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Much could be said, in a similar fashion, about other universities up and down the country. There is no need to plead the case for recognising the significant and unique role of our places of higher learning. Everyone knows that if a knowledge deficit opens up between ourselves and the powerful economies of China and India, we shall one day rue the consequences. I am sure that the Minister will assure us of the continuing and unwavering commitment of the Government to higher education, but there are two questions that I want to press. First, echoing the noble Baroness, Lady Cox, are the Government committed to sustaining the role and the future of newer universities as well as older places of learning? There is a tendency these days for some to speak of “leading” universities, by which is meant Oxbridge and research-intensive universities. Without undermining the needs of such universities, it is crucial to recognise the work of other places where the same commitment to learning goes on and where research is also maintained. One of the strengths of UK universities is their diversity, and newer universities are well known for the development of student potential as well as innovation in new subjects of study.

Secondly, the issue of funding research in newer universities has been mentioned by several noble Lords and demands re-examination. The Government’s policy of concentrating the increased research funding through the science and innovation budget in a smaller number of universities has resulted in many institutions struggling to keep research going. The Minister will be aware of the Arthur D. Little report of June 2006, The Social and Economic Impact of Publicly Funded Research. It concludes with the very firm view that the research resources of our newer universities,

Can the Government assure the House that newer universities, such as Gloucestershire and Liverpool Hope, will be adequately funded to ensure that they retain and develop the research capacity that befits a higher education institution?

3.09 pm

Lord Morris of Handsworth: My Lords, like other Members, I begin by declaring an interest. I am chancellor of Staffordshire University and a recently retired member of the board of London South Bank

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University. Although it is not relevant to this debate, I am also the chancellor of the University of Technology in Jamaica.

This debate provides the opportunity for your Lordships’ House to consider the new and changing role of higher education institutions. In addition to its traditional role of knowledge transfer, today the sector is very much engaged in regeneration, as the noble Baroness, Lady Blackstone, reminded us. It is also building social capital while rolling back the frontiers of knowledge in new fields, including climate change.

In the changing world of work and society, the values of higher education institutions are firmly grounded in their communities, training students to be work-ready, while building economic and social partnerships. I offer two brief examples. At Staffordshire University, we are housed on three campuses, one of which is in Stoke-on-Trent. Once an important industrial and creative centre, the town now struggles to create jobs. Although it is not in the premier league of innovative investment, the university, in collaboration with Stoke-on-Trent College and the sixth-form college, is building a university quarter that will see the regeneration of a large part of Stoke around the once-thriving potteries industry. That project is not being undertaken in a vacuum, but in full partnership with the community, which is consulted at every step. The project is a good example of public and private sectors working in partnership to build social capital.

London South Bank University has established the London Knowledge Innovation Centre, a joint venture with the business enterprise agency for Southwark. The centre provides incubation space, business advice and support to assist aspiring entrepreneurs to turn their innovative ideas into thriving businesses. As we have heard today, many more exciting projects are being undertaken by the higher education institutions sector, contributing billions to the UK economy.

Those are only a few of many common examples of economic impact. I support the call for investment and the call from the noble Lord, Lord Norton of Louth, for a lighter touch. I hope that the Minister can assure us that bureaucracy will not strangle the creativity and innovation spoken of in today’s debate. Our higher education institutions recognise that their community is now worldwide. They are reaching out to build relationships throughout the world through positive recruitment. Many higher education institutions have adopted Gandhi’s philosophy of thinking globally but acting locally. They are also building social capital.

3.14 pm

Lord Sutherland of Houndwood: My Lords, in my youth an Australian comedian called Bill Kerr used to open his radio routines by saying in droll tones, “I’m only here for four minutes”. I now know how he felt. I want to use my four minutes to take noble Lords through two examples of lateral and innovative thinking in the university sector that boosts UK plc and contributes significantly to our economy.

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On the first example, I had thought that I might be the first to mention in this debate the place of music and music colleges. I am delighted that the noble Lord, Lord Geddes, has been there, and I follow him enthusiastically. The Associated Board of the Royal Schools of Music is a charitable company established for the benefit of music education by the four UK royal schools of music: the Royal Academy of Music, the Royal College of Music, the Royal Northern College of Music and the Royal Scottish Academy of Music and Drama. I declare an interest: it is my privilege to chair that board.

