The Future Size and Shape of Higher Education

Thank you [Muir] and good afternoon everyone.

This is the first time I've had the chance to speak to a UUK audience and it's a great pleasure to be here. Let me start with a couple of things that set the context with what I want to say to you today.

The first is that I'd like to make clear to you how delighted I was when Gordon Brown asked me to become Higher Education Minister just over a week ago.

My own life has taught me the value of a great education and the opportunity to go to university.

I spent three fantastic years at SOAS in the 1990s studying Law and enjoying the atmosphere of free thinking that surrounds that university.

I had an incredible time at Harvard after that. A place where I officially I studied law - but also where I spent much of my time sneaking into the back of lecture theatres to listen to great thinkers talking about everything from politics to the arts.

And it's been a pleasure to remain connected to this sector in my professional life, as a fellow of Caribbean Studies at Warwick University and in accepting an honorary doctorate from the University of East London.

I know what my own higher education did for me personally. I know that it gave me new perspectives I would never otherwise have imagined existed. And it opened up opportunities I would never otherwise have enjoyed.

I know, too, how much higher education has done and continues to do for this country.

Transforming lives. Creating jobs. Producing new discoveries and innovations. And doing much to form the shared culture and values that will define what it means to be British in the 21st century.

Helping to build a country that's more civilised as well as more prosperous.

I know how important higher education is.

And that's why I look forward very much to working with all of you over the coming weeks and months. I'm excited at the prospect of how much I think we can achieve together.

The second thing I want to make clear at the start is that I'm not going to come here after precisely eight days in the job and try to tell you what's wrong with the university system and what you need to do to put it right.

In fact, however long I'm in this post, I don't want ever to come here and do that.

But for the time being, I know I've still got a lot to learn in a very short time about today's higher education sector.

I rely on you to help me climb that steep learning curve. I want to hear your views and opinions and I hope that you‘ll feel able to share them with me frankly at all times.

And I want you to know that my door is open to you. By talking together and thinking together, we'll be well-placed to move forward together.

And we must make sure that our direction of travel is forward. Because our university system is headed for radical change sooner rather than later.

I know that doesn't come as a surprise to you. I can't think of a time when higher education in this country has stood still. It's moved with the times, and that's one reason why it remains so strong.

But I must make clear that I don't mean that you should expect the sort of hailstorm of initiatives from above about which you've sometimes - and understandably - complained in the past.

Higher education will change because the world is changing, and ever more rapidly. The only unanswered question is whether universities will help actively to drive change, or just respond passively to it when it happens.

I see universities as powerful positive forces in our society, so I want to see them in the vanguard of progress. And that's also why John Denham started the great higher education debate on the changes that we can expect to see over the next 10-15 years that John Denham launched back in February.

I know that the structure of the system is an important part of UUK's own submission to that debate, and well as those expected from Christine King and others.

The initial contributions will be published very shortly.

But today, I thought you might find it interesting if I shared with you some of my own views on the factors that will influence the size and shape of UK higher education in the years to come.

The first of these is the global status of the UK higher education brand. I know that's important to all of you because of the revenue it brings in from overseas student fees.

And it's important to the rest of us, too. The total spending of overseas students in the economy is well over £3 billion a year. And our universities' reputation for research quality also helps to bring inward investment from knowledge-based business. Last year, companies coming to this country from abroad created an average of 120 new jobs every single day.

So your reputation matters.

I know that you'll all have read the Times Higher Education QS list that was published last week with interest. So you'll know that four of the top ten world universities on that measure were British and the rest US. Equally interestingly, the often-quoted Shanghai Jiao Tong ranking of European universities puts British institutions in 4 of the top 5 and 11 of the top 30 places.

Now I'm sceptical about the value of league tables. Whether you consider one institution better than another depends on what you define as being good.

In this country, we know that there's no single shape for excellence. Diversity of mission and approach is another of the great strengths of our system and we rightly cherish it.

But these surveys do tell us one important thing for certain. And that's the high regard in which our universities are held throughout the world.

I see it as an important part of my job to help you raise that reputation still further. And that means supporting you in your efforts to adapt to a changing world and to changing circumstances.

The second factor I want to mention is the changing nature of the sector's customers. As you know, the effect of changing demographics on universities is inevitable. That alone is a powerful incentive for you to reach out to more part-time students, and especially to adults who are already in work.

But it's also true that, although the number of young people in the population is falling, more and more of them are aspiring to go to university. That's going to make the impetus to widen participation unstoppable.

