-level skills ambitions. Therefore, we do need a cultural shift and that means we need financial levers in the system. It also means that we, as a government with employers, need to actually change that culture so that people will actually invest, but, even for those people who are with an employer who will not invest in them, there are other routes to reskilling that we are protecting within this process, such as vocational foundation degrees and such as a whole range of strategically important exempted subjects.

Q70 Mr Boswell: Do you accept that, if you are to increase participation in the way that we all have as a common objective and you wish to drill down into the existing labour force, quite a high proportion of those students will be likely to be part-time students rather than full-time students and, if they are, in what way do you think your proposals at the moment are going to be able to facilitate their learning as against some of those who may be the casualties of the proposals you have?

Bill Rammell: I think one of the features of this debate, and at one level I understand this, all the focus has been on the £100 million that is being redirected. The focus has not been on where that £100 million will be redirected to, and I think part-timers and more mature students are likely to be significant gainers through that process, but it is also the fact that we are increasing higher-education funding by 2.5% above inflation during the course of this CSR, so there will be further opportunities to make good on the part-time front. We also announced, HEFCE announced, in the original set of proposals that, bearing in mind that this does have an impact on part-time provision, they were going to put forward an additional £20 million in terms of the part-time premium, and that is on the back of a significant boost to the part-time premium in previous years. One of the things that I would like to do this morning is set out for you that this has been a genuine consultation on the implementation and I am minded, as a result of that, to write to HEFCE to suggest, and it is their decision, some changes to the original proposals. One of those is to increase that additional part-time premium from £20 million to £30 million.

Q71 Dr Gibson: You have declared a truly magnificent response that you are getting from a lot of people in the higher-education sector. Usually, they are a boring, dull lot, I find ----

Bill Rammell: That is just you, Ian!

Q72 Dr Gibson: Actually they have really got active on this issue, so there is something stirring there and it is good that they are getting involved in that and you have picked an area for them, but I am interested in why you picked that one to increase what is right, and we all agree with employers having more input into the system and more money getting working-class kids into the system and all that, but why do you not really go for the employers in some way? I have always felt that they get a damned good deal from our higher-education system. Football clubs get Beckhams and all that for a lot of money. We send a lot of young people and old people out into that market, and it is a market, as you put it, and we do not get much back from it. Now, I know there are schemes, they are here, there and everywhere, but you could be much uglier with the employers and make them pay for what they are getting.

Bill Rammell: Well, if we are going to have a debate about whether you have statutory force on employers to actually commit to education and training of their workforce, I have to say that I am not persuaded by the international evidence that that actually works effectively because employers can always find ways around the system, but do we need a change? Yes, we most certainly do. That is why we already have 15 projects that HEFCE are funding across the country on co-financing initiatives and just before Christmas I announced a further at least £100 million during the course of the next CSR period for co-financing initiatives with employers, and we will be shortly publishing a high-level skills strategy which gives added impetus and force to the need to change that culture and to recognise that, if we are to get to where we need to be in terms of economic competitiveness by the end of the next decade, then there needs to be a cultural change and it needs to be based on co-financing.

Q73 Dr Gibson: But why did you pick on this mechanism or did you consider others as well and down the line they might yet happen? It is strange that you picked on this one which a lot of people did not see coming, as it were, arguably, from the consultation, but there is argument about that. Did you pick on anything else?

Professor Eastwood: By "mechanism", do you mean the ELQ?

Q74 Dr Gibson: To put the money into getting first-timers into the system.

Professor Eastwood: As the Minister has said, the in principle decision was taken by ministers. We and our Board worked through the way in which that would be implemented and what we were seeking to do, which reflects the point the Minister was making earlier, was we were seeking to ensure in the implementation of the policy that the kind of priorities which the Government had already established, which Sandy Leitch had already pointed towards, would be protected and, as far as possible, be enhanced as we implemented the policy, hence the protection for employer co-funded, hence the protection for foundation degrees, hence of course the protection for strategic and vulnerable subjects which, in significant measure of course, are subjects that employers have indicated that they value highly and are in short supply.

Q75 Mr Marsden: Minister, can you tell the Committee how the £100 million, which is currently to be recirculated as a result of the changes on ELQ, will be divided between three particular initiatives, the co-funding with employers, support for full-time students and support for part-time students? What I am getting at there is, assuming we accept your premise about the recirculation of the money, who is going to benefit most from this process? Have you actually done a specific breakdown of that £100 million between those three groups?

Bill Rammell: The way the process works is that we do not micro-manage the numbers centrally in that way. What we do is give strong steers within the HEFCE grant letter that we will be publishing very shortly about where that money is to go and we do highlight that we expect the co-financing route to be a recipient. Our expectation is that, given the market that exists of adults within the workforce who are not yet educated to Level 4, a significant number will be part-time and in institutional terms.

Q76 Mr Marsden: I have to say, that sounds at the moment pretty woolly. I am not being a pedant over this because it seems to be absolutely crucial, but, if, for the sake of argument, you were to say that the vast majority of the money that you wanted to produce as a result of this £100 million change was going to go to an ambitious programme of co-funding with employers, that would have two implications. Firstly, it would take a considerable period of time to set up, but, secondly, you might even defuse some of the very sharp criticisms which have been made of this policy by Richard Lambert and by others at the CBI on the basis that there is nothing in this that would automatically encourage employers to take up the sort of numbers that you want.

Bill Rammell: On the issue of timing, it is very clear that this is a phased implementation. In the first year, this only affects 0.2% of the overall higher-education budget, so there will be time to adjust. In terms of what Richard Lambert said, he actually welcomed the proposals on co-financing and we will, within the grant letter, be making it very clear that the priorities for the £100 million are co-financing, and our own expectation is that part-timers will be major recipients. Another priority, and a very strong steer within the grant letter, is to widen participation, so we expect that to be the route as well.

Q77 Mr Marsden: Just for absolute clarification, is it your intention at the moment that that letter to HEFCE will include a specific breakdown of how that £100 million is to be recirculated?

Bill Rammell: Not in X amount of the £100 million for particular purposes because that has never been the way that the HEFCE grant letter operates. We give high-level steers at the priorities and that then needs to be undertaken in the proposals that institutions put forward for additional student numbers.

