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Higher Education

Volume 836: debated on Thursday 7 March 2024

Motion to Take Note

Moved by

That this House takes note of the contribution of higher education to national growth, productivity and levelling-up.

My Lords, I draw attention to my registered interests. I am very pleased indeed to be able to lead this debate, and thank all those who are about to contribute. Across different political complexions and none, we should be able to find the kind of agreement that I hope will carry us forward for the future.

We have a choice: we can either wallow in nostalgia, meddle, or really look to a future that will be very different—a future of rapid change, where artificial intelligence and robotics will replace so many of the current employment opportunities, but will open up new opportunities for people who have the skills and adaptability to be able to take advantage of the future.

We used to talk about the knowledge economy; I do not hear it mentioned very often these days. There seems to be a view that we have too many students at universities, and too many universities putting on courses that are irrelevant. I am afraid that this view is completely outdated, and totally, utterly wrong.

This morning, the Chancellor of the Exchequer was parading his commitment, quite rightly, to the idea of productivity and growth, but the scientists, the high-level technicians, the research for the future are possible only if we have investment in our higher education system and we value and hold it dear. Innovation, knowledge transfer and the entrepreneurial skills of the future will come from people having their minds opened and their aspirations met. I am a living example of it. I went to evening class and day release to experience the value of further education, which I continue to value dearly. Being able to go to university immediately post the 1963 report of Lord Lionel Robbins transformed the life chances of literally millions of people. That understanding came on the back of what Harold Wilson used to call the “white heat of technology”—whatever happened to that?—and has been crucial to the well-being of the United Kingdom.

There are problems and challenges for our higher education system. It is going to have to adapt to changes in artificial intelligence and in the way we teach and learn, and to a very difficult financial climate. University income has dropped by around a fifth over the past five or six years. Fee levels have not increased, Brexit has affected income from European partnership arrangements, which thankfully are now being restored under Horizon—I will come to the way in which people see the contribution of overseas students in a moment—and it is a much more arid prospect for the future.

However, in Careers Week and on World Book Day, it is important to take a look at what is happening to the young people of today and to reflect on the young people of my era. According to the Labour Force Survey published two weeks ago, 850,000 young people between the ages of 16 and 25 are not in education, training or employment. In other words, they are either working in the sub-economy or doing absolutely nothing. Some 200,000 of them are alleged to be unable to work because of ill health, including mental ill health. Finding a holistic approach to giving opportunity to the young people of the future becomes even more imperative if they are not simply to languish and deteriorate in every possible way.

I remind the House and perhaps the world outside which might be listening that there are not vast numbers of young people going to university who should be doing something else. It is Careers Week, and people should get the right information, advice and guidance on what is best for them. For some, it will be to go straight from college or school into the world of work. For some, it will be taking a BTEC national diploma or a T-level and moving into work. For others, it will be an apprenticeship, if they can get through the hoops that are put in their way, particularly for those with low-level qualifications at the age of 16. However, for many, it will be exploring their future by going into higher education. Many of those 850,000 young people should be encouraged to raise their aspirations and expectations to be able to take on that challenge. Nothing is more galling than people who benefited from higher education and expect their children to go to university telling other people that it is not for them. We have to renew our commitment to the aspiration that drove me on. I have no idea now how because the careers advice I received was zilch. The report I got from the school for the blind I left was appalling, and the expectation of the world around me was that I was going to be a lathe operator or a piano tuner, both of which are very highly rated and important tasks, although lathe operation has suffered over the years from numerical control. The world moves on, and we should move with it.

Some 750,000 jobs are created through higher education in this country. Many of them are crucial to the levelling-up process, as it is now called, in terms of giving youngsters in the most deprived areas of the country the belief that they can do something different from their parents and grandparents. It is about breaking intergenerational disadvantage, which is why I commend my noble friend Lady Armstrong on drawing attention in her debate later today to the fact that areas of the country that previously benefited from traditional industries now suffer from the worst-quality education in the country and the worst expectation of what people there will do. It is not surprising that more people go to Oxford and Cambridge from London and the south-east because the education system in London and the south-east is, sadly, still much better than it is in the Midlands and the north. It is not surprising that when we tell people that university education might be too much for them or inappropriate for them, they might believe us.

We need a menu that enables young people to make the right choice, but that allows people who may have experienced the world of work and decided that change is an imperative driver for them to come back into higher education through lifelong learning, to re-educate themselves and be able to take on new challenges. Lifelong learning should be at the root of what we are doing, saying and investing in in relation to education.

I want to address a negative before coming to the positives. The negative has been the suggestion that somehow attracting overseas students to universities in this country is squeezing out domestic applications. Applications through UCAS from English students dropped this year by 1%. That is not surprising when people are told, despite the fact that they might face unemployment, that university is not for them. The noble Baroness, Lady Falkner, who chairs the Equalities and Human Rights Commission, raised a Question in this House about inequalities arising from overseas students coming to this country in large numbers. The Minister was honest, as she always is, and brave enough to say that there is no evidence whatever of that happening—and, of course, it is not. The number of overseas students, who now include EU students, has actually dropped, marginally. As university income has fallen and the challenges of research funding have grown, it is not surprising that universities have sought to attract overseas students to allow cross-subsidisation into crucial research, which we applaud all the time, such as into better vaccines and engineering for the future things that will transform our country, including on net zero. Yet in the next breath we condemn the idea of going out there and attracting students.

The Chancellor of the Exchequer said yesterday:

“Outside the US, we have the most respected universities”—[Official Report, Commons, 6/3/24; col. 843.]

in the world. They are respected by the rest of the world but not enough by people in this country. It is bizarre to hear the Chancellor applauding our universities and then hear his colleagues going around rubbishing them. It is absurd that you can put out through the Sunday Times, a highly respected historic investigatory newspaper, the notion that students from abroad were squeezing out domestic students and their applications, and for a presenter on GB News, Katherine Forster, to say that it made her blood boil. She is a really good example of why we need more people in higher education—they might actually be able to evaluate facts and make a critical thinking exercise on what they read or, in the case of GB News, what they see in their own programmes. They might, seriously, be able to lift their horizons of what we need to do for the future.

At my own university is the University of Sheffield Advanced Manufacturing Research Centre and its work on small modular reactors and the energy needs of the future. It has not just pure science and engineering but the social science and humanities which we will need for the creative economy of the future, which so many universities are applying themselves to. Universities bring a massive input to local economies, as anchor institutions and the real levelling up, with £272 million going into Sheffield Central alone. Why? It is because we have two universities. The average across each constituency in the UK is £58 million, which is still an enormous contribution to the well-being of local people and our future.

What do we need to do? Universities need to be rigorous in their quality and aspiration. Linking up further education and higher education is a no-brainer. Ensuring that we take overseas students out of the migration statistics is a no-brainer, as it would stop silly arguments. We should ensure that we can reshape our longitudinal studies to get a real understanding of what students from higher education are actually doing in local communities, whether they are part-time or self-employed. Let us have a commission on the funding of higher education for the future—that has lost its way at the moment. Above all, we should ensure that quality research, world-class teaching and the importance of valuing our universities are put front and centre. Stop knocking what is such a valuable asset to our country; let us invest in a world of tomorrow.

My Lords, of the three key words in the very thought-provoking Motion before us, and following the provoking and thought-provoking speech we have just heard from the noble Lord, I intend to home in on productivity linked to how degree apprenticeships can fit into getting us a more productive country. It is one of the great mysteries of the age, at least to me, why in productivity we are such laggards. We all know the unsatisfactory trends that we have, but answers there are relatively few, despite an avalanche of words from multiple think tanks. Heaven only knows, we have enough think tanks in this country now, yet we still seek an answer as to why our productivity lags.

The ingredients in all this must include a bit more than just a lack of private and public capital invested and skills developed to explain away the faltering footprint of our national productivity. For sure, many universities do a good bit towards helping productivity; we even have the British Academy weighing in now with its thoughts. But even if some do not seem to be at the peak of productivity, quite a few universities do not seem to be good at managing their own affairs; hence we have at the moment a growing number of universities, unfortunately and sadly, reporting gravity-defying deficits and growing redundancies, sometimes with the closure of valuable units. Something is not quite right in the way that universities are running themselves.

Degree apprenticeships could do very much to help. They are making good progress. They were a great idea when first mooted, but they are not in the numbers necessary to correct the balance between traditional universities and higher education. There is of course that vocational tinge to it all. I do not say that everyone goes to university to follow a particular career or develop a vocation, but it is important that young people are taught to think. None the less, why has there been such slow development of degree apprenticeships?

Some people think that the very term “apprenticeship” is off-putting—that it gives the wrong image or perception. Maybe cultural conservatism is also there in our universities. Certainly, some schools do not think that an apprenticeship is quite what their brightest and best should be doing. I think that is wrong. Families also sometimes think the same for their own: that the brightest and best should not be going to apprenticeships. Maybe there is a poor selling of that concept, yet degree apprenticeships can be deeply satisfying for individuals and can greatly help productivity.

One example to illustrate this is of a young friend who started off in a school which was in measures and got into a sixth form later on. She came from a home that had never sent anyone to university before and where they are very proud of her. She told me that, despite getting the grades predicted and a place thereby in that excellent university, the University of Nottingham, she had decided that she was going to reject it. I asked why, slightly surprised, because the school had wanted her to do this. She said, “I don’t want to do that freshers week and have all that piling up of debt. I want to do something, so I want to go into a degree apprenticeship”. She has done that and gone into a big corporation, where she is very well treated and monitored. She is moving around its departments and, in the meantime, doing an excellent course of study with the partner university to that corporation.

That is certainly a choice which more people should be encouraged to take and are not being encouraged to take at the moment. We need more action on that front. Not only that, but this girl is now earning north of £20,000 per year. She has no debt whatever and is paying no fees. She can have a nice time and, by living at home, can make a contribution to the bank of mum and dad from the money that she is earning, rather than asking mum and dad for money. That might be a particular case, but I was very impressed with what she said and how she said it.

I hope very much that my noble friend—perhaps in her closing remarks, or if not then in a letter later—will explain what more the Government think they can do to promote degree apprenticeships.

My Lords, as my noble friend Lord Blunkett said in his excellent speech, higher education has been one of the UK’s most successful sectors and we must do all we can to sustain this success. Our universities have a well-earned international reputation, which we must not sacrifice because of underfunding. Our target must be nothing short of excellence, so that the great contribution they make to our national economy and to their local communities continues.

In the last decade, we have witnessed so many aspects of public life in this country threatened by lack of resources and failures in government policy, so I say to the Minister: please do not let this happen to higher education. I include in HE not just universities but FE colleges, which are so often neglected but provide much needed vocational and technical degrees and diplomas close to their students’ homes and workplaces. I hope that the Minister will not forget them when she responds to this debate.

I start with funding. I do not think the fees charged to undergraduates can be ratcheted up again to reflect inflation, because the debt that graduates face is already high and some will take a lifetime to pay it off. While high fees have not been a disincentive so far for most students, they have for some, notably part-time mature students. Instead, government grants to universities to support their teaching and various innovations in their economic contribution should be restored.

It was a mistake to move entirely to a fee-based system of financial support. UUK is right to ask for direct support from government and for strategic funding. The Government need to have the means to incentivise activities in universities which will support economic development in the regions where they are located. This will provide additional funding for knowledge exchange schemes, bringing together HE, businesses and non-commercial partners. More grant aid where possible, and matching funding from commerce and industry for start-ups and spin-offs, would be welcome.

There also needs to be a more strategic approach to lifelong learning, with government funding to support part-time short courses, backed by public and private sector employers, as a route to bedding in improved contributions to greater productivity by universities. There is a need, in a rapidly changing economic climate, including with the spread of AI, for graduates to update their skills and knowledge throughout their working lives. There is good evidence that having a degree helps graduates to be more productive, but there is still more to be done to enhance lifelong improvements in their productivity.

Universities can make a substantial difference to the well-being of their local and regional communities. Again, this can be enhanced by kick-start funding from government to tackle low levels of innovation and applied research in the local economy. Do the Government accept the UUK recommendation that university enterprise zones in specific geographical areas, working to increase growth and innovation locally, should be expanded to all universities? If they do, what are they doing about it? I ask the same question about enterprise and opportunity hubs, which UUK also advocates on a national basis so that all universities and colleges can reach out to places which have been left behind.