You might not think that this charitable company was a natural clone of the spin-out companies that we have seen elsewhere. It is not, but 600,000 candidates are examined annually by that board in the furtherance of musical education. The revenue coming into this country from overseas constitutes over half the board’s earnings; roughly £25 million is earned from examining, roughly half of which comes from the 90 different countries in which the board moves and examines. Those 90 countries boost the numbers of candidates each year—by 4.3 per cent last year.

The same board is involved in not only musical examination but taking the business of music education further in innovative ways. It has been nominated by Webby, which the techies among noble Lords will recognise as the organisation that internationally gives awards for the best websites in the world. The board has been nominated as one of five finalists internationally in the category of education for its website SoundJunction, which combines high technology and music. It is a classic example of niche institutions not simply staying in their small corners but expanding their range of capacity and interest in ways that benefit them and the cause of music education in this country—with all the consequences to which the noble Lord, Lord Geddes, pointed—and creates income for Great Britain plc.

My other example is that of a different form of innovation and involves my old stamping ground, King’s College—I was delighted to hear such a positive story about the college from the noble Baroness, Lady Rawlings. I declare an interest as an educational adviser to the Malaysian company YTL, one of the major companies in that country’s stock exchange. The company was exploring ways of benefiting education in Malaysia. Conversation focused on improvement of schools through the devolution of increased autonomy, a theme to which the Minister might warm. The outcome was that three weeks ago I was in Kuala Lumpur at a ceremony hosted by the Malaysian Minister of Education, where representatives of King’s College, London, signed an agreement to provide training for future headteachers in Malaysia—initially up to 150 over the next three years. The impact of that in terms of Britain’s influence is significant. The earnings come back to this country, and a great deal of the training will take place in this country, although clearly some of it will be based in Malaysia.

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Different factors came together: the wish of YTL to enhance Malaysian school education; the Malaysian department’s recognition of what was happening in this country in terms of pushing out the boat of education autonomy; and the reputation and excellence of King’s College, London, in the joint fields of education and professional leadership training. Without that excellence, the other bits of the jigsaw would not have fitted together. It is a marvellous story and a niche story, and I simply hope that, as the Government and the funding councils consider the impact of universities and colleges, they allow for such lateral practice and thinking to have a very high impact.

3.18 pm

Lord Bragg: My Lords, I, too, begin by congratulating my noble friend Lady Warwick on securing this important subject for debate. I intend to concentrate on the economic impact emanating from Leeds University, of which I am chancellor. Like others in your Lordships’ House, I think that the detail will provide a useful and encouraging microcosm of the range and intensity that a university can bring to both the local and national economies.

Leeds has a £340 million income, which generates a total of £870 million as an output. It creates 7,500 direct jobs and a total of 15,000 in local economies, and houses 4,000 international students, who generate £20 million a year. We have more than 30,000 students in the city, who help to keep buoyant the local economy and the city’s culture.

Leeds University is the third largest employer in the city after the NHS and the city council. The knock-on impact of employment in universities is about 200 per cent greater than that of a similar volume of employment in the financial and legal sectors. Leeds currently has 44 active spin-out companies, three of which have been floated on the Alternative Investment Market. The university runs a graduate start-up programme that has created 70 companies since 2002—for example, the GETECH Group, which provides gravity and magnetics services to the international oil and mining industry. It was floated on the AIM last year, raising £3.2 million. Arts-stra, created three years ago by a former arts student, is now a successful arts consultancy with clients including the BBC and Channel 4.

Leeds supports private and public sector businesses to innovate and remain competitive and effective through product and process development and work-related learning. In 2005-06, there was £27.5 million-worth of user-driven research and 350 to 400 companies were assisted per annum. One final cluster of facts is that the university runs six centres of industrial collaboration for supporting regional industrial clusters, provides an innovation hub for the bioscience/health sectors, and is developing lifelong learning programmes for disadvantaged groups. It is a great success story. Leeds University is primarily a centre for scholarship; it is also, increasingly, an initiator of valuable ideas for the development of the economy.

