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Higher Education: Reform

Volume 740: debated on Monday 12 November 2012

Question for Short Debate

Asked By

To ask Her Majesty’s Government what is their assessment of the impact of recent reforms of the higher education system on university education and research in the arts, humanities and fundamental science.

My Lords, I sought this debate tonight to highlight concerns about the future of the arts and humanities and fundamental science in higher education. These subjects play a vital part in our country’s well-being but they are not immediately apparently commercially valuable and that places them more at risk than they should be.

The study of the arts and humanities, and research into them, are crucial to developing the critical thinking and human empathy which nourish democracy and nourish society more widely, and which, incidentally, apart from their intrinsic value, also provide the best possible environment for business and economic prosperity to flourish.

All Governments of recent times have recognised this. However, we are entering a new era of higher education, where students incur unprecedentedly large amounts of debt to pay for their education and where they will be entering an increasingly competitive and insecure jobs market. In this new era I have three concerns about the future of the arts and humanities. First, that students will abandon their studies in favour of subjects that, on graduation, are more likely to get them work and larger salaries. Secondly, that those who do study them will tend to be those who need to worry least about debt and work—in other words, the children of the affluent. It would be a sad day if the study of these vital subjects were to dwindle and become the preserve of the children of the affluent. Such outcomes would not occur independently of government. They would flow directly and significantly, though not exclusively, from policy on higher education. My third concern is that such trends could encourage government further to reduce support in higher education for the arts and humanities.

This is not a prediction. The data for the past decade are too mixed to be able to draw any firm conclusions about trends, and the radical changes introduced by this Government to higher education funding are too recent for any data to be meaningful. However, it is a worry because students, like most of us, respond to economic stimuli, and in this case the justification for studying these subjects is not economic but cultural.

The Minister may say that there is no cause for alarm—Governments tend to say that kind of thing—but she will be aware that such concerns are not confined to this country. Many countries are undergoing much the same pressures as we are, and have much the same concerns about the future of these subjects. Three years ago, for example, in an article for the New York Times, the president of Harvard wrote of her concern that in the US,

“there has been a steep decline in the percentage of students majoring in the liberal arts and sciences, and an accompanying increase in preprofessional undergraduate degrees”.

The distinguished American philosopher Martha Nussbaum wrote, in Not for Profit: Why Democracy Needs the Humanities, which was published in this country earlier this year, of her concerns about education in the United States. She wrote:

“The ability to think and argue for oneself looks to many people like something dispensable if what we want are marketable outputs of a quantifiable nature”.

She worried that,

“the humanities are widely perceived as inessential”.

She concluded her book, which looks at liberal arts education across the globe, by saying that, sadly, in terms of support for the traditional role of humanities, the worst case by far is Britain. Professor Collini of Cambridge University has written of,

“the difficulty, in a consumerist democracy, of justifying the expenditure of public money on open-ended scholarly enquiry”.

For all their merits, markets are imperfect. They should not be the measure of all things. The introduction of market disciplines into higher education should not be allowed to jeopardise the viability and vibrancy of subjects so critical to our national well-being. I should be grateful if the Minister would indicate that, if my concerns turn out to be justified, the Government will not stand by but will intervene to protect the position of the arts and humanities in higher education. There are a range of possible interventions, although at this stage I am not advocating any particular one. I am simply asking the Government whether, in the circumstances that I described, they would be prepared to intervene to preserve the position of the arts and humanities.

I turn now to the question of research into fundamental science. For the past 20 years, successive Governments have tried to develop what this Government have called a “robust methodology” to allocate scientific research funding on the basis of the impact such research makes on what they described as,

“society, public policy, culture, the quality of life and of course the economy”.

This sounds reasonable. Democratically elected Governments need some measure to reassure taxpayers that their money is not being wasted.

It might seem as if such a formulation would protect fundamental science, as impact is to be measured over 10 to 50 years. However, the impact of fundamental science is often hard to measure except with hindsight, and the position of fundamental science is made all the harder when all the noises from politicians from all parties are, perhaps understandably, about the need to promote economic growth. We hear very little about the cultural merit of advancing knowledge for its own sake, or of the value of transmitting learning and knowledge to future generations. This is dangerously short-sighted, not simply because we neglect cultural enrichment at our peril but because it is to misunderstand the complex relationship between scientific research and economic development and prosperity.

Hendrik Casimir, a theoretical physicist who once worked with Niels Bohr and became research director of Philips—so had a foot in each of the two camps of academic life and business—once pointed out the role of fundamental science in the development of transistors, basic computer circuits, nuclear power and electronics. What all those had in common, as Sir Christopher Llewellyn Smith, the former director-general of CERN, argued, was that they were all highly profitable and were all unforeseen when the underlying discoveries were made—and in each case, there was a long time lag between the discoveries and their exploitation.

