Education and Skills

HL Deb 24 April 2002 vol 634 cc251-309

3.20 p.m.

Lord Dearing

rose to call attention to the resources needed to give effect to the Government's policies for education and skills; and to move for Papers.

The noble Lord said: My Lords, my concern in introducing this debate is with the outcome of the forthcoming triennial spending review. In that context, I warmly welcome the words of the Chancellor of the Exchequer in his Budget speech in another place, when he said that, education will receive the priority [it requires) to deliver further substantial improvements, not just in our schools but also in our universities and colleges".—[Official Report, Commons, 17/4/02; col. 588.] I want to spell out what I see as being needed.

Unless bold decisions are taken, I fear that we shall end this decade facing the near certainty of declining economic activity not only in relative but in absolute terms. We shall face declining national income, the prospect of more poverty, more unemployment and a goodbye to the aspirations for health set out in the Wanless report. History warns me that, in spite of high intent, we shall lack the resolve in the face of other spending priorities to commit to education and skills on the scale necessary for our economic well-being.

I fear that the English in particular, in a way that is not true of the Scots, have never really committed to education and skills. Historically, action by governments has been a belated response to necessity rather than being taken because of a conviction that investment in people is the basis for creating decisive economic advantage.

Perhaps I may go back in history to Trevelyan's History of England. Referring to the case for providing national primary and secondary education during the time of, the fat years of Victorian prosperity", around the 1850s so as to make provision against the return of lean years, he says of thinking at that time: As to education, Prince Albert, it was remembered, was a German, and popular education was a fad, fit perhaps for industrious foreigners in central Europe who had not our advantages of character and world position". It was not until 1870 that we had the Education Act as a belated response to the economic challenge that was then apparent from France and Germany. I could go on but I shall simply mention the scathing indictment, expressed in 1953, of post-war governments for their parsimoniousness on education and for failing to match developments abroad. It was out of a similar need to match the progress that our competitors had been making that the noble Lord, Lord Baker, as the then Secretary of State, introduced belatedly a catch-up in the provision of higher education in this country.

I turn to those, industrious foreigners…[without] our advantages of character and world position". In a debate on 10th April, the noble Baroness, Lady Sharp, told us that, compared with the 4.9 per cent of gross domestic product that we invested in this country in 1998, in Germany the figure was 5.5 per cent, in France, 6.2 per cent, and in the USA, 6.4 per cent. Those figures did not surprise me. But what did surprise me were figures given in the other place which indicated that the proportion of our gross domestic product spent on education last year was no more than it was 10 years ago.

I was even more surprised—I cannot believe it—that, in the early days of a government committed to education, that percentage was falling. It is rising only now, with the aim to achieve 5.2 per cent by 2003–04. That is still way below where the French, Germans and Americans were in 1998, and I guess that they have not been standing still.

I turn to the results of that in terms of the educational skills capital of our people. If I remember the figures correctly, in this country when these comparisons were being made in 1998, 55 per cent were at NVQ Level II—that is, GCSE; in France, the figure was 72 per cent; and in Germany, 83 per cent. At the crucial Level III, whereas the Germans were at 74 per cent, we were at half that level.

The National Institute of Economic and Social Research, in making productivity comparisons across nations, looked at France, Germany, the USA and the UK. Where did we come? Of course, we came bottom. What did the institute attribute it to? Lack of investment in skills, education and, of course, capital.

I have referred to the comparisons with our traditional competitors—those, perhaps, whom the Victorians would have had in mind. But, looking ahead and examining the figures, I believe that increasingly we must consider the 40 per cent of the world's population that lives in India and China. The growth rates of those countries over the past decade were, in one case, 6 per cent a year and, in the other, 8 per cent a year. When the other young Asian tigers trembled in 1998, they hardly blinked; their economies marched on.

China is emerging increasingly as a world economic power. According to the figures, it is now seventh in the world league. Let us just think where it could be by the end of this decade. We see references to India as the "back office of the world", with investment in information technology increasing at 50 per cent a year over the past decade. These are clever, industrious people who, the World Bank warns, at the end of this decade will still be paid only a reasonable fraction of our wage rates. Therefore, how shall we compete? There is only one way and that is by moving up-market.

The English language, in becoming the international language, exposes us more than other nations. Not only is the manufacturing sector at risk but the service sector is also. Therefore, we are doubly vulnerable.

Over the weekend I read the annual report of a company that I know well. The report commented, in a small sentence with no great emphasis, that the company would be outsourcing to other countries, transferring 30 per cent of its production to two new factories in Mexico and to China and eastern Europe. That is only one example. We read of the insurance industry and call centres. I believe that one of them employs 60,000 people and is talking of transferring to India. I could continue with such examples.

If we are to address this situation in a meaningful way, I believe that we must look again at the proportion of our national income—our gross domestic product—that we invest in education and skills. The main point that I want to make in this debate is that, whereas we have been thinking of increasing that investment by 0.1 per cent as a share of GDP, in the next triennial review we must move to an increase of 0.2 per cent a year—that is, double the present rate.

An increase from 0.1 to 0.2 per cent does not sound very much, but it is big money. Assuming that GDP grows at 2.5 per cent a year, with that change there would be an increased contribution of £3 billion in the first year, £5 billion in the second year and £8 billion in the third year, making, if my arithmetic is correct, a total of £16 billion. But I emphasise that that is a minimum amount.

I have looked at the proposals made to the Government in the context of the triennial review from the Association of Colleges, which is bidding for an extra £5 billion, and the Local Government Association, which is bidding for an extra £8 billion for schools. The universities are bidding for an extra £10 billion. That is much more than my £16 billion. They are not the only people in the game. I repeat that that is the minimum figure which we need to consider in the triennial review.

In arguing for increased resources, those institutions owe it to the nation to use such resources effectively. In general, I believe they do. For example, who has done better than British higher education in reducing the unit of resource for teaching by 40 per cent over the past 25 years? That is impressive for a labour-intensive industry if we consider the hours which our teachers work and the low cost of further education. There are faults, which I could identify, but basically those institutions are using funds well. My point is that a consistent, sustained policy of which people know in advance can be rationally and carefully planned. We do not need adventurous initiatives but a sustained, well-directed investment programme in our field.

I am grateful to the number of' noble Lords who have decided to engage in this debate. Others will speak more authoritatively than me on particular dimensions of the need for greater investment in our people. However, I should like to illustrate some. I begin, because too often we put skills at the back of the queue, by stating the need to back the Cassels committee recommendations on skills and apprenticeships.

We need to lift the numbers staying on after 16 and avoid drop-outs at 17. We must bear in mind that the proportion of those in education and skills at 17 has not increased in a decade. We must pursue vocational education, in particular through our FE colleges in partnership with schools, increasingly from the age of 14.

We must address the plight of the 20 per cent of our children whom society fails at school: the truants, the drop-outs, and the disaffected from whom society reaps a bitter harvest. We must recognise the need to see our FE colleges as the powerhouse of the skills economy. We treat them as the Cinderella at our peril. We cannot expect to remedy our longstanding skills deficit on the cheap. We must act on the advice of the national skills council that 80 per cent of the new jobs emerging over the decade will require a higher level of educational attainment, whether in FE colleges or higher education. We must respond to the needs of our teachers and schools at all levels; the pay issue will not go away.

We must not "do a railways" on education by denying it the capital resource that it needs. I have summarised the figures. We must stay with the policy of aiming for a participation rate of 50 per cent in higher education by the end of the decade and recognise that much of that can be achieved by partnerships between higher and further education. In doing that we must recognise that by engaging more young people who do not come from the traditional backgrounds for such education, there will be a cost.

At this point I declare an interest as patron of the University for Industry. The Government should keep faith with their vision for the University of Industry—which is now beginning to motor—as a flagship for a nation committed to life-long learning. I hope that the Government will want to make life-long learning a defining achievement of their term of office.

I conclude by coming back to Trevelyan. He lamented that the Victorians did not use the fat years to invest against the lean years he saw to come by investing in our people. We must accept that competitive advantage lies in investing in our people. The philosopher Santayana said—I do not know his work well, but I recall one sentence of his writing—that those who do not remember the past are condemned to revisit the past. We must remember our past, which I briefly summarised. We must in our time heed Trevelyan's admonition and use the years ahead of economic growth to navigate our way in a world in which the economic hegemony of the West is no longer a law of nature.

Accordingly, I urge the Government to ensure that the resources needed for education and skills are provided. They must recognise that that means increasing the share of GDP they receive by at least 0.2 per cent per year; 0.1 per cent simply will not do. Investment in people must be grasped as the decisive basis of economic advantage, not as a belated response beaten out of us by the competition. We are behind the game. We must now, for the first time in our history, play to win. My Lords, I beg to move for Papers.

3.35 p.m.

Lord Puttnam

My Lords, I should begin by declaring a number of interests—among them chancellor of the University of Sunderland and chairman of the General Teaching Council—but today I shall speak unequivocally in a personal capacity.

I am extremely grateful to the noble Lord, Lord Dearing, for initiating this debate. It is especially timely and as such doubly valuable. His opening remarks about the need to remain competitive in the face of challenges from not just the "established tigers" but other nations such as China and India are ones that I particularly echo. I shall also attempt to enlarge on the noble Lord's observations and, indeed, his statistics regarding the need to sustain a commitment to increased expenditure.

In preparing for today's debate—courtesy of our rather wonderful Library and its staff—I discovered something which I found astonishing. Prior to 1960 the UK was spending a higher proportion of its GDP on education than almost any comparable nation. But, a generation later, a 24-nation study by the OECD showed the UK spending less of its GDP on education than any other comparable country. That is extraordinary. No such similar reduction in any sector's share of this nation's resources has ever occurred. Nor, indeed, has it been experienced in any other developed nation in the world. To echo the noble Lord, Lord Dearing: what on earth did we think we were doing?

Prior to the First World War, it was felt sufficient to spend some 1 per cent of GDP on education. Lord knows, even that 1 per cent was hard fought for. The inter-war years saw an increase to about 3 per cent. That, in turn accelerated in the fifties and sixties to a point at which in 1975 it had reached 6.3 per cent. It then collapsed before settling at less than 5 per cent for a decade or so.

I accept that GDP fluctuated during those years but, as with our health service, the overall damage has proved inescapable: massive under-investment during the very years when the rest of the developed world was pouring sometimes scarce resources and energy into creating education and health systems equal to the extremely tough challenges of the modern world.

Will any Member of your Lordships' House who believes it possible to slash investment in education and yet develop as a coherent and competitive nation please raise a hand? Is there anyone in the House today who seriously believes it possible to reduce public spending on education and maintain any credible ambition for productivity and growth, let alone promote those more generous civic ambitions, which most of us share?

The noble Lord, Lord Dearing, implores us not to "do a railways on education". I fear that in some sense we did a railways on education in the late seventies and eighties and we are only just seeking to recover. The real analogy here should be with investment in health. I am not suggesting any diminution in last week's brave and timely funding commitment. But it was only in the early 1990s that expenditure on health as a percentage of GDP began to rise faster than that on education. One of the principal reasons for that—probably the major reason—was the necessity to invest in new, highly sophisticated and expensive technologies. There was a recognition that technology had the capacity to transform medicine in many respects. That in turn required massive injections of capital.

Education is now facing a precisely similar challenge. If we are to have any chance whatever of being competitive with those new economic tigers, never mind the established nations, we have to invest in the people—that is to say the professionals—and the technology that will help to deliver the education system we badly need. We must invest and, as the noble Lord, Lord Dearing, said, we must invest unstintingly.

The argument in favour of investment in education is ultimately, in my judgment, even more compelling than that for health. Whereas the state of an individual's health is, above all, a matter of personal and family concern, the quality of a nation's education has consequences not just for the individual and those whose lives revolve around them, but, more broadly, for the whole of society. As the noble Lord, Lord Moser, once memorably observed, unlike all other areas of public expenditure, education alone is both the "cause and the consequence of national success".

However, we have a choice. We can go on indulging the fantasy that, as a result of those "efficiency savings" that opposition parties are always so fond of promising, we can have a world-class education service at present levels of investment—or maybe even less. In the past four years I have visited 320 schools. I am sure that there are some savings, but they are really at the candle's end.

The other alternative is that we can grow up, dig deep and remind ourselves of our determination to give our children brighter, fairer and genuinely more fulfilling lives. I know of no other way of guaranteeing ourselves a successful and sustainable future as a nation.

3.41 p.m.

Lord Trefgarne

My Lords, I too am most grateful to the noble Lord, Lord Dearing, for securing this debate and for giving us the opportunity to look at an issue of such importance to the future prosperity of the United Kingdom. In discussing education and skills policy, we must be careful because policies in England are sometimes different from those in Scotland or Wales, as many employers sometimes discover to their confusion.

