Thank you for calling me to open this debate, Miss Begg. I also thank the Speaker for seeing fit to allow this debate on the topic of universities and their role in the regeneration of towns and cities.
Miss Begg, I am sure that, like me, you know very well how important universities have become to all the cities and towns where they have a presence. If I may recount briefly, when I first became the Member of Parliament for Huddersfield 30 years ago—in fact, my constituency was Huddersfield, East in those days—manufacturing employment was at a very high level. In my part of Yorkshire—west Yorkshire and particularly Huddersfield—such employment was very strong, ranging from the engineering sector, including light engineering, for example in David Brown Gear Systems, David Brown Tractors and so much else, through to textiles. Huddersfield still is a centre for the finest worsteds in the world, but in those days the textile sector employed many, many people. There was also a chemical industry associated with textiles—dyestuffs and much else—and again the companies in that sector were very large employers. At one stage, 6,000 people worked on the Imperial Chemical Industries, or ICI, site on the Leeds road in Huddersfield.
There has been a dreadful decline in manufacturing employment in the years since I was first elected to Parliament. It has been a dreadful decline not because manufacturing jobs are not there—manufacturing has become leaner, meaner, more effective and more efficient. Yes, every time we had a global takeover of a company in west Yorkshire, the rest of Yorkshire and, I suspect, the whole country, we were told that it would lead to no real change in jobs and would not really affect the economic climate of our country, but time and again—I fear it will happen again with today’s Cadbury takeover—we in west Yorkshire found that every time there was a major takeover of a company by a global company, it meant fewer jobs, relocation of the manufacturing capacity to other parts of the world, and sometimes only a small design and marketing presence left in the town where the company was originally sited.
We were very dependent on manufacturing jobs in west Yorkshire and in Huddersfield. Over the past 30 years, we have become dependent on what is now the largest employer in my constituency: Huddersfield university. It has 24,000 students and employs a large number of staff—the average figure for jobs at the university in 2008-09 was 1,820. The estimated value of its impact on the local economy is £300 million. The university is also a major supplier of teachers, health workers and other graduates to the Leeds city region. Miss Begg, I am sure that you will be impressed to hear that, six months after graduation, 72 per cent. of our graduates from Huddersfield university are still working in Yorkshire and the Humber area; I am also sure that there is a similar statistic for your part of the world. We retain our graduates, who work in the locality and the region. Those new graduates earn £54 million in total in west Yorkshire in their first year of employment. Huddersfield university is the very heart of my constituency and of Kirklees council, the local authority that covers four and a half constituencies, including my own.
I wanted to talk about the power of universities to regenerate towns and cities because, as we all know, as a result of the international financial meltdown and the various problems that we have all faced in the world as a result, including recession and new levels of public debt, there will be cuts across a large number of Departments. As Lord Mandelson mentioned in his statement to the House of Lords and my right hon. Friend the Minister for Higher Education and Intellectual Property repeated in the House of Commons, those cuts will include quite profound cuts to university budgets in the coming years.
Let me sum up the essence of my argument. We all realise that we will have to find ways to cut back public expenditure in the coming years—most reasonable people realise that. As Chairman of the Children, Schools and Families Committee, I suspect that, even in that sector, although we have certain guarantees that there will not be cuts, cuts will eventually be made. However, some cuts would be so deleterious to other aspects of our life that I ask the Minister to reassure us today that the cuts made will not harm the power of our universities, which extends beyond regeneration. Miss Begg, I think you know that the Royal Society of Arts, under the stewardship of Matthew Taylor and partly under the influence of Lord Giddens, who was the director of the London School of Economics for a substantial period, has been talking about how we regenerate local democracy. Today’s debate is not just about university expenditure, university employment or wealth creation by universities, nor is it just about having large numbers of students, paying members of staff well and creating that atmosphere of competition and success that we know university towns and cities have. It is also about that greater reach that universities have in what the vice-chancellor of Newcastle university, writing in a very impressive recent article, called the re-establishment of the civic university. The civic university reaches out.
