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The first is to maintain the unit of funding for teaching. We need a continuation of the guarantee that there will be no reduction in funding. This will ensure that the extra money available from variable fees will enable a higher quality learning experience and better sustainability. I hope that the Minister will be able to give me a guarantee that the Government are committed to this. The second issue is more money for teaching infrastructure, by which I mean buildings and equipment. There is a £5 billion backlog of infrastructure maintenance—which in itself is a great improvement since 2000, as a result of the Government’s commitment to increased capital allocations. Universities need to be able to invest further in state-of-the-art teaching infrastructure to support pedagogy and to ensure that graduates are taught to the highest standards.

Thirdly, there must be further investment in knowledge transfer, business links and other forms of employer engagement, which I know the Government are committed to. The Higher Education Innovation Fund, known as HEIF, has been extremely successful in stimulating this engagement. It has also enabled

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better engagement between universities and the community. I hope that the Minister will be able to reassure me that the Government will continue to demonstrate their support with sufficient funding and resource.

I do not want to appear complacent; there is so much more that could and will be done. But the universities themselves are strongly committed to this agenda and I am delighted that this House has the opportunity today to celebrate one of the UK’s great successes—its university sector. I look forward enormously to the contributions of the many distinguished Members of this House who I know feel as passionately as I do about the sector’s continued success. I beg to move for Papers.

2.17 pm

Lord Norton of Louth: My Lords, I warmly congratulate the noble Baroness, Lady Warwick, on securing this debate. I declare an interest as professor of government at the University of Hull, and I am delighted to see that two Hull graduates, the noble Lords, Lord Giddens and Lord Dearing, are taking part, along with the chancellor of the university, my noble friend Lady Bottomley.

As we have heard—I do not propose to repeat the figures—the contribution of higher education to the UK economy is substantial. It is essential to the health of our economy that we maintain a vibrant culture of research and of teaching in our universities.

Applied research is fundamental to our economic future. Theoretical research is fundamental, and so too is teaching. Research and teaching are complementary pursuits: each benefits from the other. It is the quality of teaching that is essential to producing those who are wealth creators, who serve increasingly to generate a successful economy. Our economy benefits from and is dependent on the generation of well qualified and highly motivated graduates. Research contributes to the quality of teaching. Teaching generates fresh ideas and ensures that researchers can locate the relevance of their research in their discipline. Because each benefits from the other, it is possible to thrive in both. I head a politics department that is rated as a 5A department in the research assessment exercise and that came top in last year’s national survey of student satisfaction. Pursuing both is demanding, but it is highly rewarding.

I take one example of the economic effect. The combination of research and teaching explains the capacity of our universities to attract so many overseas students in a highly competitive market. Overseas student numbers are increasing, and off-campus spending by international students exceeds £1 billion a year. Students are attracted by the prospect of being taught by leading figures in their field. That alone illustrates the need to maintain world-class research and teaching. To do that, and here I reiterate what the noble Baroness has said, we need not only greater investment, but also to reduce burdens and provide greater certainty. As the noble Baroness said, we need to invest in order to maintain the quality of the teaching provision. It is not just a

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case of maintaining the unit of resource. We are teaching not only more students but, as she said, a more diverse range of students. We are expanding beyond the traditional intake of the 18 year-old A-level student. That imposes greater demands than before.

We need to reduce the burden of bureaucracy. I welcome the fact that in many areas we are moving towards a lighter touch in regulation—but, as I pointed out in a previous debate, a lighter touch is not the same thing as a light touch. The regulatory regime may be effective, but it is inefficient and saps morale.

We also need more certainty. It is difficult to plan ahead if one does not know what the goal is and what resources one has to ensure its fulfilment. The RAE is a case in point. We are unsure what will happen post-RAE 2008; indeed, we are not sure what will happen in the RAE itself, given the new mode of assessment, or what the financial implications will be. The uncertainty after RAE 2008, given the likely use of metrics, is pronounced in the humanities and the social sciences, for reasons we have previously discussed. Does the Minister therefore agree that maintaining high-quality research and teaching is essential to the health of our economy, and that that entails maintaining or improving the unit of resource, reducing bureaucracy and ensuring greater certainty? If not, why not?