It is simply not possible for politicians and scientific administrators to predict with any certainty what the impact of scientific research will be. What, for example, might have been the impact assessment of Tim Berners-Lee’s original work on the world wide web 20 years ago? It was designed to enable different national proprietary computer systems to communicate with each other at CERN, an organisation dedicated to,

“nuclear research of a pure scientific and fundamental character”.

It would have taken a bold and visionary leader of the sort not usually found in the ranks of politicians and scientific administrators to have predicted the impact of that world wide web just 20 years later.

Intellectual curiosity and exploration, not “impact”, ought to be the yardstick for scientific research, and politicians ought to have the courage to justify that to taxpayers. Apart from all its other merits, history and experience suggests that, in the long term, this is the best way to ensure the economic growth to which the Government attach such priority. If problems develop with the arts and humanities in higher education, and with fundamental science, they may well become evident only when it is too late, when the most brilliant academics and researchers have left for more congenial environments overseas, and when intellectual communities have been gravely damaged.

Research and learning subsist in a fragile ecology which, once harmed, can take a long, hard time to repair and rebuild. The science base in this country received a tremendous one-off boost from brilliant refugees from Nazi tyranny—a boost that lasted generations as outstanding scientists passed on their learning and wisdom to new generations. Ill judged public policy could reverse that process, to the benefit of other countries.

The House of Lords Science and Technology Committee report, Setting Priorities for Publicly Funded Research, stated that it understood the wish of the Higher Education Funding Council to take account of the wider impact of research, but that it was,

“yet to be convinced that a practicable and fair way of doing so has been found”.

It suggested that the weighting given to “impact” should be significantly less than the 25% proposed. Since then, I understand that the Government’s response has been to lower the weighting to 20%, but with an expectation that it may rise again in future.

Will the Minister say something more about this tonight? Will she also say whether, in the weighting given to quality of outputs, which accounts for 65% of the total and the criteria for which are “originality, significance and rigour”, there is any overlap between the term “significance” and “impact”?

As the Government review such concerns and develop further their policy on allocating research funding, I hope that they will bear in mind that research in near-to-market fields where it is already apparent that there are commercial opportunities should surely be more appropriately funded for the most part by the private sector and not by the taxpayer.

In conclusion, I hope that the Minister will reassure your Lordships tonight that as the Government develop their approach, their “robust methodology” will be sufficiently ecumenical to place the highest priority on fundamental science and the pursuit of knowledge—a pursuit in which this country has such a glorious history and that should not be abandoned now.

My Lords, I thank the noble Lord, Lord Wills, for bringing this important subject to the attention of your Lordships’ House. I will take the opportunity to make more general comments but my concerns have just as much effect on the arts, humanities and fundamental science.

In July, at the degree congregation of the University of Bolton, where I have the honour and privilege of being chancellor, I said, with confidence, that our university was well placed to meet the considerable challenges faced under the reforms to higher education. October 2011 had witnessed our biggest intake of students, with queues around the building to register. We had one of the healthiest bank balances in our history and had responded to the changes in a positive and innovative way, keeping our fees low to deliver value for the learner and the taxpayer, and restructuring our courses to ensure the best possible experience for our students.

Then came the downturn in demand. Universities like my own are being affected and are going to have to make and take some hard decisions to balance the books. Good people face losing their jobs. Large numbers of our world-leading universities, including Russell Group universities, have not been immune from the reduction of more than 60,000 first-year learners as new fee levels were introduced. At the same time, established universities face new competitive pressures, with commercial and for-profit entrants taking advantage of increased fees and market conditions. No one on this side of the House would ever be against the operation of the free market but there must be a level playing field, with similar freedoms or restrictions placed on all providers in the marketplace. For example, the student number control experienced by publicly funded universities is not being applied to the for-profit sector.

I have two questions I wish to raise on these issues but will first briefly mention student visas. A large proportion of Bolton’s overseas students come from India, and India seems to have decided that the UK is no longer welcoming to its students. We must never take any risks with our home security and have to ensure that students are genuinely coming here to study. However, international students establish strong and lasting links with the UK, and unless we make our processes more user-friendly and send a message to the world that the UK values overseas students, our universities and our country will be the poorer, both culturally and economically.

How do the new funding regime and the significant downturn in the take-up of places at universities in England affect the national interest in our increasingly knowledge-based economy? How long can we afford to have reduced participation in higher education and continue to compete with the best in the world? What mechanism do the Government propose to ensure fair competition between maintained and for-profit providers?

