University Funding (Yorkshire) (Hansard, 15 May 1996)

§ Mr. Barry Sheerman (Huddersfield)
I tabled a motion for the Adjournment to draw the House's attention to higher education, especially to the universities in Yorkshire and Humberside because, like many Members of Parliament, I have had an increasingly interesting dialogue with members of the university community throughout the region I represent, especially with those at my local university of Huddersfield. I have had discussions with not only the vice-chancellors, but staff, the Association of University Teachers and all the unions whose members work on university campuses in the nine universities in Yorkshire and Humberside. Increasingly, they drew my attention to something that I in part already knew: the dire position that universities find themselves in.
To put that in context, our university system is one of the most successful aspects of our national life. It has been enormously successful historically, and, compared with our main international competitors, our higher education provision is very successful, but society has dramatically changed over a short period of years. To show that, I need say only that, just before the last war, only about 1 per cent. of people went into higher education; in the 1960s, when I was a student at the London School of Economics, the figure was just over 3 per cent.; and today it is 30 per cent. There has been a dramatic change in higher education in a short period.
Most of that boost of change has come in the past 25 years. I am not making this a strongly party political point, but fast growth has occurred since 1979, in the period of this Government. It would be silly to deny that that expansion has taken place, but it would take place in any society, and under any Government who were faced with the challenges of global competition. Increasingly, this country has had to learn that becoming globally competitive and creating wealth successfully is achieved by the pursuit of knowledge and by turning out highly skilled, highly educated, highly trained people, who can turn their hands to the most innovative processes we know.
There has been a catastrophic decline in the demand for less skilled and unskilled people. As a small boy, I would cycle past a factory, and it would have a sign saying, "Hands wanted", as though brains need not apply. We do not see such signs at a factory gate today.
There is an emphasis on knowledge and higher education. Our university system is the keystone of a wealth-creating society that provides the highly qualified personnel who make us a competitive nation. Our universities have responded magnificently to the need for a highly educated population, the rapid expansion of students and a very fast changing university world.
There are more than 100 universities in the country, and, as I said, nine in the region of Yorkshire and Humberside. Universities dominate whole communities as they never have before. In the old days, there was one major employer in most towns and cities. These days, with the emphasis on small and medium enterprises, the main employer in most towns and cities—and in my constituency—is the university, with its enormous 1048 complex of buildings in the centre of the town. It is the largest source of wealth in the town, brings more money and jobs into the town, and is certainly the focus of highly qualified individuals. In Yorkshire and Humberside, one in seven professionals work in universities. That is a large number, which has an important effect on our economic, industrial and cultural life.
There are more than 100 universities, and they are enormously important to our well-being and the future of our towns, cities and regions. They are critical not only in the traditional way of providing good education, teaching, tuition and research, but increasingly in the way in which they have responded to the challenge of a proactive relationship with the local community in every sense, and have aided urban, cultural and certainly industrial regeneration. Where that relationship works well—whether in Cambridge, Warwick, Huddersfield, Leeds or Sheffield—it has produced new ideas, innovation, new jobs, new companies, and guaranteed a future for our constituents.
Anyone who has been part, as I have, of a group looking at what our country will be doing for a living in 20 or 25 years' time—in the year 2020, along the lines of the Hamish McCrea book of that name—knows that the university will become not less important or have the same importance, but will grow exponentially in significance. The future well-being of our constituents depends on that.
I said that I wanted to concentrate on universities in Yorkshire and Humberside, because there are problems for our universities. Up to now, I have told a rather good story of expansion, growth, more people undergoing higher education, partnership and the university's dominating role. The background has been a determined and increasing squeeze on resources flowing into the university sector over the past 10 years.
There is no doubt that, in that time, there has been an enormous increase in students but a very small increase in staff. The resources devoted to each student has been squeezed. I would be the last to say that there was no room for economy, and any Government would have expected economies in higher education institutions that take so much of the national cake and national wealth.
On any criteria one can mention—productivity, effort, use of available resources—the universities have performed better and more imaginatively. When I visit them, time and again I see what they have done to maintain standards and quality, not only of the students but of research and of everything else they do, at the same time as increasing the number of students. That can go on for too long.
There has been an increasing feeling in the university community that there can be no further cuts or squeezes on the resources allocated to students and staff. That is a fact. The salaries of university personnel have recently been worse than those for any other profession, even for architects.
I should have declared an interest at the outset because I am still a member of the Association of University Teachers and was a university teacher, "when"—as I sometimes tell some of my constituents, who smile wryly—"I worked for a living." I sometimes think of what has happened to university salaries since I left teaching in 1979. If one extrapolates the salary I was on then, and 1049 had salaries stayed at that level, university teachers would today be doing very well. The fact is that they have done very much worse.
We can go only so far before we stop getting the right quality of people coming to university, staying on into postgraduate research and then entering the teaching profession. That is the truth, and it is very worrying when one speaks to any vice-chancellor in the land about recruiting and retaining good quality graduates and entrants to the profession. The problem is growing.