Q78 Mr Marsden: That most usefully brings me to you, Professor Eastwood, because you have had four months to think about this and you have been dealing with this in the consultation process. I am not asking you for figures on the £100 million, but have you had any thoughts as to where the majority of this £100 million being recirculated is likely to most benefit the sector?

Professor Eastwood: The £100 million, when recirculated, in round numbers, will put another 20,000 student numbers into the system by the end of the Spending Review period. That will constitute a significant proportion, but a minority, of the total growth that will be specified in the grant letter that the Minister has just referred to. Ministers have also announced that by the end of this Spending Review period they would expect to see some 20,000 learners on employer co-funded programmes, so that commitment ----

Q79 Mr Marsden: If I can just interrupt you there, in the previous session it was very clear that one of the crucial distinctions we had to make, not least because it affects the figures by a factor of two or three or possibly more, was between full-time and part-time students, so, when you are talking about that 20,000, are you talking about full-time or part-time?

Professor Eastwood: When I am talking about what that £100 million will buy us, I am talking about FTEs. Obviously with employer co-funded programmes, in the main they are part-time programmes.

Q80 Mr Marsden: Do you accept that, that the majority of the programmes that will be co-funded with employers will be part-time?

Professor Eastwood: They would be normally studied over a longer of period of time, and that is the experience we are having so far, so we will continue to work with institutions, as we have over the last 18 months, to get institutions committed to delivering employer co-funded provision in order to meet that target. The remainder of the numbers we are committed to distributing in accordance with the priorities that will be set out in the grant letter and I think they are actually already well-known, they are to continue to try to widen participation, so we will be looking to work with those institutions which are best able to widen participation in higher education, they are to continue to increase the number of foundation degrees to 100,000 by 2010 and they are to ensure that we have appropriate capacity in strategic and other valued subjects.

Q81 Mr Marsden: That is all very broad. There are no specifics there between the three categories that I put to the Minister.

Professor Eastwood: Well, the issue that we face in a higher-education system which is market-responsive is to identify the institutions that can deliver those numbers, and also the categorisation is not as straightforward as that because a student can simultaneously be a widening-participation student and a student on a strategic subject, for example, so it would be inappropriate in a system of allocation simply to put them into pots and identify them as driving one student type.

Q82 Chairman: You have not a clue, have you, how you are going to get these extra students in? That is the reality.

Professor Eastwood: On the contrary; all our evidence over the past few years, as the Government has increased the available number of students, is that we have had no difficulty in distributing them between institutions. What we need to do is to ensure that distribution is appropriate to institutions which are able to deliver to the priorities established.

Q83 Chairman: But the assumption here is that ELQ students are in fact preventing FTE students entering our universities, be it Birkbeck, the Open University or our regional universities, for first degrees, and you have not produced a single piece of evidence to say that that is the case.

Bill Rammell: Well, that is the financial reality. That is what has been happening within the system. Even with a government that has significantly increased investment in higher education, you have a limited pot, and within that limited pot at the moment people have been studying for ELQs financially, because numbers are managed through HEFCE, at the expense of first-degree entrants. There are 100,000 people who apply to university each year who do not succeed.

Q84 Dr Harris: Let us take the Open University. Do you have any idea how many applicants to the Open University who were suitable applicants for first-time degrees were turned down because 100,000 people may be turned down because they simply do not qualify for the courses and you would not want to argue that anyone should not apply again, so how many Open University applicants, do you know, were turned down because there was not the budget or the space for them when they were applying for first-time degrees?

Professor Eastwood: That is not data we would collect because they are ----

Q85 Chairman: On a similar question then, there are 100,000, as the Minister has said, who apply for first degrees who are turned down because there are not the places, so how many of those were suitably qualified, so they just did not get in because we are now demanding three A-stars from our A2 students, or whatever the bar is?

Professor Eastwood: The data that we have is that there are out there in the marketplace, and the Minister has already referred to them, two million students who have ----

Q86 Chairman: I am not debating the figures.

Professor Eastwood: There are potential students who are qualified to enter higher education, so, of the 100,000 that the Minister has referred to, institutions are making admissions choices. Those are constrained admissions choices because their numbers are constrained and, when they are making those judgments, in part, they will of course from time to time prefer an ELQ to a first-time applicant because the ELQ applicant may leave that institution better qualified.

Bill Rammell: Also, in addition to that, and I made this point earlier and, when we were looking at these figures, I have to say, I was surprised by the numbers initially when we first looked at them, six million adults within the workforce who are educated and qualified to A-level equivalent who do not go on to higher education, surely there is space and capacity within that volume over three years, with effort, with creativity, with the funding lever, to get 100,000.

Q87 Dr Harris: But I have just checked and in the earlier session I believe Brenda Gourley said that, despite spending an awful lot on marketing, and obviously you cannot accept students unless they apply, they have not found any students, pretty much, whom they have had to turn down for first-time degrees who are suitably qualified because of the cap or their budget. Therefore, that suggests that, firstly, you need to get these people you think are out there to apply rather than take money away and say, "If you fill them with people who are not applying, your position will be restored". Do you see the problem they face, that, if people are not applying, they can never replace that funding that you have taken from them?

Bill Rammell: But, if we were proposing that this change comes in in September and the whole £100 million is redistributed, I, in part, could accept some of that argument. That is not what we are saying. We are saying that there are three years to phase this in, it will only be £20 million that is redistributed in the first year and, with the funding lever, with a much stronger focus on those adults within the workforce and the need to recruit them, I am confident that we can get that redirection over three years. The evidence to back that up is that actually universities, certainly over the last ten years and indeed before, have responded to the changes in the funding lever that have been administered through HEFCE.

Q88 Chairman: You have made your point very forcefully, Minister. Would it be possible to let us have, because this data clearly must be available, the details of those 100,000 students who have applied to our universities last year and to say whether, and how many of, those were suitably qualified for the courses for which they have applied because I think that is the essential data to put into the pot?

Bill Rammell: Chairman, I will happily do that. I did not say all of them were suitably qualified and the real force is the six million adults.

Chairman: But, if it was 50% of them, then it is a very significant number of fish that are in the pot, one of whom is my daughter.

