Examination of Witnesses (Questions 180-199)
RT HON
JOHN DENHAM
MP AND IAN
WATMORE
29 OCTOBER 2008
Q180 Mr Marsden: I know that my colleague
Dr Roberta Blackman-Woods wants to come in further on this but
can I ask a quick supplementary on that one? In order to do that
effectively—and I entirely agree with everything you have
said, it is particularly relevant in my own region in the northwest—would
it not be better if HFCE had a stronger regional presence on the
ground? As you know, at the moment it has no regional structures
whatsoever, no people on the ground, and so would it not be better
to make sure that they were in the regions in the same way that
the LSCs had been?
Mr Denham: I think the relationship
between the Funding Council and the regions is different because
the funding system and the nature of the funding relationship
are different. We would certainly expect the Funding Council to
be well informed about regional needs and regional views when
it comes to taking decisions. The decision about whether they
think they should have a regional structure as opposed to people
who are clearly allocated to understanding what is going on in
regions is very much one for them, and when they have looked at
it in the past they have formed the view that that is not the
best way of deploying their resources. I would not read into that
the idea that the Funding Council has no sense of region.
Q181 Dr Blackman-Woods: Secretary
of State, a number of RDAs put universities at the heart of regeneration
in their region. Given what you have said about their own business,
are they right or wrong to do that?
Mr Denham: I think they are as
long as they do it properly and they make sure that the centre
of universities is properly integrated into wider strategies RDAs
are right to do that.
Q182 Dr Blackman-Woods: Surely what
is critical in this is getting the transfer of knowledge from
universities to business development to job creation. Are you
satisfied that DIUS and BERR are working closely enough together
and that they have the structures at regional level in order to
deliver that knowledge transfer?
Mr Denham: Yes, I do. I think
it has to be an area where we talk about the progress that is
being made rather than saying that we are there; but the introduction
of the Higher Education Innovation Fund, which was first brought
in on a bid for basis and now is on a formula basis has for the
universities transformed their capacity to do knowledge transfer.
The development of innovation vouchers, which we have tested in
the West Midlands and we now want to extend with RDAs across all
of the English RDAs has brought in people, particularly from the
higher tech SME sectors to universities that has not happened
previously. The work that Professor Paul Wellings, the Vice Chancellor
of Lancaster, has done for us on intellectual property and universities
has interestingly concluded and countered, as it were, a lot of
common sense views, that we are rapidly closing the gap with other
leading countries on our successful exploitation of intellectual
property and within a very short period of time will actually
be performing at the level of the best. So all of that suggests
a changed landscape for knowledge transfer over the last few years
and I think that is very, very good.
Q183 Dr Blackman-Woods: I think critics
say that we are tinkering at the edges and what we are not getting
is the big business buy-in to knowledge transferral and I wondered
if that was something that you would accept or not?
Mr Denham: No, I would not accept
that at all. I would never say that things cannot be improved
but if you look at the large companies—the pharma companies,
the IT companies and so on—that you will find engaged in
somewhere like Cambridge and the whole of that wider region they
are buying in on a massive scale and they are developing all sorts
of additional relationships with spin-out companies, with university
research departments, with the wider pool of knowledge in the
area. So I think there is huge engagement and one of the reasons
that is regularly given by inward investing companies into this
country is the quality of the research base and the UKTI have
reported on this regularly and it is a product of the doubling
of the science budget.
Q184 Mr Boswell: Do you feel that
in any way the autonomy of higher education institutions inhibits
this process or in practice there is no profit from it?
Mr Denham: I do not think it inhibits
it in the sense of being a fundamental obstacle but I think that
some of the review papers that we have written pose some challenges.
So one of the things that Paul Wellings has proposed, for example,
is that he says a university with a small tech transfer office
cannot really do the whole of the job. So it might be better to
have tech transfer offices located at a number of effectively
hub universities which service tech transfer across a wide range
of institutions in their area. If you want to say does autonomy
mean that that is a process of negotiation and discussion if we
go in that direction, yes, it does. Do you mean would it be better
if I could tell them they have to do it? No, probably it would
not. So I think we are better off where we are.
