Oral statement to Parliament

Universities UK Annual Conference

Good morning - and thank you, Eric Thomas, for that introduction. I’d like to wish you every success in your new role - and to record my…

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Dr Vince Cable

Good morning - and thank you, Eric Thomas, for that introduction.

I’d like to wish you every success in your new role - and to record my thanks to your predecessor, Steve Smith, who unfailingly offered good advice while representing the interests of a diverse sector. I know David Willetts would also want to record his appreciation. UUK will certainly remain the pre-eminent voice for universities as we begin to implement the big changes to our higher education system.

I recognise a lot of faces in the audience, from the mission group meetings and visits, and I welcome the opportunity to speak to you today. This is a key form of engagement.

It has been a remarkable year, not just in terms of the coalition and the economy, but
also because this time last year, Lord Browne had yet to issue his report on HE finance. 12 months later, and preparations are well underway for a substantially different funding system. This is a fundamentally new system, and as Eric has said, and self-evidently, I appreciate that some people have had difficulties with it. It has been a difficult and sometimes traumatic process for us, but I can honestly say that I believe the alternatives would be worse. I inherited a situation in which my Department, much of whose spending is on Universities, was due for a 25% cut, and indeed we did then have a 25% cut in the Spending Review. The implications of a straight reduction in spending of that order of magnitude for your universities doesn’t bear thinking about, although I’m sure you have thought about it. Instead, we have a different model, in which money - and more of it - will follow applicants to the institution of their choice, the quid pro quo being that those institutions become more accountable to students for the undergraduate experience.

The new model will, as you know, improve student choice and access, teaching and employability - as well as, from your point of view, putting the sector’s finances on a sustainable footing. If we aggregate my department’s investment in HE in various streams, it was around £9 billion in 2010-11, and we anticipate it will reach around £10 billion in 2014-15. I know you will talk about capital spending, about inflation and so on, and I do appreciate the situation is difficult but at a time of deep real cuts in spending and in people across the public sector, I hope you will agree, and Eric was generous in making this point, that this is a good outcome for your sector.

Universities and colleges are already responding to those aspects of the agenda which focus on students. By 2015, the sector will be spending more than half a billion pounds annually on widening access; that’s around £200 million more each year compared to 2010. I would like to record my appreciation for the way you have responded to the new expectations from the Office of Fair Access - and I also recognise the important work that Martin Harris and Graeme Davis did in getting all the access plans discussed and agreed by July. This was a potentially difficult exercise, but it went well thanks to all those involved. The new director for Fair Access, who we expect to recruit this autumn, will have a hard act to follow.

Looking forward to student recruitment for 2012-13, we will, as you will of course, all be looking very closely at how applications fare. There is some inevitable uncertainty with the introduction of the new model, but the evidence we have gives cause for optimism. Vice chancellors have been telling us about encouraging numbers of prospective applicants attending their open days. The feedback from our own information campaign suggests that large numbers of students and their parents, when the fog of propaganda is cleared and we can gauge understanding of the objective reality, now understand that nobody has to pay up-front fees; that a student loan is very different from a credit card debt; that graduates on relatively low incomes will pay less overall than they do now; that all graduates will have lower monthly repayments; and that maintenance will be more generous.

But we are not complacent. Young people - especially those from disadvantaged backgrounds or with no prior family experience of university - are still susceptible to misconceptions about HE and its cost. That is why we will be continuing the communications campaign through the autumn. Later this month, a team of recent graduates will start visiting schools, sixth forms and colleges across England to explain, from their own standpoint, the value of going to university. They’ll also be explaining the new fees, grants and loan arrangements - addressing questions and concerns right up to the UCAS application deadlines.

Undergraduate admissions for 2012-13 will be different in another sense, of course. We have had powerful representations from the sector on the Stalinist system of student number controls, and so we are liberalising student number controls to allow universities to recruit as many applicants achieving AAB at A-level as they choose to. This will mean students having a better chance of getting a place at the university of their choice. Those with AAB are likely to go to University in any event, and this makes it a sensible point to start with our plans for liberalisation. And we’re reserving 20,000 places for universities, FE colleges and other providers able to demonstrate that they can deliver high-quality courses at less than £7,500.

Both of these initiatives are about freeing up the current restrictions on student numbers, frankly increasing competition, and supporting diversity within the sector. I hope at the level of the basic objectives, you would share in this. We have to pursue them while retaining our overall financial control of public expenditure, which makes it difficult and means we need to proceed cautiously.

In my earlier life, I worked on and worried about the removal of planning, and the process of perestroika; I am aware that there will be come concerns about unintended consequences. There have been suggestions that this will reintroduce some sort of two-tier higher education system; this is absolutely not the case - our aim is diversity, not division.