These examples are ways of enhancing the fundamental role of universities in national growth and productivity. Many of them also relate indirectly to levelling up by helping reduce the divide between prosperous and disadvantaged communities. There will be many young people and adults in the poorest areas of the UK with the potential to benefit from higher education who never make it. The disastrous decision to close all schools for such a long time during the Covid epidemic will increase these numbers. It is incumbent on higher education to reach out to schools and FE colleges to promote more access to university courses. There should also be government funding allocated to universities, for example, for running remedial courses for new entrants needing such help. If levelling up is to become a reality, the number of mature students who missed out as school leavers must be restored.

I end by asking the Government not to neglect the humanities and social sciences by attaching too much priority to STEM subjects. Teaching and research in the humanities and social sciences is also vital in a knowledge economy.

My Lords, I thank the noble Lord, Lord Blunkett, for initiating this debate and for his wise and challenging words. I cannot think of a time or an issue on education where I disagreed with him. I am delighted to highlight the contribution of higher education to our national well-being and our national pride.

Higher education plays a critical part in the economy as well as in education. The media sadly seems to prefer tales of dissent—impoverished and bullied students, and overworked and underpaid staff—to tales of success and new thinking. We must never allow negative messages to shout down the immense success of the sector in which we all have confidence. Of course, we regret the issues highlighted by the noble Lord, Lord Patten.

Our universities continue to feature among the best in the world. For a small island, that is no mean achievement. It is in part because we have had very many centuries of encouraging and supporting education. We have historically valued higher education and need to continue to do so. In many towns and cities, universities and further and higher education colleges—as the noble Baroness, Lady Blackstone, said, we must never forget the colleges—are major employers. They generate millions of pounds in research and knowledge exchange and their community engagement involves staff and students volunteering in support of local projects. At Edinburgh University, for instance, its community grants scheme gives £618,000 worth of support to more than 220 community projects and its 9,200 academics generated a massive £3.2 billion impact from research and knowledge exchange activities. Many other universities can boast of similar activities and benefits to their local communities.

The Civic University Commission, led by the wonderful Lord Kerslake, claimed that when the first civic universities were set up at the end of the 19th century it was clear that, as well as aiming to rival the two ancient universities in the depth and quality of their learning, they also had specifically local concerns. They had a sense of the places in which they were located, as well as limitless intellectual ambition. That must not be lost in red tape and administrative bureaucracy.

Universities and colleges up and down the country offer opportunities for learning and working. Those in disadvantaged parts of the UK are prime sources of levelling up. Universities such as Lincoln and Lancaster have vastly increased the status of parts of the country not well served by wealth.

We know that the creative industries make a major contribution to our finances. Creativity is vital to society. The University of the Arts London, with its six component colleges, for instance, has over 22,000 students from 130 countries. It is not only a source of world-beating research, but a place where true international relations flourish. Another such place is Goodenough College in London, an educational charity that provides residential accommodation for talented British and international postgraduates and their families studying in London. It runs a programme of intellectual, cultural and social activities that aims to provide students with an international network and a global outlook—a true example of global Britain.

Adult learning in wonderful institutions such as Birkbeck and the Open University support lifelong learning, which is particularly vital for those who have never found inspiration at school but have the intellect and motivation to study for their own benefit and the benefit of society. We know that adult education is beset by lack of funding. Part-time learning misses out on grants and even loans. The lifelong learning entitlement may go some way to remedying this, but it is by no means certain that adults will wish to take on debt in order to study. Can the Minister say whether there is any evidence that adults are being enticed back into study by the entitlement?

There has been a sharp decline in part-time higher education in recent years. This is exacerbated by regional disparities. Numbers have fallen much faster in the north-east than in London, for instance. There should be much better incentives for those in low-participation areas. The Universities UK report Jobs of the Future found that more than 11 million extra graduates will be needed in the future to fill jobs in computing, engineering, teaching and health. Universities are evolving to meet such a challenging demand, but it is a challenge.

However, we must not assume that university is right for everyone. Students whose talents and interests lie in practical achievements should not be pressured by schools and parents into university when apprenticeships and vocational and professional qualifications may suit them better. Schools still do not brief their pupils on non-university routes. This is partly because they are still measured on GCSEs, A-levels and university entrance. But talented young people can feel adrift at university if that is not where their motivation lies.

As the noble Lord, Lord Blunkett, said, we must never suggest that universities are only for certain people. It takes courage to be the first in your family to go to university and we should be proud of the young people from disadvantaged backgrounds who choose university as a route out of underachievement and into opportunities for studying, socialising and learning, which will lead them to good jobs. Universities do so much to raise the status of their towns and cities, and to bring investment, enterprise and employment. We must take note of all they do and support their endeavours.

My Lords, I congratulate the noble Lord, Lord Blunkett, on securing this important debate, at a time when the university sector is under enormous pressure. He has rightly drawn our attention to the role of universities in growth, productivity and levelling up. This reflects the increasing tendency, at all levels of education, to discuss what we do in terms of the economy.

Universities have always been about training people for jobs, long before growth was seen as a central concern of Governments. Universities are indeed central to growth, productivity and levelling up. Without them, we would not have the levels of innovation and wealth that we do, or the genuinely improved opportunities—although they are not as great as they might be—for our young people.

I will use my short time in this debate to utter some words of warning and concern about our enthusiastic embrace of universities as engines of growth. There is a real danger, not just in this country but throughout the world, that a simplified understanding of this relationship and of what it means for government policy is a genuine threat to university excellence. It leads Governments down a path which does not deliver what they hope it will and leads to some reactions that we might wish to avoid.

Especially once the wonderful years straight after the Second World War came to an end and productivity suddenly started to be problematic—rather than something that just seemed to be happening and growing right, left and centre—Governments, intellectuals, academics and politicians cast around for some way of turbocharging growth. All over the world, they came to the conclusion that education was the answer—the more people we educated for longer and the more graduates we had, the more the economy would grow. It is true, I repeat, that without a highly qualified and well-educated population you cannot have a modern and innovative economy. But what has also happened is that we have all been rather disappointed: all over the world, there has been a huge increase and expansion in graduate numbers, but somehow growth has remained anaemic and productivity is not going in the directions we want.

All over the world, as the university sector gets larger and larger, resource per student tends to go down, and there are also some really concerning results: degrees become barriers to entry and you cannot get a job that you used to be able to get without a degree unless you have one. We should be very aware of this danger because it is starting to have a real impact on the way that Governments deal with the university sector in ways that threaten its ability to deliver the innovation and the type of education that we all value.

Australia, for example, having failed with one set of very complicated differential fees, is now about to introduce another set, which will apparently be based on the future contributions to the economy of different degrees—so this is not just a British disease. It has been true here, in the United States and elsewhere that we have focused more and more on whether individuals earn a lot from a particular degree. This is being hard-baked into our regulatory and accountability regime. We should take a deep breath and ask whether this is sensible, any more than it was sensible to believe that you would guarantee an uptick in economic growth simply by increasing the number of students.

Individual salaries depend on a very large number of things. They depend, for example, on whether you go into an occupation like nursing, where your wage is set not by a market but by a Government. They depend on which institution you went to and on the sort of occupation you go into. They also depend—this comes to levelling up—on where you are. You will not earn as much if you study in the north-east and stay there as if you study in the south-east and stay there—although actually you might be as well off, given house prices. But as a tool for steering, regulating and changing the higher education system, the way we have doubled down on the idea that we must look at whether a degree delivers growth—and that, if it does, it will deliver salaries—is very concerning. As well as celebrating the role of universities, I hope we will pay careful attention to some of the unfortunate consequences of focusing too much on growth.

My Lords, Britain’s universities remain a jewel in our crown. It is enormously to the credit of academics that it is so, considering the headwinds against which they are struggling. They have been casualties of the Government’s chronic mismanagement of the economy, as well as their peculiar unwillingness to invest in education. When you have such precious assets as 25 universities in the world’s top 200, you should treasure them. When your universities are essential for imparting the intellectual skills needed in the workforce of the future, you should invest in them without being paralysed by arbitrary fiscal rules.

Improving skills is one of the Government’s levelling-up missions, yet higher education is only a shadowy presence in the policy. That is bizarre. Universities are major economic presences in their communities and regions. They are important sources of employment. They are partners for business in teaching, research and innovation. They are routes for social mobility and cultural beacons. Without their existence, the plight of post-industrial areas would have been even worse. We cannot claim that universities are the solution to Britain’s productivity problem—productivity remains stubbornly poor—but the productivity challenge is multifaceted, and improving skills is only one part of what is needed.

The Government think they can get away with making students shoulder too much of the cost of the university system. They shifted the weighting of funding substantially from taxpayer-funded grants provided by funding bodies to tuition fees to be repaid by students via the loan system. Then, in 2017, they froze tuition fees for domestic students, which accounted for half the funding of universities, at £9,250. They are still frozen at that level, albeit that since then universities have faced large rises in energy costs, borrowing costs and general inflation. In 2022 the NAO found that the proportion of HE providers with an in-year deficit had increased from 5% in 2015-16 to 32% in 2019-20. The IFS has reported that spending on teaching resources per student was 18% lower in 2022-23 than in 2012-13. We are in an unsustainable situation whereby the level of fees is insufficient to fund tuition in many disciplines, yet it is seen as a poor and even unaffordable deal for many home students.

The unpredictability of the student loan system is a worry for students and for observers of the national finances alike. We know that a significant proportion of loans will not be repaid. Meanwhile, many graduates are experiencing hardship, having subsidised courses other than their own and now, with the interest rate as high as 7%, effectively paying high marginal tax rates over longer periods. I hear increasingly of clever young people who ought to have a university education saying to themselves that the financial implications mean it is not worth while. If the Government are looking for a reasonable concession to the junior doctors and a way to recruit more nurses, they could consider a scheme of loan forgiveness.

The frantic recruitment of international students has been the consequence of freezing tuition fees for domestic students. Although there is great merit in our universities attracting outstanding students from around the world, it is a different matter when they are driven by fiscal pressure to resort to flogging degrees to foreign students, charging shamelessly high fees and, in some instances, debasing academic standards through dubious agency and franchising arrangements. With the changes to the visa rules for dependants this January, the Home Office has made it harder for them to attract international students, and numbers are already tumbling.

Not all the woes of our universities have been visited on them by the Government; some are self-inflicted. Most worrying is the tendency to suppress freedom of speech, and the witch hunts against academics who hold views on, for example, gender issues or the history of empire that are considered by other academics to be heretical. Such attitudes and behaviours are contrary to the proper idea of a university, and feeble academic leadership should not allow them to prevail. Universities should rise higher than the street fascists. If a university is not a place where students and scholars are confident to explore and put forward ideas that may be unfashionable or unpopular, it is not only liberal education that is at risk but liberal society and liberal politics. It also weakens the willingness of the taxpayer to invest in such institutions and the economic and social benefits that they can confer.

My Lords, I congratulate the noble Lord, Lord Blunkett, on initiating this debate. Finding myself standing opposite him in the Chamber responding to a debate that he has initiated reminds me of when I was his shadow in another place years ago. It reminds me in particular of an incident when, as I spoke, I could see the then Secretary of State looking increasingly uncomfortable and challenged. I thought, “My points must be getting through”—until I realised that what had actually happened was that his guide dog had been sick on the Floor of the Chamber of the House of Commons, which he kindly pointed out was the guide dog’s assessment of the points I was making as shadow Secretary of State. So I hope to manage a little better this time.

It was an excellent intervention with which the noble Lord began. He was bringing all of us, from all sides of the House, to recognise the qualities and strengths of our higher education system. It is not perfect, it faces real challenges and there are areas where it is underperforming, but the system as a whole is a good one. I am a bit uncomfortable when it is always praised in terms of “four of the top 10 universities” or “25 in the top 200”. That way of assessing the quality of our higher education system does not reflect the truth that it is a very diverse system. There is no one way of being a good university. Of course, those globally respected, research-leading universities at the top of the league tables are excellent, but there are other ways of being excellent. You can be an excellent vocational university, focusing on skills requirements in your area. You can be a university that is excellent in teaching, focusing on teaching rather than research, as the tech initiative of my successor, the noble Lord, Lord Johnson, brought out. We must celebrate the strengths of a range of universities doing different things, and I hope that the Minister in her remarks at the end will make that point.