Q89 Ian Stewart: This proposal demands, as you have said, Bill, a culture change. Now, if, for example, you wish to encourage employers to contribute, some of us would support that concept, but how are you going to ensure that? How are you going to ensure that employers do not just employ people from abroad who are already skilled? Secondly, why did you not just consider leaving this and including the whole lot of this in the review that you have proposed for fees and so on?

Bill Rammell: On the need for employers to move, we do need a cultural change. In addition to this, we have announced before Christmas at least £100 million over the coming CSR period for employer co-financing schemes, and what I am convinced of, given the need for that cultural ----

Q90 Dr Gibson: You said £100 million?

Bill Rammell: That is right.

Q91 Dr Gibson: The same figure?

Bill Rammell: No, £100 million for co-financing, and then there is £100 million for ----

Q92 Chairman: It is not the same £100 million?

Bill Rammell: No. What I am convinced of is that we cannot be prescriptive in absolute terms about how those co-financing initiatives need to take place. That is why at the moment HEFCE already have 15 pilot initiatives across the country and we need to engage and encourage employers to work with us. In terms of your second question ----

Q93 Ian Stewart: Before you move on to the second question, the weakness of any previous levy system or anything else was that those good employers who invested in training and education got the benefits of that and those who did not invest had to pay a levy. That was the system in the past. That was a mandatory system. You are proposing here a voluntary system. How are you going to ensure that, even if the good employers will invest, those that do not wish to invest do not get away with it scot-free?

Bill Rammell: Well, we are not proposing levies, and there has never been a levy system at this level of qualification, because we are not convinced, based on the evidence, that that is the best way.

Q94 Ian Stewart: I heard you say that earlier though. What is your evidence? How are you going to ensure with the voluntary system that employers just do not employ people from abroad who are already skilled?

Bill Rammell: The whole of our strategy is focused right the way through the qualification chain at upskilling the existing indigenous workforce so that the claim that is made of "I can't get the home-grown workers that I need" does not have force. That is what the whole strategy at Level 2, Level 3, Level 4, the whole Leitch analysis is about, actually ensuring that British citizens have the skills to enable them to compete within that marketplace. Your second point, and this was played out quite significantly during the Opposition Day debate that we had on the floor of the House, that this should just be kicked off into the 2009 Commission, although I was interested that I did not hear anyone across any of the parties actually objecting to the policy in principle, it was a debate about delay, the problem with referring it to the 2009 Commission is that we have said that that Commission needs to address the first full three years of operation of the new variable fees system. That means that the Commission, and it will be a Commission with a report, it will not be proposals for action, is unlikely to report until the middle/end of 2009. If we delayed it, that would effectively mean that we have agreed here and now that we are going to make none of these changes during the whole of this CSR period. Given the Leitch skills imperative, I believe that would be the wrong thing to do.

Q95 Mr Cawsey: I just want to ask two very quick questions, one on timing and one on support. It strikes me that, if there were to be a simple analysis of your policy, you would be saying that there are 20 million people out there or six million who are ready to go, and both are big numbers, which the system is completely missing at the moment and, therefore, they have to be incentivised and you believe that the financial lever is the way to do it. Now, we heard evidence today that said that actually there is precious little evidence that there is the demand from these people, so is the lever by itself going to be enough? Let us just suggest for one second that it is. How can you be certain that 20,000 full-timers, which is actually a much, much bigger number ----

Bill Rammell: Full-time equivalents.

Q96 Mr Cawsey: Exactly, so the actual number is going to be much, much larger than that. How on earth do you think that the universities are going to be able to recruit that amount of people who, from everything we have been told this morning, are not asking to come into the system? Is it simply going to be achieved by saying that, because it will be funded that way, that is what you are going to go out and do?

Q97 Bill Rammell: Well, in part, it is based upon experience. We have actually got 300,000 more students in higher education today than we had ten years ago, and, I have to say, at every stage in the debate about the expansion of higher education, the critics have said, "We have enough people in the system, we shouldn't go any further, it is destabilising and actually the demand isn't out there", and at every stage the system, responding to the funding steers from government, has actually managed to significantly expand the higher-education system. The really critical point about this is that that analysis which says, "Look, this is difficult, it is challenging. We're not sure that the demand is there", if we just accept that, then we accept we are going to fall behind. That Leitch target of 40% of the adult workforce by 2020, America, Japan and Canada are already there in terms of those percentages and they are not going to stand still, they are going to continue to move forward, and that is why I think it would be an abdication of responsibility simply to say, "We accept the status quo", and we do not.

Q98 Mr Cawsey: But the timing, because the question is about timing, you think that this is a realistic timescale to expect all these institutions to change which they clearly have not been doing because these people have been ignored for so long?

Bill Rammell: Yes, I do. We are not asking for it overnight. The target is for the end of three years and it is 20,000 full-time equivalents. I am very confident, based upon the track record of the institutions that we are talking about, that they have the wherewithal with the funding support to achieve that change.

Q99 Mr Cawsey: Even more quickly, you say, and we have had you in front of us before about that, that it is all about Leitch imperatives, blah, blah, blah, but you clearly must have, therefore, discussed all of this with him. What is his view on all of this?

Bill Rammell: I think you need to talk to Sandy about that. It would be wrong for me to pass on whatever private conversations I may or may not have had about this.

Q100 Mr Boswell: As I understand the way you have formulated this with Professor Eastwood, we are looking at an objective of securing an additional 20,000 full-time equivalents which might be, on a realistic presumption, 40,000 part-time, at half rate, or even more than that. Can I just be clear, as an additional figure to this, separate from that which you seem to accept is our understanding, the CSR talks about an additional 50,000 student numbers by 2011, so is this 20,000 FTEs embraced within that CSR target or is it additional? In other words, is all of this implicit in the CSR target or is this an extra recruitment that you seek to achieve?

Bill Rammell: It is part of the overall CSR package, and I think you may be ahead of me because the HEFCE grant letter has not actually been released. It will be very shortly and, of the additional number, and I think it is likely to be higher than the 50,000 growth figure we are talking about, the 20,000 redirected is within that figure.

Q101 Chairman: Minister, both in the debate and again today and even before this Committee before, you have made a passionate defence of your policy, as indeed did the Secretary of State. Why did you not, therefore, have a consultation on these principles to actually engage the broader community before actually going down this road?

