rose to call attention to the future direction of higher education; and to move for Papers.

The noble Lord said: My Lords, it is a privilege to open this debate. My purpose today is to paint a broader picture of the future direction of higher education as I see it. I am delighted that so many noble Lords, with their vast range of experiences in higher education, wish to participate, and I am grateful to all those individuals and groups who have given me much helpful advice.

I declare an interest having been vice-chancellor of the independent University of Buckingham for five years in the 1990s. Since its foundation over 30 years ago, Buckingham has achieved much, in particular the two-year degree introduced by the first vice-chancellor, the late Lord Beloff. For two consecutive years the university has gained the highest rating for student satisfaction in a national student survey carried out by the Times Higher Education supplement. This reflects both the high motivation for students and the personal attention they receive with a staff-student ratio of 1:9. While I shall draw on my experience there, I must stress that, since Buckingham receives no taxpayers’ support, I am not advocating today that we follow that exact path.

I was lucky enough to have three years at Cambridge and a fourth at Oxford in the late 1950s, when only 4 per cent of my age group were able to be at university. Since then we have seen a welcome revolution in higher education. Today 43 per cent of 18 to 30 year-olds are at university and more than 2.25 million students in total are in higher education, served by nearly 170 institutions. Equally remarkable is the vast diversity in the provision of higher education to meet immense social changes; in particular, the emergence of the knowledge society and the fact that we can expect to change jobs several times in our career and need ever-changing new skills arising from the technological and communication revolution. This has created the concept of lifelong learning. We now have more than 900,000 students in part-time education. We can get on and off the ladder of education and training at any stage in our lives. To help us, we have a wide range of institutions providing infinite types of degree courses of varying lengths, ranging from the more academic to the more vocational, supported by some excellent teaching. Distance learning, as in the highly successful Open University, plays a significant part in this process.

I think these developments are excellent and exciting. I want everyone, from whatever background, who has the capacity to enjoy and value a university education to be able to do so. But inevitably changes of this scale produce new challenges. First, we need to revisit the question of what universities are for. In the 1850s Cardinal Newman in The Idea of a University provided answers which lasted until well into the 20th century—a liberal education, the pursuit of knowledge for its own sake, training the intellect, seeking truth and the facility of self-education all remain valuable criteria. But today's demands also include the flexibility to handle an ever-changing career and to develop employable skills. This becomes even more important in an increasingly competitive world. I agree with the view of the late Field Marshal Lord Slim who, as chancellor of an Australian university, said:

“A university must do more than teach a man how to earn a living; it should teach him how to live”.

Secondly, as the number of students has increased, so the taxpayers’ support per student has declined. This has challenged the quality of higher education and led us to accept that the taxpayer will never be able to provide enough support for the student. This means that the student is now asked to pay a proportion of the total cost of tuition and maintenance. One of the serious consequences of this trend has been a decline in staff-student ratios to an average today of 1:17 students. This means less personal attention, although modern technology can help to overcome this. I cannot resist keeping a sense of perspective by quoting these words:

“In the old days, when the name of universities was unknown, lectures were more frequent and there was more zeal for study. But now when you are invited into a university, lectures are rare, things are hurried and little is learned, the time taken for lectures being spent in meetings and discussions”.

Those were the words of the chancellor of the University of Paris in 1218.

Thirdly, it is something of a truism that universities still do better for the middle classes than they do for less well-off socio-economic groups. This has led to a somewhat unsatisfactory debate, encapsulated as excellence versus equity. The problem is merely made worse by social engineering, and I have serious doubts about targets for student participation. The key to greater equity, surely, is to remove all the obstacles in the way of those who aspire or have been deterred from aspiring to a university education. I acknowledge that the Government are trying to tackle this through measures to improve educational opportunities for 14 to 19 year-olds, including the introduction of diplomas and the Education and Skills Bill. It is also singularly important to help improve links between universities and schools, a notable example of which has been Liverpool University’s successful talent support initiative to increase the proportion of students from low participation neighbourhoods entering higher education.

This leads me to my fourth point. Non-completion rates have increased in recent years to about 22 per cent. Although not out of line with international levels, this is high for the United Kingdom, but we must acknowledge that rates vary widely between institutions. Targeted help at school should ensure that the student is on the right course at the right place. For others who drop out, the concept of lifelong learning provides a valuable second chance.

My fifth issue concerns teaching and research. Given finite taxpayers’ resources available for research, it is inevitable that in order to retain our international position, we have to focus research selectively on the universities most suitable for this purpose. This means that several universities must either concentrate mainly on teaching or, if they are well established in their region and community, look to local industry and neighbouring universities for joint research projects. This is already happening and should be encouraged.

Sixthly, the funding system for students will of course be reviewed within the next two years, and we need to learn lessons from the student fees cap of £3,145. The most glaring challenge is the probable increase in demand for part-time education and a dip in the number of 18 year-olds in the next 10 years. The system of support for part-timers is not sufficient to encourage this expansion and is made even worse by the Government’s decision to redistribute funds away from those studying for equivalent or lower qualifications, known as ELQ.

Seventhly, we must acknowledge the importance of employers’ influence on the recruitment of graduates. It is perfectly reasonable for them to argue that, in addition to an academic qualification, they need skills such as interpersonal communication, problem-solving and teamwork. I am also struck by the healthy fact that for many employers, the all-round ability of a graduate is important, for we are often too obsessed by academic qualifications at the expense of developing the character. Nevertheless, universities should no more be agents of employers than of Governments, and employers should remember this.

My eighth point is that the integration in the early 1990s of the former polytechnics into universities raises two issues. Universities are now so varied that there cannot be just one benchmark to judge their collective performance. We are entitled to look for excellence in all our universities, not against one standard but against the particular mission and objective of that university. We need universities of international repute to set the pace, but in a system providing a wide diversity of education, each university needs to perform outstandingly. Equally, the combination of well over 100 universities brings into play the contrast between academic and vocational education. In post-war years, we have been adversely affected by prejudice against the latter. Now is a chance to have a bonfire of our prejudices and to acknowledge parity of esteem between vocational and academic courses. As Confucius once said, in education there should be no class distinction.

Lastly, it is worth noting where we stand internationally. We seem to lie somewhere between the European continent, with its centralised, state-oriented universities with high dropout levels, and the United States, with some very high-quality independent universities and many state universities, which are also well endowed with private funds. The educational system and the culture there is of course different, but there are lessons for us to learn.

Noble Lords will no doubt suggest many adjustments to priorities in higher education. I conclude by making only one recommendation about the Government’s strategy. As a former Minister for the Arts, I was convinced that for the arts to flourish organisations needed to be as independent as possible of government. The job of a minister is to set the framework and climate for the arts but to remain at arm’s length from institutions. Exactly the same must apply to universities. Their very nature means that in order for them to flourish they must secure as much autonomy as possible from government. Again it is the Government’s job to provide the overall framework in which universities can succeed but otherwise to keep them at arm’s length.

I want to see from the Government and the opposition parties a commitment to a strategy to secure the greater autonomy of universities. Governments must provide the framework, including acceptable systems of governance and accountability, but we should also recognise that universities have been independent for centuries, though often influenced by the church, state or industrial philanthropists. They are technically independent in that they are charitable bodies, but in practice many describe them as nationalised in that they are dependent on the Government for over 50 per cent of their resources and for direction. It is a matter of fundamental academic freedom to remind ourselves that universities are not, and never should be, agents of the state.

There are two ways in which we could develop that autonomy. First, universities must be given every encouragement to diversify their sources of funding. At present they are dependent on taxpayers’ support, student fees and private donations for scholarships, building and research. The Government’s three-year scheme to provide £200 million for matching funding from private sources, which could yield £600 million, starting this summer is a good beginning. In the long term, however, we need a much more ambitious policy to help universities achieve endowment funds. To give some perspective, only eight British universities have endowments worth £100 million or more compared to 207 United States state and private universities. Stable and consistent taxpayers’ support must of course help to underpin the finances of universities. We have to acknowledge that public expenditure in the United Kingdom on higher education as a percentage of GDP is below the OECD average.

The principle of student fees is now established and the cap will have to be raised to ensure that there are adequate resources to maintain quality. Of course the fact that students will be paying a higher proportion of fees means that they become more effective partners with their universities in working to achieve their ambitions. The loan system must remain progressive to encourage participation by the lower socio-economic groups. We must maintain and enhance the British tradition of an admissions policy based on students’ merit, whatever the parents’ level of income. Many universities here are already pursuing a positive policy on bursaries. We must also remember that 10 per cent of our students are from countries outside the EU. They make an important financial contribution and create good links for Britain. We must continue to compete worldwide by ensuring that we look after them properly and maintain the quality of our universities.

Secondly, autonomy can also be undermined by government regulation and intervention. The performance of universities is undoubtedly affected by their measure of freedom from administrative and funding control. American universities, freer of such control, are generally thought to be of higher quality than those of the European continent, where there is much central direction. We need to review relentlessly the level of regulation for higher education. The original University Grants Committee could be regarded as a model.

There is a growing recognition that more autonomy for universities, in both funding and management, will lead to improved quality of university education. I hope that the Government and all opposition parties will give a firm commitment to this strategy. I beg to move for Papers.

My Lords, I declare an interest as being in employment with the Universities of Sunderland and York, and as a council member at Goldsmith’s College. I thank the noble Lord, Lord Luce, for, and congratulate him on, opening this debate. He gave us a broad view of higher education and rightly highlighted a number of issues that we will have to address seriously in the next few years.

First and foremost, universities are places of learning, research and pushing barriers of knowledge. At a time of globalisation and our need for ever higher levels of skills, their role in those areas is crucial. The debate about how we finance research in universities and our international competitiveness will take place during the next few months.

I shall address two other purposes of education, not because they are higher than research and teaching but because they sometimes do not receive the extent of debate that they probably deserve. They are the universities’ responsibilities for, or functions of, civic renewal, and individual opportunity and social change. I reassure the noble Lord, Lord Luce, that they perform those functions not as agents of the state but as vital institutions in the country in which we live.

