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Economy

My Lords, I join others in thanking the noble Lord, Lord Forsyth, for initiating the debate and compliment the right reverend Prelate on a thoughtful, poignant and, for me, rather nostalgic speech. I was delighted to be reminded of so many landmarks in the city in which I grew up. I commend the right reverend Prelate to the incomparable Victorian cemetery in Undercliffe. I focus my remarks on the role that higher education can play in shaping the future economy. It is reassuring to hear several speakers in the House today with connections to the world of higher education—chancellors of universities, former vice-chancellors and distinguished academics. I declare my interest as chief executive of Universities UK. One thing that we can be sure of is that the economy and the employment market will look very different after the current recession. The financial services sector, one of the UK’s biggest graduate recruiters, has shrunk dramatically during the past 18 months. Professional services firms have also cut graduate recruitment. We need to ask: what jobs will replace them. According to the recent BERR and DIUS publication, New Industry, New Jobs, of which I am sure that my noble friend will be aware, there will be, ""a continued focus on ensuring that our economy is driven by high levels of skills and creativity. Britain is, and will continue to be, an economy driven by the creation and exploitation of knowledge"." It also states: ""the world economy is set to double in size and a number of trends in the global economy will present significant new opportunities for British businesses"." Those opportunities include emerging industries such as life sciences and pharmaceuticals, advanced manufacturing, low-carbon technologies and the creative industries. The Government's approach in setting out the direction in which they believe that the economy is going over the next 10 years is to be welcomed, although of course those are predictions, not sure bets. What is clear is that the status quo of the current economy, with a large financial services sector and a small industrial base, will no longer remain. The Prime Minister himself said in a speech on Tuesday to school head teachers: ""'We need to start building for the new world, not in our financial system, but in our education system—not at bank counters but in classrooms"." I suspect that many noble Lords would agree with that sentiment. Many of the growing businesses to which I referred earlier are predominantly graduate-level professions. That means that we need existing graduates to go into those professions, but we also need to increase the pool of graduates to meet demand. UK universities produce 260,000 graduates each year. Yet the report by the noble Lord, Lord Leitch, said in 2006 that, by 2020, the UK would need 40 per cent or more of adults studying at level 4: in other words, at degree level or above. Seventy per cent of the 2020 workforce is already in work, so that is where we need to address their skills needs. It is clear that the traditional form of higher education—going away from home for three years to study for a degree—although important is no longer the predominant model of study. Many people now study part time while in work. Indeed, in 2006-07, there were more than 500,000 part-time undergraduate students and a further 300,000 students studying part time for postgraduate qualifications. The higher education sector has ever closer ties with business and is actively engaged in improving the variety of systems that are already in place to make it easier and more effective for employers to engage with the sector. Universities UK, with the CBI, has highlighted some contemporary examples of workforce development through employer-HE partnerships. These show that universities and business are aware of the need to collaborate and communicate so as to produce high-quality graduates with the high-level skills that society needs now and in the future. They are working together on the development of foundation degrees and vocational degrees, as well as vocational modules, as part of academic degree programmes. All this will be ever more relevant as the class of 2009 enters one of the most difficult labour markets for decades. Not only have universities been trying to tackle the downturn by providing their own graduates with the skills that they need, but they are reaching out to their local business communities. There is now a contact point for businesses to use at every higher education institution in the country. Universities can offer multiple opportunities: staff training at all levels, with bespoke courses designed for the specific needs of business; business schools that help to improve leadership and management skills and develop programmes to improve the customer experience; and consultancy services that help to improve company practices. They engage with business through work placements and similar schemes. Universities and higher education colleges have a strong record in fostering innovation, enterprise and skills and in helping to create wealth and job-generating opportunities. To conclude, as part of the debate today we need to consider not only the future prospects of our economy but what kind of worker we need to participate in that economy. I am sure that with continued public investment from this Government and any future Government, and with the right kind of private investment and partnership, we can build on the existing strengths of our already excellent higher education system to help to rebuild the British economy for the challenges of the next century.