Oral statement to Parliament

HEFCE annual conference 2012

I’m delighted that HEFCE has chosen this wonderful venue for its annual conference. This great college has trained, amongst others, Gustav Holst…

I’m delighted that HEFCE has chosen this wonderful venue for its annual conference. This great college has trained, amongst others, Gustav Holst, Ralph Vaughan Williams, Benjamin Britten, Joan Sutherland, and - rather more recently - Gareth Malone of The Choir. Today, students from more than 50 countries have passed the sternest test of musicianship in order to develop their exceptional talents here.

We are very fortunate that our higher education system includes specialist institutions like this one. And the conservatoire is a fascinating type of educational institution, with training at its heart. It is a good example of what we mean when we talk about the diversity of our higher education system. Diversity of mission, diversity of pursuit are among our greatest strengths, and this Government will do all it can to protect both.

Challenge facing conservatoires

But these institutions can face threats sometimes, because distinctive features of their educational model are not well understood. We have an example of that at the moment, with proposed changes to the terms of United States federal loans for US students who are studying overseas. The new requirement is that foreign institutions must have their own degree awarding powers in order for their US students to be eligible for US Federal Aid overseas. This change affects some of our world-class institutions dedicated to the performing arts, such as Trinity Laban Conservatoire of Music and Dance, the Guildhall School of Music and Drama and LAMDA, the London Academy of Music and Dramatic Art.

While so-called Listed Bodies in our system do not have their own degree awarding powers, all of their students on validated courses graduate with degrees of equal standing to students taught at the awarding body itself. Indeed, I have always argued that external degrees can be a very effective way to demonstrate high-quality teaching. It means that the standard of one institution’s programme can be scrutinised by another.

I will therefore be writing to my good friend Martha Kanter, Under Secretary at the US Department of Education, to explain the problem posed for these distinctive institutions by the Department’s proposals. Our institutions would lose income. America loses out if some of our excellent universities and colleges become inaccessible for gifted American students. And other students miss out from the enrichment provided by their American peers. We’ll do all we can to work with the American administration to try to resolve this matter speedily.

The reforms so far: funding and teaching

Today I want to review where we are on the Coalition’s radical reforms of HE. I am not going to be able to answer all your understandably important questions about 2013-14 and beyond, but I hope at least to give you an update on where we have got to on the key issues you face. I do recognise just how much change you are facing, and I do appreciate how you are facing it, if not quite with equanimity, then certainly with an attitude which is sober and mature. With the wise guidance of Alan Langlands and his excellent team at HEFCE, I am sure universities will emerge from this stronger than before. And that is not an empty claim: the figures bear it out.

Putting together recurrent and capital grant for teaching and the BIS loans outlay to higher education institutions for the upfront costs of graduate contributions, total BIS investment in pure teaching in cash terms would be over £7.4 billion in 2012-13 and could rise to over £7.9 billion in 2013-14. HEFCE’s recent assessment of the financial health of institutions concluded that the sector was financially well prepared for the new funding system with the majority of the key financial indicators the best on record - the sector reporting strong surpluses, large cash balances and healthy reserve levels. These will help the sector to manage the challenges arising from the transition to the new funding arrangements - in which the Coalition has been able to cut public spending without reducing the cash getting to our universities. It has of course been achieved not by coercing students to pay up front but by expecting graduates to pay back when their earnings are over £21,000 per year. It is a fair and progressive approach.

But these are not just financial changes. They have much deeper implications than that. Above all they bring the quality of the student academic teaching experience to centre stage. From this Autumn, students arriving at university will be asking what they are getting for the fees of up to £9,000 a year that they will be repaying when they graduate. Students are not just consumers, but they are certainly entitled to an excellent academic education for this funding. Students and their parents will be asking much more pertinent questions about the education they are getting. I understand the argument from universities that students should not be spoon fed and instead must be treated as independent learners. But that cannot be an excuse for low levels of academic engagement or feedback, or just plain inaccessibility. I already hear reports of the cultural change in our universities as the quality of the teaching experience for students comes front and centre. That is good news. I am sure you are all preparing for a level of scrutiny of the student teaching experience that you have not had before.