British universities are the envy of the world. They are huge contributors to the well-being of this country and to the Treasury’s coffers, and we must do all we can to ensure their continued health and success.

My Lords, I, too, congratulate the noble Lord, Lord Wills, on launching a very timely debate given today’s announcement by the Council for the Defence of British Universities. Its core principle is to emphasise the public gain from advancing university education. I notice that in an article in the latest Times Higher Education, Sir Keith Thomas states:

“A university education should assist students to develop their intellectual and critical capacities to the full—that is a good in itself, but it will also give them the transferable skills that will be essential in an uncertain future. Scientists and scholars should be permitted to pursue knowledge and understanding of the physical and human world in which we live and to do so for their own sake, regardless of commercial value”.

This echoes the sentiments that the noble Lord, Lord Wills, expressed and takes me back to a report on higher education that I found incredibly valuable when it was published and continue to do so today. It was that of Lord Dearing. In his report, he did his best to define what he and his committee considered to be the four main purposes of higher education. Let me quote them because they link up well this same theme. They are,

“to inspire and enable individuals to develop their capabilities to the highest potential levels throughout life, so that they grow intellectually, are well-equipped for work, can contribute effectively to society and achieve personal fulfilment; to increase knowledge and understanding for their own sake and to foster their application to the benefit of the economy and society; to serve the needs of an adaptable, sustainable, knowledge-based economy at local, regional and national levels; to play a major role in shaping a democratic, civilised, inclusive society”.

That sums up what I would like our university sector to do and I think that this view is shared by a great many people.

One of Lord Dearing’s other principles was that the cost of universities should be shared fairly equally between, first, the individual, who, as he pointed out in his report, benefits in terms of extra earnings; secondly, the Government, because there is public benefit; and, thirdly, employers, because there is a definite benefit to them. His suggestion was that the individual should contribute approximately 25% of the cost. With the introduction of the tuition fees that he proposed in 2001-02, the student contribution rose to just about 20%, with the top-up fees in 2006 taking that increase to 33%—so the individual has been contributing 33% of the cost of teaching and learning for higher education. The current increase, the trebling of tuition fees to £9,000, has taken the individual’s contribution to more than 50%. OECD statistics highlight the fact that the UK even before this increase was spending a lower proportion of its GDP on higher education than most of its competitors, approximately 0.6%. When you compare this with countries that we often seek to emulate such as South Korea, Singapore, the USA and Finland, you see that all of them are spending rather more than 1.5%—in other words, almost three times what we are spending. These figures were taken before the current increase, which will take us even higher. Are we cutting it too fine and putting too much emphasis and burden on the individual student?

I should like to raise two further points about the impact of fees. The first is in relation to mature students, where I worry very much that the drop in numbers has been disproportionate, and the second is in relation to postgraduate students, where, again, the issues raised by the increase in fees are substantial.

My Lords, I shall go back even further than the noble Baroness, Lady Sharp, to the Robbins report, which 50 years offered an articulate vision appropriate to the 1960s. Today, higher education has hugely expanded, but some things have not changed, and we should still temper the managerial and instrumental view of higher education with an appreciation of its intrinsic value. It is still a public good as well as a private benefit for young people to receive a rigorous education.

Our system should have become more diverse as it expanded, but that has not happened. Nearly all universities focus on three or four-year degrees; nearly all offer at least some postgraduate degrees and aspire to rise in a single league table. A latter-day Robbins would surely have set out a blueprint for a more diverse “ecology” of institutions, with more flexibility, more collaboration and a “credit system” that facilitates student transfers between them.

The Government hope that the mantra “the money follows the student” will bring this about. But even if, when the dust settles, the system is more diverse, the transition will have been more painful and wasteful than if it had been planned. And it frankly is not clear that the market-driven choices of financially pressured students will drive up teaching standards and raise levels of rigour and achievement rather than favouring “soft” and cheap options.

Let me mention two trends that a latter-day Robbins might commend. First, the Open University’s well tried model—distance learning supplemented by a network of local tutors and so forth—has vastly more potential in the era of the internet and smartphone than when it was founded. Indeed, because distance learning will erode the benefits of the traditional “mass university”, there will, I think, be a deepening bifurcation between, on the one hand, institutions that really offer personal mentoring and, on the other, the OU model. The serious downside of the current funding system is that the OU charges fees of £5,000. That is inflexible and a major disincentive to the kind of people whose educational horizons the OU has raised during the past four decades.

My second comment concerns graduate-level education. There are immediate concerns, as already mentioned, about whether UK students are being unduly deterred by lack of funding. But there is a structural issue, too. We should welcome the trend to concentrate PhD-level education and encourage alliances and clustering of university departments. In doing this, it is important to reassure academics that this need not entail an equal concentration of research, especially in the humanities. Many who teach in the best American liberal arts colleges are productive researchers and scholars, but if they have graduate students, those students are based in another university.