I welcome the emphasis which the Government have given to these areas in recent years, in particular the challenge to create new universities in some of our towns and cities in the next five to six years. Any Government who seriously regard regeneration and community cohesion as one of their objectives would let us all down if they did not develop the role of universities in that area of national life. When one thinks that for every 100 university jobs, 89 more are created in the location of the university; that £1.45 billion is spent off campus; and that 42,000 student volunteers work in the voluntary sector, one concludes that one does not know how any town or city can survive in the 21st century without access to a university.

I also welcome the Government’s work in widening participation. It is right that we ask how we get more students, both part- and full-time and of all ages and backgrounds, into university. We are nowhere near that yet, and I know that we need more ideas and greater success. However, I sometimes worry that we devote a lot of time to talking about how to get students there and too little time talking about how to keep them there. As we move to a more diverse higher education sector, we welcome its diversity without thinking through its implications and meaning. In terms of access, it means that as we get people from different backgrounds into universities, universities will have to change the way in which they teach and support them. I know from schools that many students going straight from school to university, and many adults going from no learning to university, get there only because the nature of teaching styles and pedagogy, and the extent of the support that they have received at school, have been transformed during the past 10 to 15 years. Too often, they get to university and find a university system that has not adjusted to those changes in teaching style and support that have taken place at school. As long as that is not end-on and as long as those changes are not made, we will continue to see in some universities a fall-out rate that we should fear and do something about. The kind of support that students now receive in schools to get them to university is matched only in Oxford and Cambridge Universities, which have the money to support students at that level. Universities which often take students from schools with lower grades do not have the resource to offer that support.

In calling for a more diverse system of university and giving more institutions the title of university, we risk not having an infrastructure that recognises that diversity. I have in mind two areas: finance and recognition. I am not arguing that money should be shifted from research to access or civic regeneration—I would not do that—but that, as long as extra government money goes mainly to those universities that are research intensive, some universities will be forced to compete in that game. If they are good at regenerating communities and in civic renewal, and if they are good at widening access, they need a recognition system and accountability mechanism that gives them resources for doing that. We had that when we had the old polytechnics. I sometimes worry that in creating diversity we might not have an infrastructure that would reflect it. However, I very much welcome the Government’s initiatives on the whole, and just ask the Minister to reflect on those comments when she responds.

My Lords, I declare a serial interest as chancellor of two universities; namely, Newcastle and Oxford. I welcome my fellow colonial oppressor in initiating this debate. The number of noble Lords who wish to take part suggests that we should talk about higher education more frequently. The quality of the knowledge and experience of those taking part suggests that the Government should listen hard to this debate.

I follow directly two points made by the noble Lord, Lord Luce, at the outset of this debate. I want to speak about funding and access. We have, by common consent, some of the best universities in the world. The general argument is that we have the second-best higher education system in the world. I worry that those achievements are threatened by what the noble Lord referred to: the proportion of GDP that we spend on higher education in this country, which is below the OECD average. Astonishingly, the American public sector spends a higher proportion of GDP on higher education than we do. We know that higher education is the main source of research in this country. Given that, we recognise that there are only three ways of funding higher education. The taxpayer can do it through public spending; it can be done through benefactions and philanthropy; or it can be done by the student paying more money towards his or her education in tuition fees.

Sad as it may be, I do not believe that higher education will achieve a higher priority in public spending arguments over the next few years. The Government cannot duck the consequences of this fact. I do not see that happening with this Government, and I would be surprised if it happens after the election when, I hope, there will be a Government of a different political party. In those circumstances, we have to look hard at the question of tuition fees. It is not, as the noble Lord said, a question of universities opting for independence; they are already independent. It is a question of facing a financial reality. When we do so, it is important that universities do all they can to increase their endowments, so that they can have more generous bursaries in order to ensure that when there are higher tuition fees—as I think there will be—there is needs-blind admission to our universities.

Secondly, the noble Lord said that when he went to university, 4 per cent of his age group went into higher education. When I went a few years later, the figure was 6 per cent. Since then, as the noble Lord indicated, it has increased just over sevenfold. While that has happened, there is no indication that there has been much of an impact on the universities’ role in social inclusion. Even today, young people from the most advantaged 20 per cent of the country are five or six times more likely to go to university than young people from the 20 per cent of most disadvantaged areas. That should matter to all of us. It matters because of the impact of a university education on a lifetime’s earnings, remuneration, and so on. It also matters because of the widening and deepening of opportunity that a university education should—and, I hope, usually does—ensure.

Universities are well aware of this issue of widening participation. They do not need to be harried by anybody, not least Governments, into facing up to some of these questions. The universities that I know best are very active in this field. Newcastle has a Partners Programme, although, perversely, the fact that it allows slightly lower admission grades for young people who have been through summer schools as part of the Partners Programme, counts against it in league tables for the medical school and elsewhere, which is crazy. Oxford University spends £1.8 million, and rising, on trying to improve access and encouraging people from more disadvantaged backgrounds to opt for it.

The one thing which it seems to me we must not do is dilute the standards that our higher education institutions set. The best answer to broadening access is to do more about the disparity of education or achievement in our secondary schools. Universities can make a contribution to this, but I do not believe that they would do anyone a favour if they decided that they should lower their own standards to help make up for some of the problems in secondary education. I hope that the Government recognise that, while of course insisting that it is important for all of us to try to encourage as broad an access as possible to higher education.

My Lords, I, too, congratulate the noble Lord, Lord Luce, on initiating the debate and I thank him. I should like to see higher education keep up its quality but become more equitable and fully tap into the talents of bright young people from lower income families. It is not only important for them as individuals but for the economy. This requires three things: aspiration; information; and support, mainly but not exclusively, financial, which needs to be focused on young people who are still at school. I shall not say anything about tuition fees as I think that many others will, but as they rise and young people have to borrow money to pay them, which has to be paid back later in their lives, that turns the focus on to maintenance.

Many young people do not want to have to borrow even more money for their maintenance and living expenses during the three or four years that they spend at university. Many of them work while they are studying. The problem with that is that many of them spend far too long working, which affects their studies. For example, music students have to spend many hours practising their instruments and find it difficult to take a job while they are studying, although they may occasionally do the odd gig to help their bank balance.

The Government offer maintenance grants based on family income and the Access to Learning Fund supports students with particular financial needs. The Government have also charged the Office for Fair Access with the task of promoting and safeguarding fair access to higher education for under-represented groups, especially in the light of the introduction of variable tuition fees. OFFA says that by 2009 around £300 million a year will be paid in bursaries for low income students. However, it is widely accepted that the funding distributed by universities and the Government is not enough and that although student loans are available at slightly below commercial rates, many potential students are reluctant to take on a burden of debt that can add up to tens of thousands of pounds by the time they graduate.

I investigated what a student would have to do to get the information he or she needs about the support that is available. It turned out to be a complex job. Looking at the websites of the various universities, I found out what Oxford is doing in this regard, which the noble Lord, Lord Patten, mentioned, and that Cambridge is offering similar bursaries and scholarships. Importantly, both those universities work with teachers as teachers give students the aspiration to attend the best universities. They have open days and invite teachers on to their campuses. We have heard about the Liverpool scheme and Imperial College offers bursaries under the study support bursary. There is a City & Guilds scholarship for engineering students and the R W Barnes Education Fund for engineering, physics and maths.

There are many similar subject-specific grants and bursaries. Many things are being done, but an awful lot of universities are under-spending their access fund money by, on average, about 19 per cent. I should like to know why that is. Are people not applying? I have come to the conclusion that students lack information because it takes so much time to find it out.

The National Audit Office has urged the Government to set up a,

“single source of comprehensive information for all Government grants, loans and bursaries”.

Can the Minister say what plans the Government have to do that? It is no good having all these initiatives if students do not know about them.

Before I finish, I should like to say one further thing about further education. Many further education colleges, apart from providing courses leading to degrees, provide the courses that give the students the qualifications to apply for degrees. Unfortunately there is a gap here, because a lot of those students find it very difficult to cover childcare and other kinds of costs while they are studying. The Helena Kennedy Foundation, of which I am privileged to be a patron, helps to fill this gap by providing smalls bits of funding to adults who are necessarily in low-paid jobs because they do not yet have the qualifications to gain entry to these access courses so that they can then go on to higher education. Many of them have a lot of success, but there is a need for more of that sort of funding.

My Lords, I hope noble Lords do not mind me interrupting momentarily. I should like to inform them that when the number 4 appears on the monitor, you are in your fifth minute; when 5 appears, you need to sit down. We have now lost about two-and-a-half minutes on this debate so I should be very grateful if noble Lords could keep to that. The noble Baroness, Lady Walmsley, was almost exactly on time.

My Lords, I congratulate the noble Lord, Lord Luce, on securing this debate and on the quality of his contribution. When looking to the future, it is logical to reflect on the purpose of universities.

The committee I chaired 10 years ago had some thoughts on purposes which have recently been endorsed by the Higher Education Funding Council. I will not weary you with them, since they are obviously immaculate. Among those purposes was responding to the needs of the economy as well as society at national, regional and local level. In those areas, two recent reports are particularly important.

The first is that of the noble Lord, Lord Sainsbury, entitled “The Race to the Top” which examines how higher education can move from its past, when we were brilliant at fundamental research but rotten at translating the benefits of that into products and services. He was able to report that we are now comparable with many American universities and that we have turned the corner. We must continue to encourage and support universities because it is fundamental to our own future that we develop the fruits of knowledge and research. I should like to see in that development increasing partnership between complementary institutions, including FE colleges and overseas universities.