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There is also the immeasurable and vital law of unexpected consequences at any university. I suppose that Isaac Newton is the key example in our academic galaxy. In the 17th century, as your Lordships are aware, Newton, at Cambridge University, wrote a book in Latin using Greek geometry to invent modern physics, and today it is still literally making the working world go round. Examples can be multiplied a thousandfold. In the sciences—even in some of the humanities—there is rarely such a thing as pure research. Everything which uncovers new ideas about our lives, the planet and the universe can become a driver of future prosperity in scholarship, commerce, technology and social organisation.

Finally, in my opinion, universities contribute vastly to civilising the mind and estate of the country in which we live in unprecedented numbers. They are educating thoughtful, rounded young people, whose well trained intelligence is far and away the best hope that this country has for a secure and prosperous future.

3.22 pm

Baroness Deech: My Lords, I start, like many others, by thanking the noble Baroness, Lady Warwick, for giving us the opportunity to discuss this important subject. I declare my interest as the Independent Adjudicator for Higher Education, a new post replacing the old jurisdiction of the visitor. My office has so far issued more than 1,000 decisions on student complaints and has handled many more inquiries and applications. Therefore, in my job I see the seamy underside of student life.

Universities are coping extremely well and I am second to no one in taking pride in their economic impact, but it comes at a cost. The economic impact is on society as a whole, rather than as a benefit to individuals, which is why the resources of universities are a proper claim on the state. To prove my point, I commend to your Lordships the annual Sunday Times rich list. I am sorry to say that you have to go a very long way down it before you come across anyone who has made their money from education. The people at the top of it have married wealth, divorced it and inherited it, so to go into higher education for personal gain is not a sensible ambition.

Consumerism has no place in higher education. One should go for the love of study, out of a willingness to make a contribution to the well-being of others, for scientific curiosity, and to grow up. The Government’s policy of increased participation, which is wonderful, means increased costs to the individual and a greater personal and family financial investment, and therefore greater disappointment if there is failure. The cost of failure or underachievement is much higher in a competitive jobs market. The blame for underperformance is more likely to be attributed to the university’s failings.

There is, of course, a growing legalism and rights culture. The QAA and my own office give quality assurance. I have to report with some interest that the complaints that we receive from overseas students—in particular, non-EU students—are higher than their

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proportion in the universities warrant. The complaints that we receive from students studying subjects allied to medicine—not medicine itself—are considerable, followed by business and law. The least complaining are those doing agriculture and veterinary science. But I am concerned about the happiness and welfare of the foreign students who play such a large part in the economic impact of our universities. We must be sure to give them an experience that they have come for; they appreciate quality. It is important to welcome them and make sure that we give them an attractive experience, bearing in mind the cultural differences.

Mobility is not as easy as it seems. Moreover, we have a very high dependence, as your Lordships know, on our foreign students. Some universities’ economies would be severely hit were the numbers of overseas students to drop. We have to attract and support them. We need special training for lecturers to deal with foreign students. We need integration with the host community, accommodation and marketing.

That brings me back to my opening theme that the commercial value of the universities lies not in revenue streams over the centuries, nor in individual wealth, but in the education of an ambitious, articulate new generation with intelligence and intelligibility, citizenship values, a sense of place in the world and, if we are fortunate, the scientific skills to advance the welfare of all mankind, whether through medicine, technology or environmental sustainability.

3.27 pm

Lord Paul: My Lords, I, too, am grateful to my noble friend Baroness Warwick for raising this important debate, and I congratulate her on the good work she does to promote higher education as chief executive of Universities UK.

The issue of the economic impact of higher education will always require constant monitoring as this must be one of its main aims and will also influence how much money is spent on our universities. I declare an interest as chancellor of two universities—Westminster and Wolverhampton, and I shall summarise briefly what we in these universities have accomplished to date, since both are substantial businesses in their own right.

The University of Wolverhampton, based in the West Midlands, had total revenue of £129 million last year. The university itself spent £126 million and attracted 3,385 non-UK students, who spent a further £16 million off campus. It provided 2,319 full-time equivalent jobs across a range of occupations. Overall, its activities generated £324 million of output in the UK—about £220 million in the region, and £103 million in the rest of the UK. Its overseas revenue of £7.56 million, plus off-campus expenditure of overseas students and visitors, generated £24 million of export earnings.