Some years ago, the RSA published a report called “Tomorrow’s Company”. It had a simple message that if a company wanted to be a company of the future—a forward-looking company—it had to look at five of its stakeholders. It had to look not only at the shareholder, the customer, the supplier and the supply chain, but at the community in which it was situated; that community mattered to the future success of that company. “Community” could be interpreted locally, regionally and nationally. So there were broader aspirations for companies, and that is how I want people to see the role of universities.
Some universities play that role exceptionally well. My constituents and I have been lucky that, although Huddersfield university briefly went through a series of problems, Sir William Taylor took hold of its governance and turned it around. Then, John Tarrant did good work for 11 years to make Huddersfield university one of the fastest growing universities in the country. By the time he retired, he had tripled the size of the student body, which, as I have said, is now 24,000 students. He also increased the number of staff. Bob Cryan, our current vice-chancellor, is carrying on that excellent work.
We know that a university should reach out to the community and involve that community, not only so that it is seen to have good public relations but so that it puts its tentacles out, as it were, and reaches out to help the future of our towns and cities. In Huddersfield, the university reaches out to new enterprises, including small start-ups, however small they are. Its business department does that, as do other departments, including those dealing with social enterprise. They ensure that that partnership with the community really helps to make small and medium-sized enterprises to grow.
I do not want to be too parochial, but let me return to the impact of the possible funding cuts. I understand that trade associations have a role. My use of the term “trade associations” will upset some universities, but there are a lot of trade associations in the university world. They seem to be breeding very quickly. It used to be mainly the Higher Education Funding Council. Now HEFC writes to five different trade associations within the university sector. However, the recent HEFC grant letter setting out its spending priorities for the next year, increased the proposed cuts set out in the pre-Budget report to £915 million. It is estimated that those cuts, which are only the ones that have been announced so far, will have an increased effect upon the north of England, given that 42 per cent. of the region’s research and development spending is channelled through universities. That R and D spending is crucial to the north of England and to Yorkshire in particular. I suggest that those cuts will have a devastating effect not only on students and staff, but on our international competitiveness and our regional and local economies, as well as the national economy.
I am happy to be given way to by my former Chairman.
Is the hon. Gentleman aware that in my constituency, the Ambleside campus of the university of Cumbria is threatened with effective closure from this July, despite having exceeded its recruitment targets for the past three years? Ambleside is a community with just 2,000 houses, 600 students and 150 staff, and the university contributes £6 million to the economy every year. Does he agree that, given the devastating effect on the community if that closure proceeds, everything should be done to avoid it?
I am sure that if I studied the Ambleside situation, about which I know little, I would find similarities, albeit on a micro scale, to what we face at the university of Huddersfield. I take it seriously. The hon. Gentleman will remember that when he was a member of the Select Committee on Education and Skills, we spent a lot of time covering higher education. I see my hon. Friend the Member for City of Durham (Dr. Blackman-Woods) nodding from behind the Minister; she was also a member of that Committee. We covered higher education, so we knew quite a bit about it. You might see a plot here, Miss Begg, and think that it was out of frustration at the fact that my Committee no longer covers higher education that I asked for this debate. That is partly the case.
The hon. Gentleman is absolutely right. Universities play a crucial part in regional and urban economic regeneration. Directly, universities provide approximately 1.2 per cent. of UK employment and generate nearly £60 billion in output. That is a lot of money, and cutbacks will hurt.
Let us talk about fairness. As Chairman of the Select Committee, every year I examine the finances of our education spend. I am proud that this Government have spent so much money at every level of education. I am particularly pleased by how much we have invested in pre-school and early education. I am proud of Building Schools for the Future and how much money we have put into schools. The fact is that when the Labour Government came to power in 1997, they said, rightly, “All the research shows that early intervention is absolutely the highest priority if we are to give children from deprived backgrounds a chance in life that they wouldn’t otherwise get.” For that reason, they spent a high percentage of resources on it. However, when we look across the piece, going back 10 years, we find that overall spend on the early years sector has increased by 57 per cent. since 1999, compared with only 39 per cent. for HE. Higher education has done well, but it has not had the same priority as other parts of the education system.
