Oral statement to Parliament

UUK conference: "A world without boundaries"

David Willetts sets out the future for UK higher education and what the government is doing to improve access, funding and collaboration.

It’s great to join you all at Keele as our hosts celebrate their 50th anniversary. Recalling the creation of universities back in the 1960s reminds us of an optimistic sector in one of its most ambitious periods. Today, even during this era of inevitable austerity, I believe that we can still be ambitious and optimistic.

The place of HE in the nation

2012 has certainly been a big year for Higher Education, with our reforms coming into effect. I recognise that inevitably some stress and uncertainty accompanies changes on this scale. The Government appreciates the maturity of the sector and the leadership of vice chancellors in what are, for some, challenging times. In particular, I appreciate the Government’s close working relationship with UUK. We cannot always agree, but our discussions are always open and founded on mutual trust. More than that, they are based on a shared belief that our universities are a tremendous national asset which we need to sustain and to grow.

In popular consciousness, of course, 2012 will be remembered for the Olympics and Paralympics - which gave our universities some excellent opportunities to demonstrate their place in national life. I congratulate UUK for illustrating the many connections between universities and the Games. We all think especially of Usain Bolt and his fellow Jamaican sprinters thanking their Birmingham University hosts after capturing all the medals in the men’s 200 metres final. But there have also been plenty of examples of volunteering and community engagement. We can all be proud of the university research which improved the performance of our athletes and the university-designed equipment which gave them a competitive edge. Now, the University of Worcester has launched a new degree programme for those wanting to study and ultimately work in disability sport.

The debt of Olympians and Paralympians to HE is just one example of a wider debt of many of us to our universities. Last week, I was at the annual British science festival, sharing the excitement around the discovery of the Higgs Boson and most recently the discovery that redundant DNA is not so redundant after all. Again, British academics and universities are at the heart of these breakthroughs. With your contributions to the intellectual life of our nation, to educating the next generation, and to innovation and research, universities are more central to our society than ever before.

Protecting our national assets: cyber security

HE’s growing economic importance was made plain at the recent launch of the Government’s cyber security guidance because quite simply, much of the UK’s intellectual property resides in our universities. Only this month, Oxford University confirmed that its online security had been compromised by a cyber attack - just a day after the Cambridge University network experienced disruption. The Government will work closely with universities to ensure that the UK’s higher education system has a visible and credible international reputation for protecting commercially sensitive research from the growing risks posed via cyber space. But we can go further than just protection. Although UK universities are potential victims of cyber attacks, they can also be a large part of the long term solution. GCHQ, the EPSRC and BIS recently recognised eight UK universities as centres of academic excellence in cyber security. There is real scope to translate this knowledge into commercial opportunities and export earnings, while - for graduates - there are good prospects in cyber jobs as demand increases, providing of course they develop the right skills.

Today I can announce the first academic research institute - receiving total investment worth £3.8 million - to improve understanding of the science behind cyber threats. This new facility, based at UCL, will draw on university expertise in both technological and behavioural disciplines. Academic teams from UCL, Imperial, Newcastle and Royal Holloway will be the first beneficiaries of research money. The institute opens for business next month.

Other kinds of “impact”

Clearly, part of the case for well-funded universities - as suggested by the example of cyber security - is their economic benefit. But I readily acknowledge that this is not what drives many academics, for whom intellectual curiosity is the main motive. It is a noble motive, which must be respected. However, it does help when academics and universities demonstrate how their research contributes to a strong economy and a good society. We are supporting this crucial work.

I can announce today that we are providing an extra £6 million for the Higher Education Innovation Funding to be shared amongst a number of universities to assist them in further driving growth, creating and supporting innovative enterprises and building strategic relationships.

The Research Excellence Framework will, for the first time, recognise the highest levels of research excellence with reward for the past impact that it has achieved. I know that you are currently busy preparing impact case studies for the REF - and that you will all be aware of the breadth of “impact” that this encompasses. It is not about “commercialisation” but more widely anything which has an effect on, changes or benefits the economy, society, culture, public policy or services, health, the environment or quality of life.

The REF is an assessment of research excellence. It is not about “journal rankings” or “journal impact factors”. Whether the research output has been published in an open access journal, a traditional publication, or even if it hasn’t been published in any journal at all, this does not affect the assessment of its quality in the REF. REF panels will not make use of “journal impact factors”, rankings or lists, nor the perceived standing of the publisher, in assessing the quality of research outputs. An underpinning principle of the REF is that all types of research and all forms of research output shall be assessed on a fair and equal basis by experts in the relevant disciplines.