2.21 pm

Baroness Cox: My Lords, I thank the noble Baroness for this important debate. I declare an interest as a founder chancellor of two of Britain’s newest universities: previously Bournemouth, and currently Liverpool Hope.

I shall focus on the link between the economic impact of higher education with diversity of provision and access for students. As already noted, the Government have declared their intention to create a diverse higher education sector, with at least 50 per cent of 18 to 30 year-olds entering higher education. The first objective is to increase choice and enhance opportunities for lifelong learning, helping to promote an educated, skilled and competitive economy.

The second objective is to increase access by reducing historical disadvantages and encouraging all British citizens, irrespective of social background, to achieve their potential as appropriate. These proposals for expansion have been criticised, because of concerns—which I respect—about the possibility of lowering standards and the maintenance of quality. I believe that those concerns can be addressed, and that the underlying objective of encouraging access to higher education by overcoming social and cultural barriers is to be welcomed. The heritage of class difference is still strong in this country. There are still large sectors of the population with low educational aspirations, in marked contrast to many developing countries, where even the very poor have high educational aspirations. If Britain is to remain economically competitive, it is crucial that historical disadvantages and their long-term socio-psychological impact are remedied.

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I draw briefly on the experience of Liverpool Hope University’s historic and current role in expanding access to higher education by overcoming barriers of gender and class and enhancing diversity of provision through its ecumenical Christian foundation. In the 19th century, Hope’s foundation colleges created the first opportunities in the region for women to receive higher education, long before they were eventually admitted to universities. Over subsequent years, in co-operation with the local university, Catholic and Anglican church foundations provided opportunities for higher education in diverse colleges, until the recent legislation enabled them to attain “university” status. Now Liverpool Hope University has achieved the distinction of becoming the only ecumenical Christian university in Europe, and there are at least 14 other faith-based higher education institutions.

Those institutions enhance choice and access, with their ethos of a long tradition of social inclusion. For example, Liverpool Hope is attracting students in a region where many communities have traditionally not been encouraged to benefit from a university education—some of the poorest and most disadvantaged communities in the country. This is making an important contribution to the local and national economy by enabling more students to realise their potential. The university is also stimulating urban regeneration and community involvement in many economic and cultural initiatives. Moreover, as an ecumenical Christian university—and this might be a counterpoint to the earlier debate—Liverpool Hope is encouraging access for students from different ethnic and religious backgrounds; not only Christian students but also those of other faiths seek and value the opportunity to study in a university that respects and enshrines the spiritual dimension of life, where sectarianism is transcended and there is a commitment to holistic education of body, mind and spirit. In such ways it is achieving the goal of social inclusion and reducing the risks of personal marginalisation.

In order to maintain such diversity, however, the new universities require appropriate support. With the present funding policy, a smaller group of large universities gets the lion’s share of teaching and research resources. The perpetuation of a hierarchy of funding of universities does not support the Government’s publicised intention to offer high-quality higher education to all students who can benefit.

In conclusion, the challenge must be to ensure the continuation of diversity, with universities enabled to make their own distinctive contributions, without having to mimic each other to survive. I hope the Minister will give an assurance that the Government’s funding policy will ensure adequate resources to enable all universities to thrive; the new ones, alongside their well established counterparts.

2.26 pm

Lord Giddens: My Lords, I, too, congratulate my noble friend Lady Warwick on having initiated this debate. I fear she has been too successful for her own

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good; we only get four minutes each to speak, and most people here are used to speaking for an hour, not less. I suppose I have to declare a cluster of interests: not only am I a proud graduate of the University of Hull but I am also an ex-director of the London School of Economics and currently a life fellow of King’s College, Cambridge.

We should give not three but four cheers for universities—if that concept exists, anyway—because universities are among the greatest unsung achievements of our society and our economy. If you look at the rankings of universities across the world, you can see we have two or sometimes three universities in the top 10, we have a number in the top 50 and even more in the top 100. Only the United States has more universities in those categories. We are a long way ahead of our continental competitors in France, Germany, Italy or elsewhere.