Q185 Ian Stewart: John and Ian, good
morning. John, we all support the thrust of the government policy
to allow wider access to further and higher education and to make
the experience both enjoyable and effective for students. The
strategy is employer-led and is based on employer demand. We have
interviewed different employer organisations like the CBI, the
Chamber of Commerce and the Federation of Small Businesses and
we have some evidence from, for example, Vice Chancellors, questioning
the commitment of employers and indeed the understanding of employers
about further and higher education. For example, John Brooks,
the Vice Chancellor at a university in my own area of Greater
Manchester, Manchester Metropolitan University, has said that
employers have been quick to criticise university provision but
they have not been so quick to engage with universities to try
and tackle this. What will the department do to try and involve
employers more within the system?
Mr Denham: If I can list a number
of things. One is that we asked our Funding Council this year
to put money aside for 5000 co-funded degree places or higher
education places between employers and universities. That has
been massively over-subscribed—I think, if I remember, the
figure is about 8000. So there is far more interest out there
in working with higher education in newer ways than people perhaps
at first anticipated. Secondly, we are close to finishing a higher
level skills strategy, which has been produced in consultation
with the university sector and with business about tackling these
interface problems. Thirdly, I think as a result of our engagement
in this area the CBI and UUK are working directly together on
better ways of collaborating and that is one of the areas where
it is good to see people owning the problem. Fourthly, in different
sectors of economic development government is trying to provide
the forum that brings people together. So the Office of Nuclear
Development, for example, in BERR actually brings together higher
education institutions that may have an interest in supporting
the engineering side of the nuclear industry with the main companies
that will be involved. By and large it is not for us to be solving
the relationship problems between them; it is to get people together
and working it out. The reality is—and I have said this
over the last year—for every university that says, "Business
does not understand us" you will find somebody in business
saying, "Universities do not understand us." We have
to oil the wheels between the two.
Q186 Ian Stewart: Is not one of the
problems that the different employer organisations representing
different sections of industry have different demands? The larger
employers seem to be at ease with the government's intention that
people should gain skills for their job, but also transferable
skills that will allow them to move from job to job. The smaller
end of the industry, which probably represents more than three-quarters
of the workers in industry are more interested in, "We want
the skills for this particular job and we are not really interested
in transferable skills that will help the employee." So how
do you reconcile, John, what role is the department to play in
helping both the industry sector and the universities because
I am conscious you say that it is not really the role of the department.
Mr Denham: In the sense that the
relationship has to be delivered between the business and the
university that is the case, and we cannot substitute that process.
But what we do is we provide the mechanisms that enable that relationship
to get better. So, for example, the creation of foundation degrees
has led to a growth of new qualifications, often developed in
a fairly bespoke way for employers at quite local level. So at
the University of Derby, for example, you can do a foundation
degree in miner engineering, in quarrying. It developed for the
industry in that region with employers. If you go to universities
at Greenwich there are foundation degrees there developed for
the local employer community. So while we are not where we want
to be there are many examples of good relationships developing.
The introduction of the co-finance courses again has focused people's
attention on new ways of developing this relationship and our
higher level skills document, which we will produce soon, will
set out more of the practical things we can do to encourage that
relationship. So I acknowledge the issue but I also think that
even in the last year the level of practical engagement between
higher education and business has improved enormously.
Q187 Ian Stewart: Can I finally put
this to you? Looking at the more strategic role you say that they
have in place, when the department has set up its shape and structure
review it has, I suppose, chosen seven business people to comment
as users of higher education on that review. Why was there no
consideration of trade unions or perhaps non-statutory sector
people or people from civil society, to get the balance right?
Mr Denham: Nick Hytner from National
Theatre is regarded not so much as a business user in this case
so we did broaden it, but I think the point that is being raised,
Chairman, is one that we acknowledge. We do not want to do something
artificial but we are giving consideration as to whether there
should be other voices in from the user point of view.
Q188 Mr Marsden: John, one of the
things that the government is saying in raising expectations is
that the local authority is going to take over a large chunk of
FE College funding for 2010. What do you think is going to happen
in that scenario to adult learners over 19 years of age?
Mr Denham: I think that over the
same period of time the funding system for adult learners will
become more flexible because we are moving from the LSC to the
Skills Funding Agency and that will enable us to be more responsive.