It might be said that higher education has done well, so what is the problem? I was one of the Members who campaigned vigorously for what we call variable fees and others call top-up fees. An investigation conducted by the Education and Skills Committee concluded in favour of variable fees, largely because we did not think that, because early years and school years were spending priorities, we would have enough in the kitty to invest sufficiently in higher education. On reflection, looking back at what has happened in the years since we introduced variable fees, I am proud that when the University and College Union came before my Committee just before it changed its focus to children, schools and families, the leader of UCU admitted that almost exactly the amount of money raised from variable fees had gone into university salaries, which have undergone a healthy increase. I looked at university salary levels recently: they have increased, so we can now retain some of the best talent of our country in teaching and research.
University funding has improved, but I think we should invest more, not less, in our higher education system because, increasingly, universities are deeply involved in communities, regeneration and new employment and enterprise initiatives. That is different, and it must be prioritised. If the Minister, in a frank moment, asked me to choose between increasing the budget for Building Schools for the Future or putting more money into universities, I would not be against spreading out the years over which we deliver BSF and giving some of the money to universities, especially if it is for specific purposes.
I have gone on long enough, but I will say two things on the Government’s side. Extremely good improvements have been made in universities. What would happen if the university were removed from your nearest city, Miss Begg? If the universities were removed from Manchester—there used to be five, but there are now four, due to amalgamation—it would be devastating. Removing the 34 London universities would be devastating. Almost every town and city with a healthy university or cluster of universities would be devastated by their loss. Yes, there is high employment in local authorities and the health service, but university employment is critical to our success as a nation and our future.
We expect universities to maintain their high standards. Yes, some people say—I am sympathetic to their view—that we want towns that do not have a university. If possible, it is sometimes better to have a satellite campus rather than a new fully independent university, which just repeats the costs of administration, such as vice-chancellor’s salaries and so on. We must guard against that. I favour satellite universities and campuses. However, I also believe that we must maintain high standards. My Committee’s recent inquiry on the training of social workers and teachers discovered that students in our country can get into university with deplorably low levels of qualification. We must maintain standards in university admissions and in the quality of degrees delivered.
We also need the highest quality of governance in universities. I have recently seen worrying figures about the range of salaries for vice-chancellors. Everybody in the sector knows that we are not breeding enough men and women who are good material for vice-chancellors. There is a dearth of vice-chancellors. I heard of a recent scandal in which a university was so desperate for a vice-chancellor that it appointed one without even taking up his references. The story of what happened to him is a sad one. On the other hand, I heard recently of a metropolitan university that suggested advertising for a head of business studies—one department in the university—at a salary of £250,000. We must have good governance at the very top. I do not mean professors. I looked at the average pay rates for professors and lecturers recently; they are perfectly modest. I have a vested interest, as I have a son-in-law and a daughter in the academic world. Researchers should be paid a decent salary—not the exorbitant bonuses of the City, but salaries that are commensurate with their qualifications and talent.
Lastly, I believe that we must be very careful about the overall governance of our universities—how they are managed and directed. We should look seriously at how they are structured, how staff are included in the governance structure and at the sanctions and precautions for universities that are running into trouble. I mention only the recent problems at London Metropolitan university, although that is not the only one that has had problems, as the Minister knows. We must have better governance and we can have it without too much bureaucracy and without sacrificing the principle that universities are independent. They should value their independence and so should we.
I congratulate my hon. Friend the Member for Huddersfield (Mr. Sheerman) on securing the debate. As all hon. Members know, he is probably the greatest champion of universities in the House.