The second report was that from the noble Lord, Lord Leitch, in which he asked universities to be responsive to the needs of industry to develop skills. This does not mean “goodbye” to the humanities; on the contrary, they matter very much to the quality of our society and to developing wealth. The response of these higher education departments can be found simply in embedding into their programmes the generic skills which every employer wants. Indeed, only a minority of recruitment requires subject-specific skills. It is the development of a range of generic skills that matters. These are my main solutions: first, asking how they find the time and funding; secondly, reducing red tape; and thirdly, as the noble Baroness, Lady Morris, said, changing some of our approaches to teaching and using IT more skilfully.

The third issue that I want particularly to mention is the challenge that we will increasingly find in these very welcome and important overseas students to whom, as the noble Lord said, we are indebted for 10 per cent of fees. Because of the demographic changes occurring here and more strongly throughout much of Europe, there will be increasing competition for those students. Our response has to be in terms of the quality of the experience we offer them, based on research into precisely what their needs are. It is in the postgraduate area that the greatest opportunities for expansion may arise. That coincides with our national interest, because if we attract postgraduates here, we are attracting some of the ablest minds in the world.

Those are my three main points regarding universities, but the decision on the future of funding is for us to make. If, as most people assume, the student is to be asked to make an increased contribution, a number of elements will have to be satisfied. First, we should consult the student voice on the form of the contribution. Secondly, we should avoid differentials in public subsidy, with state-subsidised loans limited to some base level, say £3,000, and thereafter a fair market rate of interest should be charged. Thirdly, admissions must be needs-blind, supported by bursaries. Fourthly, it is our responsibility to ensure that there is no reduction in the real value of the unit of resource from the Exchequer. Finally, there must be a perceptible benefit to the quality of the learning experience that we offer to students, not only in terms of their degree courses, but in terms of extramural activities and supplementary learning, such as languages.

I believe that in our universities we have a world-class asset which much be cherished. If we are to cherish it, we in Parliament and those of you in government must have an attitude of care, respect and support for the enduring values of what makes the university so distinctive. Newman had some very valuable points to offer. In return, we can look to the universities for full engagement in meeting the needs of society.

My Lords, I thank the noble Lord, Lord Luce, for introducing this important and useful debate. One of the key considerations for the future of higher education is that students of all religious and racial backgrounds in this country can attend university free from threats of discrimination and racist and hateful attitudes. This must apply in every university.

For instance, in an area in which I have long been deeply concerned, it is vital that Her Majesty's Government take decisive and long-term action to deal with growing anti-Semitism on university campuses. The Community Security Trust recorded 59 anti-Semitic incidents in 2007, in which all the victims were Jewish students. Typical examples include: in Nottingham, swastikas and anti-Semitic graffiti were scratched on the doors of Jewish students’ rooms and, in Birmingham, “I hate Jews” was written on the frost on cars. This sort of racism is nasty, is growing and is obviously completely unacceptable.

I hope that there will be a sub-group to the main cross-governmental anti-Semitism working group set up to deal specifically with higher education and that it will include the relevant sector bodies and Jewish community groups to agree on a long-term plan, to ensure that it is implemented and to see an end to the disgraceful and divisive boycotts which have been targeted at Israeli academics by unions, including the University and College Union, that do absolutely nothing to help bring peace to the Middle East. They infringe and assault the vital principle of academic freedom.

I am delighted that Her Majesty's Government are strongly considering providing resources for a UK-Israel academic collaboration fund, which would be extremely welcome, especially because it offers the opposite to boycotts—stronger not weaker academic ties between the two countries. In these two areas of vital importance—deeply harmful and evil anti-Semitism on campus, together with anti-Israel boycotts—we need firm, decisive and swift action. We need to fight discrimination, whomever it is against. We must ensure a more positive and anti-racist future direction for higher education in Britain. In the words of the noble Lord, Lord Luce, we must make a bonfire of prejudices.

I have finished my speech two or three minutes early.

My Lords, I speak from the experience of being president of the council of the University of Chester. Although it received its charter only in 2005, it has a long history as an Anglican teacher training college, stretching back to 1839.

We take pride in maintaining a splendid school of education, but this now comprises only a small proportion of our activity. Our founding charter speaks of preparing people for “careers of service”, originally teaching in the church schools that were being founded. We have developed this vision in various directions, from extensive training for healthcare professions to recent developments, such as a course to train youth workers for the Muslim communities of the north-west, alongside our established courses in Christian and general youth work. We have taken a particular interest in seeking to promote community cohesion. We are keen to be part of the sponsorship arrangements for new academies. We also have a very active programme of student volunteers, who put no fewer than 15,000 hours of voluntary service into the community. That is just one university’s contribution. Our emphases are typical of other universities, which have maintained a Christian foundation amid the proper cut and thrust of a modern university.

Another feature of the university’s life is a commitment to engage with employers, to ensure that the professional and business needs of a diverse range of companies and public employers are met. This includes innovative programmes of work-based learning and close partnership with FE colleges, a number of which go back 20 years or more.

The Government’s decision to end funding for equivalent-level qualifications posed a challenge. More broadly, it posed a challenge for the church’s approach to ministerial education and training. We are grateful for the willingness of the Government to listen to us over these issues. Indeed, we are grateful that they will help the various training establishments, including the University of Chester, to adjust our portfolios in the light of the new structures.

Like most of the newer universities, Chester is a teaching-led university, although we have growing centres of research excellence. As we have expanded by a factor of no fewer than three or four over the past 10 years—a remarkable rate of expansion—many of the new staff whom we have appointed have come with doctorates and research experience. They understand the applied and teaching focus of the university as a whole. There is, however, something in what Newman called,

“The Idea of a University”,

which necessarily includes a place for research and for the joy of pushing back the frontiers of human knowledge. When the Minister replies, I hope that she will say something about this spread of research funding and expectations across the whole sector, along with an understandable concentration where there is a particular centre of excellence, or where the capital investment needed is very large.

The university sector provides a diverse picture, and rightly so. The Government can take a good deal of credit for presiding over the recent period of expansion and diversification. There is, however, ongoing work required to maintain quality across such a diverse range of institutions. This needs to recognise the essential independence and autonomy of the institutions themselves—a point emphasised by other noble Lords. This has been vital to the development of the university sector in our country and its position in international comparisons.

My final point is that this independence and diversity needs to be held within an overall frame of government funding policy, which does not allow recent gains to be eroded. Against general reports that social mobility has dropped in our society since the 1970s, we do not need a wrong emergence of a new elite within our universities. That would be a danger. Any structure, society or organisation which supports freedom always tends to produce its winners and losers. One of the jobs of government is to provide a playing field and a support system which keeps that to a minimum. Whatever the future may hold, we need to promote excellence across the sector; that is, at the universities and the diverse range of institutions. That should be a prime aim of government in the years to come.

My Lords, I thank my noble friend Lord Luce and congratulate him on initiating the debate. I declare my interest as vice-chancellor of Cambridge University from 1996 to 2003. Our universities have performed well over the past few years. The quality of their science and engineering research is second only to the United States and it is now more fully funded thanks to the increase in the science budget. Problems remain, however, in transferring technology to the mainstream of our industrial base. Entrepreneurship has flourished in universities and there has been a healthy growth in the number of start-up companies spun out from the universities. But there is a need to develop mechanisms and incentives that will encourage investors, including our large companies, to become involved on a larger scale. We need to grow some of those small companies into companies that employ thousands, rather than tens, of people, so that they will have an impact at the national level.

The quality of teaching in our universities has similarly remained at a high level, but the financial support, as has been said, for teaching, unlike that for research, is far from adequate. Professor Alison Richard, the present vice-chancellor of Cambridge University, tells me that while funding varies considerably from subject to subject, on average, the university has to find from its own resources £5,000 to £6,000 a year per student to subsidise undergraduate teaching. The top-up fee has helped, but the financial gap remains large and is unsustainable in the long run. The funding of teaching remains unfinished business.

I will conclude with a point that I have made before but which needs to be made again. It relates to the lack of breadth in the subjects required to gain entrance to our universities, especially our leading research universities. At present, many students are, in effect, forced to choose between the arts and sciences at the age of 15. To my knowledge, we are the only country in the world that does this, and a lot of young people do not want it and are frustrated when they find their options blocked at university. The problem is exacerbated by our four-year science and engineering masters courses. I declare that while I was head of the Cambridge University engineering department, we introduced such a course in 1994.

To bring students to an internationally competitive masters level in four years, they need to start at a level that requires specialisation at school. Even then, the course is too short for any but the brightest students. It works satisfactorily at our very top universities, but for the majority of those who want to become professionals in their disciplines, the combination of a three-year baccalaureate followed by a two-year masters is better, which is why it is used in most other countries and has been adopted in the Bologna agreement. In the USA, a four-plus-two year course structure is common, but this would clearly be too expensive for us. The popular and profitable one-year masters courses could continue, but probably not for those who are going on to be professionals in science and engineering. There are efforts to broaden the scope of teaching in the final two years of schooling, such as the new diplomas and the new Cambridge Pre-U Diploma, about all of which I am enthusiastic. But we should have a long-term goal to require students to include English and mathematics in their final years of schooling and, preferably, a language.

My Lords, I, too, congratulate the noble Lord, Lord Luce, on his eloquent exposition of the issues facing higher education in the UK. It is indeed a pleasure, if not a daunting task, to follow the wisdom of the noble Lord, Lord Broers, on this crucial issue. I declare an interest: I hold an honorary degree from the University of Buckingham and was a former chairman of King’s College, London.

Since 2006, students have been able, if they wish, to invest their student loans in paying fees at private institutions. Although it was not much remarked on at the time, this change marked a new acceptance of private higher education institutions in the UK. As a former vice-chancellor of the independent University of Buckingham, the noble Lord, Lord Luce, and his colleagues are to be lauded on gaining this acceptance for that university.

As long ago as 2002, the pro vice-chancellor of the University of Warwick suggested that some of the bolder UK universities might follow Buckingham's lead and become private. The question is, how could those “bold” universities proceed on that route of privatisation, and is it desirable for them to do so? Recent discussions have focused on two options for universities to win independence from government: the introduction of top-up fees and/or increased income from philanthropic support.