The system also needs greater diversity, and we have already heard about degree apprenticeships, which are a very welcome addition to the range of higher education provision. My noble friend Lord Patten asked about their growth. The truth is that they are funded—nothing comes for free—to the tune of almost £30,000 out of the apprenticeship levy. They are reported to be taking approximately 20% of the apprenticeship levy and, in turn, Ministers report that the apprenticeship levy is 99% spent. It would be very interesting to hear from the Minister, if degree apprenticeships are to expand, how this growth will be funded and whether it will mean, if it remains a charge on the apprenticeship levy, that other forms of apprenticeship, often more focused on young people, suffer by comparison. While they are an excellent initiative, there is some uncomfortable evidence that, for any given discipline and compared with conventional university courses, degree apprenticeships appear to be more socially selective, less likely to take people from deprived backgrounds and less likely to take young people—more than half of those on degree apprenticeships are over 30. What more we can do to extend access to degree apprenticeships is something on which I think we would like to hear more from the Minister.

Finally, as time is tight, I will just comment on the—as always—interesting observations from the noble Baroness, Lady Wolf. There is not simply a utilitarian defence of higher education. Again, it was the noble Lord, Lord Blunkett, as Secretary of State, who commissioned an excellent research exercise on the wider benefits of learning that is still yielding findings and results to this day. When we at the Resolution Foundation—one of those think tanks—recently did work on mental ill-health among young people and economic inactivity, we found that young people who had been to university were still quite likely to suffer mental ill-health. However, it looked as if having been to university made them more resilient. They were more likely still to be in work even while suffering episodes of mental ill-health than people who had not had that opportunity. So there are wider benefits of higher education that extend beyond those that are subject to immediate economic calculation and this debate is an opportunity to repeat the point.

My Lords, it is a pleasure to follow the noble Lord, Lord Willetts, and two former Secretaries of State for Education. For my part, as an employer, I will focus on higher education and productivity, which of course is a two-way street.

It is no coincidence that the UK’s flatlining productivity since 2008 comes at a time when we have seen the education budget fall in real terms per pupil over the past 15 years. Low economic growth reduces our ability to invest in the education and training of our future workforce. This vicious cycle has brought us to the point where we now spend more annually on debt interest payments than on our entire education budget. Strangely, the Chancellor did not flag this up in yesterday’s Budget Statement.

I speak today from the perspective of an entrepreneur rather than an educator or Minister. I was an employer for 30 years, and many of our best long-term hires came from graduate trainee schemes, both here in the UK as well as in Asia and the US. I now back and advise early-stage businesses and, for many, the biggest single hurdle to growth is the supply of talent in this country, particularly graduates. This is not so much about the calibre of graduates as about the supply of work-ready graduates with relevant degrees, as there is a damaging mismatch between skills and vacancies.

We have large swathes of graduates in jobs not requiring a degree. The IFS reports that, outside London, this number has risen to 42%, up from 31% back in 1993. That is a red flag for productivity. Graduate vacancies are now falling, as is the wage premium, as students rack up a cumulative debt of £200 billion, the majority of which the Government admit will never be repaid.

For the two-thirds of graduates across the UK who go on to high-skilled employment, their median salary is reported to be £11,000 higher than that of non-graduates—but that average is much lower due to the skewing effect of very highly paid professions. To achieve that differential, graduates will have devoted three to four years to further education on little or no pay and racked up an average debt of £45,000 each—as will the other third who, despite graduating, never secure high-skilled jobs.

These numbers are symptomatic of an economy failing to keep pace with the major and, some would say, unsustainable expansion in the number of graduates over the past 30 years. Put bluntly, we do not create enough high-skilled jobs. Given this context, universities should focus much more on preparing their students for the workplace and not just on graduation. Too many graduates leave university with no clear idea of what they want to do, with the result that many stray into a series of short-term jobs that fit poorly with their skills and character.

So what can be done to address this fundamental mismatch? I have just three quickfire observations on which I would welcome the Minister’s response. First, I advocate that one-third of an undergraduate’s curriculum should be devoted to their future employment prospects, developing life skills that apply to the workplace, receiving comprehensive careers advice and gaining hands-on, relevant work experience.

Secondly, we need radically to reduce the number of students taking degree courses with poor outcomes, lack of academic rigour, high dropout rates and poor employment prospects. We need to be more discriminating.

Finally—this is a problem of both supply and demand—we need much greater involvement from employers, both public sector and private sector, in helping educate students about professional life as well as scaling up graduate traineeships and internships.

This country has an extraordinary array of young talent, but it needs much more specific advice, training and guidance if we are to turn our students into engaged, happy, well-paid and, above all, productive workers.

My Lords, I thank my noble friend Lord Blunkett for securing this debate and for his compelling introduction. I am tempted to say, “The prosecution rests, m’lud”, and sit down, but your Lordships will be disappointed that I shall try to add a few points to those made by my noble friend.

The array of former Education Ministers, vice-chancellors and other higher education experts speaking today reminds me, in making my declarations of interest, of my status as an enthusiastic amateur in a field of professionals. I am a trustee of the drama school, LAMDA; chair of an apprenticeship provider, the Credit Services Association; and an external member of the investment committee of Worcester College, Oxford, of which I am an alumnus. I am also a member of the Industry and Regulators Committee of your Lordships’ House, which published its report on the OfS and the challenges for the HE sector last summer. I look forward to debating that when the usual channels have agreed a date.

I shall try to avoid repeating the data and arguments already set out compellingly by other speakers. Higher education is vital to growth, productivity and levelling up, as well as to non-economic benefits, such as health, life expectancy, crime reduction and the general strengthening of civil society, as cogently argued by the noble Lord, Lord Willetts, in the Economy 2030 Inquiry and touched on in his speech a moment ago.

The impact of universities

“on human and intangible capital is self-evident”,

as Jonathan Grant and Andy Westwood wrote for the Bennett Institute for Public Policy—self-evident, but perhaps hard to measure. That may be one reason why too much of the debate about higher education policy in recent years has focused on the more measurable economic benefits, nationally and locally, to the communities and regions in which universities are located. These are important and hugely welcome consequences of investing in HE, but does the Minister agree that there should be absolute clarity that the mission of universities and other HE institutions to provide UK students with the highest-quality higher education should be first, second and third at the heart of government policy?

Excellence in teaching and research costs money. We seem to have reached a position, as my noble friend Lord Howarth has already said, where student fees and living costs are becoming higher than many young people can take on responsibly, while UK undergraduate fees are increasingly inadequate to fund the universities’ provision for teaching these degrees—a circle that will need somehow to be squared by future Governments.

In the meantime, I will end by briefly raising the disparity of wealth and endowments among UK universities. The US system is different, but it is worth remembering that, among the private universities—Harvard, Yale and Stanford—there are endowments of $40 billion to $50 billion, generating a return of $2 billion to $2.5 billion a year for those universities. But even among the public universities in the US, there are 50 with endowments of over £1 billion. In the UK, Oxford and Cambridge each has endowments that are 16 times greater than those of the next best-endowed university, Edinburgh. I do not for a moment want to discourage donations to either Oxford or Cambridge—to my former college, Lindsay Owen-Jones has been a recent, enormously generous benefactor—but we need to level up and find ways in which to assist the many other excellent universities to boost current and capital fundraising through match funding and other initiatives.

My Lords, first, I thank the noble Lord, Lord Blunkett, for securing this debate and for his thoughtful comments.

I look back with affection to those heady days of the 1980s and 1990s when the higher education sector in general and the university sector in particular were going through a period of transition and growth—the establishment of new universities and the evolution of polytechnics to university status—although before that the Wilson Government had formed the Open University, which was a pioneering world first. It gave students of any age, background or, indeed, geographical location the chance to study for a degree. Its partnership with the BBC was quite unique.

We saw in the late 1990s how universities released their validating powers and other institutions became stand-alone colleges and/or universities. The higher education sector blossomed and flourished. In my own city, the University of Liverpool was joined by Liverpool John Moores University, and then Hope, Europe’s first and only ecumenical university, was established—joining together two former Roman Catholic colleges and an Anglican teacher training college. More recently, the Liverpool Institute for Performing Arts, Paul McCartney’s and John Lennon’s former grammar school, has become a performing arts higher education college.

The universities complement each other, as they have worked together on many collaborative projects. The old notion of town and gown is very much still alive in Liverpool; for example, in working together with Liverpool City Council on a science park.

Britain is home to 137 Nobel Prize winners, second only to the United States, a fact that should be of great pride to us all. We are a land of academic progress and innovation. Our physicists pioneered atomic and nuclear physics and our economists designed the liberal world that we live in. Today our universities keep producing world-class, ground-breaking research that shapes our country and our world. Research briefings and research papers of our doctors and professors have inspired policy at the United Nations, the White House and the European Commission, as well as leading innovation in some of the largest global corporations, in the fields of engineering, information technology, artificial intelligence, medicine and much more. But the impact of research carried out in our universities is not limited to the grandest history-shaping excellences. For every history-shaping innovation, there will be millions of attempts by dedicated students and individuals contributing each day to moving the frontier of knowledge one step ahead. These are the students and people we need to support as, without them, there would be no innovation.

But what now? Student fees have not gone up in eight years, and costs have doubled. Student numbers are down, and some universities are facing recruitment problems, as we have heard. Universities are facing severe financial difficulties. Staff salaries have declined, and the brightest and the best are regularly poached from overseas, particularly by universities in the USA. Many staff are now appointed only on fixed-term contracts—try getting a mortgage when you are on a fixed-term contract. Like all of us, universities have been harshly hit by the pandemic and the recent higher costs of living crisis. Universities reporting year-on-year deficits jumped by 5% from 2015-16 to 32% in 2019-20, according to Universities UK.

We need to financially support our universities to keep producing the high-level research that we pride ourselves on and to keep leading in the world of innovation. The plummeting value of domestic tuition fees is forcing universities to rely more and more on overseas students—that is a good thing, as we heard from the noble Lord, Lord Blunkett, but they are increasingly hard to recruit. We need to recognise that foreign universities have increased competitiveness and are gaining in popularity. Europeans were once charged domestic fees in UK universities. Now, facing triple the yearly tuition fees, most of them are diverting to new destinations, with the Netherlands scoring highest. Others are finding US universities better value for money, as fees in American colleges have almost come to match tuition fees in the UK.

All this is not to say that our universities are perfect. They always need to support and value the best staff, and the staff always need to put the best interests of the students first. As a society, we need more than ever to have high-level skills, to support our higher education sector and to see a new renaissance in learning and research.

My Lords, the Chancellor may not have used his Budget speech to tackle the funding crisis but, as the noble Lord, Lord Blunkett, said in his excellent speech, at least he mustered some praise for our universities. That was a welcome change of tone at a time of often scepticism, bordering on hostility, towards higher education.

There is of course nothing new in the criticism that too many go to university—we have heard it again today—or that too much public money is wasted on low-value courses. Such attacks have been a constant in the history of the expansion of higher education and everybody is well used to it. I do not want to fall into the trap of complacency, and I certainly agree with the noble Lord, Lord Londesborough, that there is a case for cracking down hard on pockets of poor provision in the sector, which affect a minority of students on a minority of courses. We want to ensure that value for money is produced by this system.

However, I do not think that we should succumb to a general cynicism about higher education; nor do I think that we should return to a system of rationing higher education and limiting access to the number of students who progress from level 3 to levels 4, 5 and, particularly, degree level 6. Why do I say this? I say it because there is a very well-established skills bias in knowledge economies. Job creation takes place overwhelmingly in roles requiring graduate skills and, in the UK, this is happening at a time when we are already suffering from marked skills shortage, where we do not have enough highly skilled individuals to fill many vacancies. Our real problem as an economy is skills shortages. This really matters if we care about levelling up. Unless we continue to develop the pipeline of highly skilled human capital, we will see increasing inequality as wages rise more rapidly for those whose skills will be in stronger demand. We must not lose sight of how imbalanced our economy is. The FT recently calculated that, if you strip London out of our GDP per capita figures, the average Briton is worse off than the average resident of Mississippi, the poorest state in the United States.

The second reason is that we are living in an era of unprecedented technological disruption. As the noble Lord, Lord Blunkett, said, there are massive changes ripping through our economy due to two big waves of innovation; the first is a digital innovation wave, built on AI, supercomputing and automation; the second is a deep-science innovation wave based on biotechnologies and nanotechnologies. Our ability to surf those waves depends on the absorptive capacity of our firms and the adaptability of our people.