Open access

As you know, we have also announced that we are shifting to open access for publicly funded research published in these peer reviewed journals - following the excellent report from Janet Finch, the former vice chancellor of this university. Removing pay walls will have real economic and social benefits. Still, we understand that making the transition to “gold” open access has a cost - roughly one per cent of the national science and research budget.

Last week I announced an extra £10 million to be allocated to our 30 most research intensive universities to assist with the costs. This is in addition to the contribution RCUK will be making to institutions to support payment of article processing charges associated with open access, through block funding grants from next April onwards. We’ll be providing more detail on this soon, and the UK Funding Councils will launch a consultation on setting a requirement that research outputs submitted to any REF should be as widely accessible as possible.

HE and philanthropy

Another report, published only yesterday by HEFCE, I particularly commend to you. I took Professor Shirley Pearce’s excellent Review of Philanthropy in UK Higher Education on holiday with me, and very much enjoyed reading it - sad but true.

There has been substantial momentum since Eric Thomas’s excellent 2004 report. The matched funding pot has meant that many more universities and colleges have been able to attract philanthropic gifts over recent years, and voluntary giving has improved across the piece.

In these financially strapped times a challenge for every institution is to diversify its income streams and develop strategies to stimulate donations- to position their institution as an attractive proposition. Both BIS and HEFCE will be giving the report’s recommendations serious attention. Shirley and her team have made many telling observations, including on donor behaviour. We will be guided on your views. We do need to remind people of the charitable status of many university activities. If the option of a charity number for a university would help, we can take it up with the Charity Commission. And it is right philanthropy is properly recognised in honours system, so do put people forward to us and the Cabinet Office.

The new fees regime

Now, this is the month when the first students will arrive at university under the new fees regime. I believe the financing changes, despite the controversy, are in the best interests of universities, students, and the nation. As the Institute of Fiscal Studies concluded over the summer, the new regime is “substantially more progressive” than the previous system - with the poorest 30 per cent of graduates set to pay back less over their lifetimes. The IFS noted that universities will receive more money to invest in education, while taxpayers will save around £2,500 per graduate. And we are proud of the extra financial support for part-time students.

So, in constrained circumstances the reforms achieve three crucial objectives.

First we have saved money for the Exchequer without reducing the cash flowing to our universities. In 2011-12, the sum of teaching grant and student loan money reaching institutions was £7.2 billion. In 2012-13, it is £7.4 billion. The indicative figure for 2013-14 is £7.9 billion. That is not bad in these austere times.

Second, there is more competition and choice for the benefit of students. Under the new funding system, students still receive public funding. We have to predict and control this cost, so - like every previous government - we have to maintain student number controls. But we favour relaxing these controls for individual universities within an overall total, so that more students can go to whichever university wants to accept them. We favour maximum possible choice for students, to accommodate for example those who may want to study locally, and those who may want to choose an institution offering lower tuition charges. We are moving from a world in which each institution is allocated a fixed number of students to what is indeed a more open and competitive system.

As you know, the AAB and core/margin policies seek to move towards those objectives, within the fiscal constraints we face. We asked HEFCE to implement them, including making the best assumptions they could about numbers. In order to set the necessary rules in a competitive system, the assumptions had to be fixed in advance.

It is still too early to know fully what the outcome has been, and how students are responding. It looks as if there may have been fewer pupils achieving predicted AAB grades at “A” level, but rather more getting top grades in equivalent high-class vocational qualifications, such as BTECs. The net result may be total numbers getting AAB or equivalent which are closer to 80,000 than to 85,000, which was HEFCE’s best estimate. Different institutions will have been affected differently; that is inevitable when making significant changes, which are intended to take greater account of student choice. I recognise this comes at a time when there have been other pressures too. The number of 18 year olds is falling. Demand is unusually depressed this year because more students went straight to university last year, missing out a gap year. And more may be delaying until next year when ABB kicks in. The evidence from the Labour government’s changes in 2006 is that individual institutions can face a temporary jolt when changes like this are introduced. All this creates real pressures for some institutions. But HEFCE will take this year’s outcomes into account as it implements the changes we announced for 13/14, in the shape of a move to ABB or equivalent, plus a more flexible margin policy.

The third objective to which the reforms contribute is the greater information becoming available to prospective students - what I consider to be the final piece in the jigsaw. The Which guide has only just gone live, and I was pleased to attend the launch. Later this month we will be launching new Key Information Set data - which will also be available on university websites and on the updated Unistats site, enabling comparisons among institutions. The key indicators and summary information for students are unquestionably a force for good, but they are certainly not perfect and we should strive to improve them. HEFCE will carry out a comprehensive review of the student information landscape starting next year.