At a Cambridge Union debate in January, the vice-chancellor of Bristol University calculated that his institution would need to charge an additional £19,000 a year in top-up undergraduate fees if it wanted to replace its HEFCE teaching grant and bursary provision. As he stated, both he and many others would see such a charge as a controversial and ineffective measure. In May, Oxford University launched its campaign to raise £1.25 billion through philanthropic contributions but, although my noble friend Lord Patten, Oxford’s chancellor, rightly remarked then that universities need,

“to be able to demonstrate that they can stand on their own feet more effectively”,

I also noted his comment that that should be,

“without eschewing support from the State”.

During my nine years as chairman of King’s, I was delighted to note the generous and growing support that the college received from alumni and friends. I am certain that its next fundraising campaign, under its new chairman, Lord Douro, will have a global impact and relevance. We should be proud of that growing entrepreneurial spirit and diversity of income in all UK universities, both state and private. However, even Oxford and other distinguished Russell Group institutions such as King’s cannot hope to secure funding to match Harvard’s £36 billion endowment. Therefore, although we acknowledge and welcome the fact that universities need to diversify their income streams through philanthropic and other means, we must also recognise that that is not necessarily in the expectation that it will secure them complete independence from the state system.

At the moment, UK universities need adequate funding from the Government and from a range of private sources if they are to meet the rising expectations placed on them. Within that mixed economy, moreover, we must be vigilant in maintaining universities’ freedom. Academic freedom, including the ability to speak out against falsehood, clouded thinking and injustice, is more than ever a requirement for British universities. As Nelson Mandela, the great freedom fighter, said:

“Education is the most powerful weapon which you can use to change the world”,

but universities also need to be guarded from the still onerous regulatory burden imposed on them not only by the professional bodies, with which they have important and mutually beneficial relationships, but by the Government. We do not want universities to pay for their state funding by drowning in a sea of reporting requirements and bureaucracy. Higher education in this country needs to be protected from such a regulatory burden. Provided that such safeguards are in place, there is much that we can be proud of in our universities and much that is worth preserving when we are considering how they should be funded in future.

My Lords, first, I must declare an interest as chancellor of the University of East London.

The Government are in something of a bind over their higher education policy, caught between the commitment to widen participation and lifelong learning, the demands from the top table for the cash to compete with their US Ivy League cousins, and the pressing need to cut costs and keep the Student Loans Company afloat.

As university chancellors we have the same objectives as the Government in wanting to offer a first-class education and training to all and, in particular, to narrow the attainment gap between the most and least advantaged. However, despite significant investment since 1997, research shows that policy is in many ways working against the Government's intentions. Despite their advocacy of lifelong learning, already mentioned by my noble friend Lord Luce, the recent decision to withdraw funding for equivalent or lower level qualifications, condemned by Universities UK and the Select Committee alike, will reduce dramatically the number of adult learners in the system. The overwhelming majority are returning to university to gain professional qualifications and skills vital for the economy. That penny-pinching wheeze will affect precisely those students who wish to return to higher education to develop or change their careers.

I urge that any money saved will be targeted at those institutions that actually deliver on the widening participation agenda, rather than redirecting it to those that fail to deliver. Our mission in east London is to create opportunities for the people and communities of east London and to break down barriers to progression. It is integrated with the Government’s agenda of promoting partnership and engaging business. Above all, we are committed to the success of our students and to transforming their prospects.

That brings me to my final point: exactly how do we define successful outcomes in higher education? What does a successful student or a successful institution look like? The Government like to talk about diversity of mission and playing to institutional strengths but, as others have noted, the English have a genius for turning diversity into hierarchy. The wealthiest institutions are receiving an increasing share of the overall funding pot. Perhaps we should not be surprised, but should we not expect better?

As a society we deserve better, and that starts with better and more honest measures of success. By that, I do not mean the sort of success that the broadsheets measure in their league tables, which is success at attracting government funding grants or admitting the better and more expensively educated to the groves of academe. What value is being added here? I suggest that it is rather more challenging—and the rewards should reflect this—to achieve success in taking students who are the first in their families to attend university, who may not have done particularly well at school and who do not have much money or support, and giving them the education, skills, ambition and opportunities to get their degree and a good job. Of course, that is a risky strategy, because not all of those students go on to succeed, but I would argue that that represents real value-added success. If the Government are serious about their stated values, as we are, I urge Ministers to stop punishing the universities that are trying to make a difference and to rethink what they are trying to do in the light of what is actually happening. We live in hope.

My Lords, I, too, declare an interest as vice-chancellor of the University of Ulster from 1991 to 1999.

Other noble Lords have invoked the name of John Henry Newman. Today, we need a new John Henry Newman to imagine and define what is now required. The basic principle guiding future policy must be to strive for excellence in both teaching and research in the context of a mass tertiary education system. The question is how best that may be achieved, for it is a daunting challenge.

Higher education institutions need to be redefined in their core purposes, as the noble Baroness, Lady Morris, implied. It is clear that they are no longer just vehicles for delivering third-level teaching and research. They are also major players in sustaining and promoting economic generation in the employment that they provide, increasing consumer spending power in their environs and the spin-off activity that stems from their research. Those beneficial effects have been recognised for some time now and have been further endorsed by the Government's announcement last March that they intend to create about 20 new campuses in England. The aim is to increase the participation rate, to improve the nation’s skills base and to promote economic development.

I applaud that new policy initiative, but how is excellence and quality to be preserved in both teaching and research? Secondly, how can cost be minimised and the economies of scale maximised? The answer to both questions lies in much more higher education institution collaboration and co-operation, preferably organised on a regional, federal or confederal basis. HEIs, especially the established universities, have been notoriously parochial and turf-protecting in outlook. Happily, there are signs of a welcome change.

Regional federations—particularly in England, because in Northern Ireland, Wales and Scotland there is much greater collaboration—and confederations should be formally established. As I have said in your Lordships’ House before, the tertiary system in California, developed by Clark Kerr, affords a very good guide as to how we should proceed. Centres of real excellence in research and postgraduate teaching can be identified for each region. This is especially needed in science and engineering at the moment. Student numbers in these crucial subjects are falling and departments have been closed down. Unfortunately, these closures have been made by individual universities with scant regard to the wider needs of region and nation. A regional framework would facilitate a more strategic context for the allocation of academic resources.

Other HEIs in a region would be able to make their own dispositions in the light of the designated hub university. This would doubtless include greater liaison and collaboration with further education colleges, which is vital. This is already going on spontaneously in many areas of the country and across many disciplines. The trouble is that it is altogether too ad hoc. Hub universities need to be identified for each English region, and of course there can be more than one. Other HEIs in the region would thus be better enabled to make their own dispositions regarding future developments, including, as I have said, a more worked out and coherent approach to collaboration with the further education sector. This is a policy that the Department for Innovation, Universities and Skills needs now to articulate in England and to promote if it is to live up to its title.

My Lords, I, too, congratulate the noble Lord, Lord Luce, on initiating such an important debate on a vital topic for the future of the country. I start by declaring an interest as the principal of Jesus College, Oxford.

In my brief contribution, I shall touch on two points that have already been discussed by others: the diversity of the higher education sector and access. We have already heard that the ideal of a university as a temple dedicated to the life of the mind is nowadays supplemented by the more utilitarian view that universities are also engines of future prosperity and useful knowledge to improve our lives, for instance through curing diseases or preserving the planet. However—this is my first key point—universities should not all strive to do the same thing. A small number should aim to be world-class research and educational institutions, while many others should aim to support their local economy, for instance by training people in technical skills.

As we have heard, as a result of the system of incentives and esteem in this country, too many of our higher education institutions strive to climb up the same ladder: to be excellent in both education and research. Let me illustrate this with a striking fact. Of the 168 higher education institutions in this country, 147—nearly 90 per cent—award doctoral degrees or claim to be research institutions. Let us contrast this with the United States, where less than 6 per cent of universities award doctoral degrees, with the other 94 per cent pursuing other valid and important purposes. Translated into UK terms, this would equate to a dozen or so research universities.

Why does it matter? The answer is simple. Scarce resources are spread thinly across the whole sector rather than being concentrated in a small number of elite institutions and, importantly, training in technical skills tends to be left out as the universities that should be doing this aim to ape the elite. Rather than blurring the distinctions among universities, we should respect and celebrate diversity, as the noble Lord, Lord Rix, said. At the same time, we should distinguish between education on the one hand and training and skills on the other. These are not the same thing. If my daughters came home from school and told me that they had been to sex education classes, I would be comfortable; if they said they had been to sex training and skills classes, I would not.

My second point is about access. My own university, Oxford, has been set a target to increase its intake of students from state schools to 73 per cent. It has been criticised by Ministers for not achieving this. Currently, just over half Oxford’s intake is from the maintained sector. It rightly strives hard to attract students from less well-off backgrounds and from state schools and it provides, as we have heard, extremely generous bursaries to support them if they get into university. We want to attract the best students from all backgrounds; there is no gain to us in not doing so.

A naive view would be that, while 7 per cent of children are educated in the private sector, around half the students entering the top universities such as Oxford are from the private sector, so there must be discrimination. This is plain wrong. The entry requirement for Oxford and many other top universities is three As at A-level. Just about half the pupils in this country who reach this level are from private schools. In other words, this matches our intake. There is no evidence of discrimination. This proportion of three As at A-level from private schools would be higher if you counted only the A-levels that were shown by the Durham study to be hard and that count for Oxford entrance. The real question for the Government is why the maintained system, which educates 93 per cent of children, produces only half those who are suitably qualified for entry into elite universities. By pointing their guns at the universities, the Government are heading towards the wrong target.

My Lords, I am delighted to speak in this important debate and I am grateful to the noble Lord, Lord Luce, for providing the opportunity to do so. As he said, higher education is one of this country’s great success stories. To his list of successes, I would add that we punch above our weight in measures of research impact and that our universities are major wealth creators, generating about £46 billion a year for the economy. At this point, I declare my interest as chief executive of Universities UK.