Students aspiring to a PhD need more than just a good supervisor; they need to be in a graduate school where courses are offered over a wider range. Without this second component, newly minted British PhDs will not have the flexibility and range that is needed for their later careers.

Overall, current disruptive changes could foreclose rather than facilitate the needed restructuring. Once quality falls, it will be nearly impossible to restore, especially because we are networked in a worldwide system where other countries are strengthening their grip. To ensure that our universities continue to be a magnet for talented students and faculty, the Government must at least be mindful of these concerns.

My Lords, I, too, am grateful to the noble Lord, Lord Wills, for initiating this debate and keeping before us the issue of how best to encourage that depth of understanding that is key to the humanities. Many Members of your Lordships’ House will have been involved yesterday in Remembrance Sunday events, which will—or should—have posed the question of how we live peaceably and with dignity in a world of diversity. That needs a deep sense in our society of subjects such as history, philosophy, sociology and indeed theological and religious studies. What will the Government do to encourage studies to maintain and develop that understanding of a world of diversity that has been at the heart of the development of a liberal society?

We cannot simply assume that liberal values will continue to be accepted in our society. Your Lordships have spent the last five hours or so debating ethical issues around sexual abuse, financial integrity and journalistic honesty—all marks of how a liberal society is to live with the illiberal and the selfish. That all needs an understanding of society which is heavily dependent on the culture encouraged in HE. One example: Islamic studies used to be viewed as a strategically important and vulnerable subject. Now that category seems to be reserved for subjects deemed to be economically important. Will the Government renew this category and understanding with a view to including humanities subjects which, as their name suggests, deal with relationships between human beings?

A crucial aim of HE must be to encourage the development of all students as responsible, ethical human beings. There needs to be a stress on values which are not dominated by market forces. The HE sector, including the Church of England cathedral group of universities, has always endeavoured to develop this. Will the Minister affirm that understanding of the development of all students as responsible, ethical human beings? Will she pledge the Government’s support for those aims, for both undergraduate and research programmes?

My Lords, I, too, thank my noble friend for introducing this timely debate. The new and substantial reforms to university funding have had some unpredicted effects on applications and admissions. We do not yet have reliable data on enrolments but we know that application figures, though down by just over 7%, have been less badly affected by higher fees than many predicted. In particular, it is reassuring to note that applications from students from the lowest participation backgrounds have decreased by less than those from students from higher participation groups.

However, within this, I am concerned about the decrease in applications for some languages, arts and design, and social studies courses. Some of these subjects have recorded decreases in applications of between 16% and 20%. We need to pay attention to this but it is also worth taking the long view. Subjects in arts and design have experienced considerable growth over the past few years: a 36% increase between 2006 and 2011. Although that growth has slowed and has been less than that for STEM subjects during the same period, the trend has been positive. Unfortunately, languages have been in longer-term decline. The other worrying feature has been the fall-off in applications from mature students. If this experience is repeated in future years, we may have a serious problem. Encouraging older students into higher education is increasingly important to the economy. A huge amount of progress has been made in the past decade and we cannot afford to see it reversed.

The change in the profile of applicants this year may explain some of the variations in subject choice, so we will need to distinguish between short-term effects—because this is the first year of a new system—and longer-term trends. For instance, there is widespread concern about the combined effects of higher fees at undergraduate level and an inadequate supply of commercial loan funding on the take-up of postgraduate education. There is concern, too, about the way in which government funding and student number control policies, combined with an increasing concentration of research funding, could lead to increased stratification of the university system. I urge the Government to tread cautiously. The past year has created huge challenges for university leaders. Very strong institutions from all parts of the sector have found it extremely difficult to operate in circumstances where several sets of goalposts have shifted simultaneously.

This instability in the English system has added to concerns about simultaneous disruption of international activities. This is one of a number of areas where our universities excel. Their international reach is phenomenal. Much has been said about the economic value of their international activities, but I think that we in this House understand that the internationalisation of universities is as much about the character of their teaching and research, and the quality of the educational experience enjoyed by their students, as it is about their considerable export earnings. The Government have been urged by not one, not two but three separate Select Committees to take students out of net migration targets. When will the Government respond to these calls?

I will make a final point on research funding. What will the Government do to ensure that the European research and innovation budget is protected in the forthcoming EU budget negotiations, especially since EU funding currently constitutes 10% of national research investment? As David Miliband recently put it, we have to get the EU budget,

“out of supporting cows, sheep and goats and into supporting skills, universities, and innovation”.