The structural fallout from those facts will certainly include more higher education being delivered in the workplace as your market becomes more mature and more part-time. .

That will pose new challenges for you. Like the challenge of taking more provision off-campus and getting the most out of new technologies in doing so. And the key challenge of achieving expansion and diversification without diminishing the quality on which so much of your success depends.

When people use the term shape and structure, they often have in mind some big questions about the make up of our university system.

Do we have the right number of universities? Is there a case for some consolidation and merger activity within the sector? In a commercial sector with equivalent levels economic activity and so many providers, there would have been many mergers and acquisitions activity over the past two decades - far more than we have seen in higher education. Should more be done to encourage that among our universities?

I do not think these are decisions that should be taken through top down planning.

In the New University Challenge initiative, our approach has not been to say that new centres should be located in places X and Y and Z.

Instead, we are creating the conditions in which proposals for new centres can be developed by universities and their partners in the places where they think there can be successful ventures.

Similarly, the institutional map for the sector will emerge from decisions taken in response to user demand and the changing environment of the 21st century.

It will be surprising if there are no changes to that map over the next 10-15 years. There have been changes over the past decade, and over the decade before that.

UUK's own contribution to our debate talks about going further in the direction of diversity among universities.

That means greater specialisation in the areas where a university really excels. It also means choices about withdrawing from activities - choices which may be uncomfortable ones for those who have grown accustomed to thinking about one traditional model of a university.

As this happens, we may see universities coming together to pool their strengths - if not necessarily in mergers, in new forms of partnership or federation.

Or again, the financial pressures that we unquestionably face over the next ten to fifteen years, on both the revenue and cost side, may lead universities to decide to come more closely together.

The third factor that seems especially important to me is the relationship between universities and their environment.

For example, a university or a campus can have a real galvanising effect on the area where it is based. And not just as an employer or as a provider of skills and services, although they're undoubtedly important. Many universities act as social and cultural hubs for their communities, too. In doing so, they help to promote social solidarity and shared values.

That argues for a creative approach for how universities relate to local and wider communities. New technologies can help in that, and they can also help take higher education onto the shop floor. I know that some universities are already making lectures available by podcast.

Those of us in Government need to be aware - perhaps more aware than we have been to date - that a growing number of universities communities are also sectoral. Having been the Skills Minister, I'm particularly conscious of the value of that. And we need to think about how we can best facilitate the integration of a higher education component into all the other sector-specific skills initiatives that are now in train.

And I can't move on without failing to mention the fact that some universities are operating in is no longer exclusively British. The presence of UK institutions is now being felt in the Middle and Far East, in Africa and in Central Asia. That brings tangible benefits, but also entails a degree of risk. Individually and collectively, we need to think about how to maximise one while minimising the other.

I come finally to what I'm told is usually the elephant in the room in discussions between the sector and the Government. That, of course, is money.

You know already that this Government hasn't just talked about the value of higher education. In our first ten years, we helped you to achieve an 18 per cent increase in student numbers at the same time as increasing funding per student by 15 per cent in real terms. Funding that had been allowed to fall by no less than 36 per cent between 1989 and 1997.

We've opened up new sources of finance to you.

Like the Higher Education Innovation Fund that has helped every university in England to engage with public, private and third-sector organisations, and which will be worth £150 million a year by 2010.

Like the £200 million we've promised to help you leverage more voluntary giving from your graduates. That gives you a great opportunity. Harvard, where I studied, regularly receives over half a billion dollars a year in donations from alumni.

And like the £50 million or more a year that the Government will be spending by 2010 to support employer co-funding. That, too, gives you the chance to leverage more income from private sources.

But I know there are still difficult finance issues for many of you.

You're no more immune from difficult times in the global economy than the rest of us. When fuel costs go up worldwide, then you have to meet them, too.

Dealing with that sort of thing is part and parcel of the autonomy you so value. But that doesn't necessarily make it any easier.

Of course, not all of your concerns have their origins overseas. Some of you feel that the way universities are currently funded just isn't flexible enough to cope with the pace at which the market for higher education is changing.

There's truth in that. Especially when it comes to the part-time and credit-based provision that will be needed as you reach out increasingly into the workplace. We recognised that earlier this year in Higher Education at Work and something that's being considered as part of the great higher education debate, too.

I hope those brief comments give you some idea of the breadth and scale of some of the issues that I think the sector and the Government will face together in the future.

I look forward to working with you to address these challenges. And I know that you'll all have your own perspectives on them. So, in the few minutes I have left, I'd like to invite you to share some of them with us.