Bill Rammell: Let me turn that round. Where was the consultation that the interests of eight million graduates should be put ahead of the 20 million people in the workforce who do not have degree-level qualifications? In terms of the priorities that we set out within the HEFCE grant letter, that has always been a matter for the Government and ministers to give those steers. What we have done, however, additionally to that is, rightly, consulted on the detailed implementation and during the course of this morning I want to give you further indications of the changes I am minded to ask HEFCE to consider compared to the original proposals.

Q102 Chairman: If I could respond there just very briefly because I do not just want to have the debate between us, there is a clear issue here about a government policy which is about upskilling right throughout the agenda, and I think nobody on this Committee would disagree with that, but there is also a very, very fundamental issue about reskilling people with inappropriate qualifications of which this is an essential principle, and it is that principle that perhaps the Government could have engaged in with both the community and indeed, if you like, employers, students and the universities which would have in fact enabled you to deal with a lot of the angst which is in the system. Do you, with hindsight, feel that you could have handled this better?

Bill Rammell: Government ministers very rarely publicly admit, with hindsight, they could have handled things better.

Q103 Chairman: You are an exception!

Bill Rammell: With conviction, I do not think we could have gone about this differently. I think we did it in the right order. We set out the policy steer, but we have been consulting on the detail. In terms of re-skilling, we need to remember we are redirecting less than a third of the money which we spend through HEFCE on ELQs and we have been rightly consulting on the detail. There is protection and there is going to be protection for re-skilling in terms of foundation degrees and in terms of a whole range of strategically important and vulnerable subjects. A final word, and I should have said this to Mr Cawsey, whilst you need to go to Sandy Leitch, I am absolutely clear that what we are pursuing is absolutely in accordance with the Leitch analysis, that the higher you go up the qualifications chain the more you should rely on co-financing.

Q104 Chairman: I think the condemned prisoner who is told he is going to be condemned to death and you then consult on the method of execution is really what we are talking about. I wonder somehow whether that is a satisfactory way to move forward, but I will leave that hanging in the air!

Bill Rammell: Where was the consultation on the original funding?

Q105 Chairman: Minister, I think there were huge consultations in 1997 following the Dearing Report on the principles behind the Government's policy before it was implemented and I think in terms of top-up fees there were big issues there. Perhaps this is a similar momentous moment as to when there is a change of policy.

Bill Rammell: Except I will have to check the record, I do not recall Dearing addressing the question of ELQs.

Chairman: I did not say on ELQs, I said it would be on the issue of expansion of numbers.

Q106 Ian Stewart: Which trade unions have been consulted?

Bill Rammell: This has been a wide consultation and trade unions have had an opportunity to input their views. I personally have discussed it with University College Union and the National Union of Students as well.

Q107 Ian Stewart: Has anybody thought about consulting the industrial unions because if we are looking at making a flexible labour market, surely it would be sensible to consult the industrial unions as well?

Bill Rammell: In respect of the Higher Level Skills Strategy, which I think is a key element of this overall process of change, the TUC have been part of the working group I have been leading looking at those issues.

Q108 Mr Marsden: Professor Eastwood, can I come to you in terms of HEFCE's responsibilities in terms of assessing the impact of the policy. There is a statutory duty to have regard for eliminating unlawful discrimination and promoting equality but, in addition to that, the Government has said very strong things about the need to improve the conditions for and the admission of students with disabilities. I would like to know what assessment there has been of the impact of this policy on students with disabilities.

Professor Eastwood: As we always do, we have conducted a full sector impact assessment. That will go to my board next week and it will be published in the normal way thereafter.

Q109 Mr Marsden: Does that include a section on students with disabilities?

Professor Eastwood: It does.

Q110 Mr Marsden: Specifically?

Professor Eastwood: Specifically, and our advice is that there are no particular issues relating to students with disabilities.

Q111 Mr Marsden: If you will forgive me saying so, that seems to me to be slightly complacent. The reason I say that, in the context of what the Chairman has just said about re-skilling, is that there will be a number of potential students, leave aside the number of students with lifelong disabilities, who have acquired disabilities in a 10 to 20 year period which means that in order to pursue useful employment they will have to re-skill themselves. Would you not agree that is precisely a group whose interests ought to be addressed? In light of that, would you not agree that perhaps you ought to be thinking again about your assessment of the impact on students with disabilities?

Professor Eastwood: We did two things, and I took it you were asking whether we had done a sector impact assessment and my answer to that is yes.

Q112 Mr Marsden: On what?

Professor Eastwood: On the whole range of equalities issues.

Q113 Mr Marsden: For the purpose of time, I would like to focus you and concentrate on disabilities.

Professor Eastwood: As far as disabilities are concerned, our advice is it does not have a disproportionate impact. That said, we do recognise there are particular issues relating to learners who may have acquired a disability subsequent to their first degree and that may be relevant and we, along with a series of other issues, will keep that matter under review. If there are issues to be addressed there, they will be addressed downstream.

Q114 Mr Marsden: I hope that under review means you will do something about it. Can I come on to a second area, which is the area of the impacts particularly on newer universities? As I am sure you have, we have had evidence from Million+, which is the organisation that represents a large number of post-1992 universities, that over £42 million of the reduction fund will fall on those universities, many of whom have pioneered wider participation. The principle of this might be something the Minister wants to comment on. Is there not a danger that the law of unintended consequences is going to restrict many of the laudable aims you have for supporting the agenda for new universities?

Professor Eastwood: In terms of overall impact, if my memory serves, the post-1992 part of the sector is -2.5 and the pre-1992 part of the sector is -2.1, so there is a differential but it is not a huge differential. As you rightly say, a significant part of the redistribution of numbers will be redistribution towards widening participation.

Q115 Mr Marsden: I did not actually say that.

Professor Eastwood: My apologies.

Q116 Mr Marsden: That is what you wish to say.

Professor Eastwood: I inferred that. I think what you said is a significant proportion of post-1992 institutions had been notably successful in widening participation. My point was going to be that notwithstanding the hit that they take as a result of the ELQ decision, the fact that we will be continuing to drive widening participation will mean there will be very substantial opportunities for those institutions to continue to widen the participation and to receive additional student numbers.