A revolution in teaching

Add all this together and we’re looking at what amounts to a revolution in teaching - the largest cultural change in our universities for a generation. Research has been the primary focus of attention for a long time; it’s time for teaching to be in the spotlight as well. In 2010 two important reports were published - not just Lord Browne’s but also Graham Gibbs’s conclusions on how to measure teaching quality. It’s also worth remembering, as we approach the 50th anniversary of the Robbins report, that Robbins himself was preoccupied with teaching quality. I met Claus Moser earlier this year, one of Robbins’s key researchers alongside Richard Layard, and he confirmed that teaching was uppermost in their minds.

Keele, of course, put heavy store by teaching from the very beginning. Indeed, the 1964 Hale report on “University Teaching Methods” found that it was, at one time, the only institution with a Research Fellow on university teaching. I am also glad to acknowledge that the NUS, whose 90th anniversary we marked last night, has long campaigned about the quality of teaching.

Now universities really do need to focus on the excellence of their teaching. At the end of this new term there will be many students returning home whose parents will be asking what they got for £3000. How crowded were the seminars? What were the labs like? How many essays did you write? How much academic feedback did you get? Every university in this room needs to be confident your students will have good answers to those questions.

An environment that focuses on engaging students in their academic study means that those students are continually encouraged to apply themselves. I hope that applicants will make full use of the KIS data in figuring out which institutions can offer the most appropriate teaching environment for their individual needs - and that universities will adjust to student- and parent-power.

Student numbers

Robbins, of course, is most associated with expansion of the sector, even though that was partly set in train before he reported, as Keele perfectly illustrates. Perhaps we can best view the history of our HE sector as successive waves of expansion - a progressive interpretation that I welcome. There are periods between the waves where consolidation is the order of the day - like the current one where the number of 18-year-olds is in decline - making the raw UCAS application figures somewhat misleading. However, I believe that more growth will come and universities can rise to the challenge of proving Kingsley Amis wrong in his sour prognostication that “More will mean worse”.

Indeed various surveys show that the number of young people aspiring to go to university has increased steadily over the past 10 years. The most recent Sutton Trust survey, published in April this year, encouragingly showed that around three quarters of year 10 to 12 pupils were likely to apply to university with a similar proportion of those in year 13 actually applying. According to the Millennium cohort study, 97 per cent of mothers want their children to go to university. I’m also very encouraged by the evidence that increased fees are not putting off young people from poor backgrounds - with a recorded fall of just 0.2 per cent.

Improving access

All the more reason to welcome Les Ebdon, who has now started work as the Director of Fair Access. OFFA has additional resources to support as well as challenge institutions. Vince Cable and I wrote to HEFCE and OFFA in May, asking them to develop a shared strategy for promoting access which maximises the impact of all spending by Government, HEFCE and institutions.

There is so much going on now that it is right to assess what works best to widen participation and broaden access, taking into account the latest available evidence here and abroad.

The Government believes it is right for institutions to seek to broaden access because real meritocracy means making sure talent is spotted, not wasted. Individuals must be considered on their merits, and institutions’ procedures must be, as we say in the White Paper, “fair, transparent and evidence-based”. And we all understand the Director’s duty to protect academic freedom, including an institution’s right to decide who to admit and on what basis.

New providers & VAT

As the HE sector grows it needs to continue to be open to new types of provider. It always has been. Represented here today are universities that can trace their origins back to ancient foundations, mechanics institutes, Anglican teaching colleges, Colleges of Advanced Technology - all of which took a different route to university status. This year we have eased number limits and I hope as a result we will see at least 10 smaller institutions calling themselves universities for the first time - including alternative providers, so long as they are of the necessary standard.

Yesterday, HMRC published a consultation on extending the VAT exemption to for-profit providers of HE. Currently, the majority of these providers cannot benefit from this exemption in the same way that not-for profit providers can. This potentially puts them at a competitive disadvantage in the market and runs counter to our vision of a more level playing field for all. I welcome this opportunity to review such treatment.

Industrial strategy and education exports

When Vince Cable launched our industrial strategy on Tuesday, we identified education as one of the key sectors of the future. Our universities, for one, are internationally recognised. We can do more to take advantage of our position.

You are a great British export industry, and in a growing market - in 2000 there were just over 2 million students worldwide studying outside their own countries. Ten years later this had doubled to 4 million. By 2020 it is predicted to be around 7 million. Our education exports are already worth around £14 billion, and could rise to around £20 billion in 2020 and nearly £27 billion in 2025, representing an annual growth rate of approximately 5 per cent.