My hon. Friend is not new to subject of the contribution that universities make to their civic communities and the wider economy; he has returned to it over many years. He considered the issue as Chairman of the Education and Skills Committee. Indeed, last week he questioned me in the House on the subject. I welcome the opportunity to respond to this important debate and to put it on the record that the Government take substantially the same view as he does. We believe that universities have an important role to play at the heart of their communities. He made the point well that if we took universities out of the places where they exist, it would be devastating. He will recognise that many hon. Members would love to have a university in their constituency. There are still parts of the country where access to higher education is not what we would like, largely because there are no universities there. He was right to put his comments in the way that he did.
A couple of years ago, research commissioned by Universities UK showed that universities directly employed about a third of a million people and that they indirectly supported the employment of a similar number. The report estimated the economic impact of higher education in the UK to be £45 billion a year. These days, most universities support business growth, standing shoulder to shoulder with other agencies such as local authorities, regional development agencies and regeneration vehicles in local communities in supporting businesses. I recommend to all hon. Members the document “Standing together”, published as long ago as November 2008, in which universities moved swiftly to demonstrate to employers and local authorities what they could do to support economic growth in the downturn, many months before others caught up. I hope that my hon. Friend will agree that universities have to work in partnership. There are Opposition proposals to abolish RDAs, which make an important impact in keeping local and regional connections intact.
It is important to put on the record the intrinsic value of universities. In our democracy, we value learning for learning’s sake. Universities play an important part in the cultural and democratic life of our country. They are autonomous of Government and we celebrate their role. We also celebrate the contribution of many students and the National Union of Students to voluntary work on campus and in surrounding communities. We celebrate the employment that universities bring and their sporting life. Universities bring a raft of contributions.
I apologise for missing the start of the debate, Miss Begg, but I had a constituency visit.
The Minister is making a lot of sense. Does he agree that it is important that universities provide specialist, niche skills so that industry and the economy can thrive? I am thinking specifically of nuclear engineering skills, which are provided by Manchester university. I received correspondence from it only yesterday asking me to draw the Minister’s attention to the need for the Government to continue to support and facilitate it in providing nuclear skills for our future.
Of course, Manchester is one of our great universities. I am sure the hon. Gentleman will recognise that the Government set out in “New Industry, New Jobs” the importance of key sectors of our economy that are integral to our growth. Universities pipe into those industries, of which the nuclear industry is one. I have not seen the letter, but I will look at it closely and liaise with the Minister for Science and Innovation if there is anything I can do. Of course, it is hugely important that we support the future economy of this country, and universities are key to that.
Huddersfield university has as one of its mission statements, “Inspiring tomorrow’s professionals”. It runs programmes ranging from foundation degrees for public service professionals to postgraduate masters degrees in entrepreneurship and research programmes involving close working with businesses, not just in Huddersfield, but across the west Yorkshire region. It has one of the youngest vice-chancellors in the country, and in 2009 he was named business person of the year by The Huddersfield Daily Examiner for the contribution the university is making in the area. I recognise the importance of Huddersfield university to regeneration. There is no better advocate in this place than my hon. Friend for universities of that type.
It is important to recognise that these are tough times. Like all areas of the economy, we are asking universities to make efficiencies. That must be considered against the backdrop of the Government increasing university funding by 25 per cent. since 1997. Our overall spend in higher education is now more than £12 billion. We must recognise that universities are able to lever in to their sector substantially more money as a result of that investment.
We have asked the sector to make savings, but I hope that my hon. Friend recognises that those savings are relatively small. Indeed, the recent grant letter that the Secretary of State sent to the sector amounted to an additional 1 per cent. on the teaching grant. We have indicated that there will be further savings up to 2013. However, I hope that my hon. Friend will recognise that that will be spread across the entirety of higher education, science and beyond. We do not yet know what the outcome of the spending review will be.
I stand behind all that my hon. Friend said and reassure him that the Government are with him in this endeavour. We are committed to higher education, as we are to further education, early years and secondary education. They all needed improvement in 1997. We are now in a position in which HE can be the guiding light as we move forward in this difficult time for our economy. I recognise how important the university will be for the people of Huddersfield.