15 February 2007
Tony Blair has launched a plan to encourage former students, businesses and philanthropists to donate money to universities. He made a short speech at Brunel University in London.
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The identification of crises is hugely overdone. But I do think it is true to say that, ten years ago, higher education was in the throes of a crisis.
Funding per student had fallen by over 20 per cent in real terms in the previous five years. We were not producing enough graduates to respond to global competition. Teaching quality had suffered. So had research. Expansion had been done on the cheap.
The funding crisis had become acute. So let’s be clear: more than one Vice-Chancellor has told me that tuition fees have been the saviour of their university. Yesterday’s university admission numbers, which show a big increase on last year and a rise even on the bumper intake of 2005, are a complete vindication of that policy.
Today, we can announce a university endowment scheme, to put the funding of universities on an even surer footing. We will provide £200 million over three years to stimulate universities to raise at least £400 million more for new facilities, new staffing, new bursaries for students or new research capacity.
The politics of higher education have been a metaphor for our programme of change: the right response was very difficult politically but it was, from the start, very clear in policy terms. Following Lord Dearing’s report in 1997 we introduced tuition fees, initially at £1000 a year. And, since last year, universities have had the flexibility to charge up to £3000 a year. Most now do so.
And, like many difficult political battles, once won, the policy quickly becomes the conventional wisdom. Many other European countries are following suit.
If we recall the debate about tuition fees, stretching right back to 1997, none of the fears of critics have come to pass. Applications have not fallen: they have risen. Since 1997 there has been a 23 per cent increase in undergraduate enrolment, and a 28 per cent rise in postgraduates.
Critics said that fees would deter the poorest students. They haven’t. As fees rise, the new system offers more grants to the poorest and graduates start repayments only when they are earning enough to do so.
Critics said that the income from fees would, in any case, be insufficient. In fact, we have halted the decline in funding per student. Universities have increased spending on computers and library services by a quarter since 1997. We have been able to invest much more in staff - almost 30 per cent more than a decade ago. And we have increased research funding by over 70 per cent in real terms.
This has allowed the university sector to adapt to changing demands. Time was when it would hardly matter that a university was isolated from its local business community. No longer. Links between higher education and business are now critical and they have improved immeasurably over the last decade.
The international competition is now intense, not just from the United States but increasingly from China and India too, both of which are investing heavily in their university sectors. UK universities are now second only to the United States as a destination for overseas students - with a 47 per cent increase in foreign students since 1997.
The nature of how people study has also been changing. There has been a 25 per cent increase in part-time students since 1997. We have introduced a new vocational degree linked directly to the workplace. There are already 60,000 foundation degree students, many studying at FE colleges and we will give the best colleges the right to award foundation degrees.
Our research base is in very good health. With 1 per cent of the world’s population, our researchers carry out 5 per cent of world research and receive a tenth of internationally recognised science prizes. There is also increasing evidence that we are now exploiting our ingenuity and turning scientific innovation into entrepreneurial business practice.
So, there is no doubt that we are in a fundamentally stronger position than were ten years ago. The abiding sense of gloom that was settling over the sector has, I think, been lifted. I think that, throughout the decade, this government has understood the link between the knowledge economy and the creation of knowledge. And that has meant a central place, in both education and economic policy, for the university.
We have not thereby abandoned the classic Cardinal Newman account of the university. Colleges as sites of disinterested learning are one of the great parts of our civilisation. But we have grafted onto it a very modern phenomenon - that the knowledge that was once the preserve of an elite is now the indispensable requirement for economic advance. To that extent the democratisation of university entrance is a matter both of social justice and of economic efficiency.
There was a second insight: that the specific demands, in policy terms, of responding effectively to the world, will keep changing. Global markets have increased the pace of change. In other words, you solve one problem and you turn over another. What are the big issues facing higher education today? I think there are four.
First, we need more highly skilled workers. Lord Leitch’s recent report set out one of the truths of the open era: that the emergence of new economic superpowers, backed by more world-class universities, places an even greater premium on skills. Leitch’s estimate is that we need over 40 per cent of the workforce to have higher-level skills by 2020. We need more people going to university; more adults opting for foundation degrees.
The second issue is the global market place for students, research and talent. Last year, I launched the second phase of the Prime Minister’s Initiative with the British Council and Universities UK to encourage more students to come to the UK to study. Their presence benefits us in the global competition for talent and it is vital to our international influence. We need to foster new forms of partnership - with other universities and colleges, across borders, with industry and with local and national government.
Third, we need even more research that promotes innovation. That means greater co-operation between higher education and industry. Your industrial and product design courses here at Brunel are a great example of what can be done. More universities than ever are developing research parks with business, spin-out companies, consultancies and licenses. We need to reform the Research Assessment Exercise to recognise such activities. We need to go further, faster.
Fourth, the question of resources and governance. Increased funding brings with it, of course, the requirement for accountability. But we are conscious that this ought to be as minimally bureaucratic as possible. We have already cut the regulatory requirements and if you want us to do more, we will lend a sympathetic ear.
On resources, we currently provide around £10 billion a year for higher education. Tuition fees will provide an extra £1.3 billion a year from 2010. But this battle too is waged globally. You are competing with better- funded competitors abroad, not least in the United States.
Hence today’s announcement on endowments. Private fundraising - from alumni and business - is a major source of income in the United States. The UK does not spend much less public money on higher education than the US. But private giving there is much greater. The average US university has an endowment fourteen times that of a comparable UK university. 207 universities in the USA currently have endowments worth £100m or more. There are only 7 in the UK.
Why is this? Partly it’s about cultural attitudes, but partly it’s also about capacity. In the last twenty years, there has been a rapid growth in private endowments in US public universities, often as a result of matched funding from the state. And in Ontario, Canada, a match-funding scheme has greatly increased private giving in the province’s 29 universities and colleges.
It is time for a similar initiative here. We have listened to the evidence collected by Prof Eric Thomas and by the Sutton Trust, and I believe the time is right. Endowments fit very well with a sector that has increased autonomy, greater specialisation and a strong pursuit of excellence. Already, working with Universities UK, we have provided some resources to help build fundraising capacity. Now we want to go much further and introduce a major national fundraising initiative.
Our scheme will benefit most universities in England, and will particularly help those without a tradition of fundraising. There will be caps on grant contributions for individual institutions to ensure that the money is not concentrated in just a few institutions. Bill Rammell will say more today, and we will consult to ensure minimal bureaucracy and maximum impact.
We have come a long way in higher education over the last ten years. But the global challenges will intensify in the years ahead. It is vital that our universities are empowered to excel as they meet those challenges. Nobody should doubt the government’s commitment to the sector. We appreciate its many virtues. And we know that, with imaginative policy, we can maintain our world-class status where we have it and build it where we don’t.
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