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Higher Education: Funding

My Lords, even if the Government had not imposed a massive 40 per cent cut in the allocation of funds to universities for teaching costs, as they have now done, there would still have been a need for a report of the kind that my noble friend Lord Browne of Madingley was commissioned to produce. Given the success of the 2006 reforms in university financing—in my view they have been a remarkable success, resulting in greater investment in and greater autonomy for the universities without any falling off of demand for places or in the quality of applicants; rather the contrary—I would argue that they need to be built on, not dismantled. However, those reforms were not sustainable in the long term within the parameters laid down in 2006, for reasons largely of parliamentary arithmetic and not objective consideration. The universities were being prevented, and still are, by law from recovering the full costs of the teaching that they provide. They were also being prevented from responding to the demand for places, while the provisions for subsidising student loans were running out of control. Now, with the cuts, the review and action to follow it up have become matters of life and death for our universities. I should declare a non-pecuniary interest as someone who has been involved for the past 12 years in university governance, first at Birmingham and now at Kent, but the views that I am expressing are not those of either institution. I offer my sincere congratulations to my noble friend and his colleagues on producing such a crisp, clear and compelling report. He has explained a complex subject in manageable terms. His prescriptions seem for the most part to be what is needed, even if they are not what many of us, in an ideal world, would have wished for. I am grateful particularly for his dismissal of the false trail of a graduate tax, which would be neither implementable nor equitable. However, I have doubts about some aspects of the report’s prescriptions. First, I am not entirely convinced by the rather tortuous provisions for removing the cap on tuition fees in its entirety, with a rising government levy on fees above £6,000. Does this not risk getting the worst of both worlds, widening the gap between the small number of top universities and the others while not really satisfying the elite group, which could well end up taking fewer UK students? Would not a substantially higher cap than the present one, with a further review after a fixed time, be a simpler and more acceptable way to proceed, so long as it fills the gap created by the Government’s cuts? Secondly, I suggest that we should be a bit careful about how far we go in applauding and encouraging competition in the university sector. Well run universities have nothing to fear from a bit more competition, which variable fees could bring about. However, unlike with businesses, competition for profit is not universities’ raison d’être. Competition for academic excellence is what they are about, which is not the same thing. Thirdly, the approach to cutting back the government grant for teaching, which it is clear cannot be avoided in one form or another, is a bit too crudely utilitarian. Do we really believe that science, engineering and medicine, along with the rather oddly named ““strategic languages””, are the only subjects worthy of government support? Are the creative arts, social sciences and humanities of no value or benefit to our society? If so, I fear that most members of the Cabinet devoted their formative years to the wrong subjects. Fourthly, while I see the logic of rolling up three of the present four quangos in the higher education sector into a single higher education council, I question the wisdom of including within its scope the Office of the Independent Adjudicator. This office performs a quasi-judicial function and needs total independence. Joining it with a body that performs regulatory and financial allocation functions could end up damaging the legitimacy of the adjudicator’s rulings with no serious benefit in efficiency or cost. So much for my comments on my noble friend’s admirable report; what needs to be known now is the Government’s reaction to it and their intentions over implementation. I was most grateful to the Minister for her opening statement, which began to do that, although I think that she has a fairly long way to go. So far, the Government’s comments have been pretty vague and general. There is talk about a White Paper; there is talk about action being taken before the end of this year. The universities need clarity and certainty and they need it in the early months of 2011 if they are to be ready to work within the scope of the new arrangements by September 2012. I hope that the Minister will say more about the timetable and the procedures. Will primary legislation be required—I think that she suggested that that would be so—and, if so, for what elements? I also hope that the Government will give an absolute undertaking not to allow a gap in time to arise between imposing the cuts and empowering universities to have access to new funding. They should ensure that capital spending under way is not starved; otherwise, irremediable damage could be done. The Browne report does not cover the whole field of higher education finance, as it says nothing about research funding or postgraduates. How soon will the Government be in a position to clarify the situation on research now that the science budget seems to have been spared the worst of the cuts? Nor does the report cover an issue that will crucially affect one of the universities’ most buoyant sources of non-governmental finance: access to visas for non-EU students, postgraduates and faculty. I echo what my noble friend Lord Bilimoria said on this. Can we be assured that the review of immigration will not result in barriers to these categories of student? Surely there is a better way of dealing with abuses to the visa system than the imposition of arbitrary caps and imposing more complex and more costly procedures on bona fide applicants, who now make up one of this country’s primary invisible exports. A lot is at stake in the present review of university financing. If Britain is to be a successful competitor in a knowledge-based global economy, our universities need to emerge strengthened and not weakened. If the big society is to deliver the benefits sought of it, the universities must be available to all who want to go to them and are academically qualified to do so.