This opportunity to cast our minds 15 years or so ahead allows us to reflect on the role that we want our universities to play beyond the purely economic. We are entitled to hope that our universities will provide some of the answers to the grand challenges that we are likely to face in the next half century. I am thinking particularly of climate change. The speed and scale of likely change mean that now, more than ever, we need first-class minds to push forward the limits of our understanding of the geopolitical, social, economic and health-related consequences of global warming.

There are other unstoppable changes to which our universities will be at the forefront of helping us to adapt. Let us think about the healthcare implications of our ageing population and about the need for the coming generations to be part of the workforce for much longer. Demographic projections suggest that between 2011 and 2020 the number of full-time students will drop by 6 per cent across the UK. That is 70,000 students. On the other hand, there will be an increase in the older age groups from which most part-time students are drawn. This is a great opportunity for universities, as they are committed to helping more than 40 per cent of adults to attain skills to graduate level and above. This aim will almost certainly be achieved only through retraining that is delivered part time. Therefore, the Government will need to look again at whether provision for part-time students, which is at present much lower than that for full-time students, is adequate to meet this challenge.

That brings me to a further challenge. Public funding remains vital to the health of our universities. We have been grateful to the Government for restoring stability to the sector after years of underfunding. Together with the introduction of variable fees, this has been done by maintaining the unit of public funding in real terms. I urge the Minister to confirm today that this will continue beyond the current spending review. Without this commitment, any other promises will ring hollow. We need continuing public investment to maintain our international competitiveness. Although we lead the field in many areas, the UK lags behind many countries in spending on higher education. As the noble Lord, Lord Patten, reminded us, we spend 1.1 per cent of GDP, whereas the US spends 2.9 per cent, while countries as diverse as China and New Zealand are rapidly increasing their own investment.

There is no doubt that these challenges will be better met if the sector can work closely with the Government on shared aims. For example, we have already been trying to ensure that, for the future, the new visa system invites in the best students and staff, rather than putting up barriers that send them elsewhere. Consultation of this sort is vital for making change run smoothly. The university sector has a long-established, key role in promoting and helping to deliver public policy objectives. As has been mentioned, when such consultation does not happen—there was the recent withdrawal of funding for students with equal and lower qualifications and the Foreign and Commonwealth Office withdrew funding for Commonwealth scholarships —institutions are left able only to advise the Government on unanticipated consequences. I hope that the Minister will agree that, working as partners in a climate of mutual respect and collaboration, with a shared vision of the future that focuses on ensuring that all those who want to benefit from higher education can do so, universities and government can deal together with whatever lies ahead.

I end by reinforcing the points that the noble Lord, Lord Luce, made about autonomy. This long-established autonomy has enabled our universities to flourish, to the huge benefit of students, our communities and the economy. I trust that all parts of the House will concur that continued autonomy is vital if universities are to deliver solutions for the future.

My Lords, I join other noble Lords in thanking the noble Lord, Lord Luce, for giving us the opportunity to have this debate. I declare an interest as master of University College, Oxford, for one more month.

I start by acknowledging that higher education has a good deal to be grateful to this Government for. First, we have had strong support for research through the 10-year science and innovation investment framework, as well as the fuller economic recovery of research costs. As the noble Lord, Lord Broers, and the noble Baroness, Lady Warwick, said, the United Kingdom punches above its weight in this area, which is crucial to the success of our economy. Secondly, as the noble Baroness, Lady Warwick, mentioned, the 2004 spending review stabilised the funding of teaching per student, which had halved between 1976 and 2005.

This debate is about the future and I want to cover three points: teaching costs, internationalisation and access. Despite the measures that I have referred to, there is still in most universities a gap between teaching costs and revenues. At Oxford, average teaching costs per undergraduate are £20,000 per year and average income from all sources, including tuition fees, is £7,500 per year. The task of bridging that huge gap falls partly on the colleges and partly on the university. The university meets its share by diverting money given to it by HEFCE for research—the QR grant—and using it to subsidise teaching. The extent of this, according to recent calculations, is £13 million a year. When I told this to my noble friend Lord Dearing, he was greatly surprised—and it takes a lot to surprise the noble Lord. This is legitimate because it is a block grant that the university can use for whatever purpose it wishes. However, it is a tax on research—a tax on the very activity that we want to promote.

Secondly, higher education, as other noble Lords have pointed out, is a hugely international business. It is wonderful that it should be. In my college, we have 550 students from 45 different countries. Some people are now suggesting that universities recruit overseas for financial reasons. In my experience, academics resolutely refuse to respond to economic incentives. They take the best that they can get from all sources. Nevertheless, for a UK/EU undergraduate, we receive £7,500, whereas for a non-EU undergraduate we receive £20,000. It really is perverse to give such disincentives to the education of our own nationals.

Finally, despite many fears, tuition fees have not choked off applications from poorer students. Nevertheless, there is still a huge problem to be addressed. I read with great interest the recent evidence given by the director of Fair Access to a Select Committee in another place. Sir Martin Harris said that in his view this was not a financial matter—bursaries are in place to deal with the principal financial anxieties—or a problem of discrimination in selection. He said:

“I do not believe for a moment that any university discriminates against applicants on the grounds of social class in any direction”.

The problem, as other noble Lords have said, starts earlier. Sir Martin also said:

“However, one of the things I have been saying in all my pronouncements in the last 12 months is that maybe the focus should now shift and we should focus more on really reaching out to 14-year-olds and younger in schools to change aspirations and to recreate upward social mobility”.

I follow the noble Lords, Lord Patten and Lord Krebs, in saying amen to that. The universities can and will play their part, but it is with schools and teachers that the solution primarily lies. I hope that these points will be taken into account next year in the Government’s review of the funding regime.

My Lords, I congratulate my noble friend Lord Luce on securing this debate. I declare an interest: 21 higher education institutions are members of London First, the business organisation that I lead.

Each year, London’s universities turn over £11 billion and earn £1 billion in export earnings. The higher education sector in the 21st century continues to fulfil its traditional role of providing our society with skilled graduates and intellectual capital, but it is now also a major economic powerhouse. The success of our universities and the future competitiveness of our economy have become intimately entwined. The Government, universities and business cannot afford to rest on their laurels. We must produce employable graduates and we must ensure that entry and completion standards do not drop if we are to meet ambitious throughput targets for higher education.

To illustrate this, I will borrow an example from our newly elected Mayor of London, who asked his audience to name the most competitive city in the world—politically, intellectually and economically—in 800 AD. The answer was Baghdad. Then the largest city in the world, with more than a million people, Baghdad was home to a great university, the House of Wisdom, where scholars came from all points of the compass to study mathematics, astronomy, medicine, chemistry, zoology and geography. Today, London attracts 86,000 non-UK students each year and is the top destination worldwide for international students, who contribute nearly £1.5 billion per year to the UK economy.

However, no city’s or country’s pre-eminence is guaranteed for ever. For the sake of our country’s future competitiveness and for their own self-interest, our universities must now build much closer relationships with the business world. Currently, the topics and contents of the courses offered by universities are largely determined by students’ preferences. Universities are funded according to the number of students who start and finish their courses. Their incentive from the Government is to provide popular courses that can be filled easily and make progress towards achieving the Government’s target of 50 per cent of young people entering higher education by 2020. Courses in more difficult and unpopular subjects, such as maths, science and engineering, which are vital to our economy, are undersubscribed and remain in notoriously short supply.

Furthermore, employers complain that too many newly qualified graduates apply for jobs without the essential skills needed in a modern workplace: problem solving, the ability to work in teams, communication skills and even—incredibly—reasonable levels of literacy and numeracy. I illustrate that with the example of a leading legal firm in the City, which recruited 70 new graduates last year after receiving 1,200 applications. Although the vast bulk of these came from UK universities, only three successful candidates came from this group; the remainder were from overseas universities. This example is borne out by a London First survey of more than 2,000 London employers. It is a student’s employability skills, not just their paper qualifications, that win jobs in a highly competitive market.

My plea to the Government and the higher education sector is to recognise more clearly the urgent imperatives of the 21st-century economy. Please listen more carefully to employers and take more account of what they need from the higher education system: more emphasis on quality, not quantity, and on higher standards of employability.

My Lords, I declare an interest as an academic at the University of Hull. I, too, congratulate the noble Lord, Lord Luce, on initiating this debate. It is by no means the first such debate, but it is a necessary one.

In the time available I should like to focus on two areas of continuing concern. The first is one that I have raised on a number of occasions, and that is the sheer burden of bureaucracy on universities. The situation is less bad than it was, and I welcome the approach taken now by the QAA, but there remain significant problems. These are quantitative as well as qualitative. As the QAA acknowledged in its strategic plan for 2006-11, higher education is subject to many regulators. Universities UK makes a similar point, when it says at paragraph 58 of its briefing note:

“With universities having so many stakeholders there is a considerable potential for duplicated demands, confusion and bureaucracy that not only hinder the effectiveness of universities but also undermine the effective use of public funds (by diverting them into administration and paperwork)”.

The problem, however, goes beyond the sheer weight of bureaucracy. It is the nature of regulation that has generated problems. Top-down sector-level regulation has tended to induce a risk-averse culture. As the unit of resource declined and the need for funds became more acute, universities were too prone to accept regulation, implement it and, indeed, gold-plate it. Much of the regulation itself led to a tick-box approach rather than reflection and a willingness to be innovative. I am pleased to note acceptance of the fact that there is a case for the rationalisation of regulation—I very much welcome the QAA’s approach, very different from that which existed when I initiated a debate on this subject in 2001—but we still have some way to go to achieve a light, as opposed to a lighter, touch.

The second theme is related. It concerns the burden deriving from pursuing goals that may not be compatible. Universities are expected to achieve goals, each of which may be eminently desirable, but which in combination create tensions and may render one or more of them unachievable.