I should like to concentrate my short remarks on the future role of vocational education and training, which is an issue in which I believe passionately. It is also a key concern of the Engineering and Marine Training Authority of which I have the honour to be chairman.

The Government's most recent statement on education and skills is the Green Paper relating to 14 to 19 year-olds. It is a significant document in setting the agenda for the future of education and skills. There is much to be welcomed in it. At long last, the language that we are hearing is moving away from the notion that the academic route is for the bright ones and the remainder should consider a vocational option. We shall only encourage the brightest of young people to consider seeking vocational qualifications if we are able to persuade them—and especially their parents—tha.t they will not be disadvantaged by so doing.

Industry needs to attract people with a diversity of skills; both those who enter after completing a higher education course and the potential technician. The evidence from the introduction of the GNVQ shows that young people following such programmes from the age of 14 develop a significantly more positive attitude towards engineering, which is my special interest.

That is demonstrated not only by an increased interest in entering engineering work-based learning at the age of 16 and above, but also for those following the A-level pathway there is a greater likelihood of choosing an engineering degree course or engineering career at a later stage.

So-called vocational GCSEs will become a reality in September when GCSE engineering becomes available to schools. It is a course that has been designed with the support of the engineering employers. I am pleased that the EMTA has been able to work very closely with both the Department for Education and Skills and the Qualifications and Curriculum Authority (QCA) in its design.

For this qualification to be a success, appropriate financial resourcing is essential. Teachers will need help, support and additional training in order to be able to deliver a wider range of specialisms and cross-curricular activities in which they may have had little previous experience.

In addition to the financial resources, we also need to persuade those advising young people of its benefits. I have already mentioned the influence of parents, but the quality and effectiveness of careers advice is another factor. Teachers are very influential in advising young people on careers. Yet many have not had the opportunity of working in industry and therefore do not appreciate the opportunities available. Perhaps I may suggest to the Minister that it would be helpful for some teachers to use their five statutory "Inset" days to increase their awareness and understanding of industry and commerce. In the case of engineering, it will be necessary for schools to work in partnership with work-based training providers, colleges of further education and employers.

For the GCSE engineering qualification to have any significant impact, the target required is that 350 schools should be offering this GCSE by the year 2005—indeed, every one of those schools visited by the noble Lord, Lord Puttnam, in the past few years.

Since its introduction by my noble friend Lord Hunt of Wirral—I am not sure whether he is in his place—in 1994, the modern apprenticeship route has had a significant impact on the number of people entering the engineering industry. The recruitment needs of that industry require about 33,000 modern apprenticeships to be in training at any one time. In 1994, the number of apprentices in training was about 8,000. Today it is 22,000, of whom 18,000 are in England, 1,500 in Wales and around 2,000 in Scotland. While we have not reached the required number, we are surely moving in the right direction.

Engineering work-based learning was almost universally seriously under-funded under the training and enterprise council system, although payments varied from TEC to TEC, and a small minority of TECs operated a system of differential funding between sectors which resulted in a reasonably realistic and equitable payment for engineering. But the majority did not, resulting in serious under-funding and great disparity between different TECs.

The majority of TECs paid an average of £6,000 to £7,000 over the three to four-year period for an advanced modern apprenticeship in engineering, although some paid a good deal less. The direct costs of education and training for an engineering modern apprenticeship, excluding any direct employer costs, such as trainee wages and work-based supervisor, trainer or mentor costs, are between £13,000 and £16,000, depending on the level and complexity of the training.

Given that background, one might expect the engineering community to be pleased with the national rate for an engineering modern apprenticeship set by the Learning and Skills Council of £12,130. The reality is that, for the moment anyway, few, if any, employers or training providers receive anything like that amount because of cushioning and damping arrangements introduced for 2001 and 2002.

There is now a new set of arrangements for funding modern apprenticeships, with the funding being made available by the LSCs, recognising the expense to employers of providing places and the higher value-added outcomes. However, in England the funding is only available for the training of 16 to 18 year-olds. For those employers who train people over the age of 19 years of age, the funding available is only 56 per cent of the national rate. The industry is particularly keen to attract people aged 19 and above. This funding is not available at all for those over the age of 25, except in Wales.

So the engineering industry continues to take its concerns about these arrangements directly to the LSC. But, in closing, perhaps I may urge the Minister to reinforce the concerns of the industry.

3.48 p.m.

Baroness Walmsley

My Lords, I thank the noble Lord, Lord Dearing, for initiating this debate and for giving us the opportunity to question the Government's track record and future intentions in relation to the resources needed to provide this country with a world-class education system.

The Government claimed in 1997 that the priorities for their first term of office would be "Education, education, education". However, as the noble Lords, Lord Dearing and Lord Puttnam, have mentioned, the resources devoted to education as a percentage of GDP have fallen during their term of office. That says a good deal about the Government's actual priority as distinct from their election rhetoric.

In its first term Labour squeezed education spending to its lowest share of national income for 40 years. The Labour spin machine has done its best to mask that. The notorious £19 billion additional investment announced in the 1998 Comprehensive Spending Review was derived through double and treble counting. When inflation was taken into account the £19 billion figure fell to just £6.1 billion. Less than half of the £17 billion for school repairs announced since September 2000 will materialise.

Reform in the primary sector was supposed to be the success story of Labour's first term. It pledged to reduce the maximum class size to 30. In April last year, more than 1,000 five to seven year-olds were still in classes of 30 or more. The squeeze, where successful, has been at the expense of other age groups. Parents whose children were five in 1997 now see their nine year-olds suffering the consequences. Secondary school class sizes are now larger than they have been for 20 years.

As with many things, good education is built on good foundations. That should be found in the early years setting. Although the Government have put additional resources into nursery education, there is still a long way to go and there are questions about the quality of much provision. There can be few better investments for the Government in the education sector than raising skill levels in early years. Money is coming in now, but the so-called prudent policies of the Government's first term left many children with either no place or a place where the staff had low levels of qualification.

In addition, many of the problems found in other parts of the education system are seeping down to early years. Classroom disruption is an increasing problem and the age at which it becomes an issue of concern is falling. Early intervention is essential. That requires continuing professional development for teachers, with consequent resource implications and extra cash for on and off-site intervention units.

Many discipline problems are the result of issues outside the school that affect children's ability to cope with the stresses of school life. I have just returned from a visit to Japan during which I visited a school and was amazed to learn that every school has a professional adult school counsellor available on the staff to advise and support children and teachers. How wonderful it would be if we could have the same provision here.

Instead, we have charities such as the National Society for the Prevention of Cruelty to Children, with which I have a non-pecuniary association, running counselling services to fill the gap. Although there is a good case for those services to be outside the perceived authority of the school, there is also a case for government financial support to help such initiatives flourish. Such services do not come cheap but they are cost-effective because they often save greater cost later.

Effective early intervention also requires joined-up thinking and action between professionals across education, health, social services, youth services, housing and law enforcement. One aspect of last week's Budget that most concerns me is the danger that children's services budgets will be attacked as local authorities struggle to pay their increased national insurance bills and at the same time achieve the Government's targets on bed blocking to avoid the financial penalties of failing. The extra money to address bed blocking is cancelled out by the extra bill for national insurance, so where is the money to address bed blocking to come from if not from children's services or other hard pressed budgets? Perhaps the Minister would like to explain.

Schools and colleges are also facing another major resource problem. Last year the Special Educational Needs and Disability Act 2001 came onto the statute book. However, despite their good intentions, the Government have not provided adequate resources for our educational institutions to implement it. The result is that many schools and colleges face bills for capital and current provision that they simply cannot meet.

The combination of those two problems could cause chaos in our schools. It is all very well setting the agenda and laying down targets, but the Government have a habit of failing to provide the resources to meet their aspirations and then blaming someone else when they are not met. Passing the buck to schools, local authorities, social services, and so on, has become a nasty habit that I wish that the Government would kick.

Of course, resources are not just monetary. In a service such as education, it is human resources that matter most—that is, the teachers and support staff in our schools. In some areas, we have a real crisis of resource shortage. The Minister will undoubtedly be as tired of hearing me highlight the shortages of mathematics and science teachers as I am of highlighting them. I wish that that were not necessary. Sadly, we seem to be in a downward spiral that it will take a major effort to halt. Lack of specialist maths teachers means children uninspired to study maths and a consequent shortage of the mathematicians and maths teachers that the country needs.

Creative initiatives backed by adequate resources are needed to inspire our young people to choose maths and to choose teaching. Perhaps I missed something, but I did not hear the Chancellor promise more money to help schools address those problems last week.

Many schools are slipping through the net. In last week's Times Educational Supplement, there was an interesting case of a primary school in one of the lowest-funded counties—Staffordshire. It was not in an Excellence in Cities area or an education action zone; it was not a secondary that could apply to be a specialist school; not a small school; not a this, that or the other that attracts extra cash. And it found itself £18,000 in the red. If ever there was a case for levelling up, not levelling down, that is it.

To summarise the common thread running through my remarks, it is dishonest of the Government constantly to set targets and promote policies but not provide the necessary resources to the agencies that must carry them out. To then beat those agencies with the stick of league tables and financial penalties for failing to meet the targets is the final insult.

3.56 p.m

Lord Moser

My Lords I, too, express my gratitude to my noble friend Lord Dearing not only for introducing this important debate but for a series of a remarkable educational reports that bear his name.

The broad background is clear enough, although it may help if the Minister clarifies the overall figures. We are spending about five per cent of our gross domestic product on education—that has gradually crept up during the past few years after considerable decline. That is still a little below the Organisation for Economic Co-operation and Development average, especially in our spending on higher education. Several major countries spend a good deal more. Perhaps the Minister could give us a summary statistical picture. In any case, there is certainly no cause for complacency.

I wondered whether to speak about basic skills, with which I am involved, secondary schools or the teaching profession, but decided to devote my few minutes to universities. That is because, in a strange way, the universities have lost their place in the Government's thinking and priorities. Although I do not want for a moment to lessen the priority given to schools or basic skills, I shall speak about universities.

I must declare an interest. I am Chancellor of Keele University and am closely involved with Oxford University and the London School of Economics.

My mind goes back to the historic Robbins committee, on which the noble Lord, Lord Layard, and I both served 40 years ago. Among other things, we recommended a substantial expansion, which was implemented. But no one could conceivably have predicted that 40 years on a third of the age group would be going into higher education—still less that the Government would be aiming at 50 per cent.

The route to today's mass higher education system has been dramatic. There are now far more universities, which have coped remarkably well with a vast increase in numbers. They have widened their offerings of academic courses and research and—this is not always appreciated—have greatly increased their links with industry and communities. Those are fine achievements, the reward for which, as the noble Lord, Lord Dearing, said, has been considerable cuts over the years. In spite of that, the main government emphasis is on further expansion to 50 per cent of the age group. I suggest most strongly that that should await a tidying up of funding—not just student finance, which we often discuss, but overall funding—so that universities can offer those students the decent quality teaching and research backing that is their prime function.

I shall confine myself to two points that illustrate why government funding arrangements will force the university world into a period of decline. First, academic salaries are at a truly ludicrous level, well below all comparable occupations, not to mention the City. Twenty years ago, the average professor was paid the same as a Treasury under-secretary; today, the under-secretary—perhaps not deservedly—gets twice as much. No wonder that it is hard for universities to recruit and retain high quality academics. Moreover, it is an ageing profession. By 2010, nearly 50 per cent will be eligible for retirement. Add to that the expansion presumably required to cope with the targeted 50 per cent student intake, and one sees the scale of what can truly be described as a crisis into which years of underfunding have lead the universities. The quality of the academic staff—not their fault—is at issue.

The latest research developments make things worse. The recent research exercise showed remarkable research advances throughout the universities, which was good news. The financial response from the Government was bad news. We were told that the outcome was that there was no more government money to finance those admirable research activities. The actual outcome is that 50 per cent of research funding will go to five leading universities. I am all in favour of a flow of money going to our leading universities. We need our Harvards, Yales and Princetons, and we have them. They need every bit of support. However, it is worrying that the other 50 per cent of funding is spread between around 90 universities. That means that even well graded research departments, including those graded 4, must—remarkably—cope with a considerable decline in research money. They have been graded highly but will get less money because of the limitation of research funding. That is another discouragement to the profession.

Those two critical problems—salaries and research funding—bear on the quality of what universities, through no fault of their own, can offer the vast number of students. Both stem directly from the decline in funding over the decades. I refer your Lordships to recent reports from HEFCE and Universities UK, which show the serious implications of those trends. If noble Lords want lighter reading, they might turn to the recent brilliant lectures by Simon Jenkins at University College and the Master of Peterhouse, Cambridge. Those lectures show what has been happening to our universities.