Universities in this country are certainly a success story. The importance of this debate is that it demonstrates that universities are not just a cost to the Exchequer but actually generate enormous revenue for the country. In a knowledge-based economy, you absolutely have to have large numbers of people in higher education because of that sheer economic output of skilled labour power. We know the other narrow but important economic impacts universities have, which have been mentioned: knowledge transfer and inward investment. I am an ex-head of the LSE, which was a highly internationalised institution. I am pleased to say that it has the highest application rate of overseas students, both for undergraduate and graduate courses. The result of those economic impacts is what some students in the US have identified as a multiplier effect. It is not just that universities bring students into their local community; the money spent in the community is calculated in some American studies to be worth £3 for every £1 that is brought into the area.

I shall finish my short discourse by entering two pleas to the Government and the Minister. First, we must give due attention in this country to resisting the creeping commercialisation of universities, especially our top-end universities. We often look to the US to see what is best, but there is a gigantic debate going on there about the corruption of universities by commercial interests, led by the ex-president of Harvard, Derek Bok. People have written books like The University in Ruins. It is a very serious issue there. We must have clear boundaries to protect academic autonomy. If you do not do that, you undermine some of the most important benefits of universities.

My second plea is not to limit the understanding of those economic benefits simply to those narrow ones I have just identified, and which were in my noble friend Lady Warwick’s speech. The more important economic benefits of universities are much more diffuse. I offer as an example the career of Tim Berners-Lee, who graduated from Oxford, worked on the margins of universities and industries and worked in CERN in Geneva and MIT. He is the inventor of the world wide web. He did not know what he was inventing, but it has had an absolutely tremendous

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and worldwide economic impact. For me, the top universities depend on creativity, adaptivity, and insulation from too many commercial pressures if their longer term economic interests are to be realised.

I now move from a genius to a child in the classroom. A teacher asks Tommy, “How old were you last birthday?”, and Tommy says, “Seven”. The teacher asks, “How old will you be next birthday?”, and Tommy says, “Nine”. The teacher says, “That's impossible!” Tommy says, “No it isn't, because today is my eighth birthday”. That is what I mean by lateral thinking and creativity—the basis of the impact that the universities have not only on society but on the wider economy.

2.30 pm

Baroness Rawlings: My Lords, I, too, would like to thank the noble Baroness, Lady Warwick of Undercliffe, chief executive of Universities UK, for securing this important debate. Yesterday, when I looked at the very distinguished list of speakers for this debate, including a former principal of King's College, London, the noble Lord, Lord Sutherland, I could not imagine which would be a more daunting task—to either follow the eloquence of the noble Lord, Lord Giddens, or to be placed before the noble Lord, Lord Dearing, one of the most respected figures in higher education. Alas, I see that the House has managed to sandwich me between both the former and the latter.

There can be no doubt that Britain's universities make major contributions to the economy and the society of the country. I would like to use King’s as an example of the major positive impact made by the higher education institutions of the UK. In doing so, I declare an interest as Chairman of Council of King's College, London.

The contribution made by King’s to the economy is substantial. It is a major university institution in the heart of London with a turnover of more than £387 million in 2005-06. It employs more than 5,000 staff. The positive economic impact of such substantial employment speaks for itself. We have nearly 20,000 students in a wide range of fields stretching from humanities, law and the social and physical sciences to virtually every kind of health discipline. More than a fifth of these students are from other countries. The presence of so many home and overseas students contributes economically, socially and culturally, not only to this capital city, but also to the country more generally. Those of our graduates who make their careers in the UK will be, through their qualifications and achievements, our important wealth creators for the economy; those who choose to work overseas will be major customers for Britain due to their persisting positive ties to this country.