Information and data collection

That scrutiny should be well informed. That is why the National Student Survey matters. NSS results help institutions to see where to focus their efforts in enhancing the quality of their students’ academic experience. But NSS cannot be the whole story, not least because some students will have limited experience of higher education against which to judge their own course. Graham Gibbs, in his excellent report Dimensions of Quality, draws out some key inputs that are strongly linked with student engagement and educational gain. His list includes class or cohort size, close contact with lecturers and effective feedback. The White Paper sets out an expectation that universities publish summary reports of their student evaluation reports on their websites. HEFCE is pursuing this proposal alongside the NUS and sector bodies. It’s also looking further at the importance of class size, and at how to provide meaningful information to students about the teaching qualifications and expertise of staff. Class size, contact hours, who does the teaching; these are key indicators on which newly empowered students will be entitled to information. I welcome the way universities are beginning to make this information available and urge you on.

So we are transforming the key information available to prospective students. At the same time I know there are other data requirements for which the rationale is lost in the mists of time. There is nothing more frustrating than collecting data which disappears into the ether never to be used or referred to again. We are tackling that.

This has to be part of reforming data collection for universities. I recognise that this academic year has been particularly difficult. The changes to the Higher Education Students Early Statistics Survey (HESES) and the student record were an inevitable result of the reforms to the financing of teaching and the need to operate two parallel systems during the period of transition. The situation was far from ideal. HEFCE required institutions’ forecasts of student numbers, for example, to prepare their preliminary grant allocations. The alternative would have been HEFCE producing forecasts on behalf of institutions and then explaining their rationale to each college and university. I trust that burdens will ease in the coming years. The annual grant letter to HEFCE from Vince Cable and myself made it a priority to reduce data collection and eliminate duplication. Action is underway on that front, especially the HE Information Landscape Project that’s set to report a couple of months from now. It’s exploring improvements to the mechanisms by which changes to data specifications are managed and communicated and, through the adoption of data standards, the extent to which improved database linking can eliminate duplication during collection. The next financial statistics review, meanwhile, will look at requirements for the financial monitoring of HE providers as going concerns and at streamlining the separate HEFCE and HESA financial data collections. And the participation of universities in the well-established HESA Record Review process has recently brought about simplification of staff and estate management statistics.

There is a great deregulatory prize to be won here, driven by informed comment from the sector itself. I know that, in some cases, you’ve persuaded HEFCE to retain certain datasets that it was prepared to dispense with, because institutions find them useful for benchmarking purposes. We can improve the format in which data is required and the notice given, and eliminate conflicts in how it is collected. Ultimately, of course, the goal is to raise the quality and accessibility of information about higher education, especially for prospective students and their families - while simultaneously reducing the data collection problems.

Student power

But information aimed at students is not worth much unless those students can act on it. That is where our shift to open access for students with AAB comes in. We originally estimated that this would benefit about 65,000 students. Our latest estimate is that actually around 85,000 places will be liberated from student number controls in 2012/13. That is a quarter of all entrants. It is a radical change that has started to liberate the system.

I know from my conversations with Vice Chancellors that the sector is responding well. Because, at AAB and above, institutions can accept all the applicants they wish to, more students will be studying at their first-choice institution and universities are having to work hard to attract those applicants.

At the same time, we have been able to increase choice through the core-and-margin policy. When I opened the new University Centre in Harlow earlier this week, I met lone parents who told me they are unable to leave Harlow to study because of family responsbilities. Now, thanks to core-and-margin, they can access higher education on their doorstep better than ever before.

Our White Paper committed us to year-on-year increases in the number of liberated places. To an extent, that is likely to happen naturally - given past trends, for example, in school achievement. And I urge HEFCE to continue talking to qualification bodies about the details of the tariff policy, for example in relation to equivalent qualifications. We want to go further than this, but are still digesting strong views on whether to do so in 2013/14. I recognise that you need to know very soon exactly what our policy will be for 2013/14. We all wish to avoid last year’s scenario in which many institutions had to rewrite their access agreements so, while I am not in a position to make an announcement now, I hope to do so before the end of the month.

I am often asked why can’t we simply free up the whole system so that all those who want to study in higher education can find a place somewhere. That is after all how the school system works. But entry to higher education has always been competitive rather than automatic. We recognised the unprecedented level of demand for higher education in our student finance changes, which enable us to keep numbers broadly flat despite current fiscal retrenchment and falling numbers of young people. But the cost of educating each student remains significant, so those wishing to see further expansion need to think creatively about how to cover the costs.