Q117 Mr Marsden: Minister, you may want to come in on this. I want to pursue this particular point. Genuinely I do not have any doubts about your intention to pursue the widening participation, nor do I have any doubts about the strength that HEFCE has applied to this. I have very significant doubts about the law of unintended consequences. Have you done any analysis in the post-1992 universities as to how the unit costs of departments will be affected if, as a result of withdrawing funding, a significant number of students from ELQs in particular courses are no longer there?

Professor Eastwood: That is analysis which will be done by institutions because it is institutions that determine the distribution of that block grant.

Q118 Mr Marsden: Do you not even have a view on it?

Professor Eastwood: Clearly the distribution of ELQ students across programmes varies, it varies by programme and it varies by institutions. That is the reason, as the Minister was saying, why it is important to understand two other things: first of all, the new policy will be phased in over the three-year period and, secondly, we are cash-protecting all institutions. We are cash-protecting institutions through that three-year period so they will have ample opportunity to make adjustments in provision, recruitment and additional student numbers as appropriate.

Q119 Mr Marsden: I am aware of that.

Bill Rammell: The whole of the debate is focused on the reduction in respect of ELQs without factoring in, first, where the £100 million will go, and I think the kind of institutions you are talking about, based upon their track record, are very well placed to receive some of those redirected funds and, secondly, the overall growth in the higher education budget of two and a half per cent above inflation in the next three years. Additionally, although legally it is not within my powers to direct specific allocations of funding to particular institutions, we will within the HEFCE grant letter - and it may be helpful if I read this to you - be saying that: "I hope Professor Eastwood and his colleagues will consider carefully the position of institutions most affected by this change to the funding rules in allocating the new funded places that are being created". That, along with the growth, along with the redirection of £100 million, should give a significant degree of reassurance to the institutions that are affected.

Mr Marsden: Chairman, all I would say to that is there is a lot of hope and expectation in there, but there has been precious little modelling to suggest it. If you take my local post-1992 university, the University of Central Lancashire, if you have a class of students in there, 30 of whom are on a particular course and ten of whom disappear immediately because they are no longer getting ELQ in funding, that is going to put enormous pressure on that university and universities across the piece to close some of those courses. By the time you get the benefit of your recirculation policy those courses may no longer exist.

Q120 Chairman: I want to bring in Dr Gibson, but I think it is fair to say that students who are on existing courses will be protected. It is important to put that forward.

Professor Eastwood: Yes. Students on existing courses are protected, the policy is phased in and institutions will receive cash protection in addition to the effects of the increased spend which the Minister referred to. Also, again, one has to understand the flexibility in institutions in terms of delivery. For example, if you take a university like the University of Central Lancashire, it will use its credits flexibly and it will use unit components flexibly, so there is not a one-to-one relationship between numbers and programmes.

Q121 Chairman: Professor Eastwood, the fundamental point here is that as far as our evidence, we have not seen any modelling from individual universities as to what will happen in the future as, in fact, ELQ support from the Government is phased out and they are dependent purely on ELQ funding from the individual student or, indeed, with a supportive employer because that will make a profound impact on the size of the group and therefore the viability of the group. I think it is that modelling which we would have liked to have seen because that then gives comfort to institutions but, also, I would have thought gave comfort to you and to the Minister in terms of the policy moving forward. Surely HEFCE has got an interest in that rather than to simply say, "Woe is us, it is just the institutions". If that could be provided in any way that would be incredibly useful.

Professor Eastwood: There are a number of important staging points here. The Minister has already indicated that the grant letter has not yet reached HEFCE, so in order to do any modelling we would need to know what the headline increase in the additional student numbers would be. The other issue which is important here is that we do have a dynamic higher education system and the Minister's opening comment referred to dynamism. If we have a system which is dynamic and responsive, responsive to student demand, responsive to other agendas, for example the Leitch agenda, then over time you would expect to see some redistribution of resource between institutions, that is what you get in a dynamic market. What we will do, and what we always do working with institutions year-on-year, is we work with institutions over the allocation of funded numbers and we monitor year-on-year the impact of that on institutions and we will continue to roll that forward and those data are public domain data.

Q122 Dr Gibson: Minister, this time you used the phrase "most affected". Have you got a concept of some who will be unaffected too while our dearly beloved Russell Group Universities will be just as severely affected as some of the others?

Bill Rammell: Professor Eastwood gave the statistic in terms of the overall impact that post-1992 institutions are affected to the extent of two and a half per cent; pre-1992 institutions 2.1%, so there is some differential, although it is not very substantive. I think I am right in saying as well that in cash terms one of the most affected institutions is Oxford University.

Professor Eastwood: You are correct, it is.

Q123 Dr Gibson: But we will not have to close it!

Bill Rammell: I do not think you are going to see any institution close as a result of these changes. I understand the lobbying process that takes place and universities are very effective and skilled at asserting their interests, but there has been a degree of exaggeration in terms of the unmitigated impact of these changes.

Q124 Mr Marsden: Minister, you were making a point there about overall universities, but we know that the struggle for setting up lifelong learning centres and continuing education centres across universities has been a very hard one. Many of them operate at the margins, frankly many of them are still not at the top list of priorities in terms of that university funding. How can you be confident that if there are short-term - I will be very mild and say - dislocations in the student numbers on those courses as a result of your policies, notwithstanding the protection which is there for existing people, those centres of continuing education et cetera will not close?

Bill Rammell: First of all, we are phasing it in, and I have said that on a number of occasions, so we will have an ability to manage this process. Secondly, in terms of those institutions where there is the biggest impact, and I will talk particularly about Birkbeck College and the Open University ---

Q125 Mr Marsden: I am not talking specifically about them, I am talking about other universities where they may have those centres on the periphery, if I can put it that way.

