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Earl Russell: My Lords, does the Minister understand, first, that the message about funding is not coming simply from the Conservative Party; and, secondly, that if the noble Baroness does not heed it a large number of universities will go down the path indicated by the noble Lord, Lord Skidelsky? I do not think that she wants that any more than I do.

Baroness Blackstone: My Lords, of course I do not want that. I do not believe that universities will go down the path that the noble Lord, Lord Skidelsky, wishes them to take. Our universities wish to remain autonomous institutions but with public funding. That is the position of the Government.

The noble Baronesses, Lady James and Lady Blatch, mentioned college fees. Perhaps I may reiterate what has been said on a number of previous occasions. The Dearing committee recommended that the direct payment of Oxbridge college fees by DfEE, which amounted to a 40 per cent premium above that provided for teaching in other universities, including other top universities, should be reconsidered. It was considered by HEFCE which recommended that it should be replaced by a different system that more closely reflected the funding of the remainder of the sector. The change is being phased in over 10 years. The reduction will involve no more than 0.2 per cent of the total income of those universities. It is important not to exaggerate the impact of those changes.

I am grateful for the comments of the noble Lord, Lord Trefgarne, about foundation degrees. I was extremely surprised by the comments of the noble Baroness, Lady Perry. Those degrees will accomplish the very thing she wants: they will promote diversity in the sector, play a vital role in developing our workforce and address the skills deficit at the intermediate skills level. It is through these degrees that the Government see the great majority of the further expansion taking place. We will publish a prospectus soon and I shall ensure that the noble Lord, Lord Trefgarne, receives a copy.

A number of speakers commented on intrusive bureaucracy in the way in which our universities are treated and claimed that that was the responsibility of the Government. The Government consider it important that higher education continues to be of the highest possible quality, and I am sure that all noble Lords want to see that, too. However, the arrangements by which teaching quality is checked are not in the hands of the Government but the sector itself. I must make clear that the Quality Assurance Agency is not a government quango but is owned and managed by the sector. Following extensive

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consultation, the QAA will shortly introduce a new system for assessing quality which is designed to reduce bureaucracy and minimise burdens which the previous system placed on universities. I am extremely sympathetic to the complaints that many universities have made about that and shall watch closely to see how the new system beds down.

Few speakers said a great deal about research, but I believe that it is an aspect that we should celebrate. University research is a key part of the mission of higher education and is one where we have a reputation for excellence. The noble Baroness, Lady Sharp, referred to Sir Robert May, Chief Scientific Adviser, who often quotes figures. With 1 per cent of the world's population, the UK carried out 5.5 per cent of the world's research effort and produced 8 per cent of the world's scientific papers, placing us second only to the USA. Our success in this area, low wastage rates and high quality teaching attract many overseas students, especially postgraduates, from around the world, as the noble Lord, Lord Oxburgh (who is not in his place), pointed out. In order to sustain world-class university research in an increasingly competitive environment we need to ensure that funding exists and excellence is sustained. That is why the research assessment exercise, which allows research funding to be collective, is so important.

World-class research also depends on world-class facilities and equipment. For that reason, the Government in the previous Comprehensive Spending Review provided, with the Wellcome Trust, an extra £750 million of capital investment over three years through the Joint Infrastructure Fund. That was part of a £1.4 billion package of extra funds for the research base. With these extra resources we are reversing the years of neglect and improving the whole spectrum of research equipment and facilities. I am grateful to my noble friend Lord Morris of Castle Morris for pointing that out. I emphasise that that capital funding is in addition to the block grants which universities receive to fund their research staff and facilities--in England alone that amounts to £867 million this year--and the large amounts of public money which universities receive from the research councils and government departments. Following what was said by my noble friend Lord Desai, I say to noble Lords opposite who want to privatise universities that such a move would cut them off from all that funding. Is that really what they want to do?

Earl Russell: My Lords, does the noble Baroness understand that no one wants to do that, but to continue as we are is not an option?

Baroness Blackstone: My Lords, I thought that some of the noble Lords opposite did want to do it. I thought that they wanted to free universities from what they saw as a constraint in being publicly accountable for the money that they spend. Perhaps the noble Lord can be brief because we are short of time.

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Lord Skidelsky: My Lords, I shall be brief. No one on this side of the House advocated privatising the universities. At most they called for a new compact between the universities and the Government so that the Government would provide adequate funding for the universities to fulfil their proper role.

Baroness Blackstone: My Lords, that was not how the noble Lord's speech came across. I shall read it in Hansard, but I do not believe that he made himself as clear as he might have done. The Government already have just such a compact with the universities and are providing extra funding. I recognise that the universities may want more, and we shall fight for further improvements in the Comprehensive Spending Review.

A number of noble Lords commented on the pay of higher education staff. Our world-class reputation in higher education has been achieved by the quality and dedication of the staff who work in it. They have all contributed to the maintenance of our enviable position. I find it incredible that members of the party opposite are so self-righteous about the issue. During their time in office pay year on year did not increase even to the level of inflation, let alone above it.

The noble Baroness, Lady Blatch, and the noble Lord, Lord Baker, spoke about the brain-drain. There has always been some academic recruitment across national boundaries, but I am aware that there are concerns about that. It is being monitored by, for example, the Office of Science and Technology. It has found that there is an inflow of academics to the UK at all levels, including professorial. As I told the House previously, higher education pay is under consideration in the current spending round. I am pleased that the employers, the universities, who negotiate pay have been able to make an above inflation offer this year.

I conclude on the subject of admissions to our universities which was raised by many noble Lords. They spoke about the efforts which top universities, including Oxford, make to broaden the social mix of their students. The Government applaud these efforts. Equally, we must acknowledge, as has the Vice Chancellor of Oxford, that more needs to be done.

