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We simply cannot afford not to give high priority and public expenditure and taxation to the generous funding of higher and further education. The state

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must remain central to guaranteeing it. To pretend we cannot afford it is nonsense. As in other spheres, the danger is that we give in to the priority of private affluence as against the necessity for collective expenditure, and we do so at our peril.

1.31 pm

Lord Lewis of Newnham: My Lords, I thank my noble friend Lord Luce for initiating this debate. This is a very timely topic and has generated tremendous interest in the House and the community.

I declare an interest as a past professor of chemistry in a number of universities in the country. As a result of that, I would like to concentrate on some aspects of the funding of science, both past, present and future, in universities. As the noble Lord, Lord Broers, pointed out, there has been a significant increase in the projected funding of science in universities. Over the next four or five years, this is to be in the order of 17 per cent. However, a recent report by the Select Committee on Innovation, Universities, Science and Skills in the other place pointed out that, although the budget has increased, it does not cover all the spending commitments imposed by the Government during this period. It does not cover some of the spending commitments already agreed—for instance, the 80 per cent of the full economic cost of research. It also involves the potential closure of some of the facilities run by research councils. These are very perturbing features.

I believe the full economic funding of research work in university departments to be a significant and desirable change in the funding programme. But, as the Royal Society of Chemistry has pointed out, the way research costs are being assessed has led to a number of industrial firms, particularly pharmaceutical companies, slashing their support for research in university departments of chemistry. The figures they quote indicate a drop of 25 per cent in the number of postdoctoral grants. I do not find it surprising that an increase in the cost of research has led to this reduction in funding, but the Royal Society of Chemistry suggests that a major factor in this reduction has been the introduction of full economic costing.

This change in the funding pattern has been introduced over the past two years by the Government to allow universities to recover indirect costs from projects, such as academic staff time, the use of various instrumental facilities, and library, building and rental support services. I believe it is fair that these factors should be included in any assessment of research sponsored in a university—it has been one of the ironies of the funding of science in universities in the past that they have not been included—but it leads to problems in other general areas.

The figure suggested by the research council for projects sponsored by industry is 80 per cent, but some universities appear to be charging as little as 10 per cent or as much as 120 per cent. Certain charitable funding organisations have also been subjected to these extra costs, but as they are unable to pay them, often for very legitimate reasons, some universities are refusing to accept grants from those bodies. This reflects how dependent universities are on this funding to run their science departments. It is important that

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the Government address the problems at the interface between universities and industry if we are going to have a healthy relationship between the two, as well as the position with charities.

A further problem occurs with EU framework funding, where the figure of 80 per cent will not apply. The Government should address this problem. We must avoid the chaos that ensued from the funding programme for one of the previous frameworks. Here the percentage was minimal compared with the one given by other organisations. One of the consequences of this funding is that it influences other aspects of universities. There is a suggestion, for instance, that recruitment is being associated with people’s potential to raise money. It is also possible that less funding is directed to blue-sky research. The noble Lord, Lord Broers, referred to the recent paper by the noble Lord, Lord Sainsbury, TheRace to the Top, but there is little doubt in my mind that blue-sky research is a fundamental factor in the progress of universities in this country.

1.36 pm

Lord Ramsbotham: My Lords, I join those who have congratulated my noble friend Lord Luce on obtaining this important debate. I come 24th in the list and I come with one point. It is probably almost a marginal point to some in relation to the many that have gone before. I believe that the only raw material that every nation has in common is its people, and woe betide it if it does not do everything possible to identify, nurture and develop the talents of all those people. With that I couple the marvellous phrase of Sir Winston Churchill that,

“there is a treasure, if you can only find it, in the heart of every man”.

I declare an interest as a patron of the Prisoners’ Education Trust, which every year provides 2,000 vocational and academic courses for prisoners, many of them in the field of higher education. Education is said to be the factor with most bearing in fighting reoffending. Unfortunately, the vast majority of the people in our prisons have very low academic ability and some have none at all. It is not surprising that the Prison Service concentrates almost entirely on the people with the lowest form of need but in our prisons there are many others with talents which can be discovered and nurtured. The prison system and the sentence provide an opportunity to make something of those talents. I hope that, when the Government are making their plans for the development of higher education, the ministries concerned will liaise closely with the Ministry of Justice to make certain that the needs of this part of our population are properly met and referred to the people who can help. After all, something may well be discovered which would be to the advantage of the country, and woe betide us for not using an opportunity to identify, nurture and develop it.