The intellectual capital generated by universities also benefits our society. Much of this benefit derives from wealth creation. During the academic year which ended last July, King's College, London, generated research income in excess of £110 million—the sixth largest in England. King’s is within the

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forefront of income generation too, through knowledge transfer, spin-out companies, consultancy and partnerships in areas such as biotechnology and the creative and cultural industries. For example, early in the academic session 2005-06, King’s won the national award for Business Initiative of the Year for its spin-out company, Proximagen, which supplies therapeutic products based on first-rate academic research into Parkinson's disease.

As well as the financial impact of a large, multi-faculty university located on several sites north and south of the River Thames, the traditional artery of the capital city, there is the cultural impact. King’s has highly productive associations with many of our major arts institutions in London, all of which contribute greatly to income from visitors and tourists.

In these various ways, King’s and other universities are major engines of dynamic economic growth and cultural and social benefit. Especially in the age of the knowledge economy, this is a major rationale for adequate public funding for our higher education institutions. Such funding provides the base on which all these achievements rests.

2.35 pm

Lord Dearing: My Lords, it may be no surprise to the Minister or the noble Baroness, Lady Warwick of Undercliffe, whom I congratulate on securing this well timed debate, that, in the light of the report I recently contributed to on languages, I should want to use this debate as an opportunity to urge that we realise that English as a language is no longer enough. We need to address that problem. In that context, I want to urge the Government to ally themselves with the universities to secure a major shift in our understanding of the importance of language capability.

It has long been recognised that the lack of languages is a non-tariff barrier to trade. Our trading partners have long recognised that and have committed themselves formidably to learning English. They have thereby gained access to our markets. We have failed adequately to perceive that if we want to reciprocate and get equal access to their markets, we must do as they have done. That applies not only to the economy but to individuals. Learning a language is enfranchising: it opens doors to our young graduates. As they mature and aspire to higher posts, it is also relevant to them.

Our problem is illustrated in a lack of take-up of places on the ERASMUS programme. We manage around 7,000 a year. France, Germany and Spain manage three times that. I congratulate the British Council on aspiring to modify that several times, but how can it do so unless we change our perception of the importance of languages?

I have another illustration of our problem—the lack of English-speaking translators and interpreters. The United Nations and the European Commission have expressed serious concerns about the way that the lack of such qualified English speakers has inhibited and impeded the conduct of business. The Government could help by providing funding for

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more postgraduate scholarships and studentships through the Arts and Humanities Research Council to promote translators and interpreters.

In last month’s report on languages, to which I referred, we urged that the Government should commit themselves to a substantial programme, in partnership with others, to get across to our people and our companies the importance to them both of capability in languages. I hope that the Government will accept that as one of our major recommendations and that they will note a particular recommendation—the appointment of a careers and languages director to get across the fact that we need these people at the highest level.

We recommended a doubling of funding available through the funding council to enable our universities to go into our schools to get across to young people the value of languages. That was another major recommendation. We urge the Secretary of State in his guidance to the Learning and Skills Council to make languages one of our priorities for funding. I commend all those recommendations to the Government.

Turning specifically to the universities, they have high-level language facilities and have begun making those available to the wider community. That is a very cost-effective and well equipped capability. It is highly desirable that the Government should be prepared to fund pilot projects to enable us to establish a long-lasting use of that capability for the whole community.

For part-time students, the present high level of fees, which universities are required to charge to cover their costs, is an impediment to take-up. I hope that the Government will seriously consider how they can build in additional funding to provision of their courses.

The greatest dangers in life are those that are not perceived. A lack of language skills is dangerous because we do not perceive how serious it is. I urge the Government to enter into this partnership with universities to address that problem.

2.40 pm

Lord Bhattacharyya: My Lords, I thank my noble friend Lady Warwick for securing this important debate. I declare an interest as the director of Warwick Manufacturing Group at Warwick University.

In the Budget, the Chancellor announced that the Government will spend £6.3 billion on science by 2011 and that we aim to spend 2.5 per cent of our GDP on research and development. This funding is vital because universities provide the framework for economic growth, both from building the skills base and through research. Since 1997, increased funding and the extra income from tuition fees mean that our universities are prospering after years of neglect. Alan Johnson and his predecessors deserve great credit for their achievements.

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