If the Government do not back our universities, other Governments in other parts of the world will help their own universities fill the very big gap that we will leave.

My Lords, the debate could not be better timed and I congratulate the noble Lord, Lord Wills, on initiating it. The introduction by the coalition of a threefold increase in university tuition fees has led, as other noble Lords said, to a plummeting of applications by part-time students. Yesterday, the Observer reported significant falls in applications among middle-class families, citing the well heeled parliamentary constituencies of Banbury, Tatton and Witney as examples. In a three-page article in the same issue, the Observer analysed the prospects for the survival of the university system as we know it, in view of the exponential explosion in the provision of online distance learning courses. Students will be increasingly attracted by such lower-cost courses. Following the Browne report, the coalition hiked up fees to encourage the privatisation of higher education and make it much more market led, which will continue to have enormous reverberations.

Tomorrow, as has been mentioned, the newly formed Council for the Defence of British Universities holds its inaugural meeting. Like many of your Lordships, I am a founding member and declare my interest. The CDBU has been set up to monitor the effects of coalition policy on the HE sector, many of which seem deleterious. The STEM subjects need to be encouraged and the Government have provided funds for them—but leaving the arts, social sciences, law and particularly the performing and plastic arts to fend for themselves in a world of untrammelled market forces will lead to an imbalance among the academic disciplines that will certainly change the system of higher education. It is these trends that the CDBU will keep under continuous review.

Of course, change is inevitable and diversity is to be welcomed, but it needs to come about within a coherent framework that necessarily involves the Government. On a number of occasions in the House, I have advocated the introduction of a three-tier scheme for higher education along the lines pioneered by Clark Kerr in California. I was very gratified to see that it had been endorsed and elaborated on by the noble lord, Lord Rees of Ludlow. It is gratifying to have such an authoritative recommendation from so eminent a source.

At a time of austerity and scarce resources, it is imperative that this country has a robust system of higher education. Since the Robbins report of 1963, no wide-scale review has been undertaken. A successor to Robbins is long overdue. Leaving the system to market forces will lead to gaps in the range of disciplines in Britain. National criteria need to be devised and deployed of the kind used by the noble Lord, Lord Oxburgh, in his planned reduction of the provision of geology in the 1980s.

Finally, I turn to the possible unintended consequences of the recent Finch report on open access to the results of research and scholarship. The mandatory dissemination of the results of research and scholarship funded by UK taxpayers will of course offer free research and development to overseas competitors.

Secondly, the so-called article processing charge being levied by academic publishers on contributors will seriously handicap younger academics who can ill afford the upfront charges of up to $3,000. Those and other reservations have been raised by learned societies such as the Political Studies Association, of which I declare an interest as a vice-president. Will Her Majesty’s Government address those worrying concerns, which impact particularly on the arts and social sciences?

In winding, I ask: does the coalition propose to appoint a Robbins-type inquiry; will Her Majesty’s Government get a resolution to the contradictory policies of the Department for Business, Industry and Skills and the Home Office over student visas; and will they look carefully at the deleterious effects of the Finch report?

My Lords, reform is a weasel word. It commonly denotes the removal of abuses and malpractices, the enhancement of efficiency, the defeat of vested interests and much else besides. Successive Governments have used the word as an accompaniment of coercive attempts to gain power and to exercise control over organisations or groups of people who serve specialised functions in society and who depend on government funding.

The university sector is faced at present with major reforms that entail an attack on the professional status of academics and a belittlement of their capabilities. Under such specious slogans as “students at the heart of the system” and “putting students in the driving seat”, proposals are being made to accompany a radical change in the way that universities are financed.

Those who will have to pay more for their education are being mollified by the thought that universities will be forced to improve the quality of their provision in accordance with the increased fees. The ideological imperative of the reforms is ostensibly to create a market in higher education in which students as consumers will face universities as producers in a competitive struggle. A concealed objective is that of reinforcing the privileges of a select group of universities, described as the top institutions, which also serve the educational needs of a social elite. Universities of the middle ground will be hollowed out and, at the lower end, entrants will be allowed to participate in the competition.

Successive reforms by Governments have imposed a heavy burden of quality control and performance assessment on university lecturers. The burden has accumulated. Nowadays, vastly inflated parallel organisations exist within universities that instruct lecturers how to conduct their business, that investigate their work via peer appraisals and student assessments and that demand detailed documentation of the taught courses in respect of their objectives, their content and their methods.

One might reasonably expect there to be strong resistance on the part of the majority of the academics to those impositions, as well as a modicum of success in resisting them. However, academics have lost the power to resist and, nowadays, they are outnumbered by administrators. The loss of power has been hastened by the fact that a declining proportion of academic staff is native to the UK. For many years, our universities have failed to generate native academics to succeed those who retire. The new recruits lack the sense of ownership that one would expect of native British academics; and there is an acute sense of impermanency in many departments, where the annual rates of staff turnover can be as high as 30 per cent.