1.39 pm

Baroness Sharp of Guildford: My Lords, I, too, thank the noble Lord, Lord Luce, for introducing this extremely interesting and very wide-ranging debate. Because time has been so limited, many noble Lords

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have talked about one or two subjects only. As it has been such a diverse debate, covering many subjects, trying to pick out common themes has been quite difficult.

It is worth starting with the issue at the forefront, if we are looking forward over the next decade. I refer to numbers. At present, about 40 per cent of young people between the ages of 18 and 40 go on to university. The noble Lord, Lord Luce, said that this figure represents an increase. When he was at university in the 1950s, the figure was 4 per cent; when I was there in the late 1950s it had risen to 6 per cent; by the 1980s, it was 14 per cent. But that figure was still well below the average for advanced industrialised OECD countries. Today the figure for most of those countries is more than 40 per cent, so in order to catch up, we have to go further. In his report, the noble Lord, Lord Leitch, put the target at 50 per cent. I think that all political parties accept that as a reasonable target, but to reach it means widening participation. The noble Lord, Lord Patten, made the point that 60 to 70 per cent of young people among the top socio-economic groups go to university. That means that we have to reach out to widen participation among the lower socio-economic groups, as the noble Baroness, Lady Morris of Yardley, said.

The noble Lord, Lord Patten, said that the chances of somebody from the lowest socio-economic group going to university are six times less than for those from the top socio-economic groups. Therefore, it is a matter not just of widening participation and increasing numbers but of social equity to give these people a better chance of getting to university. Yet, as the noble Lord, Lord Patten, said, it is not a question that the universities alone have to address. Some 92 per cent of those who have the qualifications to get to university—that is, two A-levels or the equivalent—already go to university. Increasing the number of young people who get these qualifications at school is so important. The Government’s present agenda includes diplomas and efforts to motivate young people. We have to accept that we have failed many of them. Because the dropout rate is so high, we know that the secondary school curriculum we offer does not attract them. The Government are doing a great deal, but the universities can help as well. The partnership at Newcastle, for example, is very important. Inviting schoolchildren to universities, giving them access to science practicals, for example, showing them what happens at university and offering extra-mural classes all help to raise the aspirations of young people. It is vital that we continue with such experiments, some of which have been mentioned by my noble friend Lady Walmsley, and increase them to help widen participation.

It is also extremely important not to mix up the issue of fair access with widening participation. Some 4,600 people get three As at A-level. Relatively few universities have less than 80 to 90 per cent of entrants from state schools. A relatively small group of universities has problems in selecting students.

On widening participation and access, we should beware of moving too far in the direction of A* or Pre-U exams. To achieve such qualifications, schools need to provide extra tuition when they may already

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struggle to deliver further maths. Let me give a great plug to the Further Mathematics Network, which has done an enormous amount to encourage state schools to provide further maths. We need more of that sort of thing from the universities. If schools go down the route of A* and Pre-U exams, it is vital to offer state students the opportunity for the extra training required if they have it. Going down that route will make widening participation and access more difficult.

Many noble Lords have spoken of fees and lifting the cap. If we go down that route, it must be needs-blind. We have an extraordinarily complex system of bursaries that we have acquired as a result of OFFA. That was illustrated by my noble friend Lady Walmsley. There is a great deal to be said for having a national system of bursaries that helps to provide a fairer, more level playing field between universities.

If we go down the route of bursaries and maintenance grants, we are going back to a world that we were trying to get away from in the Higher Education Act 2004 and making students increasingly dependent on their parents’ income. Some parents still refuse to fill in forms.