I think that one of the longer term benefits is the existence
of coherent 14 to 19 strategies should reduce, when put together
with raising the participation age, the number of people who are
coming in to adult provision having not achieved a reasonable
level of qualification at school. So I think there will be benefits
from that. I do not think that there are any problems for the
colleges themselves that would be unmanageable in that relationship.
Q189 Mr Marsden: I share your hopes
in that area but I think there are two very practical things which
have already been flagged up by the FE sector—not least
by my own FE colleges but I know others as well—and they
were raised in fact on the draft Bill. One is that when you have,
as most FE colleges have, split local authorities, possibly three
or in some cases even four, what incentives there are going to
be to make sure that those local authorities cooperate holistically
to make sure that those colleges can deliver properly. Perhaps
more hard-headedly and specifically what safeguards are there
to make sure that this huge amount of funding that you are now
going to make available to local authorities is in a tightening
local authority budget crisis actually going to reach people.
Because you do not have a ring fencing procedure and we all know
what happened to some of the spending on FE in the 1980s with
local authorities.
Mr Denham: Chairman, if I may,
some of these questions are really for my colleagues from DCSF
because the responsibility for that is with that department. They
have set out how they intend to ensure that local authorities
work together but they have rightly, I think, put the emphasis
on local authorities seeking their own ways of cooperating and
how they ensure that they will take responsibility through the
various performance measures and the rest that they have for ensuring
that they get the results they want for the effort that is put
in. So in that sense I will say that the details of those questions
are questions for my colleagues.
Q190 Mr Marsden: I understand that,
Secretary of State.
Mr Denham: A word I might add,
though, is where we retain an overall interest, if you like, to
maintain the function of, as it were, sponsors of the colleges,
particularly the general FE colleges, it would fall to us to act
if we felt that actions were being taken which were undermining
the viability or the security or stability of an individual college.
That clearly had to lie somewhere within the system and that lies
with us.
Q191 Mr Marsden: You are confident,
are you, that the very dramatic financial changes that have been
described in terms of giving this money to local authorities are
not going to result in situations where the sorts of problems
I have described will manifest themselves, particularly in FE
colleges that genuinely want to expand their appeal to adult learners
over 19.
Mr Denham: I am confident; I think
it will bring a greater coherence into the provision for that
important generation of young people. We know that there is a
weakness in the system at the moment; that some of those that
succeed least well are not really owned by anybody in the system
in terms of responsibility and we are addressing that and that
seems to me to be absolutely fundamental.
Q192 Dr Blackman-Woods: Compared
to higher education institutions are further education colleges
over-regulated?
Mr Denham: We certainly would
like to see a continued move towards greater levels of self-regulation
within the college system. There is a process which is underway
and we are doing it on a step by step basis. One of the crucial
issues in the sector is always the extent to which the sector
itself takes responsibility for poor performance and the extent
to which that remains with us, and I think that that is an issue
that is not yet resolved.
Q193 Dr Blackman-Woods: Do you think
we are moving away from the situation where further education
is seen as the poor relation to higher education, or is that being
achieved because we are getting higher education on the cheap
through FE colleges?
Mr Denham: No, I think we are
actually raising all the time the status of further education
and something we have done a lot of over the last year is to make
it clear not just that we value the core educational role of further
education, but we value the role that further education colleges
in particular play within local communities. I have probably been
more explicit than any Secretary of State for a long time in acknowledging
the huge role that local colleges play as community leaders, as
places of social capital—some of the best gun and knife
crime work, gang work you see in the country is done in colleges.
There is no budget line from the LSC that says, "Here is
a bit of money to deal with that"; we just expect the professional
leadership of colleges to do that. I am sure, Chairman, that members
of your Committee will take part in Colleges Week where for the
first time we are actually officially celebrating the role of
colleges specifically within the FE system, which is not to take
away from the crucial role played by private and third sector
training providers, but colleges as institutions have a uniquely
important part to play in many of our communities and I really
think that our department has probably pushed that message more
strongly than has been heard for quite a long time.
Chairman: Thank you very much indeed.
You will be pleased that we are not going into science budgets
but science policy, which Dr Turner is going to raise with you.