Bill Rammell: Yes, and that is why we are phasing it in. In terms of the redirected £100 million and the overall growth which exists within the system, there will be an ability to ensure that those initiatives in those departments can continue. If I could expand specifically because I want to get this out into the public domain, in respect of Birkberk and the Open University, we do not want to harm those institutions. That is why I have met with both institutions on a number of occasions, as has Professor Eastwood, as has the Secretary of State. Birkbeck has engaged very constructively with us in terms of sitting down with HEFCE and looking at how we can give reassurance about moving the institution from where it is today to where it wants to be in three years' time. The work that Birkbeck is doing in East London is a very strong step in the right direction. After some initial exchanges of views I welcome the fact that the Open University is now engaging with HEFCE on ensuring the HEFCE model adequately responds to and reflects some of the innovative provision within the OU.

Q126 Ian Stewart: Minister, I think you need to realise that in an earlier evidence session we had the two universities representing the employers, the students' representatives and the staff representatives and all of them indicated outright opposition to the principle of this proposal. Can I now turn it back to the world of work, a main interest of mine. If employers are expected to pick up the funding shortfall, will that not penalise those who are self-employed and those who work in small businesses because they will not be able to afford the increased fee levels?

Bill Rammell: Let me be clear, in terms of the redirected £100 million, it is not just employer co-funding, as I said widening participation would be a major plank within that. In terms of the self-employed, there still will be routes through the system to ensure that you can re-skill, for example in respect of vocational foundation degrees, which I think in terms of re-skilling should become the trademark qualification for people who are looking to change careers, and a whole series of subjects which are exempted. One of the things I am minded to do is to write to Professor Eastwood as a result of the consultation to say for that list of exempted subjects HEFCE should undertake an annual review starting in December so that we ensure the impact of this policy change on those particularly important subjects is not adverse.

Q127 Dr Iddon: Bill, you have accepted that this policy change is going to disproportionately affect part-time students, I think that is a given, and that is proved by the fact that you have allocated £20 million towards a supplement for part-time studies. How have you quantified the impact on part-time students? In other words, where is that £20 million figure being plucked from, and why this morning have you changed it to £30 million? What has caused that change?

Bill Rammell: Part of the difficulty with this debate is that some of the criticism comes across as though this has been a government which has been negligent on the part-time front. I would want to reassert what I said previously to your Committee, this is the first government ever to bring in a part-time student grant. Two years ago we increased the value of that by 27%. Also, in last year's Spending Reviews we increased the part-time premium, I think I am right in saying, between the Department and HEFCE to £40 million. On top of that at the start of this process we looked at the change and made a judgment, along with the growth and the redirected £100 million, on how much more we ought to give by way of part-time premium and we have as a result of the concerns which have been put forward. I am proposing, and it is HEFCE's decision, that is increased to £30 million. It is not a science, it is a judgment based upon the amount of money within the system, the demands on it and the views that are put forward.

Q128 Dr Iddon: Why is this uplift now of £30 million only being paid a year after the policy is introduced in 2009-10?

Bill Rammell: Because the impact of the changes in the first year is very small, it is only 0.2% of the overall higher education budget, it is £20 million in total.

Q129 Dr Iddon: Sandy Leitch's name has been mentioned throughout the discussion, has he been consulted on this policy change at all? If so, what are his views?

Bill Rammell: Sorry, that question was put to me earlier. I think it would be wrong for me to reveal private conversations with Sandy, you will need to ask Sandy that question. I am absolutely convinced that the policy we are putting forward is consistent with the Leitch analysis.

Dr Iddon: Perhaps we will ask him.

Q130 Dr Harris: I want to ask you about some of these exempted subjects. In medicine there are now said to be about 30,000 junior doctors applying for about 20,000 posts. We are spending a quarter of a million pounds on training doctors, a third of whom, while perfectly qualified, they have done five or six years of study and passed continuing exams, are being told there are no jobs for them to train to be a consultant, yet you have reserved that as an exempted subject. Is that because you think we should train more doctors to fail to get into training positions or is there some future forecast catastrophe going to happen to strike down thousands of doctors in their prime who will need replacing?

Bill Rammell: I have not got the figures immediately to hand, but the figures you are quoting I do not accept as the impact which is happening on the ground. I recall last year there was a debate about the number of doctors who would end up not being placed and the actual evidence at the end of the day was not borne out by that. Medicine is a strategically important subject. Under this Government we have rightly expanded significantly the number of doctors working within the National Health Service and we want to ensure that we have a continuing supply of medical graduates who are able to take up those places.

Dr Harris: Of course there will be a continuing supply because there has been that expansion which was appropriate at the time, but I do not think anyone is arguing, Government or its expert group, that we need more medical student numbers coming through now, I do not think anyone is arguing that. You can argue whether it is 10,000 or 6,000 that end up disappointed at huge expense. If you contrast that to pharmacy, which is excluded from the exemptions, I think it is well known there is a shortage of pharmacists. I quote a letter from the Council of the University, Heads of Pharmacy, the 2006 survey: "6.5% of junior pharmacist posts in the NHS were vacant. Indeed, pharmacists are on the UK skills shortage list", so that does not seem to make sense. It sounds as bizarre as putting the medical students in.

Q131 Dr Gibson: If I could add to that. Also, the Government now has policies where we want more pharmacists to do things that they are very skilled at and are not being used. We have realised that they have come out from their bunkers, as it were, down in the bottom of hospitals and are using their scientific and technical knowledge to do screening and all these kinds of things. They are a very important help to the National Health Service.

Bill Rammell: Yet if you look at the analysis of the proportions of particular subject category students who do it as an ELQ, pharmacists is a relatively small proportion. I am doing this from memory, I think about 5% do it as an ELQ.

Q132 Chairman: That is inevitable, is it not, because there is a very small number of people with degrees in pharmacology?

Bill Rammell: Sure, but the idea that ELQs suddenly resolve that challenge I do not think is borne out by the evidence. It might be helpful at this juncture if I set out for you what I am proposing HEFCE undertakes in respect of the exempted subjects. There has been a lot of representations about the viability of particular subjects and the impact of the ELQ changes. Whilst I understand those worries, I am not convinced they are well-founded and I do not think we should rush into making special arrangements. However, we do take the concerns seriously, that is why I am writing to Professor Eastwood to suggest that there should be an annual review of that subject list, starting in December of this year, and that will look at a number of things, the extent to which a subject has economic or social significance, the scope for increased demand for that subject for those without an ELQ, whether there is adequate provision at foundation degree level, the capacity of employer co-financing to meet the gap and, lastly, having gone through that analysis, whether there is a case for exempting entrants to the subject who have an ELQ qualification.

