"It is because HE is so important that we need to identify and meet the future challenges facing the system. Today, I want to… say more about the challenges ahead and how we develop our response"
29 February 2008
CHECK AGAINST DELIVERY
In September last year, when I spoke at the UUK conference, I explained how universities are central to every aspect of DIUS work.
Our challenge is:
- to make the most of the skills and abilities of every single citizen;
- to sustain first-class research and scholarship;
- and to create the environment in which those skills and that research are translated into innovative products, services and businesses.
We cannot succeed in this without strong universities, and the creation of DIUS served as clear recognition at Cabinet level of their national importance.
Universities nurture talented students, challenging them to think critically and preparing them for rewarding careers. They unlock the talent and potential of younger and older people alike.
As centres of research excellence, they are key drivers of economic growth. They lay the foundations for further knowledge and wealth. They are a vital element in the development of communities and regions.
They are the focal point for people with the intelligence and imagination to develop solutions to challenges facing both the UK and the wider world. They are an important vehicle for international collaboration - between students, scientists and other scholars.
And universities are integral to our national culture and a cohesive society. They create a broad community of learners willing to question conventional wisdom and foster progress, while also nurturing the shared values that bind us together.
It is because HE is so important that we need to identify and meet the future challenges facing the system.
I offered some initial thoughts on these challenges last autumn. I've greatly appreciated your willingness to share your perspectives - with me, my ministerial colleagues and officials.
Today, I want to move the debate forward. To say more about the challenges ahead and how we develop our response.
The strength of DIUS should lie in its ability to bring all aspects of higher education policy - teaching, research, innovation - together.
The world is evolving very quickly and we must be able to unlock British talent and support economic growth through innovation as never before.
We need to decide what a world-class HE system of the future should look like, what it should seek to achieve, and establish the current barriers to its development.
As I have said previously, I want to do this before we initiate the review of undergraduate variable fees next year. But let me suggest what, at the end of the process, the prize should be.
Universities have told me two things about their success. Firstly, that success depends on our, the government's, respect for your leadership and autonomy. But, secondly, that you exercise that autonomy within the framework of aspiration, incentives and support set by government and the Funding Council.
We have to get both right - respect for your autonomy, and the framework within which we expect you to work. And we have to get it right for the long-term.
So, at the end of this process, we should aim to produce together a 10 to 15 year framework for the expansion and development of higher education. One that sets out what universities should aspire to achieve. And one that is clear about the role of government.
- A framework to help us ensure that Higher Education in this country meets the growing demands upon it for research, teaching, international cooperation, economic development and cultural influence in the 21st century.
- A framework that provides a reference point for future policy decisions, including decisions about funding and other priorities.
- And a framework that enables progress to be measured in an objective and transparent way.
As part of this process I am inviting a number of individuals and organisations to make contributions. Not to write government policy but to help inform it and - equally important - to stimulate debate and discussion in the sector. I will be announcing several work streams today; others in the coming weeks.
THE QUALITY OF OUR SYSTEM TODAY
We face the future from a position of strength.
We punch well above our weight in terms of research.
Ours is a system that produces highly employable graduates.
With all due respect to the Public Accounts Committee, we have one of the highest completion rates among OECD countries.
In 2007, 81% of students judged their courses satisfactory, and 85% of graduates were satisfied with their careers three and a half years after leaving university.
We have maintained our market share of international students - second only to the United States - even as overall global volumes grew by half between 2001 and 2005.
All this has been achieved over a ten-year period of sustained investment in higher education and research, of expansion in student numbers and widening participation.
We can say with confidence that the great majority of what we do is good, much is excellent, and a significant part is genuinely world-class.
THE CHALLENGES OF A CHANGING WORLD
But excellence today is no guarantee of excellence in 10 or 15 years' time.
If we want to repeat that statement of quality 15 years from now, we cannot assume that it will be possible by doing more of the same. To be regarded as excellent - world-class - is becoming much tougher.
Plenty of other countries, emerging and developed, will challenge our position.
They will do so for the same reason that we value higher education - because it is central to success in the modern world. They recognise its economic importance: the effect of creative minds nurtured, new ideas applied and marketed, inward investment generated.