Postgraduate support

Funding for postgraduate provision has also attracted attention recently - and, in the HEFCE grant letter, Vince Cable and I signalled our wish for HEFCE to protect it as far as possible. This Government has long recognised the value of postgraduate education; it is a fundamental component of the higher education sector. In response, HEFCE announced additional funding in this area, which is expected to total £39 million and returns postgraduate taught funding broadly to pre-reform levels.

HEFCE has rightly been praised for introducing these arrangements for an interim period. It is currently consulting on funding for 2013-14 onwards and is proposing to provide higher rates of grant for postgraduate taught provision than for undergraduate provision to minimise any reduction in income. I urge you to respond to this consultation to allow HEFCE to reflect on views from the sector. I would welcome policy ideas on how to finance post graduate study in future. Tim Leunig of Centre Forum has already put forward one interesting model. It would be great if others suggested alternative approaches.

OFFA and access to HE

The new fees and loans for undergraduates are essential to maintaining the financial sustainability of our universities in tough times. But we would not have been able to get support for these changes without a renewed push to ensure that universities are broadening participation and improving access. After the rather fraught debate on this, when Les Ebdon was appointed, let me make it absolutely clear that we are not introducing quotas. Your power to decide who you admit is rightly protected in legislation. And Les absolutely understands that he will be working within the framework of that legislation and the policies set out in our White Paper and the Coalition’s social mobility policy statement launched a year ago. Institutions will always have complete autonomy over whom they choose to admit. Vince Cable and I are glad that Les will be picking up the reins at OFFA. He was the strongest candidate, selected in a fair and open process - and he will provide a clear voice for the sector with the advantage of coming from the sector and understanding it. What we all want to see is not social engineering - and certainly not quotas - but quite simply genuine meritocracy. Because entry to our universities is a competitive process with more applicants than there are places we do a serious sorting exercise. This is unlike some countries, where everyone has a claim to go to their local university and then a very large number drop out over the first year as they are winnowed out. We try to do that assessment beforehand. It can be based on more than just A Level results, by looking at all the information that indicates the potential of an individual to succeed. The aim is that those who can perform best at any given university are selected for it.

We now spend a lot of money trying to overcome the barriers which might stop those who are perhaps at weaker schools or in low participation neighbourhoods going to university. There are three main funding streams. Institutions estimate that they’ll be spending £620 million annually through their access agreements by 2015-16. This is of course universities’ own funds collected from students in the form of fees. Tomorrow, HEFCE will be publishing updated guidance on the National Scholarship Programme for 2013-14, when the public contribution will be doubling to £100 million; it will reach £150 million by 2014-15. HEFCE also has its widening participation premium, running at about £140 millon. These figures are not strictly comparable and I have been warned that it would be a vulgar error just to add them together. Nevertheless, it is clear that spending is growing here, perhaps by £100m between 2009-10 and 2012-13. This is a record, in fact. It is evidence of how much universities and the Government are committed to social mobility achieved, not by quotas, but by true equality of opportunity. That increased funding is paying for a host of initiatives. Some must work better than others. Some may be paid for by one university but improve participation at a different one. We now need a much more systematic assessment of what works and what is less effective. So Vince and I will be writing to both HEFCE and the Office for Fair Access, with a request for them to develop a shared strategy for widening access to maximise the impact of the combined investment across the entire sector. In particular, we’ve stressed the importance of all widening participation activity resting on a firm evidence base - derived both domestically and from overseas - in order to deliver improvements throughout the HE system.

It’s vital here that the whole is greater than the sum of its parts, with the minimum of duplicated effort, the commissioning of new broadly valid research, where appropriate, and integrated monitoring of performance, wherever possible. Let’s not forget that the whole point of this work and this investment is to identify and realise human potential. The social, moral and economic benefits of doing so shouldn’t need repeating here. We are asking OFFA and HEFCE to provide a substantive account of their plans in the autumn with provisional evidence and findings as soon as possible.