The proposals that have been set forth in the White Paper, Students at the Heart of the System, can only exacerbate the problems that I am describing. It is proposed to enhance students’ experiences by making universities more responsive to their demands and complaints. Student appraisal of individual courses is to play a major role, as is the National Student Survey, which records the overall degree of student satisfaction with the departments in which they have been taught. We are told that there will be a new focus on student charters, student feedback and graduate outcomes. By graduate outcomes is meant the success of graduates in achieving well remunerated employment; and the competitive evaluation of comparable courses will depend crucially on this.

The pursuit of student satisfaction has already led to an inordinate grade inflation in higher education; and this development is subverting the didactic process. An ignorance of the real criteria of excellence is of no benefit to the student.

In the commercially competitive environment that is envisaged by the White Paper, in which university administrators are in control of the academic processes, the opinions and demands of students are liable to dictate what is taught and how it is taught. Indeed, this has already happened and to the severe detriment of quality.

My Lords, I thank the noble Lord, Lord Wills, for raising this crucial debate at this time, and for his insight into the subject.

I declare my interest as the Chancellor of the University of Bedfordshire, to which I shall devote my few minutes. Bedfordshire is a successful modern university where 90% of our students are in work or further study six months after graduation. The university prioritises a first-rate student experience and, despite significant changes to student number control, which have hit many universities, the University of Bedfordshire has achieved its student number control this year.

There is a risk that the increased cost to the individual of undergraduate education will reduce the likelihood of advanced study and research, as graduates move quickly to employment to start repayments to their loans. The number of UK students undertaking research in areas that are not likely to have a direct impact for potential sponsors will therefore reduce further than currently.

The university continues to offer scholarships for postgraduate study and research to offset that impact and to support the development of the next generation of researchers and research-skilled individuals in those areas. Despite the steep gradients in the HE landscape introduced in the recent reforms, the University of Bedfordshire continues in its upward progress in education, research in the arts, humanities and fundamental sciences. Although the winds have been cold and cutting, we have weathered the immediate storms in student recruitment and in reduced funding for research, especially in the arts and humanities.

We are far from complacent, as each new term introduces yet more unforeseen consequences with which we have to deal. The creative industries, which link the arts and the sciences and where the university is recognised as a leader both nationally and internationally, are a major contributor to the UK’s GDP. The university finds itself in a position where the funding for education and research in this area is being trimmed excessively. We fear that if current trends continue, the viability of our portfolio in the creative industries will be under threat. Inevitably, this will lead to the likelihood that the UK will no longer be the global leader in international business. I ask the Minister if that is the Government’s intention.

Even the Russell group has said that the university access plan will fail. Sir Keith, a member of the newly formed council already mentioned, has said that it is right that safeguards be placed on the spending of public money. He continued:

“The degree of audit and accountability now demanded is excessive, inefficient and hugely wasteful of time and resources”.

These demands, he claimed, will grossly distort the very purpose of the university and will undermine the capacity of universities to develop the intellectual and critical capacities of future generations. He begged the Government to sit up and take notice before it is too late. I urge the Government to consider the students of tomorrow.

My Lords, I thank my noble friend Lord Wills for securing this debate and all noble Lords for the excellent contributions they have made to this important topic. I complained a couple of weeks ago that there were too few opportunities to debate HE policy in your Lordships’ House. As welcome as this debate is tonight, it has confirmed my feeling that we need still more opportunities in the continuing absence of the long-promised but never-arriving higher education Bill. I will touch on a few of the many issues raised by others this evening, and look forward to hearing the responses from the Minister.

First, on demand, as mentioned by my noble friend Lady Warwick the overall drop in applications and admissions for undergraduate study this year is about 14%, according to UCAS figures. This is a significant drop in itself and of course in terms of future funding of higher education institutions over the next few years, it will be devastating. In terms of future demand, a recent poll by Ipsos MORI suggests that fear of debt may be deterring up to one-third of 11 to16 year-olds from applying to university in the future. This raises a general concern that students’ decisions to invest in their own future are being affected by increased financial commitments and potential debt-burdens. There are also worrying trends for part-time and mature students. Does the Minister recognise these concerns?