They will challenge us in every area - research; teaching; our links with business and employers; and our links between research, innovation and enterprise.
It's suggested that, over the long term, a one percentage point increase in the size of a country's tertiary educated workforce increases GDP growth by around six percentage points. The closer a country is to "the technological frontier" (as measured by patenting activity), the more dependent is its growth on a highly educated workforce. For these countries - and regions - innovation, so dependent on higher level skills, is particularly important to their economic progress.
The world's largest corporations make annual R&D investments of tens of billions of pounds. We must compete for our share, attracting further companies of the calibre of IBM, Hewlett-Packard and RIM, the makers of Blackberrys. But money can flow out as well as in. Firms like Rolls Royce, BT and GlaxoSmithKline collaborate with universities in many countries. I want them to grow their major R&D investments in the UK.
Between 2004 and 2007, China rose from 24th to 18th in the world university rankings. Its share of world academic publications and citations rose from 2% in 1996 to 6% in 2005. The Chinese State Statistical Agency already claims that China has taken second place from the UK in the global ranking for total science publications.
Between 2001 to 2005, meanwhile, growth in the UK's total publications output was lower than in China, India, Australia, Canada, the US and Germany. There is a substantial effort to create new research universities in the Middle East and the Gulf.
The number of foreign students may have risen in the UK by 43% from 2000 to 2005. But they grew in Australia by 67%, Ireland by 74%, New Zealand by 745%.
These countries can flourish, in part, because they offer English as the language of instruction. But many other countries are following suit in both Europe and Asia. If teaching in English no longer gives us a competitive advantage in attracting overseas students, we must carefully examine the value of our total offer.
Countries around the world are competing to unlock the talent of their people. We have six million adults holding A-levels or equivalent, but no HE qualification. And the percentage of 15-year-olds in the UK who expect to go to a university-level programme is 32%, one of the lowest in the OECD - lower than Greece, lower than Turkey. Despite progress on widening participation, far too many people with the ability to study at university do not make it.
HIGHER EDUCATION 15 YEARS FROM NOW
It's against this background that the challenges for the next 10-15 years begin to take shape.
If we want our higher education system to be excellent or world-class 15 years from now, what characteristics would it possess?
I think it would:
- Be responsible for a disproportionately high share of leading research output and home to thought leaders in a full range of disciplines.
- It would be world-beating in the way it maximises the benefits of its links to business and public services - both educating the workforce and exploiting the fruits of research and innovation.
- It would boast top quality relationships with HE systems elsewhere and be involved in major international collaborations.
- Universities would be developing our home-grown talent to the greatest extent through the high standard of their teaching and their ability to reach all of those who can benefit.
- And universities would be developing to the full their contribution to local and regional development, and to the cultural life of our country.
In the coming months, I want us to explore these themes in more depth. But let me touch on some of them today.
RESEARCH
Our world-class research base is fundamental to the country. With only 1% of the world's population, the UK carries out 4.5% of the world's research and has an 8% share of the world's scientific publications.
Part of this success is based on public investment. Since 1997, the ring-fenced science budget has increased from £1.3 billion to £3.4 billion. I am sure that significant public investment will be needed in the future. The Government has increased investment over the last decade to £6 billion a year to foster financially sustainable research. The dual support system also provides a stable foundation - which, together with vigorous competition, drives up excellence.
But we do need to identify the other factors behind our success.
One is the intensity of our research activity. While the process must always be open to innovation and quality, I am in no doubt that our world leading position - and our ability to sustain institutions that are world-class across a wide range of disciplines - depends on an appropriate concentration of research effort. 23 universities receive three-quarters of HEFCE's funds, while 18 universities receive around three-quarters of Research Council spending in the sector.
There's much debate surrounding the detail of new systems for allocating HEFCE research funds, but research effort takes years to develop and we must get the long-term strategy right.
I hope we can look at other factors too. The development of our graduate schools and the shape of careers in research. Opportunities for collaboration with universities overseas and with the private sector. Utilising the increasing mobility of academics and researchers, and the associated sharing of ideas and expertise.