My main point is that the spending review, which we look forward to seeing in the summer, is crucial for all of the education sector, as the noble Lord, Lord Puttnam, said, and not least for higher education. Every day that goes by, I care more about education, just as I care about health. The Prime Minister's priorities—education, education, education—are crucial, and I hope that the Government will allocate one of those "e"s to higher education.

4.4 p.m.

Lord Haskel

My Lords, the noble Lord, Lord Dearing, has consistently put the case for more resources for education and training for more years than, probably, he would like to think. I congratulate him on doing so yet again.

We all agree that a well educated, highly skilled and well trained workforce is essential to success in the modern economy? What stands in our way? Perhaps it is history. In the past, many in education regarded vocational and technical subjects as second-class. Some academics still hold that attitude, but, thankfully, it is being overcome. Since May 1997, the Government have started to tackle the discrimination against vocational training. As the noble Lord, Lord Trefgarne, told us, there will be GCSEs in subjects such as management and engineering. However, we are still at a disadvantage because we start from a lower base than our competitors.

Where is the barrier to the call from the noble Lord, Lord Dearing, for more education and skills in the economy? Could it be within the business community itself? However successfully the Government and the education sector provide the policies and resources for an educated and skilled workforce, their action alone cannot bring about the changes necessary to make a real impact on the problem of low and absent skills.

There must be a partnership with business, and business must play its part. Fortunately, many companies and businesses do so. Some of our companies, such as Ford, BAE Systems and the company with which the noble Lord, Lord Browne of Madingley, is associated do a wonderful, remarkable job. However, many do not consider training to be a top priority. Their view is that the manager's duty is, above all, to pursue increased share value by any means possible.

There are all kinds of ways of improving share value that are faster and less risky than investing in training and skills. A company can move into the currently fashionable sector of business, engage seriously in financial engineering or come to an informal arrangement with competitors. The Office of Fair Trading announced this week that it uncovered one cartel every month. We now know that, if someone does business with the right bank or brokerage house, their analysts will talk up the share price. Companies can outsource their work and avoid the cost of training altogether. As the noble Lord, Lord Dearing, reminded us, they can even move their business to a country where costs of labour and standards of employment are lower.

Skills training must have a bigger impact on share value than some of those activities. For that to be achieved, there must be a real commitment to productivity and a longer timescale. Fortunately, we have a growing number of companies whose leadership is guided by such thinking. Certainly, they are focused on results, but they are also concerned about clients, about adding value, about making a difference and continuously improving what they do. Such companies are concerned about improving relationships with employees, customers, suppliers, investors and the community.

Such leadership provides a sense of purpose; the employees know what the company is trying to achieve and what role they can play. It removes the insecurity created by the feeling that, as a result of improved productivity and efficiency achieved through training and skills, employees will cut their own throats because the company will be downsized. That kind of leadership encourages people to become more literate and more numerate and to acquire the IT skills that enable them to work more effectively and earn more. It offers every encouragement and facility for employees to move up from one level to the next because year-on-year skill requirements are rising. It recognises that, today, technical experts are increasingly expected to incorporate management into their daily work and encourages them to acquire the relevant skills.

Those are the partners that my noble friend the Minister should seek out. That is the means whereby our investment in education will be converted into the improved industrial performance we all seek. My point is simple: if our economy is to benefit from the work of the education sector and the Government's efforts to raise the performance of our workforce through education and training, those efforts must be matched by a leadership culture in business and industry that looks beyond the narrow confines of the financial markets.

4.10 p.m.

The Lord Bishop of Portsmouth

My Lords, I am grateful to the noble Lord, Lord Dearing, for initiating this timely debate. I want to begin by welcoming the Chancellor's promise in his Budget speech to, increase significantly the share of national income devoted to education over the course of this Parliament".—[Official Report, Commons, 17/4/02; col. 588.] The additional £270 million package announced last week was good news, though I imagine that some will say, "About time too!". In particular, I want to welcome the £87 million targeted at addressing issues of behaviour in the classroom. However, I hope that the increased highlighting of special needs in schools is matched by resourcing of both staff and accommodation.

On a visit to the Isle of Wight yesterday, I had the opportunity to see the excellent work done at the Bishop Lovett school at Ryde where 30 per cent of the pupils have special needs. Such schools are working extremely hard and they need more resourcing. I think of other schools such as St Luke's in the centre of Portsmouth.

I would also urge that further money be released to go beyond the 33 hot-spot areas which have been identified. While it is heart-warming to hear of the Chancellor's generosity towards the world of education, I want to make a couple of points which I would not want the House to lose sight of in the longer term.

First, the Department for Education and Skills announced on 19th March a consultation process to make the National Professional Qualification for Headship a mandatory requirement for first-time head teachers. That points up the fact that schools are reliant to a great extent on the quality of the leadership team, both in terms of direction and strategy on the one hand and vision and affirmation on the other. But while no one would doubt that raising the overall standards of schools is affected in a significant way by the quality of leadership, the standards in the classroom lie very much with thousands of teachers who day by day share in the lives of our children, young people and increasingly those in adult education.

I believe that we under-estimate the value of our teachers and that is reflected in their resourcing. None of us would argue with providing teachers with better classrooms, more facilities and enhanced working conditions. But we still have not yet moved to a position where ordinary classroom teachers are remunerated in proportion not only to their professional skills but also to the impact they have on the lives of children and young people. Here I recall with great warmth a lecture given by the noble Lord, Lord Moser, in Portsmouth University some years ago where I happen to be a governor.

I am happy to talk about the notion of vocation and I believe that to be critical in sustaining people through the sometimes thankless periods of their lives. However, I fear that in the case of teachers the notion of vocation ha .s often been used as a cloak, to put it bluntly, for avoiding paying them properly for the key role that they play in our society. Who has the most fundamental impact on a child's life outside the family? Members of the medical profession will do so at particular stages and, unfortunately, other public servants in the emergency services will also be called upon from time to time. But none comes anywhere near to the shaping and formation which takes place in school above and beyond the academic achievements which we rightly celebrate.

The second point I want to make concerns building effective partnerships. The Secretary of State, Estelle Morris, speaks of a "shared vision". I concur with the view expressed in the strategy document that, successful delivery will depend on strong and effective relationships with many partners". The words "partner" or "partnership"—we all have computers which can call up the number of times words are used if our memories are of no help in that regard—are mentioned 14 times in the document. Fortunately, I do not use those words as often in my sermons, but there we are! It is a deeply spiritual concept, joking apart.

I believe it to be a key practice in education. However, the recently announced Budget package makes little mention of this. I urge the Government to consider thoroughly how such partnerships can best be funded. In the SRB world, partnerships between business and education and Government are often difficult to sustain beyond the given period after which the whole thing has to be argued for again. Good as SRB developments are, I hope that lessons will be learnt from that.

Where voluntary organisations are working in partnership with local education authorities, it would seem that those with a stake in education are being hit by a kind of "doubly whammy". Not only do they pay for education through taxes, they are also often making voluntary contributions to other organisations.

I want to conclude by saying that the notion of "life-long learning" has not only been a significant development within educational philosophy over the past 20 years, but also in practical terms a fundamental feature of the way in which the worlds of education and employment have become explicitly connected. This is undoubtedly part of the back-drop to the creation, following last year's general election, of the Department for Education and Skills. It has led to a broader perspective—one which I wholly support—of seeing education as a continuous process in which there are any number of particular stages, rather than the somewhat curtailed versions experienced by another generation.

Fundamentally, education has to be available and attainable for children, young people, as well as adults—that is, if we are to take seriously the constantly changing needs in the workplace and home.

4.16 p.m.

Lord Sutherland of Houndwood

My Lords, I, too, am grateful to the noble Lord, Lord Dearing, for many things, including his many vigorous and rigorous contributions to the furtherance of education of which today's speech was another example.

I was particularly taken with the statistics of the noble Lord, Lord Puttnam, who pointed out that in the 1950s and since we seem to have had as a national policy disinvestment in education rather than increasing investment. Indeed, I was taken back to my boyhood in the 1950s, to the "Goon Show" and the remarkable song which began, "I'm walking backwards for Christmas". As a merry youth, I did not realise that that was a statement of government education and investment policy. The difficulty is that Christmas has not come.

Perhaps I may declare an interest. I am employed by the University of Edinburgh. Inevitably, therefore, my remarks will be from the academic coal face. Although I would wish to speak on many aspects of education, I shall restrict myself to higher education.

A point I want to make immediately is that a fixed epithet is often attached to the word "vice-chancellor"; it is the word "whinging". Perhaps I may try to deconstruct that notion immediately by first congratulating the Government, the Office of Science and Technology, the DTI, and through it the Treasury and the Wellcome Trust on the major investment in research infrastructure which has taken place over the past two or three years. The investment of £1 billion is significant and is recognition of the quality of research in our universities. It is capped—I make the point explicitly—by the institutions with the help of their friends in industry and business and other funding sources. They are alive to funding sources outside the state system of at least a further £250 million. That was the condition of receiving funds from the Budget. I congratulate the Government and the OST on that.

But—and there is bound to be a but—that investment was the recognition of the reality of which we have been speaking today. It is the reality of years of under-investment. I simply plead with the OST and through it the Treasury that in the coming spending review they find ways of entrenching at least that level of investment in the system over the years to come. A one-off bonanza is marvellous—if you hit the target and have good bids you do well, as did my own institution—but it is not a recipe for long-term growth and ensuring steady research, training and skills at the highest level in ways that are necessary for our economic future.

We have been under-investing in our universities. But, somehow, despite views to the contrary, the universities have continued to deliver more and more for much less. It is thought that universities cannot manage themselves. There has been reference to that. We do not manage ourselves; in most of the universities that I know and certainly in those in which I have worked, there are excellent governing bodies aided by superb help from captains of industry, from those in business and the local community. They have all helped us to manage what I consider has been a spectacular success.

But that success has been bought at two prices—first, a very significant cost to the infrastructure. Report after report has indicated the difficulties. I have referred to research infrastructure; I should stress that teaching infrastructure is as much in need of support and investment. If we are to broaden the base of students coming into university, we must have the facilities that allow us to do that. We want to produce graduates, not people who drop out or fail at the end of the first or second year.

The second cost, to which reference has already been made, is that borne by our staff. I shall not repeat the points made by my noble friend Lord Moser, but university staff salaries have significantly fallen behind all relevant comparators. One might ask whether that matters. We still have university teachers, so perhaps the market is settling itself at a lower level.

I shall give the House three reasons why it does matter. The first is international comparisons. If one calculates the adjustment to the relevant OECD figures for comparative academic salaries, we fall somewhat below Spain and just above Greece. Spain and Greece are marvellous nations, but they are not the natural benchmarks if we wish to succeed in developing a highly geared, technology-based economy with the kind of skills developed at the highest levels that the universities can produce. Our benchmarks have to be countries like Canada, the US, Germany and so forth. Those are not the benchmarks against which we are performing as a nation. Again, I hear some ask whether that matters. It matters because the employment world for academics is an international one; the best academics can work anywhere in the world. Unless we can recruit and retain the best people over here, again our contribution to the education and skills necessary for our economic and cultural development will fail.

The second reason is the comparison with other professions, a further point made by my noble friend Lord Moser. I shall therefore move on to the third reason and cite only one example to illustrate the fact that there are shortages in many key areas of teaching. A recent survey of computing science departments in British universities indicated that more than 90 departments are currently carrying vacancies, while almost 13 per cent of those departments have vacancies running at over 20 per cent. That has happened because we cannot afford to recruit and retain staff in a very competitive area of our economy.

Until last week, those points would have formed the substance of my speech, hut in conclusion I should like to make one further point. This matter was discussed earlier at Question Time: national insurance contributions. Perhaps I may cite my own institution to illustrate what the new proposals will mean. The employer's contributions for my institution will amount initially to £1 million a year, so I shall have to tell my staff that, yes, they will have to pay 1 per cent more in tax. That is a matter between them and the ballot box, although personally I do not mind because I would rather be honest and pay the extra money in the form of tax. But not only will my staff pay 1 per cent more in tax; there will be roughly 40 fewer junior lecturers in the institution to help my staff next year. They should not count on there being many weekends free of marking even more essays and looking through even more lab reports.

4.24 p.m.

Baroness Massey of Darwen

My Lords, it is a great pleasure to speak in a debate initiated by the noble Lord, Lord Dearing. On the last occasion he spoke in this House, he had just rushed in from Barnsley, but was nevertheless as impressive as ever in his eloquence, wit and knowledge. He is no less so today and I thank him for initiating this important debate.