Q133 Dr Iddon: Bill, could you tell us whether ICT and computing studies are exempted? My view is that they are not because I think it was Sir David King, in his parting shot to this Committee a few weeks ago, who said there is a great shortage of students in those areas, and of course they are amenable to part-time study as well.

Bill Rammell: That analysis is correct, although it is relatively recent. If you go back 18 months to two years, there was not that lack of numbers studying ICT. I think there would be a danger if at every juncture we changed the list. You do need some longevity to these judgments. I am not persuaded at the moment in respect of IT, but what I am saying very clearly, and this is for HEFCE to consider, is that we should conduct that annual review and, particularly after these changes, it should take account of the impact of the ELQ changes in reaching those judgments and those will be judgments that will come to Government.

Chairman: I hope it will be looking ahead rather than just simply looking at numbers because it is the trends and forecasts that are so important.

Q134 Dr Harris: I have not had an explanation as to why medicine is in when there is oversupply and pharmacy is out and there is undersupply this year. A review next year is too late, it is shutting the stable door after the horse has died, is it not, because the signal you are sending out now is that people should not be thinking about retraining as pharmacists when that is exactly what we need. Is this written in stone or can you have a look at that or give me an explanation?

Bill Rammell: Before Professor Eastwood comes in, I am sitting here reflecting on what kind of dialogue we would be having if I had proposed to remove medicine from the list of exempted subjects and I think this conversation would be taking a very different direction. However, I am not convinced in respect of pharmacy where only 5% are done at ELQ level, but I am not making that judgment in respect of pharmacy or medicine forever and a day and I am suggesting we have an annual review.

Professor Eastwood: I want to make a specific point on pharmacy, which is an area where there has been an establishment of a significant number of new schools of pharmacy, Medway, East Anglia, Keele to name but three. We have been addressing two issues in pharmacy, one is the overall supply of pharmacists and the other is the regional distribution of training of pharmacists. I think that reinforces the point the Minister makes, that if we are thinking about the flow-through of pharmacists we have already taken actions which are appropriate. If you couple that to our commitment to reviewing the position as we move forward, that ought to give the Committee some specific assurance in the area of pharmacy.

Q135 Dr Harris: It will not surprise you to know that I want to say a few words in advocacy of theology. Oxford University has written and they explained that they have a long tradition of working with small theological training colleges. I think the impact on training for the priesthood is going to be so serious that your assertion to Dr Gibson that you did not think any institution would close might not apply to those institutions. They go on and explain that: "Of the vast majority of students or ordinands who already hold an undergraduate or post-graduate degree in another subject, the churches are unlikely to be able to meet the significant increase in sponsoring costs, and salaries in the churches are not at a level where students could possibly afford full-cost fees themselves". If ELQ policy is implemented, it is quite likely, and highly likely they say, that these courses will close. Can you say anything in comfort to prospective theology students at least in this life?

Bill Rammell: I hope I can. Having set out the annual review mechanism, there is one particular subject on which the Government is going to ask HEFCE to consult and respond within two months and that is theological subjects where the impact has been suggested. We are going to ask the Council to lead consultations and discussions with interested parties on the training of theologians and religious teachers and to consult and look at the impact and how that might be addressed, particularly through the potential of the development of foundation degrees and employer co-founded provision and I do not set out a limit to the remit of that. I am asking HEFCE to come back to me on that issue within a two month timescale.

Q136 Dr Harris: Do you recognise the further problem or point which has been made by the churches main committee, which is a coalition of the Christian churches, that if your objective is social cohesion you need people trained in their faith rather than amateurs, if you like, to do the engagement on an interfaith basis, especially, as I would see it, when we have other policies, like allowing schools to discriminate on the basis of religion, that tend to segregate even more, so your social cohesion agenda requires there to be an adequate supply of seriously trained people who do not train in private seminaries, because that is kind of insular. The advantage of training within a university setting is that they are exposed to people outside their own religion and indeed race because that is often a proxy.

Bill Rammell: It will not surprise you if I do not accept all of that analysis, however I do accept that there is force to the argument about social cohesion and the importance of training faith leaders and it is something the Government has quite rightly given a priority to. That is a significant element of the reason why I am saying that theological subjects should be taken out of the ongoing annual review and I am asking David to come back to me within two months.

Q137 Dr Harris: What do you say to the question of whether there is a discriminatory impact, an equality impact on, for example, women in the population seeking to come back or, indeed, unfairness as to cross-religions because you have specifically exempted Islamic studies, we are not talking about training for the priesthood now? Particularly this issue about an equality impact assessment, I am not convinced that it has been done. I understand it is usual when you have a policy change to conduct one to see if, for example, women or ethnic minority members of the population are adversely impacted because there is a positive duty on you, and certainly the public institutions that you fund, to promote equality, both on race and now on gender.

Bill Rammell: In terms of what you have said on Islamic studies, I would urge you to wait for the end of this process because I think there is at least an arguable case that whilst we have rightly designated Islamic studies as strategically important, I am not convinced it is vulnerable, so we need to wait for the end of that process. In terms of women, if you look at the 20 million adults within the workforce who are not yet at Level 4, ten million of them are women, two and a half million women are qualified to A level but do not go on to degree level and I think that should give some reassurance.

Q138 Dr Harris: They might be impacted by the cuts you are making, so you cannot just assert that, you need to do an analysis surely.

Professor Eastwood: Can I take you back to the answer I gave earlier. We have done that sector impact assessment and it will be published after it has gone to the board. The answer on the impact as between men and women is that it is 7.3 on women and 6.9 on men, so there is a marginal differential.

Q139 Dr Harris: What are the units?

Professor Eastwood: The proportion who are affected by the ELQ decision. There is a small difference, but it is a small difference and it will be covered in our sector impact assessment.

Q140 Mr Boswell: You will also look at BMEs in that.

Professor Eastwood: Yes, and we have taken advice from the Equality Challenge Unit specifically on the BME issue.

Bill Rammell: Also, additionally, that is HEFCE's responsibility. We have quite rightly said that these policies are in-line with our overall PSA targets which have been equality proved, but in the spring we will be conducting an equality impact assessment on the whole of the higher education funding allocation.