Let me illustrate that by identifying three goals. First, the Government wish to achieve an increase in the undergraduate population. Increasing numbers produce not only a new body of students but many with different needs from those who previously went into higher education. That will be even more so in the future as a consequence of demographic change. Secondly, there is pressure to maintain high standards, not least in the awarding of degrees. I disagree with the chief executive of the QAA in his comments on degree classifications. I believe that the existing grading system means something and remains appropriate. The issue is not categories but quality. In my own institution, and certainly in my own department, we have strict mechanisms in place to ensure quality. Thirdly, there is pressure to achieve high retention rates. There is an obvious cost, both to the student and the public purse, if students fail to complete their programme of study.

There is a valid case for each of these goals. However, with limited resources, the danger is that in seeking to achieve two of the three—and take any combination of two—you jeopardise achieving the third. My concern is that this is not recognised sufficiently.

I bring my two themes together. Because we have different regulators, each concerned with a different aspect of what higher education delivers, we fail to look at higher education holistically. There are not just heavy pressures but, at times, conflicting pressures. I believe that there needs to be a greater recognition of that fact and, basically, less of a tendency to say to academics “do this, do that” and more of a willingness to say “well done”. We are among the best in the world in higher education not because we outspend our competitors but rather because of the sheer commitment of those in higher education. Given the limited resources, higher education in this country has achieved a high level of excellence, and that is a cause for celebration. It may achieve even more if left alone more often to get on with the job.

My Lords, I thank my noble friend Lord Luce for giving us the opportunity to have this debate, and I want to place my remarks in the broadly humanist frame of reference that he established in his fine opening speech. Like the noble Lord, Lord Norton, I am a jobbing academic. Both the noble Lord and I still find ourselves at the chalk face, and I have been so since 1975. First, I want to say a little about what is positive in our current educational system before looking to the future, as my noble friend Lord Luce advised us to do.

On the basis of my variegated experience—which has included teaching at polytechnics and being a Fellow of a Cambridge college and now a professor in a Russell Group university, and having taught also at an Ivy League school, which has given me some experience of how the American system works—I believe that we still have in our country a very traditional and almost romantic conception of the unity of teaching and research. That may be carried too far in certain respects. My noble friend Lord Krebs referred to the fact that an amazing number of our institutions give out PhDs. But at the same time there is something very positive about this, and it helps to explain the vitality of our teaching. At a time when people are talking about grade inflation and poor teaching, the low dropout rate in our universities is something to be proud of.

Let us look to the future. Professor Geoffrey Crossick, chairman of the longer-term strategy group of the board of Universities UK, is predicting a much bumpier ride for higher education. There are demographic problems which suggest a possible financial crisis, certainly financial difficulties, and little can be done about that. But we can talk about one fundamental thing that Professor Crossick mentioned in his recent remarks: the research assessment exercise and the tremendous importance of getting right whatever now replaces it. The last operation is now under way and he has stressed that it is important to ensure that whatever is put in its place retains the research culture and, in particular, does not lean towards an overly instrumental attitude to scientific research. We should still maintain proper support for curiosity-driven scientific research. At this point, British scientists still win about 10 per cent of international prizes, well beyond what their numbers would suggest. We cannot be sure that this will be so 10 or 15 years from now, despite the amazing scientific tradition in this country. We must do everything possible to ensure that it will be so. The new RAE exercise or its replacement must be an important part of that. It is an absolutely crucial matter.

When I was teaching in America the New York Times issued the results of peer reviews. This was before we had our RAE results. It was remarkable to see how even at an Ivy League school there would be alarm if a department which was considered good had not done so well. It kept everybody on their toes. People moved up and down the list. The RAE has done that for this country, and it is tremendously liberating for many scholars working in unfashionable departments. It is an enormously valuable institution. Mistakes have been made and it is an incredibly difficult thing to do well. I fully acknowledge that there are problems with it, but we must make sure that what replaces it does at least as good a job.

Finally, John Denham, the Secretary of State for Innovation, Universities and Skills, addressed the Higher Education Funding Council for England on 8 April on the subject of widening participation in higher education. This is an important theme. All noble Lords share in the disappointment at the fact that the figures for social disadvantage in this country have remained stubbornly unchanged for many decades, and I understand the Government’s concern. However, at no point in his speech did the Minister refer to the importance of excellence in higher education. While we have entirely justified concerns about access and widening participation, we must remain committed to excellence, otherwise the much vaunted global competitiveness of the UK system will be lost.

My Lords, I am not quite a jobbing academic, but I am the third academic to speak in this debate—in which there have been far too many chiefs and not enough Indians, if I may say so. Give or take a few days, this is the 17th anniversary of my maiden speech in this House, in a debate on the future of manufacturing. I pointed out then that there was no future in manufacturing in the old-fashioned manner, antagonising Members on my own Front Bench right from the beginning. I said that we would have to move on to R&D-intensive, high-value-added industry, and for that the country had to have much more education than was being provided at the time. I am glad that we have proceeded in that direction, but I am still not quite satisfied.

One of the major problems in British society is that we mistake uniformity for equality. We impose uniformity on a system that for all sorts of reasons should actually have multiple rankings. Because we have uniformity, we waste resources on people who should not be getting them. I do not mind saying that because I come from the London School of Economics. We are a low-endowment university and we live by our wits. I very much welcome the revolution of income-contingent fees for higher education, which we pioneered at the LSE. Unfortunately, not enough has been done in that respect. There is a lot of misinformation about student debt, because people do not realise that the full debt on an income-contingent loan does not have to be repaid, only a proportion of salary above a certain minimum. So there is no mortgage fear in this respect. It is a strange country where people worry more about getting mortgages for houses at non-inflated prices while resisting borrowing for education, an asset which earns much more income than would any house.

I would like to see the full fee charged. However, different universities should be allowed to charge different fees because their costs are different. There should be no government subsidy for teaching. The Government should deal with all such resources through bursaries. No university should get any subsidy for teaching; they should meet teaching costs out of their own revenues. This would encourage much more concentration on where the comparative advantage lies. As the noble Lord, Lord Krebs, said: why should we have so many universities giving PhDs? Why do we pretend that PhDs from different universities are of the same quality? I have been a teacher long enough to know that that must be a fallacy.

The California system, to which many noble Lords have referred, is a great example of how you can achieve diversity and equity while charging fees but not imposing uniformity. It is because we impose uniformity that we have the problem of, for example, access. How many people are going to Oxbridge? Who cares? What matters is that people get higher education, whether at Oxbridge, Manchester, Warwick or wherever. Many people should not go to Oxbridge; perhaps it is not suitable for them. We should concentrate on a variety of junior colleges with one-year, two-year or three-year degrees. That will spread higher education and let people have higher education at the pace that suits them. We should not insist on completion. Let people drop out and come back. Let us have a credit transfer system so that universities do not capture students and treat them like slaves until they get a degree. The attitude seems to be that they are not allowed to go away and, if they do, the little education that they have had will be of no value. I have probably spoken quite enough. I would like all teaching subsidy to be abolished and all research money to be allocated solely by the RAE.

My Lords, I, too, am grateful to the noble Lord, Lord Luce. I shall confine my remarks to my particular experience, with four years as the independent adjudicator for higher education. I also have an interest as former chair of admissions at Oxford, and head of St Anne’s at Oxford. In my capacity as adjudicator, I dealt with student complaints from 147 universities. I issued 1,400 decisions, with a disproportionate number of complaints from overseas and postgraduate students. From that perspective, I saw what could, and did, go wrong—but also what went right.

I am filled with admiration for the wonderful job that our universities do, on a shoestring, for many times the number of students who attended when your Lordships were young. The expanded universities are now, however, a microcosm of the world outside, with all the diversity and problems to be found in the general population—disabilities, poverty, child care, lack of support and unfamiliarity with the system. I shall refer to two of the problems that I dealt with.

Among overseas students, whom we value and on whom there is such heavy reliance, the Chinese educational culture is so different that we are ignoring, in our ignorance, the transition that we expect Chinese students to make when they are admitted here. Over there, there is a hierarchy with a veneration of professors, but no academic competition and no ownership as such of the wording of texts. Some of the books used are many hundreds of years old. They rely on the lecturer to help them, out of class. Yet when they come here, we are critical and independent, we have class-based teacher-student interaction and we regard plagiarism with horror, whereas they can scarcely understand or fathom what concerns us. Will the Chinese students adapt to our system or do we have to adapt to theirs? There is much to be said for the halfway house, for UK campuses to be found in China and the mentoring system. One dissatisfied Chinese student wrote to me, saying, “As God is my witness, I thought British education was the best in the world”: but in his case, it had not been.

The other problem I will refer to is the extremism and racial tension of society, which has reached campus and, indeed, may even start there. Some universities are failing to keep the peace on campus, even though that is the place for dialogue. The universities, and the University and College Union, have failed to get to grips with the guidance on good race relations and the avoidance of extremism issued by the DIUS and UUK. The UCU is an unprofessional union, and universities would do well to cease to recognise it and to deal with the alternatives.

My own university, Oxford, tops the league tables. I am, therefore, distressed to have to note that in dealing with racism it has, like some other universities, apparently ignored the code of practice on freedom of speech and its obligations under the Race Relations (Amendment) Act, the Protection from Harassment Act, the Racial and Religious Hatred Act and other acts controlling freedom of speech. When I complained, as others did, about the trouble caused by the presence of David Irving and the BNP representative at its union, the university spokesman replied that he was not in a position to know whether the university had complied with the law. It seems that it did not take the advice that it should have on the race relations obligations, and seemed unaware of the limits on freedom of speech, whether you like them or not, imposed by law. Along with other universities, it needs to study the law and its obligations, update the code of practice on freedom of speech and take action to promote good relations. The tools are there; the department should consolidate the guidance that applies to campus racism. Students should be told to whom to complain and be helped to do so. Before we go forward, we must take care of the problems of the students we have.