The noble Lord spoke of investment in people, which I agree is vital. He spoke also of the need to cultivate a diversity of skills; again I agree that that is vital. Resources of any kind for any service need to be targeted, appropriate, cost-effective and monitored in order to test their effectiveness. Today I want to discuss two initiatives in education which comply with those criteria. They invest in people and develop skills. I refer to the Sure Start programme and the National Healthy Schools Standard.

As a governor of an inner city London primary school, I am well aware of the importance to education of that vital resource, teachers—and how to recruit and retain them in the inner cities. I know that it also concerns my noble friend on the Front Bench. No doubt she will wish to comment on this issue when she comes to respond to the debate.

I shall focus on Sure Start and the National Healthy Schools Standard because I think that both initiatives illustrate what resources for education and skills should be about; namely, raising pupil achievement, promoting social inclusion and addressing health inequalities. Both programmes have also used processes of implementation which I believe the systems in education and health could learn from. Both are being evaluated; both include partnerships—a point mentioned by the right reverend Prelate the Bishop of Portsmouth—and both are moving forwards.

In addressing the basics of how young people are encouraged to achieve, not only academically but also socially, we have to address how their needs are met and how their confidence can be built up in the early years—a point mentioned by the noble Baroness, Lady Walmsley—and then by the ethos of a school.

The Sure Start programme was initiated by the Government in October 1999 with an initial budget of £452 million to cover three years. Its aims are to work with parents-to-be, parents and children to promote the physical, intellectual and social development of babies and young children, in particular those who are disadvantaged, so that they are stimulated at home to perform better when they get to school. Its principles involve using culturally sensitive programmes to encourage families to participate. By now, some 259 such programmes are in operation. The next 177 programmes have been announced and should be in place by next summer.

The Sure Start programme works across government departments and local networks, including parents, local education authorities, social services departments, local NHS structures, voluntary and community organisations. It provides an excellent example of partnership building.

A large-scale, long-term national evaluation of the Sure Start programme began in January 2001. I have selected only a few indices here, but early findings indicate that local links to other services are good, that parental involvement is high—including management of the local programmes—and that support to parents and families is marked, including links with local education institutions to encourage parents to take up training or education. Programmes support new mothers by providing ante-natal and post-natal care, including smoking cessation programmes and breastfeeding advice.

The reason I consider this programme to be a vital resource is because it begins in the early years, offering support to and involving parents and communities, thus empowering people to make the programme sustainable. It is at this stage that young people learn fundamentally how to operate in society and how to develop and use opportunities. We all know of the difficulties faced in adolescence. However, by then it is too late to expect resources of whatever kind to compensate for a lack of security and motivation.

I shall turn briefly to the National Healthy Schools Standard, an award for schools established in 1998, funded jointly by the Department of Health and the Department for Education and Skills. The budget for 2002–03 is £7.5 million. The programme promotes physical and emotional health by equipping children and young people with the attitudes and skills to make informed decisions about health, which can then he transferred to other areas of life. Investing in health, of course, assists in raising levels of pupil achievement.

The National Healthy Schools Standard encourages schools to provide a physical and social environment which is conducive to learning. Every LEA is now working in partnership with health to develop local healthy schools programmes. Almost 14,000 schools out of a possible 25,000 are accessing quality assured training services provided by those programmes. A review undertaken in 2000 by Ofsted stated that the National Healthy Schools Standard award has helped to improve working between LEAs and health service structures, and has helped to develop school policies such as drug education and citizenship. Programmes have been instrumental in making improvements at both primary and secondary levels in the behaviour of pupils, standards of work in the classroom and the quality of personal and social education programmes.

When we are examining the resources needed to develop education and skills, we do not always need expensive technology, although IT is a great bonus. I return to my original premise, that raising achievement, promoting social inclusion and addressing health inequalities are fundamental to education and skills. The two programmes that I have mentioned cost less than they might through good-will and joint working. Their depth, consistency and impact are worth noting. They cost less than picking up the pieces or trying to compensate by putting extra resources into dysfunctional children or families at a later stage.

Children deserve resources which are carefully designed and implemented. The programmes that I have discussed provide examples of what engages and inspires people to be involved in decisions about their lives. Again as the noble Lord, Lord Dearing, said, investment in people is crucial. Does the Minister agree that resources such as the two I have mentioned are invaluable?

4.31 p.m.

Lord Chan

My Lords, I congratulate the noble Lord, Lord Dearing, on securing the debate. I thank him for asking me to speak on a subject that is the cornerstone for the success of the Government's policies, particularly in health and social care. I must apologise to noble Lords. I am unable to stay to hear the Minister's reply as I have to be in Liverpool to chair a meeting this evening.

I want to focus on the future needs of the National Health Service for skilled professional people with compassion and sensitivity to deliver a service of the highest quality that everyone expects.

The Secretary of State for Health said in his address last Thursday on Delivering the NHS Plan that by 2008 he would expect a, net increase of at least 15,000 more GPs and consultants, 30,000 more therapists and scientists, and 35,000 more nurses, midwives and health visitors". The achievement of these large increases in highly skilled professional people in so short a time will require at least three key conditions: first, increased sustained recruitment of students and graduates; secondly, more funds for training institutions and support to enable students to afford the fees and costs of training; and, thirdly, new innovative training courses that prepare new graduates to provide the health and social care services that people need.

In order to motivate and attract the kind of people needed by the NHS, more attention should be given to inviting prospective candidates to visit primary healthcare centres, hospitals and laboratories that support the health service. There should be opportunities for them to go on structured visits, to shadow health professionals and to accompany them on visits to homes. This exposure to real patients and the actual workplace would help to select future NHS staff with the appropriate attitudes to patient care.

Education and training courses in medicine, nursing and health-related sciences cost more than other academic courses because they involve contact with patients and take longer. The current estimate is that a university student will accumulate about £10,000 in debts from student loans over three years. For a medical student the debt will be £16,000 after five years. Clearly the Government need to consider supporting students, particularly those from families with modest incomes, in order to enable them to pursue training in healthcare professions. Failure to do this will perpetuate medicine, for example, as the preserve of the children of professional families.

Although the undergraduate medical and nursing curricula have undergone changes in the past three decades, the pace of change has not kept up with the reality of a health service increasingly used by people, inadequately funded and inadequately staffed. The expectations of the public and patients have risen rapidly with advances in information technology. Demand for acute medical and health services has also risen steeply because of drug and alcohol abuse, particularly among young people. About one-third of all cases in our accident and emergency departments in hospitals result from alcohol abuse.

What then will constitute an appropriate curriculum for our medical and health professionals of the 21st century? It will have to be an integrated curriculum for doctors, dentists, nurses and other health professionals. Causes of premature death and disability must be addressed—in particular, lifestyle-induced diseases of the heart, lungs and blood vessels, sexually transmitted diseases, obesity and diabetes, to mention a few. Health inequalities associated with poverty, deprivation and ethnicity should be included in the curriculum. Public health, with its emphasis on prevention of disease and the maintenance of health, will need as much prominence as treatment of diseases.

I therefore look forward to the outcome of the development in the next two years of the new "common learning" programmes for undergraduate health professionals announced by the Health Minister, John Hutton, on 14th February this year.

The Government need to focus their attention and funding on all these issues in regard to the training of health professionals if the NHS Plan for a better health service is to be achieved in the next five years.

4.36 p.m.

Baroness Carnegy of Lour

My Lords, the noble Lord has made a very important contribution to the debate. As other speakers have pointed out, large sums of money will be needed if the education service is to do its job.

I should like to comment on an aspect of what the noble Lord, Lord Dearing, said in regard to one area where the nation need not wait until the next spending review. Some of your Lordships—the professional educators and councillors among you—may think I am over-simplifying, but I am entirely unrepentant about that.

This week the secondary school league tables were published in Scotland. They contain only pass numbers and percentages at standard and higher grade levels, but it is interesting to make comparisons, on that level alone, between schools and locations with which one is familiar— for example, between two schools in country towns a few miles apart with similar catchment areas. Those schools show roughly the same percentage of passes at Highers level—the equivalent of A-levels—but at standard grade one school achieved very much more than the other.

Looking elsewhere on the list, at comparative city schools as well as those in local towns, the same evidence appears. The unevenness that is unexplained by catchment area is in the standard grade achievement; the unevenness is in what schools have done for their least able pupils; the unevenness is in the number of young people leaving school with little or nothing to show for the 18,000 hours they have spent in classrooms.

Your Lordships will accept that that unevenness is not peculiar to my part of the country or to Scotland. Surely a top priority at this time must be the young people whom school is failing, the ones who form the gap in the league tables because they achieve so little. We must surely concentrate on them above all, not only for their own sakes—although that is the most important reason of all—but because to improve their lot will be the key to so many other of our national problems—the youth crime on our streets, the drugs and drink and bad diet, teenage pregnancies and single motherhood, employers' recruitment problems, the universities' difficulty in widening access, the apparently unchanging large number of adults lacking basic reading and calculating skills.

Of course, the problems are not new, but the need to tackle them is increasingly urgent. Surely, this Government, with their stated commitment and enthusiasm for social justice and their big House of Commons' majority, should have the strength to stand up to the excuses which continue to be made within the system and insist.

Is the difficulty due to funding? The difference between the schools I have mentioned is not financial —they have similar funding regimes—nor is it the formal curriculum, which is broadly shared. The difference is what interests and motivates the young people most; what the schools are like to be in; how they feel and how they feel to the parents. It is also in the informal curriculum such as sports, clubs, societies, expeditions, drama, and the relationship with staff which those informal activities offer. It is in the hidden curriculum, the atmosphere, the attitude to individuals within the school, to visitors, the attitude to uniform and the whole ethos of the school.

Some schools can do it. Some are motivating those most difficult to motivate. Others in similar circumstances are far less successful. Should not the Government now start a big campaign, not by producing yet more targets to be met and bureaucracy in measuring those targets, but asking schools, each in their own way, to pool experience and challenging them to do better for the less advantaged? We all know that the need is there and we all need to meet it. Should schools themselves not make a huge effort to do better in this way when they are not succeeding?

I believe that it is a matter of will; of political will; of will in education and among our people. I believe that the Government could do a lot to give a lead on this.

4.42 p.m.

Lord Quirk

My Lords, in gladly joining the debate of the noble Lord, Lord Dearing, I start with a word on the problem of attracting, recruiting and retaining good teachers, surely the most important and vital resource in education. In addition to inspiring our own teenage young with the prospects of a rewarding career, there are other possibilities. One is to look abroad, as we have done with teachers and nurses. As it happens, I am against overseas recruitment if it means filching teachers from countries like South Africa where the need is even greater than ours. But nearer to home there are countries such as Germany and Poland producing a buoyant supply of graduates well able—thanks to a good education system—to teach maths and other shortage subjects in English. We should be looking at that rather more carefully than I suspect we are.

I also wonder about the possibility of second-career attractions being offered to men and women in their 40s. Are Ministers studying the model presented by the Alternative Certification route in the United States? It has a 20-year track record and according to the Economist last month, it is now the means whereby about one-third of all teachers in the United States enter the profession. It is a quick way of tapping into the academic knowledge and also the life skills and experience of people who have a real contribution to make in the classroom. Moreover, it seems to be a recruitment stream especially favoured by men and ethnic minorities. They are just the people, one may say, that we need in our inner city schools. Do not let us forget that we have vacancies for 2,000 in London alone, and needs too in the prison education service to which I now turn.

Successive governments have acknowledged the crucial role of education if those emerging from young offender institutions and from adult prisons alike are to have any chance of getting regular employment and going straight. Yet we all know how little has actually been achieved to improve matters over the years. I drew attention just a year ago to the fact that in FIMP Birmingham only 60 out of 1,000 inmates were on proper education or vocational courses. Last month I noted that in HMP Wandsworth only 90 of 1,400 inmates could be in classes at any one time and that the education facilities were in use for only 20 hours a week.

I happily acknowledge that there has been notable progress over the past year with responsibility for education and training being transferred with ring-fenced budgets to the Department for Education. I welcome, too, the establishment within the DIES of a prisoners' learning and skills unit, just as I welcome innovative schemes like "Learndirect" now being piloted in several prisons. I have high praise for the splendid volunteer work done by bodies such as the Prisoners Education Trust, which is doing remarkable work on an annual budget of less than £200,000 a year.

But how much remains to be done. Provision is still inexplicably uneven across the Prison Service and woefully inadequate overall. Even with the planned increase to £62 million in the financial year 2002–3, this works out at only about £600 per head for education per annum as against the total cost of incarceration, which is well over £25,000 per head per annum.

