There needs to be more incentives for dynamism and innovation in order for the higher education sector to take a more strategic approach to the current and future needs of the economy, John Denham said today
02 April 2009
Speaking at the Higher Education Funding Council for England’s annual conference, Mr Denham will argue that many parts of public policy will need to change to make the most of our national strengths and potential and higher education will also need to respond.
Secretary of State for Universities John Denham said,
“As the world moves, as it will, out of recession, we will face the challenge of building a more diverse and more equitable economy, with greater resilience in terms of our energy and food supplies – all within an increasingly competitive world.
“As we develop a clearer idea of the sectors of the economy in which we have particular expertise, what we do to respond to the downturn must take us towards our vision for a world class higher education system in 10-15 years.
“Strengths, potential competitive advantage, and the ability to generate wealth and jobs, we will need to ensure that government policy is coherently organised to make the most of this potential.”
He went on to argue:
“Funding is, of course, important. The funding mechanisms will need to support, and not hinder, changes in these directions. Just as the funding mechanisms we currently have shape the sector as it currently exists.
“I want to provide more incentives for dynamism, innovation and entrepreneurial activism. By dynamism, I mean having the flexibility and drive to move things in all directions. To be as innovative as possible with how we operate the funding mechanism. I’ve hinted at some areas today. We know that it can be hard to generate the type of higher level CPD course employers want, if the predictable demand from the employer cannot justify the investment by the university. We know that if there is no incentive to develop courses which bring professional accreditation, or which are tailored to current and future needs – and if student demand is insufficiently discerning - there is no particular pressure to do so.
“I suspect that most of the time, in most courses, in most institutions, this may really not be the problem some imagine. But in key areas in key subjects in key areas of national importance it may well be.
“So I will want to discuss with the Funding Council how we might evolve our current funding model to enable the higher education system to become more responsive.
“It is relatively easy to create new pots of money to incentivise change. But at the expense of reducing the size and flexibility of the core grant. So although we could consider a slight rebalancing: relatively less funding in the core block grants and relatively more to support and drive change, the temptation to proliferate ever more initiatives could be strong.
“So in developing the framework for higher education, which we will be publishing in the summer, I’ll be discussing with HEFCE what steers we should give.
“Perhaps we should clearly limit the amount which could be withheld centrally at anyone time. As now, I would hope that special funding would be deployed to promote strategically important developments such as international capacity; collaboration and partnerships; e-learning; and deeper engagement with business.
“But it would create a strong pressure to retire or scale down current special funding streams as new priorities emerged. HEIF has already moved from competition funding to allocated grant, and as such activities prove their worth, may at some point no longer need to be separately identified. I would be disappointed if we had to spend as high a proportion of our funding on widening participation we do today.
“Within this approach, we may see the fastest change and the greatest innovation where funding is distributed through contestable processes rather than allocation.”
In his speech, Mr Denham will also highlight a report published today by Vice Chancellors Julia Goodfellow and John Coyne looking at Universities' links with schools, and how those links can be used to encourage greater uptake of STEM subjects.
This important report makes a number of key recommendations which we will be asking universities to pursue in order to make sure that our young people get the opportunities to take their STEM studies further.
Its recommendations are being taken forward as part of the Implementation plan of the National Council for Educational Excellence.
Notes to editors
1. A full copy of the Coyne and Goodfellow report can be found in our higher education debate section.