I will conclude by paying my respect to teaching, above all, but also to research. I have frequently been stopped at railway stations and airports by former students who I barely recognise. They say, “You taught me”, and they are grateful. That makes it all worth while, but no one has ever stopped me to say, “Your research made all the difference”.

My Lords, I add my thanks to the noble Lord, Lord Luce, for raising this debate, which has turned out to be an important one. A declaration of my personal interests will reveal the area that I want to cover. For many years, I have been a medical academic but also an NHS manager. Recently, I chaired a London strategic health authority, which is responsible for commissioning education and training places from higher and further education for the NHS. I now chair the council of St George’s, University of London—a health sciences university which, by the way, has the highest retention rate of any UK university.

I have therefore looked at relations between the NHS and higher education from all sides now, as the Joni Mitchell song says, and I am afraid that I have looked:

“From up and down, and still somehow

It’s life’s illusions I recall”.

When on earth will the new department, the DIUS, agree a joint, long-term strategy with the Department of Health for educating the health and social care workforce that makes sense for both the NHS and for higher education? For many universities, which massively expanded their capacity to meet the voracious demand for nurses, allied health professionals and doctors in the past decade, the agreeable cash cow of the NHS has quite suddenly turned into our key strategic risk. Such is the volatility of NHS funding that it is not surprising that some universities are exiting from the fray altogether—City University, for example, which provided excellent quality university teaching for nursing education, is one that springs to mind.

Important though the Darzi review is, strategic health authorities seem to have turned their attention away from education altogether since the recent reorganisation. Once more, we are back into the bust bit of the boom-and-bust cycle, which is the result of poor workforce planning on the part of the NHS, short-term vision and failure to communicate the need for changing skills; and, on the university side, a failure to address responsively the need for research excellence to be relevant to the needs of the NHS and for training to be tailored to the changing face of health and disease.

I shall not touch on the recent reorganisation of postgraduate medical education, but that in itself poses significant challenges for the medical school in addressing the changing face of specialties and preparing undergraduates for the different kinds of specialties and the different needs of healthcare. There is no joint strategy between the two departments and agreed ways forward.

The opportunities are vast for widening participation. There are 1.3 million jobs in the NHS and 900,000 in social care services, of which 600,000 are in the independent sector. This workforce will continue to grow inexorably as the numbers of the very aged grow, and as those surviving with physical and mental disabilities demand and rightly expect the same life choices as the rest of us. We must have a joint, unified workforce with a common understanding of the basic principles of health and social care sciences. In spite of numerous initiatives such as foundation degrees, which have proved exceedingly difficult in the area of healthcare, the creation of new roles, joint NVQs at the bottom end of the life-skills training ladder, assistant practitioners and the like, we have somehow failed to address this serious problem.

It is usually left to the initiatives of individual higher education institutes and interested professionals acting on their own behalf to create the cutting edge examples that get the right kind of children going through the diverse biological education and health science enthusiasms that we want them to adopt. It is this approach that will lead to a better workforce. At the moment, we are nowhere near there and a joint strategy has to be worked on very soon.

My Lords, I congratulate my noble friend Lord Luce on the debate. I declare as an interest my role in Cardiff University.

Wales is known to punch above its weight in higher education but the sector faces real financial threats and devolution has brought its challenges. The turnover of universities and colleges in Wales exceeds £850 million a year and represents value for money. Indeed, the Welsh economy receives an output of more than £4.5 million for every £1 million invested in the higher education sector by the National Assembly. But there are tensions between time in teaching, research and the entrepreneurial translation of innovation into industry for the emerging knowledge economy. To benefit fully from the emerging knowledge economy, further investment in higher education and learning will prove essential.

Given the graduate premium, university education must be widely accessible, regardless of social background or financial considerations. The Welsh higher education sector consistently outperforms England in widening participation. Indeed, yesterday’s Audit Commission figures for England show marked under representation in higher education of those from poor social backgrounds. Cardiff University recently became the first in Wales to receive the Frank Buttle Trust quality mark for its support for looked-after children and people leaving care so that they can progress into higher education. It is a myth that research-led excellence institutions do not contribute fully to the widening access agenda.

But, as the noble Baroness, Lady Morris of Yardley, said, widening access in recruitment must be linked to student retention. Their learning experience must be of a high standard and relevant to their needs, and they need inspiring and supportive role models to stay the course. Last year in Cardiff we awarded more than £1 million in means-tested grants from financial contingency funds to students from low-income backgrounds who were at the greatest risk of leaving university because of financial problems.

Support for students with disabilities and long-term medical conditions is also essential, but it has a cost. The Disability and Dyslexia Service in Cardiff currently works with more than 1,800 students, and a specialist mental health adviser helps students with long-term conditions to access support to remain on their course. Poor student retention represents a financial and human waste and it is essential that, once in, students are helped to develop.

The threat of inadequate investment is of grave concern to the Welsh higher education institutes. Public investment in higher education is now lower in Wales than in either England or Scotland and, therefore, the ability of the Welsh higher education sector to punch above its weight may not be sustainable without further investment. How are the Government planning to ensure that devolution does not widen inequity in society by removing opportunities across the UK?

Do the Government recognise that British universities overall face fierce international competition for students, particularly from other English language countries, a point outlined by my noble friend Lady Valentine? These students have loyalty in the long term that affects their investment in Britain in the future when they become economically active. Will the Minister comment on whether the overall funding of Commonwealth scholarships will not be cut but will be refocused to less developed countries? These respected schemes have attracted students to highly skilled areas of study and enhanced the infrastructure in those developing countries with which we have historic links. Does the Minister recognise that outreach distance learning programmes and university partnerships with developing higher education institutions abroad provide a cost-effective way of educating healthcare workers and others in their own countries? These schemes encourage such people to stay there to develop services rather than risking a brain drain from the developing world, whose students come over here to study and then decide to stay.

I ask the Minister to address both these issues. I fear she may say that devolution is outwith her remit but, for the social fabric of our society, it is important that we do not allow devolution to create gross inequity.

My Lords, like others, I warmly thank the noble Lord, Lord Luce, for introducing the debate so well today. I declare an interest as a member of court at the LSE and Lancaster and Newcastle Universities. I am also involved professionally in De Montfort University.

The immense challenges of the 21st century mean that we desperately need a high-quality, comprehensive matrix of higher education, with different institutions playing different roles. The developing diversity is already exciting. Universities such as De Montfort or TVU are developing productive relationships with business and local employers. They are also building strong links with key professions such as nursing, pharmacy, social, community and youth work, the police and probation services, and they often provide a success story of effective multiculturalism. Others such as Manchester, Birmingham and Liverpool are well positioned to accelerate the trend, specifically and firmly embraced by Newcastle, to regenerate the concept of the civic university, rooted in the community but dedicated to world-class teaching and research and at the centre of the knowledge economy.

For the UK to flourish, we can leave none of our human potential untapped, but, as a civilised society, we surely cannot still accept millions of people going to their grave never having begun to recognise their potential, let alone fulfil it. Further education often gives the lead in this. Most sectors make a growing contribution to widening access and to enabling the United Kingdom to be a convincing player in globalised communities, not least by their work abroad and by their overseas students here. Both of these contributions are essential in their own right, but they are also vital to the quality of learning and research within any community of scholars.

I fervently hope that we do not pursue the misguided notion of having totally separate teaching and research-based universities. The quality of each discipline is enhanced by interplay with the other, whatever form the research takes. In our evaluation of research, we must look to its special value when based on practical engagement in the dynamics of society. Of course we must nurture our older universities with their pace-setting role of established, high-quality research and teaching, and we must never lose our commitment to the imperative for ensuring the strength of original, free-standing research. That research is indispensable to the future of humanity. But I can think of no better shortcut to falling standards and lowered morale than fostering the concept of a teaching institution with no involvement in research, however it is organised.

Amid the quantitative preoccupations of modern society, the imperative of values, reflection and intellectual originality becomes more significant than ever. Will we suffocate ourselves as a species in a surfeit of information because we have neglected the vital disciplines of properly digesting and analysing that information? Cleverness must never be allowed to squeeze out wisdom. Good management is important, but good management for what? Who is on the bridge and what is the destination? The classics, arts, humanities, ethics and philosophy are as critical as ever to the creative quality of life, but they are also critical to the very survival of the species.

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 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.

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 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, The Race 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.

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.

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 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 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 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.

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 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 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.

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—

Skills.

Skills, that is right. We will get there.

My right honourable friend John Deham launched a wide-ranging debate on the future of higher education. He signalled a desire to develop a 10 to 15-year framework for the future of higher education, which is why today’s debate has been so helpful. The higher education sector is changing rapidly in an international context. We know that other countries are developing fast. For example, the number of Chinese graduates tripled between 2001 and 2006 to more than 3.5 million per year. We have a world-class higher education system, but we cannot rest on our laurels. By launching the 10 to 15 year framework for the future of higher education, my right honourable friend opened up a series of discussions which will allow the Government to gather the opinions of those who work and study in higher education. The result of this work will be a dynamic and wide-ranging document that sets out the framework within which the higher education sector will develop and thrive during the next 10 to 15 years. This framework will help to ensure that higher education meets the growing and challenging demands of the 21st century; it will provide a reference point for future policy-making decisions; and it will enable progress to be measured objectively and transparently. It is the Government’s intention to set this framework before, importantly, reviewing undergraduate variable fees in 2009.

The way in which we are approaching this debate has been welcomed, as I am sure all noble Lords have seen. We have asked a number of distinguished contributors to provide advice to us on a series of strategic questions about the future of higher education. They are questions about the international role of our universities, about the consequences of demographic changes during the next decade and beyond—highlighted today by my noble friend Lady Morris and by the noble Lord, Lord Dearing—and about teaching and the experience that students have in higher education. As the noble Lord, Lord Ramsbotham, reminded us, all students—those in custody as well as those in higher education institutions—are important. Those questions are also about part-time provision, which has been highlighted by many noble Lords today. As the noble Lord, Lord Luce, said, they are a very important group of students in university. They are questions about how universities use intellectual property and the income from research, and about careers in research.

