“In the UK, we are expecting graduates to contribute more than in the past to the costs of their education but crucially no one has to pay upfront…
“In the UK, we are expecting graduates to contribute more than in the past to the costs of their education but crucially no one has to pay upfront. There are publicly-financed loans that do not have to be repaid until the graduate finds reasonably paid employment, as well as grants and scholarships for those from poorer households. But today I wish to set what we are doing in the UK within the wider international debate.
“Many people are sceptical about enabling more people to attend university. But the evidence on the benefits of higher education is overwhelming. It is good for the individual, good for the economy and good for society.
“That list of benefits is a crucial clue that helps us answer the question of how to pay. It has to be a mixed model. We in Britain have developed what I think is one of most balanced models. In fact, OECD figures suggest our reforms shift from having 60 per cent of the costs covered by the taxpayer and 40 per cent by the graduate to 40 per cent by the taxpayer and 60 per cent by the graduate. The Dearing report and the Browne report both recommended this sort of approach and all three of our political parties have come to income-contingent loans when faced with dilemma of how to pay for higher education. It remains controversial but it is here to stay. Indeed, models like ours are beginning to be floated here in California.
“It is no accident that our student finance reforms are happening at a time of fiscal restraint. But they are not just, or even primarily about, saving money. They also deliver wider reform. Substantial public finance is delivered via the student rather than the funding agency. So we can liberate universities from the hidden regulation that comes with the power of the purse and instead have more limited but explicit regulations. In many key ways, our institutions are freer than those here in US, where state power can determine admission arrangements or the mission of an individual college, as it does here in California.
“As part of this approach, we are liberalising student number controls. This year, universities can recruit as many students as they wish who achieve AAB in their A-Levels. Next year, it will be ABB. That means one-third of entry places are no longer subject to distribution from the centre.
“The objective of all our changes is a better academic experience for students. Our world-class research base has long benefitted from intense managed competition but sharper incentives are overdue to improve student teaching.
“We are serious about supply-side reform. Those who are churlish about this forget that many of our universities started as alternative providers challenging Oxbridge dominance by offering something different often with support from local councils and local businesses. Those alternative providers were dismissed at the time - the new University College London was denounced when it was set up as a “mere lecture-bazaar” and now it is one do the world’s great universities. Now we are once more opening up our system to a wider range of providers that can take on students with public loan support.
“There are many ways an alternative provider can enter our system. We welcome new start ups, and international institutions with experience abroad. Or an existing university might set up a commercial subsidiary aimed for example at the overseas market. The current transformation of the College of Law is another example of what can be done provided of course charitable funds are protected. I envisage a wider range of providers with a particular focus on teaching, or concentrating on the efficient delivery of licences to practise, or focussing on distance learning.
“So far, this issue has been approached largely as a domestic issue but higher education is at the early stages of globalisation. There are middle income nations such as Indonesia, Turkey or Brazil with a surge in the number of young people. They are looking to a massive and rapid expansion of higher education. Educating citizens to a higher level is the crucial challenge for any nation that wishes to modernise. British higher education can work with them to achieve this. This is an opportunity we must take. It contributes to the growth of education abroad and is a great British export industry.
“We have excellent universities. We have a regulatory system with the QAA which gives confidence in our academic standards. And of course there is the advantage of teaching in English.
“Our higher education sector is becoming more international in four ways. It applies to institutions and to people. And it involves movement in and out of Britain. So first there is the increasing presence of international providers in UK. Secondly, British institutions are planting deep roots overseas. Thirdly, there are growing numbers of overseas students who choose to study in the UK. And fourthly more British students opt to go and study abroad. All these trends are evidence that higher education is going global. And that is a good thing as students broaden their experience and successful institutions move away from the confines of a single campus.
“As the Government focuses on growth there are few sectors of our economy with the capacity to grow and generate export earnings as great as higher education. Every overseas student on average pays fees of about £10,000 a year and spends almost as much whilst they are here. That means 400,000 overseas students bring in almost £8 billion a year. They make a big contribution to the economies of cities like Bradford or Exeter or Manchester as well as London of course, one of the world’s great centres for international education. It is because we recognise their importance that there is no cap on the number of legitimate overseas students coming to study in Britain.
“Our universities are internationally-recognised: they are a great British brand. We can do more to take advantage of our position. Our universities are well-financed for what they do but under-financed for big expansion. I want to see investors from Britain and abroad helping our universities access these big overseas markets. I know that companies like Goldman Sachs who have organised this conference today are keen to investigate this possibility.
“Overseas students travelling to the UK to study is just one way we can grow. Last year 400,000 overseas students came to the UK to study. But for the first time this was exceeded by the record 500,000 people who benefitted from British higher education whilst living abroad. They can do this in many ways. They might study at an overseas campus of a British university. The degrees of British institutions, most notably the University of London, are taught in local colleges all over the world - Nelson Mandela took his London degree whilst imprisoned on Robben Island. And of course there is distance learning too through institutions like the Open University. Here in the US this week I have been struck by the surge of activity in distance learning. Professor Agarwal President of Edx, a not for profit set up jointly by Harvard and MIT, told me of his ambition to getting a billion students across the world studying online. Here on the West Coast social enterprises like Coursera spun off from Stanford are similarly ambitious. We may be at a tipping point in distance learning as technology offers more efficient and more effective ways of learning than ever before. British higher education must not be left behind.
“We are fortunate to have a world-class higher education sector. It is deeply worthwhile in its own right. It transforms the lives and life chances of British students. But in these tough economic times we should also recognise it is one of our great export industries too. The bold new steps we are taking on student finance and opening up to alternative providers brings together two of this Government’s key objectives - education reform and our growth strategy.”
**Notes to editors
**1. The Government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries.’ It set four ambitions in the ‘Plan for Growth’ (PDF 1.7MB), published at Budget 2011:
- To create the most competitive tax system in the G20;
- To make the UK the best place in Europe to start, finance and grow a business;
- To encourage investment and exports as a route to a more balanced economy;
- To create a more educated workforce that is the most flexible in Europe
Work is underway across Government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the Government wants the economy to travel.
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Notes to Editors
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