We are already seeing massive labour market disruption. As the noble Lord, Lord Blunkett, said, these powerful technologies, a number of which are converging at the same time—not just AI, but big data, cloud computing, the internet of things, virtual reality and blockchain—are driving change in all aspects of our lives. As the World Economic Forum’s Future of Jobs report found in its survey of employers, 44% of workers’ skills are likely to be disrupted over the course of the next five years. It is only the quality of our education system that will determine whether the UK will benefit from these innovations and whether it will be able to join the ranks of countries developing the next technologies. The most highly innovative knowledge economies around the world—look at South Korea, Israel, Japan and Canada—have boosted tertiary participation rates to well above ours, to the order of 60%, 70% or even more. Our ambition should be to join this vanguard of knowledge economies, not to give in to the dismal voices calling for student number controls that will hold back our productivity, widen inequality and throw sand into the engines of social mobility.

My Lords, last year, as chancellor of the University of Birmingham, I spoke at the QS world university rankings conference in India. I spoke with pride as, with less than 1% of the world’s population, the UK has four of the top 10 universities in the world. The latest QS rankings show Cambridge and Oxford second and third. I declare my interests as an honorary fellow at Sidney Sussex College, Cambridge; an ambassador for the Cambridge Judge Business School, where I am conducting research as we speak; and a Bynum Tudor fellow at Kellogg College of the University of Oxford. His Majesty the King is a Bynum Tudor fellow, as was Archbishop Desmond Tutu. I am also a visiting fellow at the Centre for Corporate Reputation at Saïd Business School in Oxford.

The QS rankings go further: 17 of the top 100 universities in the world—including the University of Birmingham, where I am proud to be chancellor—are British. This is fantastic, yet this Government have frozen fees at £9,250 for many years, so the real value of those fees is about £6,000. Inflation has meant that costs have gone up, but we are still meant to produce the best universities in the world with our hands tied behind our backs.

I thank the noble Lord, Lord Blunkett, for his brilliant opening speech and for initiating this debate. Universities UK states very clearly that:

“The higher education sector creates enormous economic impact across the country… contributing over £130 billion”,

that universities “support more than … 768,000” jobs, and that

“UK higher education providers … educated approximately 2.9 million students”.

This is a really important part of our economy. In October 2023, there was a report written as part of the Economy 2030 inquiry by the Resolution Foundation and Nuffield Foundation—the noble Lord, Lord Willetts, was also involved. It set out how higher education can improve productivity and drive economic growth, with four groups of benefits that higher education can offer individuals and society, including longer life expectancy, better health, higher earnings, less likelihood to be unemployed, lower crime rate, being more likely to volunteer and vote, more tax receipts and increased exporting. This is music to my ears.

Some 24% of students enrolling in higher education institutions in 2021-22 were non-UK. We now have over 600,000 international students—which I will come back to. Business and management is the popular subject, with 19% of all students studying it. I am patron of the Small Business Charter—I took over from the noble Lord, Lord Young—and we accredit business schools around the country with the Chartered Association of Business Schools to be able to teach SMEs. I am also on the council of the Help to Grow management scheme, which provides mini MBAs for businesses where they pay only £750. This is the value of our business schools.

The British Academy, in a report, said in relation to higher education entrepreneurship that many higher education institutions are incubating future economic disruptors across all disciplines. I came up with the idea for Cobra Beer when I was studying law at Cambridge University. The innovation mindset is foundational to UK higher education. Some 80% of UK higher education research is assessed as world-leading and internationally excellent. The return on investment for public and private R&D is estimated at 20%; the sector was responsible for 25% of UK R&D. This is amazing, yet we as a country spend only 1.7% of GDP on R&D and innovation, versus America’s 3.2%—just imagine if we spent more.

Just a week ago, Bhaskar Vira, the pro-vice-chancellor for education at the University of Cambridge, showed me the brilliant report The Economic Impact of the University of Cambridge, which sets out how the university contributes nearly £30 billion to the UK economy and supports more than 86,000 jobs across the economy.

Before I conclude, as co-chair of the All-Party Parliamentary Group on International Students, president of the UK Council for International Student Affairs—UKCISA—and a former international student myself, I must touch on international students. HEPI pointed out last year that international students bring in £42 billion to our economy. I remember fighting in this House in 2007 to bring in the two-year post-graduation work visa. It was brought in in 2008 by a Labour Government, taken away in 2012 by Theresa May as Home Secretary, and brought back in by Boris Johnson in 2021. Just look at how the number of international students has rocketed; yet this Government seem to have an anti-international student attitude—an anti-immigration attitude. We need to take international students out of the net migration figures. It would almost halve that figure.

This is the strongest element of soft power that we have in this country: 25% of world leaders have been educated at UK universities, 25% at US universities, and the other 50% across all the other countries in the world put together. Let us celebrate international students and celebrate our universities. Our universities are the jewel in this nation’s crown.

My Lords, it is a pleasure to follow my friend the noble Lord, Lord Bilimoria, who speaks with such insight, enthusiasm and, I have to say, speed on this important topic.

Before I move on to the speech I had prepared, I want to say something in response to the contribution of the noble Lord, Lord Londesborough, which was very interesting and made points that we often hear. I was reflecting on my experience. I was the first person in my family to go to university—not just my immediate family, but my entire extended family. I took 20 years to pay back the debt I accrued. I have never had a job that would show up in an employment survey as a graduate job, but I learned things that have stayed with me and supported me throughout my life: how to read, how to analyse, how to understand a set of data, how to be sceptical, and how to appreciate how much knowledge there is out there in the world that I do not know. I learned so many things that will serve me throughout my life. I only wish that my own two children would go to university and have the same experience, but I am having no luck in persuading them just yet.

I am very grateful to the noble Lord, Lord Blunkett, for securing this debate. It really could not be more timely. He described a more arid future, as he put it, and the wasteful negativity that we have too often heard, I am afraid even from Ministers in the party opposite. As the need to grow our economy becomes ever more urgent, our universities are playing a crucial role. Universities could add even more value if they had a Government committed to working with them, not, as sometimes feels the case, against them. We have had a string of Bills, Ministers and appointments determined to involve universities in and, as I see it, co-opt them into culture wars. We have had the freedom of speech Act, the economic activity of public bodies Bill, the attitude to overseas students that we have heard referred to in this debate, and now the Science Minister using UK taxpayer money to settle legal battles after calling academics “extremists”. None of this helps harness the power of our higher education sector, which can do so much to help the UK move forward. Sadly, there has been no coherent strategy for this for years now.

I declare an interest as Chancellor of Teesside University, which is a northern powerhouse all on its own. It is global university based in Middlesbrough. It contributes just short of £148 million in GVA to the region each year, has over 2,000 apprentices on courses designed to fill regional skills gaps, and over 200 successful business start-ups, employing almost 800 people, have grown out of our Launchpad programme: we are doing our bit. Teesside University is not just a powerful engine of social mobility for individuals, which it absolutely is; it is an anchor institution for the region. Its mission is to transform lives and economies. It innovates, bringing new degrees that should be valued by anyone who claims to understand the modern UK economy, in areas such as games design. It is agile enough to try something new and stable enough to stick with it while it grows into one of the fastest, most exciting industries in the world—great jobs, global opportunities and a £7 billion a year industry. It is not just Teesside, although obviously we are the best at this; the same can be said for many other institutions up and down the country that are future-facing, innovative, entrepreneurial and delivering the 11 million extra graduates we will need to fill jobs in the UK by 2035.

When I was very much younger—about 25—I was at an event in Trimdon Labour Club where Tony Blair spoke. I am not going to do a Blair impression, though I can. He was talking about higher education, China and the UK as a global competitor. He said, “Look, the thing we all need to understand is that they are educating their population. They are no longer poor people riding around on bikes. The UK needs to lift its sights and invest in education if we are to compete on the world stage”. Those words are as true now as they were then, and have stuck with me ever since. We have a huge advantage in our long-established, high-quality higher education sector. What we need is a Government who recognise this strength and work with the sector to support and grow it. It is a sector that, like Teesside University, transforms lives and economies, harnesses the knowledge to tackle the world’s challenges, and will work in partnership with a Government who value it as the asset that it is.

My Lords, I too thank the noble Lord, Lord Blunkett, for securing this important debate and for his very thoughtful and pertinent remarks, particularly about the role of education in opening minds and meeting aspirations. I was glad that the noble Lord, Lord Willetts, amplified that too.

I will focus on the university sector in all its diversity, and two interrelated issues affecting the sector: funding and international students. Our universities are a success story and one of our major assets. They are essential not only for education for education’s sake but as the bedrock of our science, research, innovation, creative output and much more. At present, universities face many challenges and unrealistic expectations. Some of them have been mentioned in the course of the debate. Of course these need to be responded to, but without making what I call inconsistent compromises. Otherwise, we are in danger of frittering away our comparative advantage and damaging our major asset. The comments of the noble Baroness, Lady Wolf, were pertinent in that context.

As we have heard, domestic undergraduate tuition fees, which are the main source of funding, have been frozen for the past decade. Meanwhile, inflation has driven up universities’ operating costs. To make ends meet, universities have become reliant on attracting international students. The recent negative and ill-informed rhetoric around immigration, and linking it to international students, has had the effect of reduced demand from international students, as shown by figures produced by Universities UK. Work by PwC shows that this could put four-fifths of universities in deficit. We have had what has been called a yo-yo approach to international students. We closed the post-study work route in 2011, reversed that in 2019, and now we are applying the brakes again, making it impossible for universities to plan ahead. This is the consequence of continuing to count international students as part of the immigration figures, thus creating a perception that they are a burden, which we all know is far from the truth.

Blaming international students, and not taking positive steps to present accurate information about the benefits they bring to this country, is disingenuous and not in our national interest. This is a policy failure for which we are making international students scapegoats and, in the process, hurting our universities and, in effect, shooting ourselves in the foot. Unless the funding issue is addressed, it will lead to cutbacks in research and affect salaries, learning and facilities. It also risks the potential for innovation and will blunt our competitiveness. Easing academic entry requirements for international students is not the answer; it will actually compound the problem.

In a very thoughtful paper published recently, Professor Shitij Kapur, the vice-chancellor of King’s College, argued that universities are trapped in a “triangle of sadness” between students burdened with debt, a stretched Government who have allowed tuition fees to fall far behind inflation and beleaguered staff who feel caught in the middle. He says that the fate of our universities cannot be left to the vagaries of the decisions of overseas students. He argues for inflation-related uplifts in student fees, as planned under the Theresa May Government, linked to quality, and he questions whether a single funding framework is suitable for all needs.

I am not suggesting that that is the only solution. We have had reference to the funding model; indeed, the noble Lord, Lord Blunkett, talked about a possible commission to look at funding. My fundamental point is that we need to address the question of funding if we are to reap the benefit of this national asset we keep talking about. If we want universities to continue to make a significant contribution, we need to address the question of funding universities and their sustainability. Therefore, I ask the Minister whether there are plans to settle the uncertainty around our policy with regard to international students and take them out of the immigration figures. Has any consideration been given to setting up a commission to look at funding?

My Lords, I congratulate the noble Lord, Lord Blunkett, on securing this debate. I declare an interest as an academic at the University of Hull, mention of which gives me an opportunity to pay tribute to one of our alumni, the late noble Lord, Lord Cormack. I knew him for almost 60 years and his is a great loss to this House, to which he was dedicated.

It is difficult to train graduates for future jobs when we do not know what those future jobs will be. In the time available, I want to focus on just two contributions made by higher education. The first is the contribution made beyond the economic. As we have heard, higher education makes a massive contribution to the UK economy. Indeed, we rely on our universities to generate the research that will ensure we remain competitive in a global market. That economic contribution is essential to the nation’s well-being, but so too is the social contribution. Our universities are turning out not just economic units but well-rounded members of society. Higher education is crucial to personal development, something that benefits not just the individual but society. That is especially important at a time of social and economic stress, not least as a consequence of the pandemic, economic uncertainty and international conflict. For our citizens, higher education is a good in itself as well as a fundamental contributor to economic development. The Government tend to focus almost exclusively on the latter. Educating young people who are the first in their family to go into higher education is part of levelling up, but my point goes more widely than that. Spending on higher education is an investment for the nation’s future, not just the economy but the social health of society.