We have a very diverse sector at present, and UUK rightly celebrates it as such. Our changes are meant to enhance that diversity, not to divide institutions into arbitrary groupings. This applies also to the HE/FE boundary. I continue to hear worrying reports that FE colleges’ attempts to offer HE courses are being discouraged by university partners.

We will of course be looking very carefully at how the changes bed in, and will ask HEFCE to do the same. HEFCE will also be keeping an eye on issues like subject balance so that we avoid inadvertently affecting the supply of strategically important subjects, like engineering. We have had a number of conversations about this; some people think there could be positive and some people think there could be negative outcomes for science subjects, for example. This suggests that we don’t know yet - but we will obviously keep a very close eye on it.

We have made clear that this is not a one off; we want to increase, year-on-year, the share of places that are liberated from student number controls. We want the 20,000 places for which institutions will need to compete to grow steadily in future years. We believe these policies will help successful, dynamic institutions of all kinds meet the very wide range of demand from different students. But we will keep the details under observation.

HEFCE are currently consulting on the practicalities for 2012/13, and we will listen closely to any advice they give us, based on your responses. We are certainly not tied to a particular set of criteria or rules into the indefinite future. We are keen to listen and react. But nor are we going to be scared off by worries that may never come to pass, when there is a real prize here, which is greater choice for students between different types of good quality provision.

Pulling these threads together, we have put forward - in our response to Browne, in the White Paper, and through many discussions with UUK and other groups - a clear strategy for HE, and we believe that it’s the right one.

The emphasis will remain firmly on improving teaching; on new, innovative ways of organising undergraduate courses; on making sure that all applicants can see essential information about contact time, work experience opportunities, subsequent employability data and the like on universities’ websites. We’re intent on seeing the sector modernise and also achieve greater operational efficiency, recognising that our world class institutions have a broader mission than fitting in with our financial constraints.

And as we said in the White Paper, while this government has no target for the “right” size of the higher education system; we have been critical of the 50% target. While we are eager to establish parity of esteem for those who chose vocational training in preference to university, we endorse the principle of the 1963 Robbins report that “courses of higher education should be available for all those who are qualified by ability and attainment to pursue them, and who wish to do so” - subject to expenditure constraints.

Indeed, for all the short-term disruption, which I know is how some of you perceive this, I honestly believe that we can take what is internationally acknowledged as an excellent HE system to greater heights. As we reduce the bureaucratic weight on universities, as we create room for dynamic institutions to expand in line with student demand, there are real opportunities for colleges and universities to make the most of their autonomy and fulfil their respective missions.

We undertook in the White Paper to implement a very light-touch regulatory regime that puts different types of university on a level playing field, if they want their students to access public funding in the form of our much-improved support package. We’ve since elaborated on that commitment in a consultation document, and are due to introduce a Bill to Parliament in the next session, in 2012, that will put this regime into law.

There are further reasons for optimism. This summer’s clearing exercise has, all in all, gone well, and I congratulate everyone involved at UCAS and elsewhere. Meanwhile, there’s been no repeat of the large-scale problems suffered in the recent past by the Student Loans Company, who have become much more focused on the needs of their customers.

I would acknowledge - this point is made to me when I visit Universities, and I hope you know that we’ve been putting the case - that an area of concern to the sector is visa reform. I hope you’ll agree that we’ve managed to make progress on the key issues. Bona fide students from overseas make a significant contribution to campus life and the financial security of universities and will be encouraged- and this is why no cap has been introduced on students during the recent changes to the visa system. From 2012, those graduating from a UK university will be able to switch onto a Tier 2 visa, provided they meet certain requirements. There is, in principle, no cap on the number of graduates who will be able to follow this route.

You’ll know that the UK Border Agency announced last week its changes to the criteria for Highly Trusted Sponsor status. The HE sector has excellent standards of compliance, and we do not anticipate the new criteria being problematic. The criteria aim to achieve a sensible balance between attracting genuine students and operating a robust immigration system that denies entry to people with an ulterior motive. They recognise that some students will fail at various points in the system, so allowances have been made to cover such instances in determining refusal, enrolment and completion rates.

I’m glad that the HE sector made a significant contribution to the consultation process, and I would appreciate having your further views on how well the new system beds down, and whether any changes are needed to support your long-term sustainability.

Separately, we have made progress on tackling the hurdles that institutions can face in bringing foreign academics over as guest lecturers and external examiners, a key and positive part of the University scene, by expanding the terms of the Tier 5 Government Authorised Exchange Scheme. We’ve also had success in raising the status of scientists and researchers, many of whom will take jobs in universities, under Tier 2. Exceptional academics can apply via the new Tier 1 Exceptional Talent route - a route that takes account of the expert views of the National Academies.

