Universities: Income (Hansard, 4 July 1996)

§ The Minister of State, Department for Education and Employment (Lord Henley)
My Lords, universities are autonomous bodies and it is for them to decide their own priorities. The Government expect them to manage their affairs to ensure that they remain solvent and that over a period their income from both public and private sources exceeds their expenditure.

§ Lord Wallace of Saltaire
My Lords, I thank the Minister for that Answer. May I ask the House to remember that, nevertheless, universities receive a substantial amount of their income—in most cases more than half—from government funds; that over the past six years the amount per student has fallen by 30 per cent. while the number of students has risen by 45 per cent.; and that in the past year funding has been cut by a further 7 per cent. and capital funding by 30 per cent.?
Is the Minister aware that the general agreement of all university administrators is that that is not sustainable and that the university system cannot wait for Dearing? The idea that you can cut both current expenditure and PFI is simply not acceptable—

Noble Lords
Order! Question!

§ Lord Wallace of Saltaire
My Lords, will the Minister say whether the Government accept that universities must now begin to charge fees or must go down the road to further cuts?

§ Lord Henley
My Lords, we do not see a case for undergraduate contributions to fees in the current funding context. Perhaps I may remind the noble Lord, as he reminded the House, that we spend considerable amounts of public money on higher education; some £7 billion, which is 20 per cent. of the total education budget. Difficult decisions have to be made in terms of priorities. I accept that we have reduced the amount available for capital spending in the forthcoming year. I also accept that the universities might find that difficult and we are looking at ways in which the universities can access other funds through the private 1575 finance initiative and so forth. We will look at the evidence from the higher education sector about the impact of levels of public funding on the universities and colleges. Obviously, we will take that into account together with all other considerations relating to education and wider public expenditure in the current public expenditure round.

§ The Earl of Lauderdale
My Lords, are any of the institutions of higher education taking steps to market their post-graduate expertise in the way in which the LSE is now doing very effectively?

§ Lord Henley
My Lords, my noble friend raised an interesting point. I hope that all universities are doing what they can to find other sources of finance in the private sector. The noble Lord, Lord Wallace of Saltaire, stressed that in his view many of them are gaining a considerable amount of private finance. I hope that they will continue to do so and and I hope they will consider ideas such as that mentioned by my noble friend.

§ Lord Winston
My Lords, perhaps I may first present my apologies to the Minister for being present in the House this afternoon. I could have chosen to join some of the members of my rowing team at Henley.
Does the Minister agree that one of the most serious financial crises in the universities is that affecting medical education and that the cuts which are now being faced will affect not only teaching but also our vital research base and clinical services in the National Health Service?

§ Lord Henley
My Lords, perhaps I may say to the House how pleased I am to see the noble Lord in his place this afternoon and how sorry I am that he has missed his chance to see his rowing colleagues perform at Henley, where I am sure they have performed with distinction.
Obviously, we accept that in all sectors there will be difficulties as a result of the cuts in capital expenditure, which we necessarily had to make. We will look at all the evidence produced by the higher education sector in the current public expenditure round, as I made clear to the noble Lord, Lord Wallace of Saltaire. However, the noble Lord, Lord Winston, would not expect me to give any assurances about decisions which are dependent on all other relevant considerations.

§ Lord Beloff
My Lords, is my noble friend aware that one important possible source of finance for universities is from their contacts with industry? Ought it not to be taken into account that if capital equipment in laboratories is cut, those laboratories look less attractive and many important firms prefer to go to universities in other countries where their research equipment is up to date?

§ Lord Henley
My Lords, the first part of my noble friend's question made the point that it should be for 1576 the universities themselves to look to the private sector. I hope that they will do that and I believe that there are rich pickings out there which they can pursue.

§ Lord Morris of Castle Morris
My Lords, is it not a fact that the Minister's department makes careful calculations about the funding of universities before making cuts of the magnitude that have recently been made? In the light of that information, can he tell the House what percentage of the gap in universities' finances the Government believe can be covered by the private finance initiative?

§ Lord Henley
My Lords, as I made clear earlier, we make considerable resources available to the higher education sector. As I said, it is some £7 billion, which is 20 per cent. of the total education budget for the United Kingdom. It is up to the funding councils then to allocate that to universities. I believe that they do a good job in that and it is not for us to interfere with that process.

§ Baroness Gardner of Parkes
My Lords, am I correct in believing that overseas students pay full fees and that that can be a valuable source of income? Are there any limitations on the number of overseas students who can be accepted by universities?

§ Lord Henley
My Lords, overseas students pay full fees, which is a useful source of income for universities. We are pleased to see a considerable number of overseas students in this country. The party opposite opposed the move to make them pay full fees and made it clear that they believed that there would be a reduction in the number. I am pleased to tell the party opposite that that is not the case and that during the past few years we have seen an increase in the number of overseas students.

§ Earl Russell
My Lords, can the Minister explain how the private finance initiative can be used to finance things which do not generate an income?

§ Lord Henley
My Lords, we have cut capital expenditure for universities; we have not abolished all grants of capital expenditure for universities. There is still a considerable amount of money available for them. One should look at the cut of some £100 million in the context of some £1.6 billion of capital investment which has been financed by the universities in recent years. It is not that large a cut.