The backdrop to the problem is the most recent Budget, because it represented a cut too far. The cuts announced by the Chancellor amazed everyone. I was in the Chamber for it, but I did not realise quite how deep the cuts were. Their depth became apparent in the few days after the Budget.
To do justice to the Chancellor, I do not think that he knew quite what he was doing. I have known him for a long time, and I know that he has a very positive attitude to higher education and is very interested in the university sector. I do not believe that he would consciously have done what he did in the Budget last November, but that he misunderstood what he was doing because of the way in which the facts were presented to him by civil servants and by people in the Treasury. I do not think that he would otherwise have made those cuts.
I should be grateful if, in his reply, the Minister of State will tell us whether he understood how punishing those cuts would be when the Budget was debated, whether he wanted that level of cuts to be made, or whether he fought his corner. Did he know what would happen with, for example, a 30 per cent. cut in capital spending?
There has been not only a new £657 million cut in universities' budget, but a cut of 30 per cent. in capital spending. The Chancellor suggested that that could be made up with funds from the private finance initiative. The fact is that 70 per cent. of that capital spending is used for building maintenance and minor extensions to buildings, and to buy new equipment and new technology. That expenditure is the very stuff that keeps a university running, and it is not the type of expenditure that is appropriately funded by the PFI.
Our universities are very positive about using the PFI. They have long used private finance in a range of building programmes. But the fact is that every vice-chancellor I have spoken to in Yorkshire, Leeds, Bradford, Huddersfield, the Leeds metropolitan area, and—last night in the House—Hull has said that it is not an appropriate way in which to use the PFI. A catastrophe is about to happen in higher education in our country, and that is not an exaggeration.
We have reached the point where teachers can no longer teach and researchers can no longer undertake research, and put their hands on their hearts and say, "We are maintaining the traditional high-quality education of the British university system." One cannot do that without the necessary tools. One cannot even respond to requests from the Chancellor and his colleagues to use modern technology in teaching, and thus reduce the cost of teaching, because one is prohibited from buying the new technology that would deliver that modern teaching.
Overseas students provide 10 per cent. of the income of British universities. They represent an important part of every university budget—for example, they provide £6 million for Bradford university. If that money was 1050 lost, any of our universities would be in great trouble, and the Chancellor and the Department for Education and Employment would be deeply disturbed. The provision of higher education is subject to global competition, and those making that choice are knowledgeable. Once there is a feeling that our standards are not being maintained, those countries that send so many students here will quickly switch their choice.
I have spoken to university personnel who go around the world doing the marvellous job of selling our courses. They tell me that our tough competitors from Australia, Canada and America are telling people not to send their students to Britain because the quality of education is not as good as it used to be. I am emphatic that that quality has been maintained, but I do not believe that it will be possible to guarantee that as a result of the latest swathe of cuts.
That is why it is so important to ask the Minister to use his influence to reverse the cuts announced in the November budget. He should restore the funding dedicated to capital spending and declare that there will not be another cut next year, followed by another the year after that.
Those cuts have been announced against the backdrop of a freeze on long-term planning for higher education, because Sir Ron Dearing is not due to report until after the next election. I do not agree with my party's philosophy, because I do not believe that we can fight the general election with a significant element of our economy in cold storage. Everyone is saying that we should wait to hear what Dearing says. I think it is healthy for those in a democracy to say vigorously, Dearing or not, that we have to have an expanding, healthy and wealth-creating higher education sector. I must demur from party policy on that.
I should like to conclude by citing a few examples of what the cuts mean to the universities of Yorkshire and Humberside. The higher education institutions of Yorkshire have lost £15.2 million in real terms in their Higher Education Funding Council income for 1996–97; Bradford university has been the hardest hit with a 5.8 per cent. cut; and Leeds faces the largest cash cut of £2.91 million.
According to the economic multiplier used in the work of Professor lain McNicol, who has calculated the impact of cuts on Scottish higher education, the combined effect of the cuts will be a loss of £27.35 million in economic output, and 749 jobs from the Yorkshire and Humberside economy. That reveals how important and disastrous those cuts will be to our local economy.
It is not only the economies of Yorkshire and Humberside that will be dramatically affected by the cuts but that of whole country. We will kill the goose that lays the golden eggs. That is a nice old cliché, but we need greater investment in the university sector to boost new activities such as partnerships with the private sector and to help turn out more highly qualified undergraduates and postgraduates. That is where we will get our professionals, innovators and entrepreneurs. If we do not, we can give up against the competition, because our competitors around the world are investing vigorously in higher education.
The Minister and I both know that there are some hard choices to be made in higher education. Comparisons with Europe show that higher education does not do badly in its share of the cake, but we get the balance wrong. I would be the first to admit that the balance in Britain means that students get too much of the cake and 1051 institutions too little. Whichever party is in government after the next general election will have some hard choices to make about how to meet that challenge.
I suspect that it is inevitable, as night follows day, that we will adopt some sort of income-related loan scheme. When students have finished their education, are in employment and have reached a reasonable level of income, they will start to pay back what their country has invested in them.
I have tried to be honest about the challenges we must face, and I hope that the Minister will respond in an equally positive way and say that he will work with the vice-chancellors and university staff to pressure the Chancellor to draw back from the cuts that have been set in hand before it is too late.