Q141 Mr Marsden: Professor Eastwood, the Minister indicated this morning some lines of thought for you in terms of extending the exemptions. If these exemptions are extended, have you got any thoughts as to how they are going to be financed? How is this going to affect the overall £100 million figure? The Minister may wish to come in on this, but it is a fact, is it not, that if these results, however laudably insignificant, give extra exemptions it will have an impact on that £100 million figure?

Professor Eastwood: Clearly if there was a significant increase in the number of exemptions, that would have a funding consequence and we would need to refer that back to Government in terms of the £100 million savings targets. I think what the Minister is saying is that this is a policy which will be dynamic as it moves forward. On the basis of the assessments that we will conduct in this Spending Review period and beyond, the Government will have to come to appropriate decisions. In that context it is worth noting, as we have been saying throughout, that the major financial impact of this comes at the end of the Spending Review period, so a number of these issues, including issues about augmenting the number of exemptions, will almost certainly be issues for the next Spending Review period.

Q142 Mr Marsden: Accepting what Professor Eastwood has just said about the gearing effect, have any of your civil servants done any modelling for you as to what the implications of your suggestions would be on the £100 million figure?

Bill Rammell: Let me reiterate what I said earlier, that I am not persuaded we should add to the exempted list at the moment, but I think it is right that we should look at that. In terms of the process that I will be asking HEFCE annually to go through, the last analysis they undertake, if they accept my proposals, is whether there is a case for exempting entrants to the subject who have an ELQ from the general ELQ funding rule. In such cases the Council should also advise on the scope for removing exempted subjects from the list.

Q143 Mr Marsden: You see it as a like-for-like process, do you?

Bill Rammell: Not in all circumstances.

Q144 Mr Marsden: That is the principle in order to maintain your £100 million, is it?

Bill Rammell: It is, and I do not say that can never be breached. If HEFCE comes back to us we would have to look at that.

Q145 Mr Marsden: Forgive me for saying this, because I think this is a crucial point, that is how you would square the circle over the medium to long-term beyond that three year period, is it?

Bill Rammell: Yes. I say that because I do not accept that exempted subjects are set in tablets of stone forever and a day.

Q146 Ian Stewart: In line with that, if you are looking at it, will you then consider the OU-Birkbeck proposal in relation to people who return after five years?

Bill Rammell: I have to say, I am not persuaded and convinced of that argument and I think it is one not factually borne out by the evidence. It is a fairly risky proposition for universities to effectively be saying that the value and currency of your degree qualification ceases after five years. Certainly in terms of the graduate earnings premium it does not stop after five years, if anything the graduate earnings premium lengthens the longer you are in the workplace with that degree or qualification.

Q147 Ian Stewart: Surely, Minister, it is relevant in a flexible workforce situation where you are asking people to re-skill?

Bill Rammell: In respect of those, we are saying vocational foundation degrees, we are saying a whole range of strategically important and vulnerable subjects, we are saying employer co-financing, but you cannot spend the same amount of money twice. This comes back to a fundamental choice, do we put the interests of the eight million people in this country who already have degree qualifications ahead of those who are not at first base, and I do not think we should.

Q148 Mr Cawsey: There was something said this morning which I was quite taken with, which is a simple practicality about all of this, that is the universities will not be able to monitor it. If somebody comes forward to apply and they have got a previous qualification, maybe from several years ago, and they simply do not declare that then you cannot make the system work, can you, because you would be classing them as people coming to the system for the first time?

Bill Rammell: I think we can and David might comment on this.

Q149 Mr Cawsey: How?

Bill Rammell: We will shortly be asking HEFCE to advise us and then issue guidance on the way this is dealt with. I think by and large, and I do not accept this in all cases, most people will and do obey the rules, but clearly there will need to be a random checking process. In some cases universities may need to check with the previous employers and previous education establishments to corroborate that particular students do not have a first degree. We will have to do that in a way that we get the balance right between protection and not an overly bureaucratic system. That is something we are going to ask David to advise on and then get that advice as quickly as possible.

Professor Eastwood: There are three quick points. First of all, we will offer good practice guidelines to institutions in March. Secondly, we work with institutions to audit numbers and final funding is determined on the basis of audited returns. Thirdly, as the Minister has hinted, there will need to probably be some additional dipstick-type checking mechanism in order to have a robust audit process.

Q150 Mr Boswell: Just briefly, because in a sense I was on the same point as Ian, I suppose my ELQ dates from 1966 so it might have got forgotten about, but MPs have public biographies so it tends not to be! Can we at least have some understanding from HEFCE about the duty of care which is put on the institution? This is not trivial because in this House yesterday we were discussing the obligations on employers in relation to the issue of National Insurance numbers and whatever and in particular that there would be no fine or onerous duty which will add to the problems which other of our witnesses have identified about these proposals.

Professor Eastwood: As the Committee knows, for a number of years now HEFCE has been working, and working effectively, to reduce the burden of regulation on institutions, and the way in which we have sought to implement this policy and the way in which we will continue to implement this policy will be consonant with that.

Q151 Dr Gibson: Several of us are quite interested in how the numbers are collected and particularly not just the number crunching but analysis of them and database setting and so on. Have you got a statistical unit within HEFCE that looks at the significance of figures because that is very important to look at trends and to look at whether the figures are significant or not? We have had experience with other departments where the statisticians are very low in numbers on the ground and yet many copious figures come out of there ostensibly to dictate policy.

Professor Eastwood: I have got two responses to that. The first is that the responsibility to us for the collection of most of these key data lies with the Higher Education Statistics Agency, its reputation is unrivalled. Within HEFCE we have got an analytical services group, the head of which is sitting behind me. That is a group of remarkable quality and remarkable reputation and it does precisely the kinds of things, Dr Gibson, you are referring to. It does some of them because it is asked to, it does some of them because it thinks it is a good idea and it does some of them because it cannot resist the temptation.

Chairman: I see a pay rise looming there! On that note, Minister, first of all, can I thank you for your time this morning and thank you, Professor Eastwood, for your time also. You have been most generous and most frank with us and we very much appreciate it. Also, thank you to my Committee.