I listened carefully to the wise words of my noble friend Lord Plant. It is regrettable that the latest figures show that 65 per cent of young people who gain three A grades at A-level are state-educated, but only 52 per cent of entrants to Oxford come from state schools and colleges. Research carried out by the eminent Professor Halsey at Oxford shows that it is not just a matter of applications; more students with three As from state schools who apply are turned down than students with three As from independent schools. The North report also recognised that, stating:

    "Fairness to applicants and fulfilment of the university's mission alike suggest that the proportion of applicants accepted should be closer to the ratio of higher grades at A-level, one-third independent school pupils to two-thirds maintained".

Therefore, the Government and the University of Oxford, as I am sure the noble Lord, Lord Jenkins, will agree, are thinking on exactly the same lines. We want

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to work not only with Oxford but with all the other universities to ensure that students are admitted on the basis of merit.

What is required is a comprehensive attack on under-achievement in our schools so that more young people gain the grades which they need to enter higher education. We need an attack on the relatively low number of suitably qualified young people from disadvantaged backgrounds who apply and on admissions systems which sometimes result in certain categories of applicants doing better than others.

The Government are taking action on a number of fronts, some of which I have indicated. There is much more that I could say--for example, about educational maintenance allowances which are being piloted for 16 to 19 year-olds--but my time is running out. I know that the universities are taking their responsibilities seriously in that respect.

The last time that we debated higher education the noble Baroness, Lady Blatch, accused me of being concerned about the gloom and doom that emerged in that debate. I am concerned about it because I believe that we have a great deal to celebrate. I believe that our universities and higher education colleges compare very favourably with the rest of the world in terms of the proportion of young people who go to university, the proportion who manage to gain degrees, the employment of graduates and cost-efficiency. I look at the volume and impact of academic research. We punch above our weight. However, that does not mean that we can be complacent, especially in a world of increasing globalisation and competitiveness. Quality must be maintained and completion rates must not be allowed to decline. Above all, as many noble Lords have said, we must ensure that more students from a wider range of backgrounds benefit from higher education. It is to those ends that our policies are directed.

8 p.m.

Lord Baker of Dorking: My Lords, I congratulate the noble Lord, Lord Bernstein, on his maiden speech. He brought his knowledge of the arts and media and reminded us of the importance of colleges of art. I also congratulate the noble Baroness, Lady Walmsley, on her witty speech and on the demonstration that she is confident and communicates well. I am sure that we shall hear much more from both of them.

This has been an interesting debate, and I thank all noble Lords who have taken part. It is an impressive list: four chancellors from Bradford, Leeds, Oxford and Nottingham Universities; two heads of colleges; five former heads of colleges; two former vice-chancellors; and any number of professors. In fact, there were so many professors that at one stage I was reminded of what Lord Keynes said when he was called to be a professor. He said, "I don't want the insult without the emolument". The emolument is what the debate is largely about.

I remind the Government that they have received many warnings tonight. The noble Lord, Lord Dearing, spoke of worn-down research infrastructure; the noble Lord, Lord Bragg, and my noble friend Lady

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James of disgraceful salaries; the noble Lord, Lord Dahrendorf, of signs of strain; and the noble Lord, Lord Weidenfeld, said that Gordon Brown had received a good sand-bagging in this debate and had damaged the reputation of universities in Europe as a result of his action. The Minister should listen to those comments. She should listen to what my noble friends Lord Norton, Lord Renfrew and Lord Hunt, say about the burden of bureaucracy. Those are warnings to her.

I believe that she is in great personal difficulty as a Minister with responsibility for higher education. The funding gap is absolutely enormous. The salaries of academics should rise by between 30 per cent and 40 per cent. There is little point in arguing who is to blame for this situation. We, as Tories, take some of the blame, but the Minister must still achieve an additional £800 million a year in order to return to the level of average funding that obtained in our 18 years of government.

The gap is huge. How will she bridge that gap? How many years will it be before academics catch up? We are not talking about hundreds of millions of pounds; we are talking about billions of pounds. When it comes to the funding gap for research, one should read the speech of the noble Lord, Lord Oxburgh. He is the head of our greatest research college; he is at the pinnacle. He said that he is ashamed to invite his peers from around the world to his university. He is ashamed because of his research infrastructure.

This is the knowledge economy for which the Minister is responsible. How much will she obtain from the Chancellor? She needs not hundreds of millions; she needs billions of pounds. I do not believe that she has the fire power to take on a disgruntled Chancellor. Therefore, I feel sorry for her because the gap is enormous. As the noble Earl, Lord Russell, said, we cannot go on as we are. Noble Lords have complained of bureaucracy. Bureaucracy becomes so over-burdened because it is determined by state money. My poor noble friend Lord Renfrew must record on a form the percentage of his time that he spends thinking. And so on and so on.

Nothing will be achieved until the universities again become independent and truly autonomous. That will happen, and the Minister should try to devise schemes to move matters along more easily; otherwise, she will come to the House with a very disappointing settlement. She has heard the demands from her own side. Incidentally, only one noble Lord defended Gordon Brown. He should be promoted! The Minister has heard the demands. How will she meet them? The gap is absolutely enormous and thus the slow, slow decline continues. And it is a decline. I urge noble Lords to read again the speeches made today in order to understand the real problem.

I began by saying that there is a crisis. It is a crisis. I said that the universities are a nationalised industry. They have all the weaknesses of a nationalised industry. That is what has been rehearsed in this House today. I hope that the Government will listen. My Lords, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.

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