My second point relates to the value to the United Kingdom of the export of higher education. As the noble Lords, Lord Blunkett and Lord Bilimoria, have said, we benefit enormously from recruiting overseas students. Overseas students are beneficial in terms of what they contribute to the local economy while they study here—many local businesses are dependent on student trade—as well as the research undertaken at universities, especially at postgraduate level. Crucially, overseas students come to study here and then they go home. Returning home is often beneficial to their home country, especially in the case of developing nations. Indeed, we would make a greater contribution to developing nations by investing in bringing students here to study than by giving money directly to the governing regime. Their returning home also benefits the United Kingdom, both economically and politically. Foreign nationals who have been educated in the United Kingdom are more likely to trade with the UK than those educated elsewhere. That is the economic benefit. The political benefit, as the noble Lord, Lord Bilimoria, said, is in terms of soft power. We produce students who are well disposed towards the United Kingdom as a result of studying here. Many go on to hold major public positions in their home nations. At a time when our capacity to exercise hard power is decreasing, the capacity to exert soft power becomes even more crucial.

We therefore need to look at the benefits deriving from overseas students. Conveying the impression that they are not welcome is a massive exercise in self-harm, especially when we are in a highly competitive market. There are other nations, such as Australia, that invest heavily in recruiting overseas students. It will be a great help if my noble friend Lady Barran acknowledges this benefit and outlines what the Government are doing to maintain our share of the market. Without it, not only will our universities suffer but so too will the economy and the global clout of the United Kingdom.

My Lords, it is a familiar aspersion that the scientific and technological innovations that occur in our universities are too slow in giving rise to practical industrial applications that might sustain our economic growth and prosperity. It has been suggested that much of the fault lies with the universities: the academics appear unwilling to become engaged in promoting the fruits of their research, which is a much less attractive activity than pursuing the research. I contend that much of the fault lies elsewhere. Britain’s industrial sector is so attenuated that it is hardly in a position to benefit from the fruits of applied research. Those fruits are gathered mainly by other nations.

There are abundant examples of this. It applies, in particular, in the cases of inventions that are capable of contributing to what is optimistically described as the green revolution. A tragic example concerns the battery technology on which electric vehicles depend. The lithium-ion battery was the invention of a British scientist, but the dominant manufacturers of batteries are in the Far East. There is an optimistic notion that, although we are severely behind in establishing British manufacturers of batteries, we are nevertheless in a good position to exploit future technical developments in this area. We are sponsoring academic research to this purpose. However, the support from the Government is pitiful. It is provided in research grants, which are small sums of money available for only three years at a time.

There is also a failure on the part of civil servants and others to recognise that much of any research effort is bound to run to waste. This accounts for the very stinting provision of financial support and the alacrity with which scientific and technological projects are cancelled. Often, they are cancelled at the very point when they reach fruition. An example concerns the British advanced gas-cooled reactor. It suffered a long and expensive process of development, but when the technology had been perfected it was abandoned in favour of an American pressurised water reactor, which is the Sizewell B reactor. We may be in the act of perpetrating the same folly by abandoning the small modular British reactor in favour of an American reactor for which we shall not have to bear the costs of development.

In Britain there has traditionally been an uncomfortable distinction between the arts and humanities on the one hand and science and technology on the other. This has been sustained by a distinction between a gentlemanly university education and a technical education deemed to be more appropriate to the working masses. This was reflected in the distinction between universities and colleges of technology.

The 1956 White Paper on technical education proposed the creation of 10 colleges of advanced technology, albeit that the number had originally been 25. This reflected the anxiety that universities were not adequately fulfilling the role of technical education. In the Robbins report of 1963, it was proposed that these colleges, which had been under the control of local authorities, should become chartered universities. The proposal was greatly welcomed by the Labour Party, which had decried the seeming class distinction between a university education and a technical education.

Of course, I applaud the removal of any such distinction. However, the change has been to the detriment of technical education. The erstwhile colleges of advanced technology and the polytechnics, which became universities in 1966, have abandoned much of their original mission. This is partly because they have been catering to consumer demand, but it is also for financial reasons. A course in the arts and the social sciences or a course that teaches commercial skills is much cheaper to run than a fully fledged technical or scientific course.

Our universities are suffering from perilous ill health. They are understaffed by academics who are severely overworked. The academics have lost a large proportion of their real income, and their pension rights have been severely affected by the disastrous investments of the universities superannuation fund. It has been raided on successive occasions to finance the early retirement of staff, in consequence of successive rounds of cuts.

Recently, a large proportion of the university staff were European nationals. Since Brexit, they have ceased to come in such large numbers. The temporary employment contracts, to which the majority of new university staff are subject, are not attractive to them. The income from overseas students is now set to decline. The exceptions are liable to be in departments of engineering and computer science, which continue to attract large numbers of foreign students. They will carry their skills back to their native countries, with which we may no longer be able to compete in economic terms.

All told, these circumstances evince a profound sense of pessimism.

My Lords, I thank the noble Lord, Lord Blunkett, for this debate and congratulate him on his excellent introductory speech. In seeking to avoid what has already been said, I will focus on the important role the UK’s higher education sector plays in enhancing the UK’s business credibility and attractiveness to foreign businesses and investors, which is so very important. Like the noble Baroness, Lady Chapman, I intend to base myself on an area I know very well, so I am taking the City of London as a case study.

A recent City of London Corporation report shows that London and the UK ranks highest amongst international financial services centres in the access to talent and skills provided for companies. However, this should not be seen solely in terms of business, law or economics graduates. The wider contribution provided by the higher education sector is essential to maintaining the UK’s status as a place to do business.

The square mile, the heart of the UK’s largest business sector, financial and professional business services, is perhaps not well known as a location for higher education, unlike other parts of London such as Bloomsbury. However, in the wider area there are 70 universities and 130 research institutes. Many of these are business skills focused, such as City, University of London’s Bayes Business School, which is, inter alia, home to the Costas Grammenos Centre for Shipping, Trade and Finance. It offers, if I may mention a slightly specific personal involvement for a moment, in my view the world’s best master’s in shipping, trade and finance, and an excellent master’s in energy, trade and finance. The courses are heavily subscribed by the brightest and best internationally, but sadly with few UK students taking advantage.

The City is blessed with a world class conservatoire, in the form of the Guildhall School of Music and Drama, as well as the first institute of higher education in London, Gresham College. Gresham College is arguably one of the first iterations in Britain of levelling up, providing free public education across the arts and sciences since 1597. Gresham’s executors founded the college to bring the “new learning” to Londoners in English rather than Latin, the language of universities over most of Europe at that time. It was the first institute of higher education in London. The college adds immeasurably to the intellectual life of the square mile, enhancing it as a place to do business. Gresham was a trailblazer in promoting public education, being one of the first higher education establishments outside the ancient universities of Cambridge and Oxford. The college continues to trailblaze: since 2001, all Gresham College lectures have been made available online, and since 2007 they have been uploaded to YouTube, once again increasing public access to education and pre-empting the Covid development of online streaming of events. Lectures are free and open to all.

Similarly, the Guildhall School of Music and Drama enhances wider London’s attractiveness as a business destination. As well as providing world-famous actors and musicians, its production arts department provides the West End and the world with experts in theatre crafts such a prop making, set design and stage lighting, which feeds our creative industries. The school is ranked number one in arts, drama and music by the Complete University Guide 2024, and as one of the top 10 performing arts institutions in the world in the QS World University Rankings 2023.

For international companies thinking about where to base their European office, London’s cultural offer is an important consideration. However, as we have heard, the sector faces challenges. The graduate visa route is an important draw for international students to the UK; however, removal of this route could imperil the attractiveness of courses such as the Guildhall’s music therapy MA. Graduates looking to use their skills in hospitals, SEN schools and care homes would struggle to secure a skilled-worker visa due to their work being based on multiple part-time contracts, making it extremely difficult for them to meet the financial threshold.

The current Lord Mayor of London, Alderman Professor Michael Mainelli, has sought to show the links between business and higher education through his theme of “Connect to Prosper” and the appointment of the first Lord Mayor’s Fellow at City University, where he is rector. I would encourage the Minister and business community to give greater recognition to the core role that the higher education sector plays in making the UK an attractive business destination.

In conclusion, I have a few words on professional qualifications and training—we have not spoken very much about this, other than in terms of apprenticeships. There are many chartered institutes, such as chartered accountants, ship brokers, et cetera, setting courses and examinations for specialists in London, across the UK and indeed around the globe. These professional bodies contribute immeasurably to professionalism and, importantly, business ethics.

The current Lord Mayor has collaborated with CISI on the 695th Lord Mayor’s ethical AI initiative, introducing a certificate in artificial intelligence. This has been taken up phenomenally across the world. It is hoped that other professional bodies will introduce related certificate courses.

My Lords, I begin by thanking the noble Lord, Lord Blunkett, for securing this debate and congratulate him on introducing it with such wisdom and insight.

We have been talking about universities; they are funny institutions that keep evolving over time. They began with Aristotle’s and Plato’s academies; in the Middle Ages we had the theology-based institutions; in the 19th century, with the rise of capitalism, they underwent further changes and now, under the impact of modern technology, they are undergoing even further changes, with the result that it becomes rather difficult to talk about “the university”. I am fairly confident that the university will continue to respond to contemporary technological changes, and one of the things I expect it to do over time—in fact, it is already doing it—is to make sure that lectures, for example, which it has concentrated on delivering, are taken over by one or two places in the world and the contents are then broadcast to other parts of the world. So I do not have to go to Harvard to listen to lectures on philosophy from a professor there; I can listen to them on tape in my own study, or my fellow students can listen to them in the University of Bombay or Delhi. In which case, why do you need a lecturer in the university? Why do you want a person to be engaged in lecturing, taking up time that could be freed up for other activities? This means that universities 10 years from now will be very different institutions.

However different the institutions are, there will be some roles they will have to continue to play and cannot avoid playing—in fact, more so than before. We have been talking about universities’ contribution to the economy. That is only one small role that they play. As the noble Lord, Lord Norton, pointed out, they are also custodians of civilisation. University is a place where people think about the world around them and comment on the values that inspire people and the way in which their society is declining, which they cry out against. Universities are unique places where individuals are paid to withdraw themselves from the world around them and comment on that world.

So universities play multiple roles, one of which is to become centres of international excellence. International students come to our universities because our universities were born 500 years ago and have developed in a manner suited to the modern age, which has not happened in India or China, or elsewhere—their universities are growing slowly and are not fully developed. In some cases, they are rather poor and corrupt, hence their students come to us. Rather than resenting their presence and talking about them in a very dismissive way, we should welcome them.

This obviously raises problems, because the whole world wants to come to our universities—not because we are a great people but because we had the historical opportunity to start much earlier than them. Given this, what do we do? Naturally, we want to be able to open our doors to them, but, at the same time, we cannot throw them open completely, because what happens to our people? Given the asymmetry between the two different streams of students coming in, we need to find ways of coping with it. There are various ways and that is what we should concentrate on, not lambasting international students who are paying enormous sums of money to come here. Rather, we should talk about reserving a minimum number of places for our own students, or other ways in which this can be done. This is what is being done in France, Germany and the United States.

The other point I want to make, which I am sure the noble Lord, Lord Blunkett, wanted us to explore, is about levelling up, which I think has been ignored. Levelling up is a concept which has become quite famous since 2019, but I am not very comfortable with levelling up. It is like meritocracy: you pick up people and bring them up to a certain level, and that is what you are supposed to do, but who fixes what level they should be brought up to? If you can level up, you can also level down, and so students become objects of manipulation.

I suggest instead that we should create a system where students are able to realise their full potential and do whatever they want to do, be that through a university degree, acquiring higher skills in a polytechnic, or through other ways. I therefore suggest that we continue to talk about our students in a very respectful way, making sure that they leave university as well-rounded citizens.

My Lords, I thank the noble Lord, Lord Blunkett, for enabling us to have this extremely important debate. As someone whose main career was with the Open University, and then as a council leader, working closely with local universities in the north-east, I recognise the huge contribution that they make to their local economies. As Universities UK said in its Jobs of the Future report, more than 11 million extra graduates will be needed to fill jobs in the UK by 2035, in industries such as computing and engineering, teaching and education, and health. The latest developments in AI mean that there will be a 10% net increase in jobs that require a degree over the next 20 years. This comes at a time when the UK economy is stagnating.