Q194 Dr Turner: Lord Drayson recently
swapped his racing car seat for a seat in the Cabinet. He is also
a member of the National Economic Council, chairs a Cabinet Committee
for Science and Innovation with a mission to integrate science
across government. Does this mean that the science part of DIUS
is emerging almost as a freestanding entity?
Mr Denham: No, I think it means
that the science and innovation part of DIUS has a minister of
quite exceptional ability, both in terms of his own science background,
his business career and the work that he did particularly on the
defence industrial strategy. If, Chairman, we look at Innovation
Nation and the amount of that policy that needs to be delivered
across government in terms of use of public procurement to drive
the market for innovative products, the development of the SBRI
and so on, I think Paul Drayson is a huge addition to the team
to drive that and is enormously welcome. But it does not mean
in any way that there is a separation of those activities from
DIUS as a department as a whole.
Q195 Dr Turner: While these activities
were in BERR and Lord Sainsbury was the Science Minister there
was a freestanding office of Science and Innovation, which covered
all the activities that you have just described. Do you think
there is any mileage in resurrecting that?
Mr Denham: I do not. You have
the critical role of GO-Science—the government office, the
Chief Scientific Adviser who is sort of hosted within DIUS but
has the autonomy that we all understand, which I talked about
last time I was here. Innovation policy and science innovation
policy critically has to be integrated into the whole of the government
effort. So Paul Drayson's role in the Cabinet committee is not
to be over here somewhere in a separate office saying, "This
is a bit of government that has a science policy and the rest
of you can get on with it," the critical thing is to engage
the rest of government. We had a very good example of that this
week, which was the launch of the electric car project, which
has a buy-in from BERR; it has involvement from DIUS; you have
the Department for Transport helping to create the market. We
are going to need far more of those sorts of farsighted market
making activities which pull things through from the fundamental
research to the consumer products of the future if we are going
to be successful. I think the last thing you want to do is to
separate off the science and innovation bit of that into a separate
bit of government with no purchase on the rest of the system.
Q196 Dr Turner: How can we expect
to see science policy develop, given that Lord Drayson has virtually
dedicated himself to continue where Lord Sainsbury left off, and
of course there was the Sainsbury Review of Science and Innovation
published a year ago? What do you think are the implications for
the future of science policy?
Mr Denham: I think what we are
going to see is a continuation of the work that David Sainsbury
did and which we then took further and broader in the Innovation
Nation policy, which crucially began to institute some cross-government
mechanisms for making this happen, and also took our understanding
of innovation that much broader than purely science-based innovation.
I am slightly traducing what David Sainsbury said because he was
not that limited, but I think we are more explicit in the wider
role of innovation. The crucial task in government I think at
the moment is to actually make that policy work in practice. I
am not saying there will be no development of policy but we have
a pretty good basis of innovation policy analysis set out in David's
report and in Innovation Nation, and I would say that the critical
challenge is to make that policy happen in government on the ground.
Q197 Dr Turner: To this day one of
the greatest weaknesses in the innovation process is essentially
a commercial one and it is small-scale venture capital. Do you
have plans within DIUS to address that problem?
Mr Denham: The area that we have
concentrated on has been reforming the small business research
initiative. If you go to the States—and I went to the States
earlier this year—one of the things that is built into the
business plans of many innovative start-up companies is the ability
to get not a government grant but a government contract at that
crucial stage of developing a new product. We have had one for
a number of years which has not really played that same role.
It has been revamped—the first two projects are now on the
TSB website, which went on in July, one from defence and one from
health, and that is the particular DIUS contribution to this.
Obviously the Treasury have discussions with BERR about wider
venture capital policy but our particular contribution is probably
more in the SBRI area and the general fostering of the right environment
for innovation that has been announced to take place.
Q198 Chairman: Secretary of State
when Lloyd Mandelson of Foy in Hartlepool gave evidence before
the BERR Committee last week he said that science would be better
placed in BERR. Why are you right and he is wrong; or can we say
he is wrong?
Mr Denham: I am not entirely sure
he said that, Chairman, although I was not at the Committee, but
no doubt you can quote it back to me?
Q199 Chairman: Yes, we could do.
Mr Denham: Could I invite you
to!
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