Widening participation through pulling in more students from low socio-economic groups is important. Let me pick up the point made by the noble Baroness, Lady Warwick. Since we are to lose 700,000 young people over the next decade, we must look to mature students, many of whom prefer to work part time rather than full time. It is quite absurd—a point made by the noble Lord, Lord Rix—that the present system incentivises full-time students rather than those studying part time. Indeed, it discriminates grossly against part-time students. Mature students may want to earn and learn, but, if part time, they have to pay fees upfront and have no access to loans. Only 10 per cent of part-time students receive any form of maintenance grant, and the cut-off point is £25,000 a year for their assessed income, whereas 60 per cent of full-time students are now eligible for maintenance grants, and the cut-off point is £65,000. There is gross discrimination against part-time students and we will have to make use of them.

I declare an interest as an honorary fellow of Birkbeck College. Colleges such as Birkbeck come almost top in the student survey leagues for satisfaction and remain at the top of the research league. On research, let me pick up the point made by the noble Lord, Lord Lewis. We should pay tribute to the noble Lord, Lord Sainsbury, for what he did for the science community and for maintaining and increasing the proportion of funding going to science. But the UK is still very far down the league in terms of proportion of income devoted to science. Some 1.75 per cent of our GDP goes on research funding, compared with an average of well over 2 per cent among advanced OECD industrial countries. Countries such as the United States and Japan have now reached the 3 per cent mark, which is the target we have.

We may be looking in the CSR for a more generous funding settlement. Nevertheless, there is a problem with the full economic cost of funding. The noble Lord, Lord Lewis, mentioned the problems with charities; there is also the problem that the universities are being

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given only 80 per cent of the full economic cost. Ten per cent is supposed to come from their capital funding and another 10 per cent is to be found among the universities. That amounts to £1 billion a year that universities have to find from their own funds for what is supposed to be the full economic cost. It would be good to see government departments living up to the Government’s promise here and paying full economic costs on their own research commissions.

The noble Lord, Lord Norton, raised a vital point on autonomy. On the research funding for the Facilities Council, the Government used the Haldane principle of autonomy. They claimed, “It is not our business, it is the Research Council’s business”. They cannot have it both ways. We have the Government interfering on the ELQ issue. They interfere in decisions made by HEFCE, dictating what it should do and how it should spend its money. On the other hand, when a decision is made and people say, “Can you really allow the Research Council to make such a mess of its funding?” they say, “It is nothing to do with us. It is all to do with the Research Council”. The Government have to make up their mind.

We have had a diverse debate. We have a diversity of institutions. Like the noble Lord, Lord Luce, I think we should celebrate and build on that diversity. It serves us well.

1.51 pm

Baroness Verma: My Lords, this has been a most useful and interesting debate, one that has covered in great depth this important subject. I congratulate the noble Lord, Lord Luce, on securing the debate and on the excellent range of contributions from across the House.

The noble Lord eloquently pointed out that we face many challenges. Higher education institutions and FE colleges have to adopt from and adapt to the ever-changing environment around them. We have been promised that the Government intend to work with the higher education sector on what action should be taken over the next 10 to 15 years to ensure a world-class system of higher education.

We also need to be proactive in ensuring that we do not squander the talent that already exists, and that the success of our research establishment in the global academic community is strengthened and enhanced. There is nothing wrong with a strategic approach but we must not lose sight of the day-to-day challenges. The United Kingdom produces around 9 per cent of the world’s research papers. To ensure that we remain world leaders, universities must be confident that they are able to attract the best academic minds. Fear of debt and artificial engineering of inclusion must not be the determinant or deterrent factors.

The important work done by the higher education sector in the advancement of scientific research has been highlighted in this debate. I will make a few observations about this area. This country enjoys one of the finest reputations in world science and wider research. That is a legacy of which any Government should be proud. Yet I am concerned that the Government’s growing stranglehold over science funding represents nothing less than a breach of trust with the

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science community and is putting the independent direction of scientific research at risk. In recent times, we have seen a reduction in this important sector. How do the Government intend to salvage their science policy, to liberate it from the creeping political interference that has characterised recent experience?