However, the UK’s net zero economy grew by 9% in 2023, according to a report by the Energy and Climate Intelligence Unit and the CBI. This tells us that growth can be achieved if research and investment lead it. Universities, as so many speakers have said, are central in doing that. Some 90% of universities embed entrepreneurship in their degree programmes, and 80% of university research is categorised as world leading or internationally excellent. It must be built on.

In 2021, according to Universities UK, 21,000 spin-out companies were in existence, together with start-ups and social enterprises. We must build on that too. However, two weeks ago, on 21 February, there was a two-page advertisement funded by the UK Government in my regional morning paper, the Journal. The headline read: “Levelling up is happening here in the north-east”. That is good, and I welcome it, but the word “universities” never appeared, and it should have done. Indeed, a report by the Bennett Institute for Public Policy, based at Cambridge University, argued that the role of universities was not adequately recognised in the levelling up White Paper. I hope that the relevant departments across Whitehall will recognise that situation.

When I led Newcastle City Council a number of years ago, we developed very close working relationships with the two universities in the city and the regional development agency, One NorthEast. Our investment policies were aligned to buy the huge Newcastle breweries’ vacant site in the city centre. The council assembled the land and dealt with the planning side. One NorthEast provided capital and development support, and Newcastle University aligned its research and spin-out ambitions on the site. Multimillion pound cutting-edge investments have followed. We need more of that, and it is done through partnership work.

A lot has been said about overseas students. I agree entirely with what the noble Lord, Lord Blunkett, said: they are crucially important. They pay high fees and enable fees for UK students to be lower than they otherwise would be. They generate resource in our university cities and towns, particularly supporting the retail sector. We know that many overseas students are entrepreneurs and will set up businesses generating jobs. Overseas students have been vital for growth. The OBR has just reported that half of our projected growth will rely on immigration. I agree with the noble Lord, Lord Bilimoria, that we should leave overseas students out of ONS figures, to be counted in immigration figures only if they stay.

In conclusion, I am absolutely convinced that universities are central to growth and productivity gain. I support the remarks made by a number of noble Lords, including my noble friends Lady Garden of Frognal and Lord Storey, about the importance of part-time higher education to the economy. A report by London Economics found that the Open University has a total economic impact of £2.8 billion across the UK, a benefit-to-cost ratio of £6 for every £1 spent. We should never forget the importance of part-time higher education and lifetime learning. We need to invest in our universities.

My Lords, it is a pleasure to take part in this debate. I congratulate the noble Lord, Lord Blunkett, on calling it. I agreed with every word he said, and it took me back to when the noble Lord, Lord Bragg, initiated the arts debate. We rely on our elder statesmen on the Benches opposite to remind us, again and again, of what is valuable and good in our country.

It is a great pleasure to follow the noble Lord, Lord Shipley, not least because I spent some time in the north-east recently, working on a project with Newcastle University and four other universities called Creative Fuse, bringing together technology companies and creative companies. In fact, I think I am getting an honorary degree from Newcastle University—I am not sure if I am allowed to say that in public. I spent some time as Culture Minister understanding the incredible work that Newcastle and Gateshead have done on culture, turning Newcastle and Gateshead into a tourism site. I am sure that the noble Lord, Lord Shipley, played an absolutely vital role in that.

That leads me to universities. I could make a whole speech on the incredibly important role that our universities now play in culture. They were the saviours of culture as I set about slashing the culture budget. They supported many museums and performing arts institutions. The university of my friend, the noble Lord, Lord Bilimoria, is supporting the archive of the British Museum, and universities all over the country do that.

I could do a challenging speech on higher education. There is a part of me—probably based entirely on huge ignorance—that regrets that the university marketplace is not more competitive, with a variety of lengths of degrees and a variety of levels of tuition fees. However, I am sure I would be put right if I dared to venture into that territory.

I am now a stuck record, having followed the brilliant speeches of the noble Lords, Lord Shipley and Lord Bilimoria, as well as the remarks of the noble Lord, Lord Blunkett. In fact, the noble Lord, Lord Bilimoria, came on my yet to be award-winning Times Radio show to defend overseas students. He broke off from a lunch in Paris, and was incredibly articulate at a moment’s notice, to defend overseas students. I want to follow him, and the noble Lords, Lord Blunkett and Lord Shipley, in doing the same.

We have around 600,000 overseas students in the UK at the moment. That is pretty much the number that we predicted in 2013. There is not suddenly a surge in overseas students, and we have been through Covid and Theresa May to get to the figure that was predicted. However, there is no real policy on overseas students and no established consensus on how many overseas students the UK should host. If we had the same proportion of overseas students as Australia, we would have a million studying in the UK. We should be proud of the fact that, alongside Canada, Australia and the United States, we are the leading nation in the world for higher education for overseas students.

The number of potential eligible students around the world is growing by about 4% a year. If this was a business, you would be salivating at the prospect of increasing your customer base every single year, and thinking, “How do we attract more?” It is a myth that international students displace domestic students. In fact, the number of domestic students at our universities—84%—is the highest level it has ever been.

However, we need to update the data on how we measure overseas students because students are changing their behaviour and becoming more sophisticated. If you want to study for a master’s degree overseas, you apply for three or four different visas in different countries to ensure that you can move seamlessly into the one that accepts you, which could be in one of three or four countries where you have made an application. We tend to measure overseas students on the basis of those to whom we have granted visas rather than those who have come into the country to study. One of the reasons why we are popular is that we offer a shorter master’s degree than most of our competitors.

We need to think carefully about which countries are sending overseas students. A few tend to dominate at the moment—India, China and Nigeria. We might need a broader range of countries to hedge our bets in the future. However, we cannot be complacent. We might find it very easy to be rude about overseas students and put forward these silly arguments about how it is immigration by other means or how they are being attracted only because they are cash cows, but we should remember that many other countries are dying to have our kind of higher education market. For example, Turkey is emerging as a key player in the higher education market.

I wanted to take part in this excellent debate simply to make the point that overseas students are a massive asset for our country, a massive part of our economy and, as the noble Lord, Lord Bilimoria, said so eloquently in his brilliant speech, a massive part of our soft power.

My Lords, my noble friend Lord Blunkett has done your Lordships’ House a service by introducing this important debate. I thank him for that.

Levelling up is a term that is almost incapable of meaningful definition. However, it was a key pledge made by the Government at the last general election to reduce regional inequality in England and it is fair to ask what has happened since then. The £3.6 billion towns fund was the main initiative, yet the Government have had to admit that less than a fifth of the projects approved to improve towns across England have been completed. Last year we learned that councils were having to scale back or freeze levelling-up projects because of soaring costs and that the Department for Levelling Up, Housing and Communities was returning almost £2 billion of housing money to the Treasury, unable to find projects to spend it on.

Of course, inflation and interest rates have made it difficult for some projects to make progress, but the Government have failed to respond, instead asking local authorities to reduce their ambition. Surely, the very last thing required in the pursuit of increased growth, productivity and levelling up is less ambition. However, yesterday’s Budget provided evidence that the Government have redefined levelling up to their own advantage. The Chancellor highlighted future investments in Buckinghamshire, Cambridge and Surrey—all of which happen to include battleground seats for the upcoming election. Even that well-known deprived area of Canary Wharf is to be the recipient of government support.

The economic impact of higher education institutions was graphically illustrated by my noble friend Lord Blunkett in his powerful opening speech. Research by London Economics found that the estimated total benefit to the UK economy from 2021-22 first-year international students over the duration of their studies was more than £40 billion, while the estimated total costs were around £4 billion, meaning a benefit-to-cost ratio of 10:1. You would think that an economic impact of that level would be hard to ignore, yet the Government are making a determined attempt to do just that: as my noble friend Lord Howarth said, visa rules were changed at the start of the year so that international students could no longer bring dependants to the UK unless they were studying a postgraduate research course or a course with a government-funded scholarship.

This will hit many universities hard, given their reliance on international student fees to offset the fact that domestic student fees have not risen for a decade. Ironically, in their levelling-up strategy of 2022, the Government highlighted the importance of higher education institutions and their role in boosting local economies, but it seems that this crucial role has been trumped by the need to appease the right wing of the Conservative Party.

I want to highlight a part of the higher education sector which has a unique, vital and too-often undervalued role in levelling up—the Open University, to which the noble Lord, Lord Storey, referred. Flexible lifelong learning through part-time higher education is crucial to improving the UK’s economic growth rate. Supporting and encouraging adults who are already in work to reskill and upskill will be critical to increasing productivity and filling skills shortages in growth areas of the economy. Flexibility is essential in allowing people to access higher-level skills in the area where they live by enabling them to fit their studies around the demands of work and family. The sharp decline in part-time higher education over the last 15 years has led to a big decrease in the number of adults aged 21 and over accessing higher education and therefore caused regional disparities in higher education participation to widen.

The higher education participation rate of working-age adults aged 21 and over in England is now 30% lower than it is in the rest of the UK, largely due to the ending of the maintenance allowance and other support that is available to full-time students. Part-time distance learning is critical to widening access, supporting social justice and levelling up by allowing disadvantaged adults and those from higher education cold spots to access higher-level qualifications in their local area. That is evidenced by the Open University. More than half of its students begin their studies without the traditional entry qualifications demanded by other universities and more than a quarter come from the most disadvantaged areas in the UK.

The lifelong learning entitlement will offer a real opportunity to tackle many of the barriers to people studying flexibly in England. It will not be introduced until next year, but the removal of some of the restrictions on how additional funding entitlements for reskilling later in life are used will significantly improve flexibility. The positive impact of the lifelong learning entitlement could be enhanced by extending maintenance support to all part-time students, including distance learners, either through an extension of maintenance loans or the introduction of targeted maintenance bursaries. This has had a transformative impact in supporting flexible learning in Wales and those lessons need to be learned in England, if not by this Government then certainly by the one that will follow them.

My Lords, as the last speaker before the Front-Bench speakers, I also congratulate the noble Lord, Lord Blunkett, on initiating this important debate.

In the brief time allotted, I will focus on how design and technology education contributes to national growth and productivity. In an era when innovation is the driving force behind progress, the role of art and design in shaping our educational landscape cannot be overstated. According to research from the Design Council, the design economy increased by 73% between 2010 and 2019, which is twice as fast as the UK GDP. It has 1.97 million workers and a gross value added of £97.4 billion, more than two-thirds that of the financial services sector in the UK. The design economy encompasses industries such as product and industrial design, advertising, graphics, fashion, digital design, architecture and urban planning, as well as designers working in finance and marketing. Design skills are also used by non-designers in jobs such as civil engineering. Its multidisciplinary approach benefits all sectors of society, especially those addressing larger challenges such as achieving net zero carbon emissions, where 80% of a product’s environmental impact is established at the design stage.

It is therefore hugely worrying that the pipeline of designers to industry risks running dry in the wake of the collapse in design and technology GCSE numbers. Over the past decade, the number of students pursuing a GCSE in design and technology, which the majority of designers have, has decreased by 68%, raising concerns about a potential shortage of talent in the profession. This trend was noted by the House of Lords Education for 11-16 Year Olds Committee, chaired ably by the noble Lord, Lord Johnson, which looked at secondary education more broadly. Its report observes that

“creativity is increasingly valued by employers across all sectors of the economy”,

and that

“the creative industries contributed £116 billion to the UK economy gross value added and grew faster than the economy as a whole”

prior to the pandemic. However, it goes on to note that there has been a

“general decline in opportunities to develop creativity across secondary education”,

as well as

“some academies … using the flexibility they have over their curricula to drop national curriculum arts subjects, such as art and design”.

According to several witnesses, school accountability policies that promote traditional academic study over more creative learning are mostly to blame for the drop in possibilities for students to study creative and artistic topics throughout the 11 to 16 phase. The committee’s recommendations include lessening the focus on the Government’s “knowledge-rich” approach, which it claims has led to

“an overburdened curriculum that necessitates narrow teaching methods such as rote learning and ‘cramming’ subject knowledge”,

and moving away from an excessive emphasis on “traditionally academic study” at the expense of creative learning.