On investment in higher education, as the noble Baroness, Lady Sharp, said, the UK now sits near the bottom of the OECD countries when looking at the amount that the state invests in higher education. Looking at public expenditure on higher education alone, the UK’s investment of 0.56% of GDP is one of the lowest in the OECD. Our universities are experiencing cuts while other nations are investing. The UK spends about $16,333 per student, well below the USA at $29,200, Canada at $20,000, and Switzerland at $21,000. Surely new and more innovative ways of funding university places may be required. The recent review of the noble Lord, Lord Heseltine, recognised this. He called for Government to provide incentives for employers to employ more skilled graduates. Can the Minister tell us what the Government intend to do about this recommendation?

On postgraduate study, the recent report by the Higher Education Commission on postgraduate education has argued that progression to postgraduate study is threatened by rising financial pressures on students, and called for a system of state-backed loans for postgraduate study. These points were also made by Alan Milburn in his recent report on social mobility and access to higher education. Does the Minister recognise these issues, and will she consider implementing changes?

On immigration policy, several noble Lords have mentioned the problems that have been caused, particularly the impression being given that the UK does not welcome overseas students. As we have heard, excellent international students are indispensable for world-class universities and a thriving society, culture and economy. There is fierce global competition for the best academic talent. At the moment, the UK is the second most popular destination in the world for both international students and PhD students, behind only the USA. The noble Lord, Lord Heseltine in his recent growth review also argued for a review of immigration arrangements to provide,

“a welcoming environment for foreign students because this is an important market in which the UK excels”.

What steps will the Government be taking to implement this recommendation?

Finally, I turn to private providers—raised I think by the noble Baroness, Lady Morris. These providers remain remarkably unscathed and unregulated as a result of the failure to include a higher education Bill in the current legislative programme. Is this remedy going to be brought forward? There is really a concern here. At the same time, we gather that the Treasury is proposing that a VAT exemption be granted for some of the services provided by these private providers. Can the Minister explain what justification exists for offering for-profit providers with this additional benefit at taxpayers’ expense?

My Lords, I, too, am grateful to the noble Lord, Lord Wills, for this opportunity to consider the enormous contribution that our higher education sector makes to national life. Our universities are a tremendous national asset, which we need to sustain and to grow. BIS is developing a long-term education export strategy as part of its broader work on an industrial strategy. This will recognise the significance and contribution of the HE sector and be published next year, while 2012 has certainly been a significant year for higher education as the Government’s reforms take effect. These are fundamental reforms designed to achieve a well funded, diverse and responsive sector that values both research and teaching but in which institutions focus on what they do best and are able to attract funding based on excellence within their field.

Inevitably, there is some stress and uncertainty accompanying change on this scale but the higher education system is mature, well managed and financially well prepared to meet the challenges ahead. The sector has an income of more than £22.7 billion per annum and, last week, the Higher Education Funding Council for England published a report on the English sector’s finances, which assessed them as sound with a likely continuation of positive cash in-flows and healthy cash-backed reserves. The OECD has said that our reforms are an exemplary model of how to reform higher education. The research councils continue to invest in the UK’s world-leading research base, which of course includes the arts. Just last week, the Chancellor announced an additional £20 million for synthetic biology.

The new higher education funding regime does not mean that the Government fail to support certain subjects. We are told that the shift from grants to fees and loans somehow penalises the arts and humanities or penalises expensive science courses. In fact, it is a scrupulously neutral policy. Under the arrangements we have put in place it is the source of university funding that will change, not the overall amount. What will dictate whether courses run will be their quality and the efficacy of the institution in making them attractive to students. I well understand that there may be concerns about the fate of particular courses but the noble Lord, Lord Wills, and others can rest assured that Ministers and the funding council will continue to monitor the position and will keep strategically important subjects under review. Arts and humanities can lead to rewarding and fulfilling careers. The British Academy reports that admission figures for 2012 show the humanities holding up, with around half of all applicants. Indeed, Bristol University has announced an expansion in humanities on the back of the reforms.

I listened with interest to what the right reverend Prelate the Bishop of Ripon and Leeds said about diversity and social understanding, and about producing responsible and ethical students. I think we would all support that, but it would be down to the autonomous universities as to how it was implemented. We must remember that the system the Government have introduced is more progressive. The noble Baroness, Lady Howells, expressed concern about access for all students and the noble Lord, Lord Stevenson, expressed concern about adults being put off studying. However, repayments will be made only when graduates can afford to do so and are earning a good salary. We have been clear that university study has intrinsic value, irrespective of any economic or financial potential. We heard powerful inputs from my noble friend Lady Sharp and the noble Lord, Lord Rees, in support of the intrinsic value of universities.

The coalition has protected the budget for science and research. The ring-fenced settlement for 2011-15 extends further than its predecessor as, for the first time, it covers all core publicly funded research activity, including specific support for knowledge exchange. Protecting resource funding inside the ring-fence is a commitment to maintaining activity even in tough times. The research base is among our greatest national assets and vital for our future. The UK relies on a strong base of scientific skills; science and technology underpin much of our economic growth and universities are integral to helping to stimulate growth through dynamic research.