A few months ago, the Secretary of State announced the next steps in the implementation and development of the research excellence framework. In consequence, we will have to wait a further year before the new framework is implemented—it is now not to be operational until the 2014 academic year. Can the Minister provide a further update on the consequences of this extra delay for research planning and research activity?

The concerns expressed about the relative value for higher education institutions of A-level qualifications in assessing candidates’ respective suitability for admission to higher education courses deserve to be considered. The Government need to be clear that the voices of higher education institutions are heard in the design and implementation of the changes they are making to A-levels and in the creation of new diplomas.

We all recollect the Government’s much heralded target of 50 per cent of young people entering higher education. Yet in answer to a Question in another place on 10 June, only five local authorities were exceeding that target. Indeed, in a significant number of local authorities the proportion of young people entering higher education at 18 and 19 has fallen since this Government came to power. The overall figure for England stands at around 40 per cent. My noble friend Lord Patten of Barnes rightly pointed out that to widen access it is crucial to first address the disparities students face in secondary education. Only then can we expand on wider participation.

One component of the Government’s approach to widening access has been the use of higher national diplomas and foundation degrees. Since 1997, the number domiciled in the United Kingdom who qualify for a higher national diploma and go on to study for a first degree in the following academic year has fallen. Similarly, since the introduction of foundation degrees, the number of those who qualify for such a degree and go on to a first degree has fallen.

Some students cite the pressure of personal debt as a reason for not continuing. The average level of debt for those who graduate is around £15,000, a considerable sum for many either already at or considering going to university. This often proves a deterrent and will certainly focus the mind of any potential student about the marketability of the skills that they will learn in securing employment and paying off the debt incurred as a result. The Government’s own estimates are that it takes a student around 13 years to repay a student loan. This can appear a remarkably long time for someone embarking upon a course of higher education. Students need access to advice that will help direct them into courses that best suit their particular skills and interests, alongside meeting the needs required by employers.

Further to the comments of the noble Lord, Lord Rix, I would like to touch briefly on ELQs. While I acknowledge the importance of a first degree, I am

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deeply concerned that the Government’s decision to cut £100 million funding will have a huge impact on part-time learners, mature learners and those returning to the workplace, particularly women. In view of the Leitch report, a better skilled and educated workforce is crucial if we are to remain competitive, with the growth of emerging economies. It will have a major impact on universities such as Birkbeck and the Open University, which are so supportive in enabling people to study around families and work commitments. When 25 per cent of Open University students study for qualifications in maths, science and technology, they will now be at risk because of the ELQ funding cuts. How does the Minister reconcile that loss with the importance of the skills agenda?

My noble friend Lady Rawlings highlighted some of the really visionary work undertaken by a number of universities. It highlights the need to ensure that universities are not burdened with unnecessary interference and bureaucracy. My noble friend Lord Norton of Louth candidly spoke of how much further the Government need to go to free up universities. We are fortunate to have the excellent calibre of academics such as him leading the way in our universities. With so many excellent and much better qualified speakers than myself, I leave it to the Minister to answer the many questions raised in this debate.

1.59 pm

The Parliamentary Under-Secretary of State, Department for Innovation, Universities and Skills (Baroness Morgan of Drefelin): My Lords, I have found the debate enormously stimulating. It has been hugely important. Having listened to noble Lords beginning their contributions by declaring interests, I was trying to think what kind of interest I could declare—apart from having been a student union president. That might be an interesting one. I declare an interest as a woman with a little treasure in her heart. I think the noble Lord, Lord Ramsbotham, would agree that if we all have a treasure in our hearts, how we unlock that talent is the key at the centre of the debate.

I am grateful to the noble Lord, Lord Luce, for securing this timely debate and for his wide-ranging and thought-provoking opening remarks, which provided a perfect context for it. I welcomed particularly his suggestion of a bonfire of the prejudices.

The debate is particularly timely because in his speech at the Wellcome Trust earlier this year my right honourable friend the Secretary of State for Universities, Innovation and Science—I always get that the wrong way round—has launched—

A noble Lord: Skills.

Baroness Morgan of Drefelin: Skills, that is right. We will get there.

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