A study in 2022 by the Education Policy Institute on the state of design and technology highlights many factors that have corresponded with the significant decrease in uptake. Between 2011 and 2020, the number of DT teachers plummeted by half, from 14,800 to 7,300, as the Government failed to reach their recruitment targets. The All-Party Parliamentary Group for Art, Craft and Design in Education found in its Art Now inquiry report that:

“Sixty-seven per cent of art and design teachers … surveyed reported that they were thinking about leaving the profession … Four out of five art and design teacher respondents reported that wellbeing and workload were … the two biggest disincentives to stay in teaching and that these had worsened since the pandemic”.

Equally alarmingly, students and parents often prioritise fields of study that are perceived to offer better job prospects and financial stability. The perception that design and technology may not lead to lucrative or stable career paths can discourage enrolment in such programmes. Because design and technology has proven to be a critically important GCSE subject for students to study at the 16 to 19 level, if we are not careful there will not be a talent pool ready to be developed at higher education level. This trend is underscored by the fact that fewer than 2% of people who did not study DT for their GCSEs went on to study the subject later in their education. For this reason, calls to update the curriculum to make it more engaging and relevant are to be encouraged. Children who lack the desire or opportunity to begin studying DT early in life are far less likely to pursue the subject at a higher educational level. Neglecting to nurture this significant talent could seriously threaten its future. As Minnie Moll, the CEO of the Design Council, says:

“We need to re-design nearly every aspect of how we live our lives to tackle the climate emergency”,

and therefore it is critical that we engage with this issue now.

My Lords, this has been a very interesting debate from which I have learned a lot. We thank the noble Lord, Lord Blunkett, for introducing it; I am sorry that he did not say more about the quality of Sheffield’s own universities. I have visited both the University of Sheffield and Sheffield Hallam University; they have some really superb scientific laboratories, and they are acting as a motor for the regeneration of industry in that region. Sheffield also has one of the best politics departments in this country—dare I say it, possibly even better than Hull’s. We need to persuade people that Oxbridge is not the only place to go; they should get out there and go to the other excellent universities that we have around the regions.

There is still an overconcentration on Oxford and Cambridge. I note that a Liberal Democrat councillor in Cambridge has pointed out that Cambridge cannot expand much further because there simply is not enough water to support the larger activities it wishes to have. I note that the Government seem to give a high priority to a direct Oxford-Cambridge railway line, but a vital link across the Pennines would bring together Manchester, Leeds, Hull and others across the north. If levelling up is important, our regional universities have a key role to play in that, and we need the infrastructure as well. My children both work in research-intensive universities. My son stayed with us last night on his way from Edinburgh to San Francisco for a life sciences conference. If you are in that sort of world, you have to travel and you need good communications. If you say to someone, “You really should come and visit Leeds or Hull, but it will take an awfully long time to get there, even if you fly to Manchester Airport”, that is not going to help that university compete with Oxford, Cambridge and the south-eastern golden triangle.

We have superb universities in the north, the south-west and Scotland. The teaching-intensive universities are also very important to regional regeneration. As your Lordships know, Saltaire is part of the Bradford metropolitan area. The University of Bradford plays a key role in bringing back what was, at one point in the 19th century, one of our richest cities but has now become one of our poorest.

Partnerships with further education colleges are also important. It happens that one of Bradford’s further education colleges is based in Saltaire and I watch its teachers struggling with poor resources and poor salaries. I recognise that, if our universities are to flourish, they need not only enough well-qualified staff but technicians. We have a gross shortage of lab technicians across the United Kingdom at present, so this is one of the categories in which people must be attracted from overseas. Therefore, continuing education and bringing people back to work that they have missed is another very important part of what our universities do. I am proud to say that one of the best researchers at my son’s current lab came back from five years of child-rearing, on a charity’s fund helping women to return to university life. That is the sort of thing on which we need to focus if we are to reskill the whole of our workforce.

The noble Lord, Lord Blunkett, talked about the underlying anti-university tone that one hears from some parts of our right. It is part of the infiltration of the right wing in Britain by the radical right in the United States. I recall reading an op-ed in the Telegraph some months ago, which said that our universities are systemically left-wing and indoctrinate their students. That is nonsense and I am sure the Minister agrees. Apart from anything else, a large number of our university staff are not even British, so are not involved in that sort of left-wing indoctrination.

It is deeply unfortunate that this tone is coming back into British politics. It works through the Government. The Higher Education (Freedom of Speech) Act, which we passed last year, imposed a number of restrictions on freedom of speech within universities. The Economic Activity of Public Bodies (Overseas Matters) Bill, now before the House, makes a number of further incursions on university autonomy. We will be examining this in Committee in a week or two. The dismissal of experts, and of reasoned argument and evidence, is to be resisted at all costs, including by people who work for systemically left-wing foundations, such as the Resolution Foundation. I am sure this is part of the deep state that Liz Truss warned us against.

Research and innovation are extremely important. It is extremely important that we do not keep narrowing what is allowable to research to that which has an immediate and obvious pay-off. I am just reading Katalin Karikó’s book on her work, for which she has now been given the Nobel Prize. In her early years at the University of Pennsylvania, she was regarded as the “mad transferable RNA lady”.

I also remember a dinner with a professor of nanotechnology at Oxford, who was a few years older than me—we had sung together as boys—at which he assured me that nanotechnology had no possible commercial application whatever. Three years later, his son-in-law discovered a way to make injections without piercing the skin and the entire family became extraordinarily well off. We need to maintain research in the sciences, even if we are not quite sure where they are presently going. That is the path for the future.

As a number of noble Lords have said, we also need to talk about reskilling in a world in which whatever we learned between the ages of 10 and 23 will be out of date and irrelevant by the time we are 50. Since our children will have to go on working until they are 70, they will need to go back to university, with universities providing executive education, evening education and part-time courses.

If I am allowed to include the social sciences, I was asked at a dinner at an Oxford college last week whether I could justify the teaching of politics and international relations in universities on an academic scale—I should say that this was by a leading scientist. I could say only that I have trained a number of members of the British Diplomatic Service, people who work in the City on international issues, and students from abroad, and that it seems that teaching them about how to think, and how to understand that others do not necessarily think the same way as them, is a necessary part. I have a vivid memory of being asked by Boeing whether the LSE would give it an executive training course for some senior managers. We discovered that it had no idea that the rest of the world did not think like people who were born in Kansas. That is a justification for social science, in passing.

Financial crisis has been mentioned several times. We all have to recognise that, as the noble Lord, Lord Howarth, remarked, the long-term prospect for universities is of financial unsustainability and that, unless we get away from a model that depends on fees which no longer pay for the courses, and more and more overseas students, some of our universities will be in great difficulty. Those who say that tax cuts are the most important thing have to take this on board when thinking about the future of the country. That includes uncompetitive salaries, since our universities are in a global competition in which academics move from one country to another. I now note that some of the academics I know are moving from Britain to Germany, the Netherlands, Scandinavian countries or, of course, the United States.

Above all, we should never take the continuing success of our universities for granted. The noble Baroness, Lady Wolf, commented that they have always been training people but, in the 19th century, it was for the Church and the law, while German universities were training people for the sciences and engineering. Look at what happened to the British economy compared with the German, given the higher quality of German universities then. We could find ourselves in a similar position in the next 15 years if we are not careful. That is why we have to nourish our universities and ensure that they play their part in national economic growth and regional levelling up.

My Lords, I am delighted that my noble friend has brought this debate to our Chamber today. I commend him for the decades of work he has dedicated to the pursuit of better educational opportunities for all. I have the distinction of having been a serving teacher under his stewardship of the portfolio: prior to devolution of education to the Welsh Government in 1999, I had two years of working for the dynamic Secretary of State, now my noble friend Lord Blunkett, who was determined to ensure higher standards in literacy and numeracy and the introduction of the inspirational Sure Start programme, bringing together early education, childcare, health and family support. Unfortunately, this model was disbanded in England in 2011, but I am pleased to say that we kept it in Wales, under the banner of Flying Start. It is still running today, helping the most disadvantaged children and supporting their parents.

I cannot cover all the excellent points made by my noble friend, but some of his most salient are about an holistic approach to the young people of the future, getting them into the right place and giving encouragement. Higher education is indeed for them. It is about breaking the cycle of disadvantage, and lifelong learning is indeed at the root of this.

Many noble Lords have already commented on how higher education institutions play a critical role in driving innovation, producing a skilled workforce and facilitating regional development across the nations and regions. By operating sensitively and in close connection with the places and communities in which they are situated, universities have a distinct role to play in intraregional equality. They can serve as crucial social and cultural infrastructure, offering spaces, services and structures that foster community cohesion and strengthen social and cultural ties, as noted by my noble friend Lady Blackstone, and humanities are indeed a vital area of study.

When I taught for many years at Hawthorn High School in Pontypridd we gained the status, through a series of collaborations, of a university school. For many of our pupils, although the University of Glamorgan—later the University of South Wales—was physically situated in their community, it was as alien a structure to them as any other building in the town. Through various joint schemes and use of the campus facilities, including a wonderful radio studio, it gradually dawned on our pupils that the university was a place to continue their studies after leaving school, and that they could—in most cases, and as I was—be the first family member to go to university.

Universities provide a strong return on investment. We have an uncertain future ahead for our economy and labour market, and high-skilled jobs will be essential to guarantee the United Kingdom’s success. Demand is growing for individuals to be equipped with higher-level skills, as discussed by my noble friend Lord Howarth of Newport and the noble Lord, Lord Johnson of Marylebone.

London Economics estimated, based on the 2021-22 academic year, that the economic footprint of higher education providers contributed 768,000 full-time jobs, £71 billion of gross value added, and £116 billion of general economic output. This does not take into account the wider economic benefit of higher education on productivity, innovation from world-class research, increased wages and so forth. I am sure that my noble friend Lady Chapman demonstrated the value of her university education with so many erudite and insightful comments; I have no doubt that her sons will eventually be persuaded by her to attend university.

The Government report in July 2023 on higher education set out certain reforms, such as improving access to level 4 and 5 courses, and reducing fees for foundation courses which are classroom-based. Some issues that resulted from the report were that, in terms of limiting recruitment to certain courses, academics argued that these courses are accessible for disadvantaged students and important for social mobility and supporting the local economy. Labour argued that basing the outcome of courses on earning potential was limiting, and would restrict opportunities for disadvantaged students.

Many commentators have highlighted the lack of reference to universities in this Government’s levelling-up agenda. It has been reported that building a university in a town is the

“best way to level up a locality”.

There is a pool of graduates, many jobs, and a large influx of spending.

Education is at the heart of Labour’s mission to spread and expand opportunity. From our earliest years, through to learning or retraining as adults, gaining knowledge, skills and qualifications and exploring our interests and abilities enables us to build the lives that we want and the society we share. There was an excellent reminder by my noble friend Lord Watson of Invergowrie of the depth, breadth and success of the Open University in lifelong learning.

Today, the best education that our country has to offer is not available to every young person. The opportunity to learn and train as an adult is limited and available to too few. Our mission to spread opportunity means both enabling everyone to access the opportunities that excellent education brings and giving everyone opportunities throughout our education system.

Our world-leading universities and the research they undertake should be a source of pride and are one of Britain’s great strengths. The 2021 Research Excellence Framework found that the vast majority of UK university research was either “world-leading” or “internationally excellent”. University spin-outs, which commercialise this innovation, can directly drive up economic growth. However, we lag behind countries such as the United States in generating and scaling spin-outs. A Labour Government will track spin-outs from universities with a dashboard to identify what is working and where there are barriers. As recommended by Labour’s start-up review, we will work with universities to ensure that there are a “range of options” on founder-track agreements, helping boost spin-outs and economic growth.

Universities are anchor institutions and, at their best, are civic actors working with partners across local and regional communities to respond to the needs of that place. We welcome the work of the Civic University Network to establish peer review learning to support and expand the work of universities in responding to the needs of their local communities.

Will the Minister say whether limiting recruitment on certain courses reduces the accessibility of university education for disadvantaged young people? As I said earlier, universities are central to breaking down barriers to opportunities for young people, by exposing them to new communities, new people and new experiences, as I saw with my pupils when they engaged with university life. It is therefore, as many noble Lords have mentioned, a shame that the levelling-up agenda gives little recognition to the effect that universities and colleges have on local areas. Why do the Government neglect due recognition for the levelling-up qualities of universities and not want to incentivise more young people to take part in higher education? It is a wasted opportunity, and one which we will hope to redress. Our desire is to build on the legacy of the previous Labour Government’s target for 50% of young people to go to university to reverse the trend of declining numbers of adults participating in education and training. We will press on and ensure that the ambition of any young person to pursue higher education regardless of background or geography is realised.