My right honourable friend has asked distinguished colleagues to look at how academics can contribute more effectively to public policy-making, on which I think noble Lords will have views. As the noble Lord, Lord Rix, suggested, they will look at how we understand the performance of our universities as the higher education sector both in this country and abroad becomes more diverse and the environment in which it operates becomes increasingly challenging. They will look, too, at widening access to higher education through more transparent admissions processes, through improved partnership with, and recruitment from, further education colleges, and at making scientific, engineering and maths degrees a realistic goal for the most talented of our young people, whatever their background.

In his speech, my right honourable friend used a phrase that bears repeating. He said that in producing our framework, we would not only look at what government should do but also set out what universities “should aspire to achieve”. We have respect for the autonomy of the university system in this country, which is an important point made by noble Lords today, first of all by the noble Lord, Lord Luce.

However, to talk only of autonomy is not enough. As the noble Lord, Lord Norton, suggested, we need to be clear about our goals. We need a shared vision of what it will mean to be world class in higher education as the world changes around us with bewildering speed. The Government’s challenge is to set the right policy framework with the right incentives to achieve a world-class system overall. The Government have earned the credibility to lead this debate, but in partnership with an autonomous sector. Our track record in sustaining investment and facing up to unpopular choices means that we are a partner with which universities can work with confidence.

We are determined not to allow the analysis that we have rightly asked for in this debate to lead to paralysis. We are still determined to go forward and continue making decisions in the mean time. A recent example was the new university challenge, which was highlighted by my noble friend Lady Morris. It will enable 20 towns and cities to develop university centres, bringing higher education closer to those with the potential to benefit from it.

I shall try to respond to the many points made in the debate. If I do not do so adequately here, I will endeavour to write to noble Lords. The noble Lord, Lord Luce, the noble Baroness, Lady Sharp, and others spoke about the importance of part-time student support. This Government were the first to make financial support available to part-time students. We see their role as being increasingly important in higher education, and we know that, as the student body becomes more diverse in the future, it is a challenge to which we must respond.

Many Peers highlighted concerns about our forthcoming fees review. My noble friend Lord Desai, in celebrating the 17th anniversary of his maiden speech, made a bold proposal on that question. However, as we have said previously, there will be an independent review of the first three years of the new fee arrangements. It will be wide ranging. The draft terms of reference that we published in January 2004 said that it would cover not only participation and retention rates but issues such as the impact on teaching, students’ choice of subjects and graduate destinations.

The noble Lord, Lord Dearing, spoke about many things with, as ever, great eloquence, but touched on the importance of meeting the challenge on skills. We know that the proportion of working-age adults holding qualifications at level 4 or above is increasing, from 25 per cent in 2001 to 31 per cent in 2007. We are not complacent: we believe that our 40 per cent ambition is achievable. However, many countries are already exceeding 40 per cent. We know that we have the opportunity, because 6 million adults hold only level 3 qualifications. We want to see them stretched and able to achieve their level 4. There is an important skills debate to be had, and universities have an enormous amount to contribute.

The noble Lords, Lord Luce, Lord Broers and Lord Patten, and my noble friend Lady Warwick and many others mentioned the importance of funding, its volume and its diversity. By 2011, we will have increased funding for universities by 30 per cent in real terms since 1997. Funding per student will stay constant in real terms at the same time as we introduce fees that bring in an extra £1.3 billion annually to universities. My noble friend Lady Warwick would, I think, be surprised if I went further and made commitments beyond this CSR period, but I heard what she said.

We have also committed to diversity of funding and encouraged universities to develop their research partnerships. We have asked students to share the costs of higher education and, as some noble Lords mentioned, we have introduced our matched-funding scheme to support voluntary giving, which will use £200 million of public funds to lever in £400 million in donations. That is very important. As the noble Baroness, Lady Rawlings, said, we should be proud of the increasing entrepreneurial success of the university sector in this country. I agree with her on that.

The noble Baroness, Lady Morris, the noble Lord, Lord Butler, the noble Baroness, Lady Sharp, the noble Baroness, Lady Walmsley, and the noble Lord, Lord Krebs, talked about widening participation. I agree with the noble Baroness, Lady Sharp: we should not confuse widening participation with fair access. There are debates to be had on both. For the record, university participation among the four lowest socio-economic groups rose from 17.5 per cent in 2002 to 19 per cent in 2006. I congratulate all those higher education institutions who have worked hard, through their outreach work and by working with the “Aim Higher” scheme, to increase success in widening participation. I say to the noble Baroness, Lady Walmsley, that we are working very hard to create an integrated information and application process. The noble Baroness is right: all the strands of information that help students to make choices about student finance and university courses should be made far more streamlined. We will be launching an integrated system in September, through Student Finance England.

The interesting speech of the noble Lord, Lord Krebs, gave Ministers in this Government the opportunity to congratulate the University of Oxford on its outreach work and recruiting more students from state schools. While the noble Lord may talk about pointing guns, I talk about pointing funding. We point that funding at many targets, including schools, further education colleges and such initiatives as “Aim Higher”. The noble Lord, Lord Butler, said clearly how important the role of schools is in widening participation. I agree with him.

The noble Lord, Lord Janner, raised an important point about recognising the devastating effect that anti-Semitism and other hate crimes can have on those university students who experience them. My department takes this very seriously and I hope it will be able to work positively with the sector and all those involved in the All-Party Group on Anti-Semitism. The noble Baroness, Lady Deech, talked about extremism in higher education and the need to tackle it more widely. I congratulate my honourable friend Bill Rammell, who is leading a debate in higher education at the moment, on the role of academic freedom in combating extremism. The right to speak out, espousing views that are sometimes extreme, is very much a core value of this country, and something that we would like to ensure that all those involved in higher education can be proud of. The noble Baroness highlighted that the DIUS has produced guidance for universities on how to promote and reinforce shared values, support mainstream voices who want to speak out, break down segregation among different communities, and ensure that every student feels safe on campus. These guidelines have been widely circulated. They include practical information about booking rooms and managing external speakers. I hope they are helpful in providing practical support to those working in the sector.

The right reverend Prelate the Bishop of Chester, the noble Lords, Lord Butler and Lord Bew, talked about research. Of course, research is an enormously important part of higher education. By 2011 government funding for the UK research base will have risen to around £4 billion, from £1.3 billion in 1997. I ask the noble Baroness, Lady Verma, whether her party would be prepared to show a similar commitment to funding the science base in the UK. I would be tremendously supportive of that commitment if it could be made. We are committed to ensuring that the UK maintains its reputation for world-class research. The new Research Excellence Framework will recognise and support excellent research of all kinds in all disciplines, wherever that research is being carried out. That means across the sector. The new metrics-based assessment system will enable academics to spend more time on high-quality research. It is being tested and piloted; I would not call that a delay. I would call it an important piece of work that has been supported by the sector and by research. The new system will be in place, when it has been tried and tested, by 2014.

The noble Lords, Lord Smith, Lord Broers and Lord Lewis, and others talked specifically about science. Science funding has increased with regard to the research base. It has increased significantly, doubling in real terms under this Government. It must continue to increase, and will do so over the next three years. We are very clear about how the Research Funding Council’s independence will work. It is important that the Government and research councils have distinct roles. We will see funding in three streams, looking at sustaining world-class research within the UK; harnessing research to tackle such key challenges as climate change; and increasing the impact on the economy through collaboration between research and business. On another note, noble Lords should be reassured that we have seen significant increases in the numbers of people applying to study maths, science and engineering. I remember, in the last debate on higher education that I took part in as a Back-Bencher, talking about the need to see more people coming forward to study science at university. I am delighted that it is starting to happen.

The noble Baroness, Lady Rawlings, and the noble Lord, Lord Norton, talked about the need to tackle regulation within higher education. I take that very seriously. We are making progress, but we are not complacent; a lot more needs to be done. My noble friend Lady Warwick and the noble Baroness, Lady Finlay, talked about the importance of international scholarships. I want to be clear that DfID is increasing its funding of scholarship programmes. I know that there are concerns, but I say again that the Government are committed to increasing funding for overseas scholarships.

The noble Baroness, Lady Murphy, raised her concerns about the strategy for education of the health and social care workforce. The DIUS and the DoH work together on many matters, not least the questions raised by the noble Baroness. The Darzi review will be out soon. There is a great deal of contact between the two departments. I hope that the higher education sector can respond to the NHS as an extremely important future employer. Through the review, we should make sure that the environment exists to make that possible.

The noble Baroness, Lady Finlay, talked about devolution, which I care about very much. I would be very concerned if we saw devolution adding to inequality. We do not necessarily have to be the same in Wales and England, but we have to see opportunities for all potential graduates and postgraduates across the UK. My right honourable friend John Denham will, in his review, be looking at research in particular across the UK. It is also an important issue for Wales.

This has been an important debate. I will make sure that all noble Lords’ comments are fed back to the department, and are heard and looked at carefully. I close by thanking the noble Lord, Lord Luce, again for securing this important debate.

My Lords, it is my pleasure to thank all noble Lords for the quality of their speeches and the Minister for her extensive reply. A strength of this Chamber is that it can be reflective and think long term. This was my purpose in asking for this debate on higher education.

So many big guns from the field of higher education have contributed that it would be invidious of me to pick out any one speaker, save to say that the range of knowledge, experience and wisdom that we have heard today was self-evident to everybody. Despite the tight discipline that had to be shown as regards the length of our speeches, noble Lords made a wide range of significant and important points. Notwithstanding the Minister’s difficulty recalling the title of the Secretary of State, I very much hope that she and her colleagues will think carefully about the issues that we raised. I cannot resist asking what other second Chamber in the world today would produce the range of wisdom and experience on this subject or any other that we have heard today. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.