Two weeks ago, seven new university and business research partnerships in sectors including life sciences, energy efficiency and advanced manufacturing were announced by the Minister for Universities and Science. I entirely take the point made by the noble Lord, Lord Wills, that one cannot predict which of these branches of science will result in fruitful outcomes but there has to be funding for blue-skies thinking and research. The new projects double the number of successful projects supported by the UK Research Partnership Investment Fund to 14, covering the whole of the UK and leveraging a total of more than £600 million of private support. Noble Lords expressed interest in having private money coming into university funding. When fully allocated, the scheme will secure more than £1 billion of new support for research from government, industry and charities.

Turning to some specific points that have been raised in the debate, I recognise the concerns of the noble Lord, Lord Wills, about impact. However, we think that there must be some mechanism for assessing impact. For the first time, the RIF for 2014 will include recognition of past impact and explicit assessment of recent impact, but we must get that balance right in measuring the value of universities.

My noble friends Lady Morris and Lord Smith, the noble Baroness, Lady Warwick, and the noble Lord, Lord Stevenson, all expressed concerns about visas and the messages that we are sending to overseas students—that they are not welcome in this country. I assure noble Lords that we are looking closely at simplifying the visa system and trying to ensure that no legitimate students are denied entry and are indeed made most welcome to the country. The difficulty is in trying to deny the false students—those who do not really come here to study—but somehow that message must go out: that the universities in this country are open for business and warmly welcome students from overseas.

My noble friend Lady Morris mentioned her concerns about the University of Bolton in particular. Overall applications for HE were down slightly this autumn, but this is an atypical year. It has been affected by a demographic dip as well as the reforms. It means that some institutions did not have as many students, and therefore for some their income stream was affected. We are encouraged that applications so far for 2013-14 are up. We hope this will be a temporary situation for my noble friend’s university.

My noble friend Lady Sharp mentioned the Dearing report on the four core purposes. Indeed, they are still very valid today, as is so much of Lord Dearing’s thinking. She and my noble friend Lord Smith also referred to the launch of the Council for the Defence of British Universities. We shall be watching with interest the thoughts that come out of that initiative.

The noble Lord, Lord Rees, spoke eloquently about the merits of the US system and the clustering of departments, but I would put the case for the merits of the university system here in the UK. Our institutions are autonomous and are free to determine their own admission arrangements and choose their own mission. There are also exciting times ahead with the expansion of distance learning and online learning, which the Government will consider with keen interest. We note the tremendous work of the Open University in expanding horizons and access for so many people in this country.

The noble Baroness, Lady Warwick, mentioned student visas and international reach. Once again, we will do our level best to ensure that research and innovation budgets are protected because our links with the EU are valuable.

My noble friend Lord Smith mentioned open access. The Government have made £10 million available to pump-prime the formation of publication funds to enable institutions to act on the Government’s open access policy. That is again something we shall be watching.

The noble Viscount, Lord Hanworth, mentioned that the administrative burden on universities exacerbates the difficulties for students. The Government make no apology for asking institutions to focus on an improved student experience and on providing information to help students make informed life-changing decisions. Once again, one needs to get the balance right. The noble Viscount also mentioned the turnover of staff, which one would want to discourage in an academic institution where continuity can often be an enormous benefit. We welcome international academics to this country in order to ensure that students can profit from the most expert and skilled people in each of our institutions.

The noble Baroness, Lady Howells, mentioned her chancellorship of the University of Bedfordshire, and we note the points she made about it and its success.

The noble Lord, Lord Stevenson, raised a number of questions, on which I cannot go into detail at this time, including about the mix of private providers. We feel that it is important that our higher education sector should have a mix of private and public funding in order to ensure that it is as healthy as it can be.

Any new funding system will change behaviour, both of students and of institutions. What we are seeing is a paradigm shift. The impact of such a dramatic change for the sector will be felt both immediately and in the longer term as students become more discerning consumers of higher education, as institutions develop a greater diversity of funding streams and develop a renewed focus on high-quality teaching so that it has the same prestige as research.

I thank all noble Lords who have taken part in this thought-provoking and stimulating debate. If in the short time I had, I have not covered all the questions raised, I undertake to write to noble Lords. Our reforms are intended to make our world-class system stronger. As noble Lords have made clear, we must ensure that our universities continue to encourage reflective inquiry, as the noble Lord, Lord Rees, mentioned in his recent pamphlet; they must encourage thinking the unthinkable, intellectual curiosity and cutting-edge research. The Government are determined that our universities’ international reputation will be maintained and enhanced.