My Lords, I join noble Lords in congratulating the noble Lord, Lord Blunkett, on securing this very important debate and thank him for the way he introduced it. I underline how both personally and on behalf of the Government I absolutely share his aspiration that there should be equal opportunity for every young person to access the benefits of higher education. I am not sure whether I am meant to declare this, but I am the slightly bemused recipient of an honorary degree from the University of Bath.

I thank all noble Lords for their contributions to this important debate. Our world-leading higher education sector plays a pivotal role in driving economic prosperity, creating employment opportunities and supporting the local communities that are the foundation of our levelling-up agenda. To reassure my noble friend Lord Willetts, I say that the Government accept that there are definitely different models of higher education. Indeed, we are investing in a number to encourage this diversity. We had a great example from the noble Baroness, Lady Chapman, regarding Teesside University and some others. I also absolutely agree with my noble friend Lord Norton of Louth that there is a wider social good that universities bring to their students and more widely to their communities.

As we have heard from noble Lords this afternoon, England’s higher education system already stands at the forefront globally, and it is imperative that we sustain this position. We should be proud that more than 40% of UK adults have achieved level 6 qualifications equivalent to a bachelor’s degree or above, surpassing other G7 nations and exceeding the OECD and EU averages, although I hear my noble friend Lord Johnson’s aspirations to go further. We continue to invest in our higher education system. Our latest reforms are introducing stringent controls to ensure that higher education courses deliver positive outcomes for all students and for taxpayers.

The noble Lord, Lord Blunkett, and the noble Viscount, Lord Chandos, talked about the importance of the quality of courses and I think a number of noble Lords, including the noble Baroness, Lady Chapman of Darlington, criticised the Government for some of the language used about the range in their quality. I would say from talking to universities that they share our view that it is incredibly important that we maintain quality in our higher education sector. That is hard to do—I absolutely recognise the pushback from noble Lords—but if we were to have evidence of poor-quality courses, that would risk besmirching the reputation of all our universities, as well as impacting on international students and the soft power to which noble Lords alluded.

Reference was made to the report in the Times. I suppose that the nuanced version of the balance of our great institutions and where we are focusing to ensure that quality is maintained does not make such good headlines.

We also recognise the central importance of technical and further education in delivering the key skills needed for economic growth. The Government’s reform agenda, outlined in the Skills for Jobs White Paper and subsequent legislation, aims to strengthen this sector by putting employers at the heart of post-16 skills through an integrated offer that includes T-levels, higher technical qualifications, apprenticeships—including, of course, degree apprenticeships—and improved support and guidance. The noble Lord, Lord Londesborough, referred to a number of those points in his remarks about the importance of links with employers. We have really tried to weave that through all our skills reforms.

I hope that the noble Lord, Lord Freyberg, is reassured a little by a number of the T-levels, which directly address some of the points that he raised. We will introduce T-levels in craft and design, and media broadcast and production, from September this year. There is, of course, a digital production design and development T-level as well.

My noble friend Lord Patten made the case strongly for degree apprenticeships. My right honourable friend the Secretary of State would certainly agree with him vehemently, given her experience as a degree apprentice. I will come in a moment to respond to my noble friend Lord Willetts’s points about the funding of degree apprenticeships going forward.

Our comprehensive reforms are supported by a substantial investment of £3.8 billion over the course of this Parliament. Specifically, £185 million in 2023-24 and £285 million in 2024-25 will address recruitment and retention challenges faced by colleges offering high-value technical, vocational and academic programmes—something which the noble Viscount, Lord Hanworth, was concerned about. This investment ensures that higher and further education training aligns with employer needs and empowers individuals to enter the workforce, progress and develop new skills continually through their lives. This skills development is imperative, because we know that one-third of labour productivity growth can be directly attributed to skill level improvements. Enhancing our workforce’s competence will help drive economic growth right across the country.

The noble Baroness, Lady Blackstone, asked about progress with the university enterprise zones. She will know that in October 2023, the Government invested £60 million in the regional innovation fund, which is obviously about aspiring to similar outcomes in driving regional business engagement and growth through knowledge exchange. But we have a number of pilot university enterprise zones: 24 of them were set up between 2015 and 2019 and are currently being evaluated for their impact.

Turning to research and development, higher education providers contribute significantly to the UK’s current R&D efforts by delivering a massive proportion of the UK’s current research and development expenditure. Our universities deliver 77.5% of the UK’s non-business R&D and innovation activities, which is significantly more than in other comparable countries. For example, in France the figure is 59.8%, in Germany it is 55.2%, and in the United States it is 46.5%.

The noble Lord, Lord Wallace of Saltaire, made the very wise point that R&D should not be seen only in terms of its immediate pay-off. One of the things that university R&D does is stimulate private investment. This is incredibly important for growth. Public spending on R&D is at its highest-ever level, and we are fulfilling our commitment to spend £20 billion per annum by 2024-25, in the knowledge that every £1 of public expenditure leverages double the amount of private investment in the long run.

This record wider investment is a key part of how the Government are delivering the long-term change to ensure that our country has the brightest possible future, growing the economy and improving opportunity for all. This most recent investment builds on the £137 billion we have invested in R&D across all parts of the UK in the last decade.

As noble Lords have illustrated, we are home to a world-class research community. We have thriving technology and life sciences sectors, excellent green skills and a fantastic creative sector. Those sectors help us lead Europe in terms of investment, particularly in relation to science and technology. We are focused on ensuring that we have the right skills for the future, the right conditions for start-ups and scale-ups, and the right regulatory environment that supports innovation and long-term business confidence.

We know that we have ground to make up compared with France, Germany and the US on productivity. Although the global financial crisis triggered an international productivity slowdown, the UK suffered a greater slowdown than some of those nations. Our investment in research and development, our reforms to higher technical education and our drive to increase participation in degree apprenticeships will all drive the change needed to fill this missing middle in our skills landscape and improve our productivity. My noble friend Lord Johnson of Marylebone referred to this.

Employers are demanding level 4 and level 5 skills to fill vacancies, yet only 4% of people have a level 4 or level 5 qualification as their highest qualification by the age of 25. Higher technical qualifications, approved to provide the skills employers need, will help to improve the prestige, profile and uptake of these valuable skills.

On funding growth in degree apprenticeships, which my noble friend Lord Willetts asked about, we are providing an additional £40 million in the next two financial years to support providers to expand their offer and improve access for young people and disadvantaged groups to these valuable programmes. Overall, investment in the apprenticeship system in England will increase to £2.7 billion by 2024-25. As I know my noble friend knows, 65% of all apprenticeship starts so far this year have been at level 2 and level 3, with level 3 remaining the most popular level, accounting for 43% of all apprenticeship starts.

The noble Baroness, Lady Garden, asked about evidence of encouraging adults back into education. Of course, it is too early to see the impact of the lifelong learning entitlement, but we can see tens of thousands of people taking our skills bootcamps, particularly in future-facing skills such as digital and data.

Levelling up was the focus of the noble Baroness, Lady Wilcox of Newport, and the noble Lord, Lord Watson of Invergowrie. Despite the noble Lord’s remarks, levelling up remains at the heart of the agenda to build back better after the pandemic and to deliver better productivity for every part of the UK. As noble Lords know very well, ability is evenly spread in education but opportunity is not. The department’s focus on levelling up differences in the quantity and quality of human capital between different parts of the country is essential; we know that this is the single most important factor in driving differences in productivity over time.

The noble Lord, Storey, spoke eloquently about the importance of skills, and he is right. To help improve people’s lives and boost the economy, the Government’s skills mission sets out an ambition for 200,000 more people to complete high-quality training in England each year by 2030. This includes 80,000 more people completing courses in areas of England with the lowest skills level. We want to make sure we are raising skills levels in the places they are needed most, so that more people have the skills that they need to get good jobs.

As the noble Lord, Lord Shipley, articulated, the higher education sector is one of the major partners in delivering the research and development levelling-up mission through hubs of research and innovation. The Department for Science, Innovation and Technology is leading delivery of the research and development levelling-up mission—a cross-government commitment to increase domestic public investment in R&D outside the greater south-east by at least 40% by 2030 and, over the spending review period, by at least one-third.

We are supporting this through ambitious programmes such as the innovation accelerators, investing £100 million to support Glasgow, Greater Manchester and the West Midlands to become major centres for research and innovation, bringing together higher education with local government and business leaders. The programme is pioneering a new model of research and development decision-making that empowers local leaders to harness innovation in support of regional economic growth. Strengthening innovation clusters is a top priority for driving growth across the UK. As many noble Lords said, universities, as anchor institutions, play a crucial role in this, creating a pipeline of skilled graduates, attracting talent and investment, spinning out innovative firms, and catalysing collaboration across the local ecosystem.

The noble Baroness, Lady Wilcox, was critical of the Government’s record on spin-outs and university commercialisation. This surprises me, because, looking at the data, we see that the number and value of equity investments secured by academic spin-outs has increased from just over £1 billion in 2014-15 to comfortably over £5 billion in 2021-22. If you consider the research resource, UK universities generate more income from intellectual property, and only slightly fewer spin-outs, than US universities.

A number of noble Lords, including the noble Lords, Lord Bilimoria and Lord Parekh, my noble friend Lord Vaizey and the noble Baroness, Lady Prashar, talked about international students. My noble friend Lord Norton of Louth asked me to confirm our commitment to our extraordinarily successful international education strategy—that remains firm.

The noble Lord, Lord Blunkett, was generous enough to say that I had already said this, but I shall say it one more time: international undergraduate student numbers have grown in recent years, but not at the expense of domestic undergraduate numbers. Most international entrants to the UK higher education system are at postgraduate level.

The noble Baroness, Lady Prashar, asked about taking international students out of the migration statistics. Net migration is a demographic measure, and it can always be derived even if we were to take students out, but that is ultimately a decision for the Office for National Statistics.

In closing, I want to mention the speech of the noble Baroness, Lady Wolf, who put in a far more sophisticated way than I am about to do some of the wider reflections on the role of higher education as we look forward in a rapidly changing world. Historically—when I was lucky enough to be at university—models of higher education facilitated, in effect, a smaller number of more privileged students to achieve university places and go on to very well-paid and high-status careers. The inequalities of those models have rightly been challenged, including by the reforms of the Blair Government, with that focus on widening participation.

Of course, higher education is a vital part of social mobility. However, as we continue to support, we must also challenge the higher education sector as participation widens to make sure that we do not lose that focus on quality, on employability and on good outcomes for all its learners. The noble Baroness, Lady Wolf, raised wider questions, but while higher education plays a critical role in growth and productivity both nationally and regionally, it needs to be part, and is part, of a wider growth strategy that addresses the worsening trends in inactivity in the working-age population, the levels of investment across the economy, and the education and careers that our children and young people deserve. That is where this Government are focusing.

My Lords, it is a very wise tradition that those who have moved take-note Motions do not make another speech at the end, but I shall just take one minute, if your Lordships do not mind, to thank the noble Baroness for, as ever, a thoughtful and comprehensive response to what has been an excellent debate. I thank everyone who has taken part for their generosity and for their wisdom, including those with whom I disagreed. The great thing about a seminar of this sort is that the spirit of Socrates still shines through. I say this to the noble Lord, Lord Wallace of Saltaire: when the scientist challenged the idea of social sciences having a value, did he not wonder what he might have said to his colleagues who were teaching classics?

I was really pleased that the Minister got an honorary degree from Bath. “Don’t throw the baby out” is the message that we crave this afternoon.

The noble Lord, Lord Norton, and I were contemporaries at the University of Sheffield politics department. I spent too much of my time, perhaps, marching against apartheid, while he spent far too much of his time in the library.

To conclude, I want to reassure the noble Lord, Lord Willetts, that the dog has kept his breakfast in on this occasion. I think that was a measure of the quality of the debate. The quality of education is crucial to all of us. If there are problems, we can fix them, but, above all, we should tell the rest of the world, as the Chancellor endeavoured to do yesterday, that the higher education sector in Britain is open for business, is the best in the world and will give a very warm welcome to any student who wants to come here.

Motion agreed.