Meanwhile, the University of Westminster, which has 24,000 students in London, and employs 2,000 staff, has annual expenditure of £140 million. Its estimated contribution to the national economy is

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between £500 million to £800 million through expenditure on salaries, services, research and knowledge transfer.

Both universities have strong records of widening participation and of producing economically active graduates. At Westminster, 44 per cent of first degree students come from lower socio-economic groups, while at Wolverhampton the figure is 50 per cent. The University of Westminster is a major provider of part-time education with 10,000 part-time students, 40 per cent of whom are postgraduates.

It helps more than 1,000 small and medium-sized companies through the WestFocus Knowledge Exchange giving support in such growth areas as creative industries, information technology, materials and health.

Wolverhampton also has more than 10,000 part-time students. Over the past six years it has delivered business support services to more than 5,000 businesses and 13,000 employees. Therefore, these two universities, strongly embedded in their regional communities and with international activity, are between them making a contribution of some £l billion to their regional, national and international economies. Universities must be constantly aware that they must respond to the needs of the economy and the demands of the students for modern and relevant programmes which will equip them for employment and the challenges of the new globalised world and economy.

On a different note, I congratulate the Government on their newest initiative, allowing international students to stay in the UK for a year after graduating to gain work experience. That will be of great help to international students and their families. It will also benefit the universities, as it will attract more students from overseas. It will particularly help universities such as Westminster, which is making great efforts to be a global institution.

3.31 pm

Lord Butler of Brockwell: My Lords, I congratulate the noble Baroness, Lady Warwick, on obtaining this debate. I declare an interest as master of University College, Oxford.

The noble Baroness spoke eloquently, as have other noble Lords, of the wide contribution that higher education makes to employment, exports and our culture. I shall concentrate these few remarks on research. There can have been few periods in history when opportunities have been greater for advances through intellectual effort and applied research. Research attracts money, not only from research councils in the UK, but from sponsors of all sorts. It is important for current economic activity but, of course, its significance spreads far more widely than that. It supports advances which address both the world’s needs and—as the noble and right reverend Lord, Lord Carey, has said—give our country a competitive edge against the lower labour costs of the Far East.

To their credit, the Government have recognised the importance of this national asset. Their support for research, through the Science Research Investment Fund and in other ways, has been strong

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and commendable. Coming from Oxford, I pay particular tribute to the Government for their staunch support for the construction of Oxford’s biomedical research facility against the obstruction of animal rights protestors.

I make two points about the future. I read a press report last week saying that a number of universities are offering incentives to obtain the best researchers, in the expectation that cutbacks in the Comprehensive Spending Review will reduce the overall supply. I make no complaint about the competition for research funds being tough. While the UK’s share of the most highly cited research papers is second only to the United States’, we also have more than our fair share of the least cited papers. This suggests that it would be a mistake to spread the available resources more thinly at the expense of supporting the best.

Lest the noble and right reverend Lord, Lord Carey, should think that I wish to deny funds to the newer universities, my second point is that the cap on tuition fees means that money that could be spent on research has to be diverted to subsidising teaching. The fact that HEFCE’s teaching grant plus tuition fees is less than the cost of teaching undergraduates means that the deficit has to be made good from elsewhere. It is a tax on the research so crucial to the UK’s economic future.

The irony is that this can be put right without cost to the taxpayer. Recent surveys show that students are prepared to pay a higher tuition fee than the current limit of £3,000 for high-quality higher education. It is to be hoped that, when the Government review the tuition fee in 2009, they will raise the threshold to a level that more accurately reflects the cost of undergraduate teaching and thus release funds for research, which is the life blood of our national economic strength in the future.

3.35 pm

Baroness Lockwood: My Lords, I will illustrate the tremendous change, almost a revolution, that has taken place in higher education. I do so in the context of Yorkshire Forward, with its 10 universities and four HEIs, and Bradford University in particular, with which I have been closely associated since 1981.

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