§ The Minister of State, Department for Education and Employment (Mr. Eric Forth)
I congratulate the hon. Member for Huddersfield (Mr. Sheerman) on obtaining this debate on what we would readily agree is a most important subject. I welcome much of what he said. He speaks with knowledge and experience of the sector, as was clearly shown by his remarks.
I join the hon. Gentleman in welcoming and acknowledging the success of the higher education sector in several respects in recent years. He referred to the domestic and international success of our universities, which are widely known and understood. We are somewhat in awe of the way in which the higher education sector has responded to the challenge of the huge expansion in the number of students, from about 3 per cent. of the relevant cohort in the 1960s to some 30 per cent. now. He was kind enough to acknowledge that higher education expenditure per pupil is as high in Britain as it is in most European countries.
I was slightly intrigued when the hon. Gentleman expressed his preference for an income-related loan scheme, because we already have one—the student loan scheme. To use an over-used and misunderstood expression, it is an income-contingent scheme in the important sense that our graduates do not start to repay the money they have borrowed until their incomes reach 85 per cent. of the average, which is in line with the much-vaunted Australian scheme. The repayment period is not much different from that in Australia. I mention that to illustrate that we are not much out of line with international experience.
I do not want to be tempted too far down the route that the hon. Gentleman boldly took when he hinted that he wanted elements of tuition fees to be paid by students as well. That is a debate still to come, and one which will rightly be led by the Dearing committee of inquiry.
I can understand the hon. Gentleman's frustration about that, but the truth is that the Government set up the committee of inquiry with the Opposition's full support. We have not had a proper, systematic, impartial review of higher education and its role in society for a generation now, since Robbins. There is a consensus that that is the right thing to do.
1052 Where I begin to part company slightly with the hon. Gentleman is when he suggests that somehow higher education is the sole custodian, and should be the sole deliverer, of our requirement as a competitive trading economy to develop our skills and knowledge. That was the implication of what he said.
Of course higher education has a key, crucial and central role in that, but not an exclusive one. We must look increasingly to further education, to the development of technical skills, to modern apprenticeships, and to the range of different qualifications that we will increasingly have to offer not just our young people but people of all ages in the lifelong learning context.
Although universities will obviously have a key and important role to play in that, it will not be to the exclusion of the other important elements in the education process—our schools, sixth forms, and further education colleges—which do such a marvellous job and which will increasingly be asked to dovetail with what higher education is doing.