We get some idea of the continuing problem from the report on the young offender institution, Deerbolt, by Ms Anne Owers, published last month. Deerbolt, she says, is "one of the better" young offender institutions, yet it, suffers from insufficient investment in regimes and activities", with, education places for only 30% of the prison population at a time", the rest being locked up in their cells for "up to 23 hours" at a stretch: and that is one of the better young offender institutions.

Nor is that all. There is the little matter of priorities. The otherwise praiseworthy drive to raise basic skills seriously misses the point. Ms Owers reports that the education targets do not meet the needs of most young people there. Sixty per cent of them are functionally illiterate; that is to say, below Level 1 in basic skills. But the Prison Service targets focus on Level 2. Praiseworthily, Deerbolt is exceeding those targets, but at the expense, she says, of cutting by one-third the lower level courses that nearly two-thirds of the population of Deerbolt needs. That was Ms Owers only last month. But her message is exactly what her predecessor, Sir David Ramsbotham, told me in a letter two years ago.

There is one final point. The 60 per cent who are below Level 1 deprived themselves of education through exclusion or bunking off as 10-year olds. But now many see the light and are keen to make up for their deficit in education and skills. Those who are not might well respond to the kind of deal suggested by several of us, most recently by the noble Lord, Lord Dearing, himself, of remission time being negotiated in return for courses passed. That would be a double gain for us because, first, it would be a reduction in the enormous costs of our Prison Service and, secondly, an increase in the number of those released who would have some chance of entering an honest career thereafter.

4.50 p.m.

Baroness Warnock

My Lords, this is an extremely timely debate. I join in the expressions of gratitude to my noble friend Lord Dearing not only for initiating the debate but also for introducing it with such vision and for putting our present predicament into its historical context.

I have nothing to say that has not been said or will not be said more eloquently by others. But for those of us who have spent our entire lives in education it is our absolute duty to state the facts even if that means restating the obvious.

The fact is that it will be impossible for the Government to meet their manifesto undertaking—the target of 50 per cent of school leavers having some experience of higher education—without investing an enormous amount of money in education, not at some future date but now, immediately, this summer. I agree strongly with my noble friend Lord Moser that that target cannot be met without money first being invested in schools. The target should he removed until the performance of secondary schools has improved greatly, as I believe has the performance of primary schools as a result of government initiatives. I disagree with the somewhat gloomy remarks on primary schools of the noble Baroness, Lady Walmsley. The Government have made a clear commitment to primary education and there is a great deal of evidence that it is beginning to work. But the same cannot be said for the secondary schools.

Again I make an obvious point. I refer to the difficulty of obtaining and retaining good teachers. No one can pretend that it is not a matter of money. Teachers have themselves to be educated. They have to be trained. But, above all, they must be paid a proper salary which does not place them at the bottom of the professional pile but reflects their worth.

That has further consequences. As we all know, the cost of housing now makes it impossible for teachers in a large number of areas throughout the country to live anywhere near their place of work. Therefore, teachers are bound to leave London, Birmingham and other areas where they are urgently needed because they simply cannot afford to live there.

The other obvious fact is that the universities will be unable to provide higher education for new students without millions of pounds being provided to them through the funding council. If higher education is not only to retain some elements of its old-fashioned use of academic education but also to expand to cover all the kinds of education about which we have heard today—and it must do so; otherwise there is no point in these vast numbers of people having the experience of higher education—then teachers of higher education must be found. They will not be found if they are not given, first, a proper salary; and, secondly, an opportunity for research. In many cases, people go into higher education to combine teaching with research. I maintain that the best university teachers combine teaching with research. We cannot find those people—and certainly not among young people. There is still a body of university teachers, as I well know, but they are all knocking on a bit. They are not likely to find replacements for themselves without a serious rise in the standard of living for university teachers.

I have to declare an interest. The university that I know best is Oxford. It is quite astonishing to reflect on the comparative wealth that we enjoyed when I was in my 20s, 30s and 40s: the houses we lived in; the schools to which we could expect to send our children; and the status now of university teachers. I take one example. The Dragon School is an independent preparatory school which all my five children attended. University members of Oxford's community are barely represented among the parents of those at Dragon School. They cannot afford that kind of education. Neither do they live in the kind of houses that we were able to live in. The real drop in the standard of living of university teachers is extraordinary.

I conclude with an important point. One of the most remarkable aspects about teaching in Oxford was that we attracted undergraduates from overseas. Many of them having already gained a degree from their home country took another undergraduate degree in Oxford. I cannot help thinking of the wonderful Rhodes Scholars we taught at Oxford. Those people are beginning no longer to want to come to this country. Why should they want to do so? Last week Sir Howard Newby said that the top priority of the funding distribution was accessibility of universities to people from deprived backgrounds and the outreach of universities into the community. If you are an undergraduate from Harvard or Princeton, or from wherever it is in Germany, why would you want to come to a university which, because of those priorities, is degenerating, being allowed to crumble, not having the academic aspirations that it used to have? I believe that the loss of overseas undergraduates will be very serious not only to the universities but also the country as a whole. The status of this country has always depended, and I hope in future will be able to depend, on the quality of its universities. I do not talk just about the ancient universities but the many other universities—they are no more than 40 years old—which are and have been at the peak of academic success. We must not let that go through a failure to take the issue seriously.

Lord Lea of Crondall

My Lords, before the noble Baroness sits down, perhaps I may clarify something she said. It may be relevant to the debate. Is it not appropriate to do so?

Lord Davies of Oldham

My Lords, it is a timed debate. There is a list of speakers.

4.58 p.m.

Baroness Gibson of Market Rasen

My Lords, I thank the noble Lord, Lord Dearing, for initiating the debate. Perhaps I may mention in particular how pleased I am that he spoke about the challenges from France and Germany. That is pertinent to my contribution.

I want to give a flavour of the 15th report from Sub-Committee F of the Select Committee on the European Union of which I am a member. The report is called Working in Europe: Access for all. Sub-Committee F covers social affairs, education and home affairs and is ably chaired by the noble Baroness, Lady Harris of Richmond. The report's findings have implications for government resources. One of the European Community's key objectives is the abolition of obstacles to freedom of movement of workers between member states. Free movement within the Union is a right of EU citizens, added by the Maastricht Treaty and reiterated in the Charter of Fundamental Rights of the European Union.

While some steps have been taken to secure the free movement of workers, there is no doubt that barriers remain which inhibit the mobility of movement; and it is upon those that Sub-Committee F commented. The Commission has said clearly in the past that it aims to ensure that European labour markets are efficient, open and accessible to all and to deliver full employment in a dynamic, competitive, knowledge-based economy. It was against that background, therefore, that Sub-Committee F carried out its deliberations.

During the course of our studies, we looked at the level of easy access to employment—what is described as geographical mobility—in the EU, examining this against other elements of a flexible labour market. We examined the perceived barriers to geographical mobility and considered movement between jobs—occupational mobility—in depth. We considered the need to improve people's level of basic skills, the provision of life-long learning and the recognition of both informal and non-formal learning. We considered also the availability of information open to those who wish to be mobile.

As we hope that the report will be discussed at length in this Chamber at a future date, I shall concentrate my remarks on only two of the findings and recommendations of this wide-ranging report. The first crucial finding was that 20 per cent —one in five—of UK workers lack the basic education to compete in the rapidly changing European labour market. That is a devastating figure. It is therefore vital that the Government place emphasis on life-long learning if such workers are to survive in the modern labour market. There must be free access not only to basic skills but to other forms of help for all our people, irrespective of age.

If the UK workforce is to compete with others in Europe, the Government's priorities must be: to ensure that all workers have basic skills, and that all are able to improve the skills that they have gained; to ensure further progress on national recognition of qualifications between states; and to ensure a concentration on language skills. In that context, the lack of language skills caused the sub-committee a great deal of concern, which resulted in a call by the committee for a development of the national curriculum so that the first foreign language can be taught in our schools to all pupils from the age of eight at the latest.

I now turn to the second finding to which I wish to draw your Lordships' attention. It is the lack of any systematic data on individual perceptions and experiences of geographical mobility. We do not know to what extent the geographical mobility of workforces in the EU is artificially restricted by barriers. There are no data on which we can rely to find this out. Witness after witness reporting to the sub-committee—from a wide range of national and international organisations—admitted that that was the case.

We know that for some the barrier is the lack of education and skills; for others, it may be a question of housing, or of their children's schooling; or it may be the difficulty that partners experience in getting a job in a new country. We know that all these are factors; but we do not know which are the most important. Unless we can gain more information in this crucial area, we cannot hope to overcome these barriers.

I conclude, therefore, by asking my noble friend questions on two points pertinent to our findings. First, will she share with the House the Government's latest thinking on the teaching of foreign languages in schools and in particular at what age the Government encourage such teaching to start? Secondly, bearing in mind that policy continues to be drafted and negotiated despite the absence of significant statistical information in this area, do the Government have plans to rectify that for the future?

5.4 p.m.

Lord Browne of Madingley

My Lords, I am indebted to the noble Lord, Lord Dearing, for initiating this debate. This is an important subject.

I shall concentrate on universities. My direct knowledge is of Cambridge and of Stanford in the United States, but I speak as the chief executive of a company which employs more than 50,000 graduates world-wide.

From that perspective, no one can doubt the value of a university education for individuals in developing not just professional skills but also the ability to learn, to question and to develop ideas in co-operation with others. Equally, no one can doubt the economic value of universities. America's strength in the world now owes an enormous amount to sustained investment in higher education. As the work of Richard Levin at Yale and others has shown, the best universities have created new industries and have driven improvements in human capital and productivity. The investment that we make now in our universities and the way in which that investment is directed will shape the fortunes of this country for decades to come.

Globalisation has brought competition—for the best brains and for the research funding which follows quality. British universities have many strengths, but we are slipping behind in ways which, if not corrected, will damage our long-term economic prospects.

The level of funding for universities here is well below that of the best universities in the world, perhaps by a factor of four. Additional funding is needed, but that is not sufficient. Existing and new money should be invested in accordance with four simple principles.

First, we must invest in focus and merit. We have to devote a greater proportion of any available funding to world-leading research, because in the end the most powerful research is work which extends human knowledge. So we need a wider scale of assessment, and one which recognises that the most creative research often comes from co-operation across disciplinary boundaries. The current assessment system does not differentiate sufficiently between the adequate and the best, particularly when almost half of all research is rated as five or five star.

With merit will come differentiation. That is the second principle. Institutions need to be able to define their own missions. Research is not the only function of universities. The quality of teaching must also be enhanced if the expansion of access is to be worth while. As education becomes a global activity, the proven ability to teach will be an immense source of competitive advantage for British institutions. In the end, that ability can be judged only by the users, and I strongly support the introduction of open and published assessments by students.

The third principle is proper funding. If we are asking universities to undertake world-leading research, or to teach an ever growing number of students, each task should be properly funded. If, as many argue, funding should follow the student, and the research teams, their budgets should cover the costs of maintaining the university as an institution. The backlog of capital spending should also be met. Funding should recognise the need to reward the best academics at world-class levels—openly—as a signal to others to pursue academic careers.

The fourth principle is governance—which underpins everything else. If universities themselves are asking for the right to increase fees and if they are accepting the responsibility that goes with that—to ensure that access is available on the basis of merit rather than the ability to pay—governance is essential. Opaque and antique systems will not produce the necessary trust.

We have to apply to universities the basic principles of governance—external oversight; clarity of roles and responsibilities; accountability against defined objectives; and professional management. The four principles of focus, differentiation, proper funding and good governance are all important and inextricably linked. If they can be achieved, we can change the competitive order.

The ranking of universities across the world is not immutable. The ranking of the top universities in the United States changes all the time. In this country over the past 20 years we have seen the rise of highly successful universities such as Warwick, which did not exist about 40 years ago. Like the noble Lord, Lord Dearing, I believe that in the next 20 years we shall see the development of the great universities of China and other countries to a global level. The international movement of academics and students will become the norm.

We can compete and we can lead in research on focused areas of expertise and in teaching. However, to compete we must change. We have to increase funding, but we must also use that funding with greater care. These decisions will shape where we stand in that competitive race and they will shape our future as a nation.

5.11 p.m.

Baroness Howe of Idlicote

My Lords, I, too, join in heaping paeans of praise on the head of my noble friend Lord Dearing for raising this subject at this time. One thing is crystal clear from the debate. Despite the Budget's tax increases, there is unlikely to be enough public money to meet all the Government's—and your Lordships'—ambitious plans for education. However, resources can imply more than financial funding. I shall explore the potential of other resources that could also be mobilised.

I congratulate the Government on the priority given to education and, despite criticisms, on some achievements. They have rightly put more emphasis on and provided more money for nursery education and the recruitment and training of teachers, although still not enough. Nor is sufficient given for salaries.