One area that does attract debate is the way in which universities should be expected to use the intellectual property they develop. For their own and the broader good. As secretary of state for higher education, I want HEIs to reap the fruits of their own labour. But as secretary of state for innovation, I want to see financial benefits flow through the economy and the wider diffusion of knowledge across the country.
There is a complicated relationship between investment; output in terms of papers, patents, and products; and economic benefit. And there is the critical role of local enterprise or international business in translating innovative research into world-beating products and services.
I have asked Paul Wellings, VC of Lancaster University, to look at how universities should manage IP for their own benefit and for the wider economy. He will work with my colleague Baroness Delyth Morgan in doing so.
BUSINESS ENGAGEMENT
As a onetime - if rather unsuccessful - research scientist, I need no persuading of the fundamental value of research - both for its own sake and for laying the foundations for future prosperity, unpredictable though that may be.
Yet there is no doubt that universities do need to address practical issues around helping to translate knowledge into innovation and thereby adding real economic benefit.
In the past, the quality of our research base has enabled us to attract substantial inward investment from international companies - like Boeing, Pfizer and Microsoft - who choose to locate here because they value the innovative work not only of individual researchers, but the system as a whole.
Government is working hard, with you, to develop more links of this kind.
- Research Councils have ambitious plans to increase their economic impact during the CSR period.
- The Higher Education Innovation Fund will reach £150m annually by 2010/11, so that universities can work with business and commercialise research.
- The Technology Strategy Board will be working alongside Research Councils to translate research results into business opportunities.
- The Knowledge Transfer Partnerships scheme will double in size.
- And the forthcoming Science and Innovation Strategy, which we will publish in a few weeks, will set out further plans for this area.
I would be the first to acknowledge how much has been achieved in this area over the last few years. But in a recent survey, just 2% of businesses said they rate universities as an important source of information about innovation. Both institutions and the country are paying a heavy cost for this lack of engagement.
We need to understand how we can build more effective relationships between universities and business. There's no question that the most successful economies in the world in 15 years' time will take our current best practice as their norm. Will we have done enough by then to keep pace?
Over the past months I have seen some excellent practice and exciting projects. But I have picked up warning signs too.
- Worries among employers that graduates lack personal and team-working skills.
- Worries about the start-up costs for an employer-led course.
- Worries about the ability of universities to make the necessary links between the development of innovative ideas and the teaching of skills in order to convert them into commercial successes - with a reluctance to take risks without firm guarantees.
- Worries about the lack of careers advice for students and their lack of opportunities to experience the world of work
- And worries about the cultural gap that can divide universities and businesses: notions of separate career paths, even the use of completely different language, so that neither side knows how to approach the other.
And I think the concerns about HE/business links are most marked when we consider higher level skills.
We simply do not have enough people with high-level skills in the workplace, and universities must envisage a bigger role for themselves in meeting that demand.
In line with Sandy Leitch's recommendations, we have set a target of at least 40% of the workforce having higher level skills by 2020 - to drive economic growth and ensure that people can share in national prosperity.
To get to 40% is an enormous challenge and yet it's a relatively modest target. Some of our competitors are already there: Canada at 45%; Japan at 40%. And these countries - as well as others - will not stand still.
Right now, the market for employer expenditure on higher level training is worth around £5 billion per annum. Currently the HE sector secures no more than £335 million of this business - 94% of the investment goes elsewhere.
So there is a real challenge. To win more of employers' current commitment to higher level skills. But then, and more importantly, to win new work as employers become convinced of the value of higher level skills. To be part of reaching that Leitch target.
This will only be possible if the HE offer is attractive and persuasive. Our shared vision must surely be of a system where businesses are willing to pay for provision, because they can see a direct connection between what students are learning and increased productivity.
But right now, fewer UK students have studied vocational subjects compared to the EU average. Fewer have received work experience through placements or internships; and those who do have spent less time on them.
More UK graduates say they feel less prepared for their jobs after graduation and say that they receive more employer-supported training in order to carry out their roles.
Building on contributions from the CBI and UUK, Bill Rammell will soon be leading a consultation on higher level skills. This will open a serious debate on several aspects of the relationship between HE and business, including graduate skills, co-funded degrees, and sponsorship.