§ Sir Irvine Patnick (Sheffield, Hallam)
As my hon. Friend is more than aware, it was after a meeting with the vice-chancellor of the university of Sheffield when I heard of his concerns that I facilitated a meeting with my right hon. Friend the Secretary of State for Education and Employment, at which my hon. Friend was present. Have any further meetings taken place on that, and is anything being done to allay the fears that the vice-chancellor expressed at that meeting?

§ Mr. Forth
I thank my hon. Friend for arranging and facilitating that meeting, which was important, and which took place at a key time in the period following the Budget changes to which the hon. Member for Huddersfield referred.
I can assure my hon. Friend that there are on-going discussions with the Committee of Vice-Chancellors and Principals—so ably led by the vice-chancellor my hon. Friend brought to see my right hon. Friend the Secretary of State—in order to cover the points that the hon. Gentleman made about the concerns that I well understand in higher education, following the somewhat dramatic changes in the Budget last November; in order to identify the true impact of those changes and, in particular, to what extent the private finance initiative can effectively replace the reductions in taxpayer funded capital expenditure; and to identify them sector by sector, institution by institution, and often, where relevant, faculty by faculty.
The hon. Gentleman was right to point out that we cannot expect the PFI in a uniform sense to step in and deal with every contingency in the same sort of way. There will be a real difference in the extent to which the PFI can effectively replace taxpayer funding, particularly on the capital side.

§ Mr. Richard Caborn (Sheffield, Central)
When that exercise has been carried out, if the cuts that have been explained by the vice-chancellors are as draconian as they say, will the Chancellor revisit the whole question of the cuts that were announced in the 1995 Budget?

§ Mr. Forth
I shall not pre-empt or try to guess the outcome of the discussions and the investigations. I am 1053 not sure whether Opposition Members are making a spending commitment and saying in terms that, were there to be a Labour Government, that Government would fully restore the level of taxpayer funding that existed before. It is a fair question. There is no point in creating a great fuss about cuts or reductions without saying what one would do about it.
We are now looking, with the CVCP and the institutions, at the extent to which the PFI can step into the breach and make good the changes that have been made. That is bound to vary enormously from one institution to another. But it is incumbent on Opposition Members—not tonight, but at some time in the future—to say what they think should or could be done in the context of the constraints laid upon them by their hon. Friend the Member for Dunfermline, East (Mr. Brown).

§ Mr. Sheerman
But is not the real problem the fact that, when one caps university entrants and says, "No more students," one is dealing with a non-dynamic 1054 economy in the university sector, and that makes it so much more difficult to manage the cut made in November?

§ Mr. Forth
When the hon. Gentleman comes on to the number of students, he is opening up all the matters at which the Dearing committee will have to look in considering the purpose, shape, size and structure of the higher education sector. Inevitably, that will bring in the appropriate size of the cohort, the proportion of the cohort, that goes into higher education and how that is funded.
I share the hon. Gentleman's view that ways will have to be found if it is in the end concluded that many more people have to go into higher education to fund that. The Government of the day will have to face that squarely. I am convinced that they will be guided by the Dearing committee in what they do, and there is no point in us today trying to imagine what that committee will conclude.