The Government have also emphasised the need to attract more young people into higher and further education. I agree with everything that has been said about the need on the further education side, particularly for those from deprived backgrounds. However, concern is growing as to whether the resources deployed are delivering value for money. The Government should note two recurring criticisms: of the bureaucratic workload being imposed on those at the grass roots by the constant changes, and of the Government's reluctance to delegate sufficiently to where the action takes place.

Like others, I feel a particular concern about universities. I declare an interest as vice-chairman of the Open University council and a governor of the LSE. We still await the results of the Government's inquiry into student financing, but ahead of that we know that students, especially those from deprived backgrounds, are increasingly concerned about their mounting debts. Another major concern that we have heard a lot about today is that university salaries are down comparatively, as the noble Lord, Lord Moser, stressed. They are far higher in other countries, particularly the United States. Scarce UK teaching and research talent is inevitably being attracted overseas.

To their considerable credit, many UK universities have responded by becoming increasingly entrepreneurial. Partnerships with other universities and with businesses are helping to provide extra resources in efforts to keep standards high. However, universities still need greater freedom to innovate. I agree entirely with the points stressed by my noble friend Lord Browne on that issue.

Has not the time come for a different approach to the funding of higher education? Should we consider something more akin to what happens in the US, perhaps involving a voucher system? Such a system has the advantage of being firmly student-centred and gives each qualified individual a basic funded voucher providing an entitlement at some stage in life to a university education. Universities would compete for students, with fewer restrictions on the numbers they could take in. They might also be allowed greater freedom to charge more for some degree courses than for others. Such a system would mean less hands-on involvement by government and the HEFCE in the affairs of universities. It would also allow universities greater freedom to raise and spend extra resources.

The Government should retain the power to set the parameters for what they believe is important. For example, they could raise the value of a voucher for a shortage subject or double its value for students from a deprived background.

Several recent debates in your Lordships' House have focused on deprived communities and the importance of spending more money on the children most at risk in the early stages of their lives in school and pre-school. The aim is that, among other benefits to society, that focus might head off at least some of the escalating cost of the grizzly alternative if they reach prison. That raises the question of identifying children at risk early enough to begin helping them and supporting their families. My experience is that teachers, social workers and the police at grass roots know exactly where early intervention is needed. I am glad to commend the Government's plans to spend more money in that area, but is the joined-up thinking mentioned by the noble Baroness, Lady Walmsley, yet in place in anything like the relevant number of local authorities?

As well as that, we need far greater involvement by the whole community in tackling the problem, whether by personal voluntary efforts or local businesses and employers providing support financially and through employee secondment. I heard recently of the excellent partnership initiative between London First and the Metropolitan Police.

Alas, there are growing concerns that as a society we are becoming less concerned individually to help our fellow citizens. Thankfully, there are exceptions. To their great credit, many schools and universities are playing a practical role in helping to raise the aspirations and self-esteem of the young in deprived areas. Surely it is far better to motivate talented deprived young people from an early age and, by such mentoring, enable them to qualify for university in the normal way rather than asking universities to accept them with lower qualifications, as suggested recently by one Minister.

Citizenship will become a compulsory curriculum subject in September. In a Written Answer, the Minister told me that community involvement is to be included. Following that, should we not aim to encourage everyone to contribute a period of voluntary social work to the community? That way, the habit—and the benefit to each one of us—of helping others would, one hopes, remain an active ingredient for the rest of our lives.

Whatever the merits of that idea, surely we all need to be more aware that early intervention for those most at risk can have positive results for the local community as well as nationally. A reduction in crime is one obvious and very important objective, as is the unblocking of much needed skills and abilities, which the noble Lord, Lord Dearing, was talking about, for the cultural and economic benefit of us all. A far more fulfilling life would ensue for the young whose talents would be successfully developed and steered in a more socially desirable direction.

I hope that those are some ways in which we can make more effective use of the human resources already available. I also back the many calls that we have heard for a greater percentage of GDP to be devoted to this most vital of all our investments in this country's future.

5.19 p.m.

Lord Layard

My Lords, I, too, thank the noble Lord, Lord Dearing. Like some others, I shall focus on research in universities. I begin by contrasting what we say with what we do. We say, as we certainly should, that the knowledge economy is crucial. New knowledge is the main source of human progress. Moreover, there is an extraordinary rate of return from research, averaging 50 per cent per annum in the private sector and probably even more in the university sector. It is a very important sphere, to which we pay our respects.

In contrast, what do we do? Where are British universities in the league of the world's great research universities? As we all know, they are not where they were. The tragic fact is that all the world's top research universities—all of them—are in the United States. The world's leadership in both science and ideas is on the other side of the Atlantic, which is a deeply unhealthy situation. The only consolation for Britain is that we are better than the rest of Europe.

How did that happen? The cause was simply money and, above all, salaries. Noble Lords have quoted some facts; I shall quote one more. In 1999, the average full professor at Oxbridge and the top London colleges earned £50,000 annually. That is the same as the salary for a grade 7 Whitehall civil servant—or what used to be called a principal, although I shall use grades rather than the old terms used by the noble Lord, Lord Moser. Comparisons with the City would be infinitely more extreme. By comparison, the American universities have adjusted. The top seven American universities pay roughly double what is paid—at both junior and senior levels—by our top five or so universities. The effect on quality has been both predictable and inevitable.

I should declare an interest: I work at the London School of Economics. Although we are generally considered the best economics department, in the past 20 years we have been able to recruit only three suitable British candidates when trying to fill 40 permanent lecturer appointments. More recently, I offered a job to an idealistic young researcher who wanted to come and work with us, and I thought that he had accepted. However, he felt that he should consult four of his friends whom he considered more academic than him although not working in academia. My friend asked why they were not, and they all gave the same reply: "Don't you know that in Britain there is no future in academia?". That is a formula for national decline.

Britain is passing up a tremendous opportunity to lead Europe in building up this continent's intellectual capital. It is not too late, but our top universities are the key in this effort. There are three reasons why we should focus on the top universities. First, they give the best value for money in research, as shown by careful analysis of research output conducted by Jonathan Adams. The research shows that, compared with other departments, five-star departments produce double the research output for every pound of research funding. I believe that that justifies a highly selective approach.

Secondly, top universities are crucial for training the profession. In Britain, almost two thirds of the articles in economics, for example, are written by former PhD students from only three universities—Oxford, Cambridge and the LSE. Thirdly, I believe that the top universities are crucial to the prestige and drawing power of the whole of the profession. In living memory, however, that prestige has never been as low as it is now.

What can be done? We have to decide first whether we want top research universities in Britain. If we do, we shall have to give them more money. As the noble Lord, Lord Browne, said, income per student in our top universities, excluding research grants, is one quarter that in the top American schools. There is simply no way in which they can compete effectively. The higher education funding councils have to be given extra money to fund the top of the system. I add parenthetically that that must be done through the funding councils rather than the research councils because it is the former that fund the salaries of the leading researchers.

I therefore propose the following. We should aim to increase funding from one quarter of the US level to one third. Although we probably could not do that, for the reasons already given, for every five-star department, we could group departments into about six faculties and then identify the best-performing universities within each faculty area. It would cost about £200 million to identify the best four, for example, and increase their income by one third. Those are the types of figures that we should be considering if we want to restore our intellectual leadership in the world. It is a smallish price to pay for enabling our country to compete effectively in the world's knowledge industry.

There are of course other claims on resources. I spend much more time thinking about and working on the problems of young people who never go to university than I do on those who do go. Much has rightly been said about that issue. However, as has also been said, our universities are living on borrowed time. The truly extraordinary fact is that since 1970—a period of 30 years—real salaries in universities have barely increased. Contrast that with what has happened in the competitive professions in the rest of the country. I have asked, but no one can think of any other occupation that has been similarly treated. We shall be practising a collective hypocrisy if we continue to praise the knowledge economy while continuing to treat our knowledge workers in such a manner. The key question is this. What do I say to the next young person who asks me whether there is indeed a future in academia?

5.27 p.m.

Lord Northbourne

My Lords, I thank the noble Lord, Lord Dearing, for initiating this debate and congratulate him on introducing it so lucidly. I shall, however, take a slightly different line. Education is not just about what happens in schools and universities. Of course properly funded schools and good, well-trained teachers are important, but so is the education, in the widest sense, that a child acquires outside school. So—most importantly of all—is the preparation of a child's mind before it goes to school.

We must not ignore the role of parents. A child in full-time education today spends about 27 per cent of its time in school. In other words, it spends about three-quarters of its waking hours outside school, the expenditure of that time—probably and hopefully—being influenced by its parents. The role of parents is of course even more important for pre-school children. The Government are doing a lot for pre-school education, but much more help is needed for parents in relation to the other three-quarters of the child's time, or rather more in the case of pre-school education when the child is not in school.

I should like to speak of an even less well known problem—the educational development of children from birth to three years old. Let no one imagine that this is not an important issue or an important period in a child's life and education: it is the time when the brain is being formed. Recent research made possible by new deep scanning has given neurologists a much clearer understanding of the early development of the child's brain. At birth, on average, a child has 100 billion neurons—brain cells—which are all it will ever have, and it has already formed about 50 trillion synapses, which are the connections between the brain cells.

By the age of two the number of synapses in the average child's brain will have increased to about 1,000 trillion. The environment in which the baby develops influences the way in which these synapses develop. Some may become "hard wired" by constant use and may become difficult to dislodge later. Others, if they are not used, may atrophy or be diverted to other uses in the brain. For example, the mechanisms which trigger aggressiveness and an aggressive response are among those which are difficult to dislodge later in life. So a tendency to violence and aggression can be built into a child's brain in the first two years of its life. Conversely, if certain parts of a child's cognitive brain are not stimulated and used during the first two years, they may be difficult to build back later. Language skills which were mentioned earlier are but one example.

Both those findings are of fundamental importance to education. If we define education as it is defined in the education Acts, the healthy development of a child's brain must be a crucial element in education. I believe that education ought to be a "seamless robe" from birth to maturity and beyond. In a society which believes in human rights, surely it must be the right of every child to grow up in an environment which secures the proper and normal development of his or her brain.

The problem, of course, as with all human rights, is to know who has the duty to deliver them. Some of your Lordships will have heard the second of this year's Reith Lectures in which Professor Onora O'Neill says this: democracy presupposes rights—and rights presuppose duties … if any of us is to have rights, others have got to have counterpart duties. The thought that nobody has rights unless others have duties is a precise logical claim". Every child has a right to medical care. In this country it is the state which assumes that counterpart duty. The state also accepts the duty to provide education in schools for every child over the age of five. So we must ask ourselves, should the state accept the duty to provide an appropriate environment for the development of a child's brain and his emotions and social skills in the first two or three years of that child's life? It has to be admitted that the state has not made a very good fist of it up to now when it has had children in its care. Parents do not always make a good fist of it either.

I suggest that the answer must be a partnership between state, parents and communities. Few parents want to fail their children. I believe that there are two main reasons for failure: ignorance and circumstances. Ignorance can be cured by the right kind of education. The kind of ignorance which needs to be addressed includes the following: first, poor understanding of the real needs, emotional, mental and physical, of a young child. Some parents, especially fathers, do not realise how important they are to their child. The second is little or no experience of what a happy, supportive family is like, or of the importance of the support of a partner. The third is lack of the skills to set boundaries of acceptable behaviour through positive parenting rather than by physical and verbal abuse of the child. The fourth is lack of understanding of the positive role of play and conversation in the development of the young child's brain and, of course, unwillingness to seek help.

External adverse circumstances are susceptible to amelioration. They may include poor and inappropriate housing, especially bed-and-breakfast accommodation, poverty, unemployment, debt and the associated stresses, ill health, including mental ill health, loneliness, boredom, lack of support, addiction to drugs and alcohol, violence and, of course, the lack in some areas of the basic support facilities which the state and the local authority should supply. With all these problems the state, local authorities and communities could do more to help without intruding in any way on the liberty of parents. The Government are going some of the way to address these problems, but if we truly want all our children to have a fair chance to succeed at school and to have equal opportunity in the truest sense, there is a real need to do much more to help nought to three year-olds by helping their parents.

5.35 p.m.

Lord Bragg

My Lords, I, too, should like to join the chorus of approval in congratulating the noble Lord, Lord Dearing, on initiating such an important debate. I thank him for giving me and others the opportunity to speak to the Motion.

I want to focus my intervention on higher education. In doing so I declare an interest as Chancellor of the University of Leeds. I also want to make some remarks on behalf of Universities UK, the body that represents university vice-chancellors with whom I have been in touch on this issue and this debate.