You have my absolute assurance that David Willetts and I will continue to work with the UK Border Agency - and with universities - on removing obstacles to the essential business of global intellectual exchange. International students are important for a university’s basic mission and important for the economy; put crudely, HE is an export industry.

But my main cause for optimism has been the activity I’ve seen for myself during visits to colleges and universities over the past year. In recent months, for example, I have visited Plymouth University’s outstanding research facilities for marine energy, and talked to students there in the process of launching their own businesses. At London Southbank University, I opened the Puri Institute for fostering enterprise among engineers - a great example of philanthropy. And I was at Edinburgh last week, for the launch of a new doctoral programme for engineers focused on offshore renewable energy. In Norwich, I visited the Research Park. I am constantly amazed and uplifted by the work I see.

I also see a lot of encouraging work, often to degree standard, going on during visits to FE colleges. HE in FE is very much part of this country’s educational future. At Farnborough, the quality of training for students of aerospace engineering is first class. The same goes for courses at Birmingham Metropolitan College, who have a link with Caterpillar to provide advanced manufacturing training, and in Solihull College where they have fantastic veterinary facilities. There’s no question that many colleges have the capacity to deliver HE and to contribute to growth.

The HE and FE sectors have a major role to play in both underpinning and spearheading economic growth, and it’s no accident that David Willetts is also speaking about universities and growth at another event this morning. The contribution to growth happens in many ways.

Many institutions are extremely important to their local economies as well as the national economy, and I welcome the participation of many of you in the new Local Enterprise Partnerships. Of the 18 LEP boards formally recognised so far, every single one has at least one HE or FE institution on board. Some, like the South East LEP, which covers East Sussex, Kent and Essex, have three universities signed up.

I would like to talk now about universities in respect of research. The White Paper was largely silent on the research side of the sector’s work, not because it is unimportant, but because we intend to address it separately in the forthcoming innovation and research strategy which is going on now and will give an end-product by the end of the year.

Research is not all and does not have to be utilitarian. It is worth acknowledging the key role of university researchers in attracting substantial foreign direct investment. While we are outstanding currently, the world is changing rapidly and we cannot be complacent. The UK’s share of global publications is falling. The challenge is to maintain the virtuous circle of excellent research, which entices the brightest people to our universities and pulls in resources from business and philanthropic institutions, so that the intellectual, medical and technological breakthroughs continue to be achieved. I would also stress that while a lot of research is undertaken in clusters, we will support excellence wherever it is found; it is not our intention to create a handful of successful institutions.

The Government made a decision to protect public investment in science and research, and we have allocated an additional £100 million for capital research spend in this financial year. Thanks, meanwhile, to grants from round 4 of Higher Education Innovation Funding, among other things, microbiologists at Coventry University have helped Bostik to bring a new antibacterial sealant to market. Imperial is helping Scottish Power to advance techniques for carbon capture and storage, which is also a key environmental objective for this Government. Hull is working with the likes of Philips and Siemens on remote monitoring technologies for patients with heart failure and pulmonary disease.

The programmes funded by the Technology Strategy Board (TSB) provide another reliable route to collaborative R&D. Of the 900 projects currently funded by the TSB, more than two-thirds have at least one university partner involved. I attach particular importance to the new Technology and Innovation Centres which will accelerate the commercialisation of emerging technologies by drawing on research taking place across the country. We have one fully launched, integrating universities and business; the first centre focuses on High Value Manufacturing - and will build on national expertise in the manufacturing research centres funded through the Engineering and Physical Sciences Research Council. Two further centres have already been announced.

The duty of government is to make sure that our policies in support of innovation are coherent and efficient; that they enable useful knowledge transfer and growth across the economy, not just in high-technology sectors; that they give taxpayers the greatest bang for their buck. These are the overarching issues we’re examining in preparation of the innovation and research strategy, as I say coming forward by the end of the year - in consultation with universities, among others.

I would like to make one final point. What’s certain is that operational efficiency is essential in every part of our innovation infrastructure, universities included.

In this regard, I very much welcome UUK’s initiative in setting up its Efficiency and Modernisation task group. I’ve discussed its work with Ian Diamond - and I’m looking forward to seeing the group’s final recommendations in a couple of weeks from now. There is a lot of scope for savings within institutions through better procurement, outsourcing, and the use of shared services. There’s also scope for much greater transparency about costs, not least so students can know how their fees are being spent - and how effectively. I hope that we get real progress in this area over the next 12 months.

On a more personal note, I know that many of us think about things using visual images rather than on bits of paper. I was an undergraduate many years ago - half a century. I was an academic, around 40 years ago, and I have had three children go through the system more decades ago than I care to think about. But it is important that we don’t get trapped in our prejudices, important that we engage and see how universities are reaching and justifying every day the banner of being called “world-class.”

Published 8 September 2011