Work is already underway to assemble the evidence on the effects of the emerging changes in Higher Education. With the Department for Education and Nuffield Foundation, we are funding new analysis by the Institute of Fiscal Studies and the Institute of Education on access and the effects of tuition fees. Using longitudinal survey data, it will include assessment of the earnings returns from different kinds of degree, to improve understanding of the influence of universities on social mobility and to estimate the future profile of student loan repayments. We are also working to improve the graduate earnings data we have already to establish a more detailed picture of variations across the sector; the Office for National Statistics, for example, have piloted a new question in the Labour Force Survey this year on institution attended. In the meantime, I encourage more university academics to follow the lead of the Institute of Education, Neil Shephard and Nick Barr, think tanks and independent organisations like the Sutton Trust in exploring HE policy options and compiling associated evidence.

Enterprising universities

No one nowadays can ignore the economic impact of universities. This is not the whole story. What goes on in universities is fundamentally worthwhile in its own right. It is part of being a civilised society. But you can recognise that and at the same time welcome the sheer economic boost provided by our universities. And our Universities are opening up to enterprise and business as never before. Often, I speak about the value of university autonomy primarily in terms of teaching and research. But it is no accident that freedom from government interference in other activities enables you to spread your wings. When the European University Association found that English institutions have substantially more autonomy than those on the Continent, it included the ability to reach out to business and foreign markets.

In last month’s Budget, George Osborne announced £100 million for universities to attract co-investment in new research infrastructure. It was an important boost for the sector and reflects the Government’s understanding that universities are key economic agents with the power to encourage growth.

There have been plenty of recent examples. Earlier this month, I attended the formal opening of the new Southampton Marine and Maritime Institute, a partnership between the university and Lloyd’s Register enabling a revamp of the Boldrewood campus worth £116 million. Elsewhere, I’ve been pleased to learn that a £4 million capital investment at Loughborough University opened the door to a £60m investment from BAE systems, while at Dundee, a capital investment of £8 million attracted £23m from AstraZeneca, GSK, and others for a major new life sciences research centre.

Many of us have been excited by the competition Mayor Bloomberg ran in New York, and, in January, I announced that the Coalition is inviting proposals for a new type of university. Professor Adrian Smith followed up with inviting ideas for to see if we can attract investment for new post graduate science and technology research institutes here. This work led to the new money announced in the Budget. The new money will be granted to large capital projects across the UK which are capable of levering in significant private and/or charity investment - upwards of £200 million. This is a well-rehearsed way of stimulating innovation by increasing the funding going into economically promising research fields and advanced technologies.

The first grants will be allocated in the 2012-13 academic year. HEFCE, in consultation with the devolved administrations, is currently working out governance of the funding, processes and representation of both the academic and business communities. I’m hoping that, following the HEFCE Board meeting at the end of this month, we’ll be able to put out a call for expressions of interest with accompanying criteria - perhaps in Universities Week.

Other international opportunities

In the international sphere, meanwhile, a whole host of other opportunities for enterprising institutions. Demand for HE is growing worldwide. UNESCO estimates there are currently 150 million HE students; there could be as many as 260 million by 2025. Many of these students want to study abroad, of course, and the UK attracts more of them than any other country except the United States.

But, increasingly, emerging economies want to educate their students at home, and the UK - a global pioneer in developing educational facilities - is well placed to help. We not only have strengths in teaching and research but in design and construction of universities, mobilising finance, curriculum development, qualification accreditation and quality assurance.

Since becoming universities minister, I have worked hard with UUK’s excellent international office and of course the British Council in forging partnerships with other countries: with China, India, Brazil, Saudi Arabia and - in the past fortnight - Turkey and Indonesia. In Turkey, for instance, I witnessed the real potential for a “system-to-system” offer - with students able to study in either country, sharing of educational technologies, academic exchanges and degree validation.

In Indonesia, I agreed a joint communique on education to develop our links with Indonesian universities - promoting two-way student mobility, institutional leadership and knowledge transfer. The likes of Nottingham University already have solid connections to Indonesian institutions. There’s room for more productive associations - in Malaysia, for example, which has more overseas British campuses than any other country.

My department is working with UUK, UKTI, the British Council and others to support our excellent universities - and private companies working in the education sector - to seize these opportunities. It means attracting overseas students here. It means more overseas campuses. But it has to go further and be a full offer from the range of players that make up British higher education today - from architects and trainers of administrators through to external examiners and shared post graduate study. We are still only scratching the surface. This is one of Britain’s great growth industries of the future. The deep respect for our universities across the world is a reminder of what we have achieved here and what more we can do in the future.

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