We should be proud of the universities in this country. They teach more and more students; produce ever greater quantities of high-quality research; build up increasing links with business and local communities unheard of just a few years ago; and train the thousands of extra nurses, teachers and other professionals the country needs to improve public services. When I visit them, as do many other noble Lords, we find that they are bright, positive, cheerful places. We have decided—finally, it seems to me—that our future lies in our brains. I find it encouraging that the Government are now addressing the engine-room of the intellect; that is, the universities.

Universities UK has submitted a bill to the Government asking for about £10 billion over the next three years. It seems a huge amount but one that reflects accurately the costs of what the Government want universities to do. Without proper funding there is a danger that universities will not be in a position to achieve some of the Government's own key goals. Let me illustrate that and bring in a little local reference to the University of Leeds.

First, Leeds, like many other universities, has been innovative in widening participation policies, for example, by the use of Ogden scholarships to encourage youngsters to stay on at school from 16. There are many youngsters throughout the area which Leeds serves who simply do not and cannot stay on at school after 16. Those scholarships enable them to stay on for those two years. We have run a pilot scheme. After the first two years of the scheme, 23 out of 26 Ogden scholars achieved university places. So it can be done but it has to be properly funded. This is not a case for marginal funding. If the Government are to achieve their national aim of 30,000 new students a year over the next eight years, to get to a figure of 50 per cent, they will need to be properly funded as most of those people will come from poor homes.

Secondly, teaching quality at Leeds has been maintained, as is shown by high scores in teaching assessments. But, again, to continue to achieve those standards, funding, after years of reductions in the unit of resource, must continue to be maintained in real terms. Here I fully agree with my noble friend Lord Moser who knows far more than I do about this subject. In the settlement announced in January that was not the case. There was a small—about 1 per cent—"efficiency gain". Tight squeezes such as that can be strangulating. Art has long followed money and so does knowledge, as was pointed out by the noble Lord, Lord Layard, in his apposite remarks.

Research quality at Leeds and at many other of our universities has risen over the past five or 10 years despite great obstacles. That is shown by the 2001 research assessment exercise. If this had been fully funded for 2003, the University of Leeds would have won an additional £7.5 million. In fact, it will receive an additional £2.5 million. Again, the Comprehensive Spending Review needs to deliver funds to sustain what is a world-class research base. I agree completely with the noble Lord, Lord Dearing, when he said that the only market that we can go for now is upmarket. For that we have to have world-class research.

An excellent achievement of government policy has been the agreed future investment in scientific infrastructure worth something like £40 million to the University of Leeds over the next two to three years. But if the research budget continues to be underfunded, there will not be the revenue support to utilise this infrastructure. Therefore, the only benefit will go to students of irony.

Finally, the University of Leeds, like the rest of the sector, exploits its research and works with many agencies, including Yorkshire Forward, the regional development agency. The fact is that universities are now a major driving force in increasing the competitiveness of the country. They do not want to lose the momentum that has been achieved because of marginal underfunding in the spending review.

In sum, the Government are absolutely right to put education so high up the agenda. The inclusion of higher education in the Government's top 10 of their second-term priorities shows a realisation of the sector's importance. I trust that when the Chancellor announces the results of his spending review, the hopes that he has raised will be met with new funds to meet his own priorities, as well as the priorities of those working in our universities. As my noble friend Lord Puttnam said, I can think of nothing that is more important for our future.

I say yes to education, education, education. Without proper funding, that is an empty cry. With adequate funding, it is a democratic, visionary and dynamic call to arms that is of incalculable benefit for the widest agenda and future of our country.

5.40 p.m.

The Earl of Listowel

My Lords, I join other noble Lords in thanking my noble friend Lord Dearing for providing this opportunity to discuss education. I shall concentrate on the education of looked-after children. I declare an interest as patron of A Voice for the Child in Care.

The Government's target for the educational attainment of looked-after children this year is that 50 per cent of them should achieve one GCSE grade A to G. The national average is that 50 per cent of children receive at least five GCSEs of grades A to C. In Germany, 57 per cent of looked-after children achieve their Abitur, which is equivalent to a trio of good A-levels.

I shall concentrate on a smaller group—5,000 of the 55,000 looked-after children who are in residential units. They are often the most problematic children and therefore deserve special interest. For those children to achieve an adequate education, more resources are needed to develop their carers. Without stability in their home, those children will often be unable to engage in education, whether it be in a large secondary school or a small pupil referral unit. A high priority is placed on stability, but currently many of the staff in those hostels are agency staff, who come and go—who flit in and out.

Lord Northbourne

A disaster.

The Earl of Listowel

My Lords, that is a disaster, as my noble friend Lord Northbourne points out.

I request the patience of noble Lords while I recall a visit to a project run by Centrepoint three years ago. I wanted to make that visit because I had been told by outreach workers—those who work directly with young rough sleepers on the street—that it had an outstanding reputation for holding on to the most challenging clients. The building and garden were a shambles but young people were clearly attached to the staff and their home. One young Irishman who I met had been from hostel to street countless times before arriving at Buffy House, but he had spent several months in that setting. A young woman talked proudly of her involvement with a project run by the Prince's Trust. Another female resident had scars on her wrists from previous self-harm, but she was later to win a commission from a City firm to provide artwork for its foyer.

There was plenty with which to find fault. I have already mentioned the state of the home. Those young people still had a very long way to go and their passage was most uncertain. What was perhaps most remarkable about Buffy House was that in that setting, in which workers cared for the most troubled young people who presented themselves at Centrepoint, its workers had the lowest rate of sickness leave in the whole of the Centrepoint organisation.

Why was that? What made it different? The manager was very clear in her mind about what singled out her and her team. For several years, she and her staff had been supported each week by an outside consultant. Each week, the staff, as a group, had had the opportunity to speak with a psychotherapist about their experience of the young people. One consequence of that was that the staff thought carefully about every aspect of their work with the children. Every occasion was seized to learn more about their young people and their practice with them.

Another consequence was that staff were spurred to take studies in that area of work. The manager had entered residential work with those difficult children with no qualifications, as 80 per cent of such carers did previously. Several years later, she had a masters degree in that field. The other staff member who was present that evening was taking a course of study at the Tavistock Clinic.

In that microcosm, which had many of the ingredients that are associated with good residential care for looked-after children, the staff had a shared philosophy about what they did. They were well supported, they experienced continued professional development and they had a remarkable leader. She was available to them and the clients on the telephone at all times and she radiated confidence and self-assurance.

I turn to the broader context. In his Budget, the Chancellor made available an increase for social services. For the first time in a Budget, he singled out social services and he regretted their past neglect. The Government's "quality protects" money is being used to train residential care staff up to national vocational qualification level 3. That is most welcome, although one must remember that "quality protects" funding runs out in one or two years.

However, to make a real difference to the educational prospects of looked-after children in those settings, much more needs to be done to support their carers, particularly those who work with the most troubled children. I look forward to the publication later this year of the Social Exclusion Unit's report on looked-after children and education. I hope that it will look closely at the training, support and development of care staff who work with children in residential settings. I trust that there will be an opportunity for us to debate its findings on the Floor of the House.

Last night, I encountered two young women—refugees at a Centrepoint hostel. The 18 year-old West African helped me—she gave me advice on my English language. We discussed "The Merchant of Venice" and she quoted Portia. The Kurdish woman explained to me what the "lexis of the semantic field of young women" meant.

In other countries, being taken into care can mean rescue from poverty and provides the opportunity of a first-rate education. Refugees often teach us the value of a good education when one has experienced trauma and been uprooted. We should do fir more to make the protection of a good education available to our looked-after children. Integral to that is to provide support for the carers of those children.

5.48 p.m.

Lord Hannay of Chiswick

My Lords, this debate on resources for education is certainly timely. My noble friend Lord Dearing is to be congratulated on providing an opportunity to review, in the run up to July's Comprehensive Spending Review, the adequacy—or, as I would argue, the inadequacy—of the resources that we in this country devote to education.

When the Government were first elected to office in 1997, it was on the platform, as a number of noble Lords have reminded them, of "education, education, education". Since then, much has been done and substantial additional resources have been provided to improve the first two legs of that tripod—primary and secondary education. However, much less has been done, and far fewer resources provided, for the essential third leg—higher education—which has become the orphan of the group.

I therefore make no apology for devoting my contribution to the higher education sector, in which I declare an interest as Pro-Chancellor of the University of Birmingham. That is not to suggest that the Government have been backward in setting extremely ambitious targets for higher education. Many of them are highly laudable targets, which the universities would wish to achieve—to extend higher education to half of the population, to increase the numbers qualifying in the medical profession and many other such targets. Nor have the Government been backward in piling on universities additional bureaucratic burdens, requiring the allocation of scarce resources.

However, when it comes to providing resources, the story is a little different. Then, it is all a question of efficiency savings and of reductions in the provisions per head of the student population. As an example, I cite—several other noble Lords have mentioned this—the recently completed research assessment exercise. This complex and laborious process, demanding a substantial allocation of staff resources, revealed that our universities were delivering a world-class performance with major improvements, confirmed by systematic international verification during the period under review.

But what was the reward when resources came to be allocated? The smallish top, five-star, category maintained its funding in real terms—I repeat: it maintained its funding; there was no increase—while the second, third and fourth categories, which were by far the largest groups, saw their funding reduced by 15, 35 and 65 per cent respectively. Anyone below that was cut off with nothing at all. That is hardly a major incentive for the next research assessment.

But, rather than looking back, let us look ahead and try to identify what resources will be required if we—that is, the universities and the Government—are to have any hope at all of achieving and delivering the ambitious targets that we have set for ourselves.

First, there is the target of achieving a 50 per cent participation rate in higher education by 2010. I know that some people question that target and doubt the desirability of having such a high proportion of the population receiving a university education. I am not among them myself. I feel that a Britain which is to hold its own in a knowledge-based world and which is to offer its citizens careers genuinely open to their talents needs to stretch for a target of that nature. But that means providing 30,000 additional student places every year from now to 2010 at a recurrent annual cost of £420 million per year. And it will almost certainly also require an access premium of 20 per cent in addition to the full unit of funding if we are to fulfil the objective of inclusiveness and recruit students disproportionately from those sectors of society which have not hitherto traditionally benefited from higher education. That would cost another £65 million per year.

Then there is the urgent need to increase investment in health education provision if the ever-more pressing demands of the National Health Service are to be met. We should have no illusions about that. As another noble Lord reminded the House, it takes a considerable period of time to train health professionals. If we do not provide the resources now, we shall not have the doctors, nurses and others when they are needed and all the resources being allocated to the National Health Service will be to no avail. There will be a minimum of £60 million of recurrent funding for that requirement.

Thirdly, if we cannot modernise pay structures and enhance staff management and training, we shall simply not be able to recruit and retain the staff that universities need in order to have top-quality establishments. I do not imagine that anyone who has spent even a few hours in one of our universities can believe that our academics are overpaid or that the resources available for the management of them are adequate. To achieve something like a satisfactory basis for the future in that respect would require £1,225 million of recurrent expenditure.

Fourthly, if the academic staff and the students are to be capable of developing to their full potential, there must be a massive investment in teaching, learning and research infrastructure. Plenty of serious analysis has been done by independent consultants, and figures of £6.56 billion for the period up to 2005–06 for teaching and learning infrastructure and £1.7 billion for research infrastructure have been identified.

I am very well aware that all that adds up to a substantial quantum—some £9.94 billion over the next three-year period, to be exact—and that there are plenty of competing bids from other parts of the public services, including from other parts of the educational sector itself. But it is frankly not serious to pour huge resources into primary and secondary education and then to neglect higher education. And it is not serious to set the universities hugely ambitious targets knowing that they do not have the resources to achieve them.

I know that the Minister did not greatly appreciate it when, some weeks ago, I described such an approach as "feckless". But that, I am afraid, is what it is. What is surely needed is for the Government to sit down with the universities to work out together what their targets and objectives are, how much achieving them will cost and where the resources are to be found. I hope very much that the Minister will be able to say that that is what is now going to be done before decisions are reached on the Comprehensive Spending Review.

What we have in higher education, ineluctably, is a public/private partnership. In other sectors, such as transport, the debate may rage as to whether or not that is a good approach. But for higher education there is simply no alternative. No university—not even the most ancient and prestigious among them—can survive without substantial public support.

But the Government cannot deliver on their objectives for higher education without the willing and effective contribution of a huge network of independent and autonomous institutions which are determined to maintain high standards and provide excellence. For any such partnership to succeed, there must be adequate investment. The Government can quite reasonably look to the universities to stimulate more investment from their links with industry and from their alumni through development campaigns and to be more efficient about the way that they allocate and spend the resources. The universities are doing all that to the best of their ability.