Some of our key economic partners of the future like Turkey, Indonesia, Brazil are experiencing a surge in the number of young people. They are keen to invest in this generation through more HE at home and more opportunities abroad. That is why HE now has such an important role in our trade missions. Earlier this year, vice chancellors accompanied the PM and me to Asia. We’re going to Brazil later this month.

Opportunities for UK education overseas extend significantly beyond teaching students. For example, other countries are attracted to the expertise that UK institutions can offer in governance models, professional development and curricular design; construction, management and financing. Some foreign education systems, particularly in emerging markets, have complex needs. For them, we are adopting a new approach, which we are calling “system-to-system” - facilitated and coordinated by the UK Government. Under this umbrella, the new UK Education Services will identify opportunities, then initiate and mobilise consortia to win the contracts. It could include higher education, further education and schools, as well as a range of non-education specific services. I am taking a delegation on a system-to-system education export mission to Colombia and Mexico later this year.

The system-to-system approach is not about replacing or duplicating the many excellent initiatives underway. But system-to-system supplements the bilateral opportunities already undertaken by many institutions and other organisations.

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 while living abroad. I salute the trail blazers like Nottingham, Liverpool Reading, UCL and Newcastle with campuses abroad. On a recent visit to the US I was struck by the surge of activity in distance learning. We may be at a tipping point in distance learning as technology offers more efficient and more effective ways of online learning than ever before. We will be doing more work on this in BIS over the months ahead as I believe these forms of education are really going to take off.

Visas and the situation at London Met

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 while 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 and Exeter and Manchester, as well as London.

We must not allow the London Met issues to jeopardise this success story. I am grateful to the whole sector for its prompt, coordinated and effective response to the UKBA’s decision to remove London Met’s tier 4 sponsor licence. Both UUK and the NUS are playing a full role in the London Met task force that I set up within hours UKBA’s announcement. Individual universities are offering places for the mini clearing operation that goes live next Monday.

We must not lose sight of the individual students who are most affected by the current situation and we must maintain confidence across the world in the fair deal for overseas students. They may face costs of moving to alternative accommodation and costs of applying for a new visa. So I can announce today that we are setting up a £2 million fund to help legitimate overseas students at London Met who face extra costs through no fault of their own as a result of transferring to another institution. This will provide certainty to London Met students at what is a stressful and unsettling time.

I hope no other institution will face a similar situation in future. But it makes sense for the sector to plan now for how it would manage that risk if it did arise - we need to underline the message to students and potential students and their families that the UK is a safe and welcoming destination. There are examples of protection schemes in other countries and in other sectors - the ABTA scheme is one obvious example. So I very much welcome UUK’s willingness to develop proposals for a sector-led response to discuss with all its members. I look forward to seeing the results of that work.

We must go further to protect our international reputation in the short-term too. We have already used Foreign Office posts to signal that we remain open to overseas students and I have agreed with your President, Eric Thomas, that we will jointly author an article to offer to key newspapers in our target markets explaining that overseas students are welcome here, and reminding them of what a great opportunity it is to study in UK.

Every year, countries around the world send their best and brightest here to learn. When they come, they bring with them the potential to add a rich and diverse cultural scene to many of our towns and cities. They bring a great opportunity to make our courses more international in scope and to contribute to enabling a well-rounded education for our home students. This is a globalised world, and our people should consider themselves privileged to be exposed to such talented people from all its corners. Without international students, we would not only be poorer economically - we would also be more boring, more insular, and more ignorant of the wider world.

That is why transparency in the immigration statistics is vital. We therefore want to publicise disaggregated figures so that the debate can be better informed. The ONS is planning improvements in its methodology so that in future it will be possible to better identify students in the emigration flows.

I want to make clear the attitude of the government. There is no limit on the number of legitimate students from overseas studying at British universities. They have to have the language skills and the academic training to benefit from Higher Education here. It is in everyone’s interest to maintain our high standards. The vast majority of international students are here legitimately, study hard, contribute to our economy, and take nothing from us except a world-class education. Where things are working at their best, they also make us more cosmopolitan, sustain links between our communities with heritage in other parts of the world and those places, and make the higher education offer more diverse than it otherwise would be. It is crucial that we sustain and develop these advantages.

Conclusion

The Coalition believes in our great higher education institutions. Whenever David Cameron is listing our great national assets, he puts our universities high on the list. We are proud of our international reputation. We are proud so many students from around the world want to come and study here. We are proud that the lives of so many British people are transformed by the opportunity to study at our great universities. And everything we know about our culture, the needs of our economy, and the aspirations of our young people tells us that our universities will have an even greater role in the future.

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