We will examine whether there are sufficient financial incentives for universities and businesses to engage, where the real barriers and rubbing points exist, and what each side needs and wants from the other. We will explore how to stimulate employees to undertake more higher skills learning - with the help of the TUC, among others.
But what's certain is that income from business - in all its forms - will have to rise as we develop the higher education system of the future.
TEACHING
A world-class system of higher education is one where teaching excellence is the norm - for undergraduates and postgrads; for full-time students and part-time; for those coming straight from school and those returning to education after a long gap.
The students of the next decade will be different from today's. Between 2010 and 2020 the number of 18 years olds in the UK will fall by more than 100,000 - or over 15%.
Not only will there be more older students. There will be more people studying part-time and, hopefully, more people from overseas - so long as we continue to offer a superior university experience to what's available elsewhere. And I certainly expect there to be more students from non-traditional backgrounds.
I have asked Universities UK to lead work on understanding more precisely the trends here, and consider how universities should respond and how Government should facilitate change.
Student expectations are also changing. They will increasingly demand high-quality provision that they themselves are funding directly through fees as well as through taxes. Younger students will increasingly arrive from school environments where traditional barriers between subjects are breaking down, where the use of ICT and state-of-the-art facilities is taken for granted, and where learning is increasingly personalised.
The reason why I created a Minister for Students at DIUS was not out of nostalgia for my days as a student union president, but out of a recognition that students are - and should be - an increasingly powerful force shaping our higher education system.
The evidence from the student juries we have funded as part of the development of the new student forum has raised issues about the quality of teaching and employment prospects. About accommodation. Financial support. About information, advice and guidance. And about the way diversity is valued and addressed on campus.
If we don't address these concerns - if students do not feel they are getting value for money - then talented people will not take up the chance to develop their skills, and we will damage our reputation as a prized destination for international applicants.
Similarly, the public will not endorse this government's continued and unprecedented investment in the sector if they also question universities' ability to deliver increasing value for money.
So we must sustain the quality of provision where it already meets student needs and make radical changes in anticipation of future cohorts. And we need to look at the pace of change.
The changing composition of the student population raises further issues besides: the challenge of catering to people who might have left compulsory education 20 or 30 years ago; preserving 'communities of learning' as students study in different ways; rethinking campus activities as the age range and interests of students broaden.
We need greater choice of learning, with options for greater flexibility: compressed degrees, distance learning, e-learning. Credit arrangements encouraging and simplifying transfers between courses, institutions and between countries.
What came out of the Burgess proposals on credits is an essential prerequisite for any world-class HE system in the future: to facilitate mobility, lifelong learning, and accommodate demographic trends.
Burgess's Higher Education Achievement Report has been well received. It's another piece of the infrastructure creating a system fit for the modern world - and in 2020 students, employers and government will wonder how we managed without it.
I have asked Paul Ramsden of the Higher Education Academy to investigate the student experience, and to offer a perspective on how universities and academics - in the UK and internationally - are currently responding to evolving student expectations of their educational experience.
Meanwhile, work on widening participation - and on building links between universities and schools in particular - is being taken forward by Professor Steve Smith and his colleagues on the NCEE. I will be returning to this issue at the HEFCE conference in April.
INTERNATIONAL
Every theme I've covered today contains an international dimension - with implications for every institution and for the overall place of the sector within a global HE system. Indeed, international developments are setting the context for most of our domestic challenges.
In the coming decades we can expect the international HE system to change markedly. I've talked about competition from other countries, but of course one of the ways we can stay ahead will be by improving international cooperation and collaboration.
DIUS has recently supported new Research Council UK offices in Beijing, Delhi and Washington. In China and India, RCUK is setting up 'science bridges' to improve the transfer of research and expertise from our research base to their high-tech businesses and universities. The UK-India Education and Research Initiative aims to build sustainable links between us. And the Government has sustained the GSIF network, promoting science and innovation collaboration around the globe.
We've developed a fellowship scheme which aims to make the UK the destination of choice for international researchers and encourage greater collaboration between UK and overseas scientists.
At the institutional level, some universities are focusing on their alumni networks to cultivate international links, as well as offering their own scholarships and fellowships. UK host institutions secured more European Research Council grants for European scientists to establish their own teams than any other country.
Many universities are developing physical or e-based methods of delivering a British education overseas. And research intensive institutions are demonstrating the potential for the strongest research universities to be magnets for investment both domestically and overseas.
But these are complex issues, and it is not always easy to see how individual institutions or the system as a whole can make the most of global opportunities. So I have asked Professor Drummond Bone, Vice Chancellor of Liverpool, to look at the international dimension of the challenge facing the sector.
INSTITUTIONAL DIVERSITY
To return to my tentative list of objectives for 15 years' time:
- Leadership in research output and across a full range of disciplines.
- World beating for business and employer links.
- Setting the standard in international collaboration.
- Unlocking all our home grown talent.
- Maximising the regional and cultural role of universities.
Achieving these would give us a world class system. But not a set of uniform institutions.
We have a diverse system of higher education. There is diversity of scale: further education colleges with just a couple of hundred HE students; a number of universities with more than 30,000; and the OU with more than 150,000 students.
- Some universities have student bodies where as many as 40% are postgrads; others have around 10%.
- At some institutions, half of all students are on part-time courses; at other it's less than one tenth.
- And for Funding Council income as a percentage of total income, the range among universities is between roughly one to two thirds.
There are major differences in size, student composition, income, and range and importance of research activity. A diverse pattern of provision to match an increasingly diverse set of demands.
The challenge is to fully exploit the value of diversity in the system. I want universities to play to their strengths because I believe that all organisations do best when they focus on what they are good at. And the system's overall strength will increase if we get to a stage where every institution values the work of its peers.
The decisions about where to take your institutions must be for you and your governing bodies to take. What I need to know is whether the framework set by government and the funding councils will deliver a world-class higher education system.
In many areas of public policy, value isn't necessarily measurable - and where it can be assessed - as with research excellence - those measurements can be controversial.
It's important that we devise robust methods for evaluating those aspects of universities' work that I'm discussing today - teaching, business engagement, support for communities, widening participation, and international collaboration.
I have asked HEFCE to investigate how we might measure these elements of a successful HE sector in such a way that reflects the individual missions of different institutions
Kenneth Clarke said as health minister that if he wanted a GP to read something, he wrote it on a cheque. I won't use the same line about vice-chancellors'
But plenty of VCs have said they do strive to maximise the income of their institutions - and are expected to do so. So I need to understand whether the current funding regime gives the right support to different types of institution as they pursue a variety of strategies for growth.
I suspect that it is not only traditional cultures within the higher education world that inhibit change. The alignment of incentives could mean that radical change goes against the grain.
We should have a system that facilitates far-reaching and rapid changes in strategic direction for all institutions, each according to their priorities.
Before I close, let me just touch on three issues which are either already on our agenda or about which I'll be saying more in the near future.
First, HE already plays a transformational role in many communities. Regenerating and developing local economies by providing graduates with skills relevant to local businesses. Attracting talent to an area. Employing local people and building local purchasing power. Raising aspirations and ambitions. We know there remains an untapped demand for access to higher education in many parts of the country and I expect to say more on the role of higher education in unlocking human and economic potential in the next few days.
Second, a few months ago, we published revised guidance on tackling extremism on campus. The debate and discussions which contributed to this updated guidance brought home forcefully the cultural role of higher education in forging and transmitting the shared values - including academic freedom - upon which the success of our university system depends. With so much talk - including mine today - of economic impacts, we should not forget that our strength has deep and enduring roots.
And third, I mention the process of government decision-making itself. As I told the RSA recently, this government spends £6bn a year on research, yet ministers and officials sometimes find it hard to access academic knowledge tailored to the practical needs of public policy. In addition to commenting on the RAE, I've asked the Council for Science and Technology, led by Janet Finch to take a broad at the relationship academia and policy makers.
CONCLUSION
The challenge, then, is to be at least as proud of our university system in 15 years' time as we justifiably can be today.
To do that, we need shared aims. We must accept the scale of the challenge and agree about the importance of success. We must be prepared, where necessary, for radical reform and change.
We need a long-term framework for expansion and development. Bold leadership from universities and a clear understanding of how government will provide support.
That is what we must now work towards.