But there is no way in which those private sector resources will see the universities through; nor will student fees, which are, in any case, being reviewed by the Government, and I do not imagine that the Minister will astonish us by telling us that they are going to be increased. Therefore, one comes back to the question of investment by the public sector—the heart of this debate.

I hope that the Government will not overlook in their deliberations the key role which higher education plays as one of Britain's largest and most dynamic service industries. The advantages that can accrue to the United Kingdom incorporated from our use of what is now the global language of higher education and research are large and growing. But those advantages will not simply drop into our lap. They will need to be won by continued excellence and competitivity. There are plenty of others out there competing for them, not only in fellow English-speaking countries, such as the United States, Australia, New Zealand and Canada, but more widely. Twelve per cent of our student population and 39 per cent of full-time postgraduates come from overseas.

Lord Davies of Oldham

My Lords, will the noble Lord forgive me? We are restricted to seven minutes each in this debate.

Lord Hannay of Chiswick

My Lords, I am so sorry. I shall draw to a close if I may.

The point that I am making is that the new sector of the universities as a service industry is worth nurturing. I noticed that in an article in the Observer 10 days ago the right honourable gentleman the Prime Minister said: You cannot have world-class schools and hospitals if you are not prepared to pay for them". That quotation seems to me to illustrate two key points. One certainly cannot have world-class universities if one is not prepared to pay for them.

Noble Lords

Order!

Lord Hannay of Chiswick

My Lords, I am so sorry. I am on my last sentence if noble Lords will permit me to complete it, but, of course, I shall not complete it if they do not wish me to do so. May I complete it?

Lord Davies of Oldham

My Lords, I believe that the noble Lord has had his time. He has seven minutes—that is all.

5.58 p.m.

Lord Dormand of Easington

My Lords, there are many pleasurable features about being a Member of your Lordships' House. One of the less favourable aspects is to put down your name for a speech, as we have all done today, and then come to the Chamber and find that, out of 22 speakers, you are 22nd. I say that because, as we all know, speeches in this Chamber are of a very high level and one can guarantee that, in the carefully produced speech that one has prepared, the points which one makes will have been dealt with at least six times before it is one's turn to speak.

However, in this case, I am glad to say that the noble Lord, Lord Dearing, who mentioned further education a number of times—a subject with which I intend to deal—at least left me room to raise some of the details. In the few minutes that I have, that is what I intend to do.

The most neglected sector of the education service is that of further education; that is, for the age range of 16 to 19 year-olds. Nearly 4 million students attend further education colleges in England and, as in other areas of education, standards vary a great deal. My right honourable friend the Minister of State for Lifelong Learning said recently that only half the students going through FE colleges succeed in finishing and passing their courses. Perhaps I should say that some doubt has been expressed about that figure. If it is even anywhere near that figure—I suppose it is—that is a devastating comment on that particular sector of education.

We have to ask how that position could arise. I believe that there are a number of reasons, but say immediately—I mean this sincerely—that blame cannot be laid at the door of the teachers and lecturers in further education. In my experience in this sector, which is fairly considerable, I find them to be as conscientious and enthusiastic as teachers in other sectors of education. However, I make one comment on that aspect. Staff in further education do not usually receive the training which teachers in other sectors receive. I believe I am right in saying that up until fairly recently some did not have any kind of training whatever, but that has improved. Perhaps the Minister can say something about that when she replies.

It is probable that that training would be somewhat different from other teacher training because of the circumstances in which some, indeed most, FE teachers are recruited. Nevertheless, there are some principles which govern the whole process of learning from infant stage to university of which all teachers should be made aware. Perhaps the real problem with further education is the serious long-term underfunding; an aspect which has been talked about for some considerable time in the field of further education and was frequently referred to in yesterday's lobbying of Parliament by FE teachers and managers. Perhaps some of your Lordships were there yesterday and realise the tremendous impact on the people concerned.

The Association of Colleges claims that colleges receive 20 per cent less funding for every individual who goes through an A-level programme in colleges than schools receive for their A-level students, comparing like with like. If that is correct—I follow these matters fairly closely and think there are grounds for believing it—it is a most serious situation which needs urgent attention from the Government. I am sure that my noble friend will have something to say on that when she replies. It will require a huge sum to redress the balance for FE to that of schools and universities. The Government said that they are spending more. Some of us would like to know exactly how much more.

Can the Minister say why there is such a difference in funding for FE? Presumably the Government feel that there is a reason. FE has long been the poor relation—I hope I shall be forgiven for using that phrase—in the field of education. Now is surely the time to try to correct it. I understand that colleges work on the 1995–96 core funding levels. If that is the case, it is inevitable that the quality of their work will be affected. Indeed, it is incredible that they achieve the level of success they do despite the difficulties.

There is all-round praise from the Learning and Skills Council, the annual report of Her Majesty's Chief Inspector of Schools and the National Audit Office. All of those bodies are aware of the basic handicap endured by the colleges. Your Lordships may know that HM Chief Inspector of Schools has been inspecting FE colleges since April 2001. Obviously, findings show that there are weaknesses, as is usual in all inspections of education establishments, but I give two of the inspectors' findings: The level of academic and personal support offered to students is high, and priority is given to ensuring that students are well prepared to progress to higher level courses". That sentence is of great importance. One of the basic aims of which the colleges are proud is laying the foundation for higher education. The annual report of Her Majesty's Chief Inspector of Schools states: Teaching and learning were found to be satisfactory in over 91 per cent of lessons". As a former Chief Inspector who has had to deal with many HMI reports, perhaps I may say that that is high praise indeed and something which we should not forget. That is not to say that there are not shortcomings; there are, but they measure slightly against what I have just said.

I see that my time is up. I know that we shall receive detailed replies from the Minister on the points I have raised.

6.6 p.m.

Baroness Sharp of Guildford

My Lords, we have had a good debate today, even if there have been occasions when I thought that we had been carried forward to next week's debate on universities. I join others in paying tribute to the noble Lord, Lord Dearing, for initiating the debate, which, with the forthcoming Comprehensive Spending Review in July, is extraordinarily timely.

As everyone knows, since 1992 the Liberal Democrats have put a great deal of emphasis on the concept of investing in education. We have deliberately used the term "investing in education" because we have always felt that spending money now reaps rewards later. In terms of considering the rewards from spending resources on education, a number of Members of your Lordships' House, including the noble Lords, Lord Dearing, Lord Bragg and Lord Puttnam, emphasised what I call the competitive element. As the noble Lord, Lord Bragg, said, the future lies in using our brains. We can no longer compete by brawn; we have to compete by brain. We must invest in those brains if we are to remain competitive with other industrialised countries.

However, in putting emphasis on investment in education, the Liberal Democrats think not just in terms of being competitive. We on the Left still feel that education is a vital route to equality of opportunity, and that equality of opportunity is still a good objective. In new Labour-speak it is a question of overcoming poverty and social exclusion. We also feel that education is a vital route to self-fulfilment of the individual. Paddy Ashdown used a term which I did not like: empowerment of the individual. I much prefer the term self-fulfilment. One gets much more enjoyment out of life if one can read. Education opens many doors.

We have heard much about statistics. There is no doubt that somewhere in the region of 5 per cent of our GDP currently goes into education, broadly defined. GDP is currently about £1,000 billion. Therefore, 1 per cent of GDP is £10 billion, and 0.1 per cent is £1 billion. We are talking of annual figures. If we can raise the amount of money that is put into education from the current 5 per cent to somewhere in the region of the OECD average, which is currently about 5.8 per cent but by 2005 is more likely to be 6 per cent, we are looking at an annual injection of about £10 billion per year.

I make a plea to the Minister for better statistics on what is being spent on education. From the Budget Red Book one cannot find out that information because the figures are mixed up. We cannot get the figures from the Blue Book because we do not know whether what is stated is in terms of financial years or calendar years. May we have a good and consistent set of statistics on precisely how much is being spent in each sector of education? Noble Lords may know that in the financial year 2000–01, there was, indeed, an underspend of £1.5 billion on the education budget but we do not know where that £1.5 billion came from. Perhaps the Minister can tell us. That is a great deal of money. As the noble Baroness, Lady Carnegy, said, it is vital that we spend money on those whom the system has failed so often. It would be marvellous if we could use that £1.5 billion in that way.

The debate has concerned the question of whether we have the necessary resources in order for the Government to fulfil their targets. The targets that they set in their manifesto relate primarily to the secondary school and further education sectors. They concern improving the quality of education in secondary schools; increasing the participation rate after the school leaving age of 16; and—we have heard a great deal about this—achieving a 50 per cent participation rate in higher education, particularly among social classes 4 and 5.

One of the problems is that we cannot achieve that latter target unless we improve the former. There are not enough people in social classes 4 and 5 with the requisite qualifications coming forward to go to university. It is therefore absolutely vital that we improve the quality of teaching in secondary schools.

I return to a point that I have made time and time again. I do not understand why the Government are putting around £500 million into specialist schools, most of which serve middle-class areas and the middle-classes, rather than putting that money into the schools that need it the most. More than 30,000 children each year leave school with no qualifications. That occurs particularly in the inner cities, although I know that the Excellence in Cities initiative is helping a great deal. But other schools that are regarded sometimes as failing schools also need more money.

The average amount that is spent on secondary school pupils in this country is £2,600. In private schools it is £6,000. We should be spending £6,000 per pupil in those failing schools. It is those pupils who need this money, not often the middle-class children. I make that plea from my heart because I feel very strongly about it.

Perhaps I may also pick up the question of teacher recruitment raised by the noble Baroness, Lady Warnock. There are currently 5,000 teacher vacancies in secondary schools in England and Wales. Having on average, as we do, 30 pupils per class, that means that 150,000 pupils are currently without teachers.

I should also like to refer to the Roberts report on science and engineering. Are noble Lords aware that 60 per cent of those teaching physics at key stage 4 have no degree in physics; that 30 per cent do not even have an A-level in physics; and that 50 per cent of those teaching chemistry do not have a degree in that subject? That is a terrible indictment of our secondary schools system. The Roberts report makes it quite clear that more resources are needed.

I echo the words of the noble Lord, Lord Quirk. Are there not ways in which we could bring in mature people from other careers to help? For example, in my own area—Guildford—many people with draftsman skills were made redundant by British Aerospace. They could he brought in to teach some of the subjects. There is a crisis. We need to do something about it.

I was delighted that the noble Lord, Lord Dorrnand, mentioned further education. The 14 to 19 year-old sector is crucial. The big skill gaps are not in degree level qualifications but in level—3 qualifications—the A-level equivalent in vocational subjects. It is in this area that year after year we have failed. We must now succeed. I echo the words of the noble Lord, Lord Dormand. I think that our further education colleges do a great job and need to be encouraged. But they need more resources. We need to have a look at their teachers' salaries. Many jobs have been casualised. Often staff receive salaries which are little above the minimum wage.

Teachers in secondary schools who cover the same area—there is a good deal of overlap at A-level—are receiving more money. Their salaries are higher than those in further education colleges. There is currently a leaching of resources from further education colleges. One is paid more teaching in a primary school than one is in a further education college. There is a great need for more resources to go into those colleges. These vocational qualifications are vital to us. Very shortly I shall stimulate a debate on the shortage of plumbers. Unless we train these people, noble Lords may ponder on the issue of who will do one's plumbing in future. Currently, we have fewer than 6,000 people training to level 3, which is the A-level equivalent in plumbing. There is an enormous problem.

I was going to talk more about the university sector, but we have heard a good deal about that. I have been a university teacher. I declare an interest in that I think I am still a member of the Association of University Teachers. The work is terribly paid. Again, we are paying our schoolteachers more than we offer young people, of whom we demand a doctorate, to work in our universities.

As a woman, the universities have totally failed to implement the Bett report. I know what the Minister will say. She will turn around to all of us with an interest in universities—I know because I have asked so many Questions in this House—and say to us, "It is nothing to do with me, my Lords. Each university employs its own people. It is up to the universities to pay what they wish to pay". That is precisely what the Government say. They know perfectly well that the universities cannot pay this money unless the Government put more money into them.

Our university system is in danger of collapsing unless more money goes into it. We have an excellent science base. Again, that is in danger of collapsing unless we put more money into it. All your Lordships' pleas are utterly right: let us have more investment in education.

6.16 p.m.

Baroness Blatch

My Lords, I, too, congratulate the noble Lord, Lord Dearing, on initiating this debate. The noble Lord, as we all know, brings to this House many years of public and private sector experience and in particular is renowned for the Dearing report on higher education and his close involvement with national curriculum issues. The noble Lord has focused today on the need for high-quality skills education. He has posed the question: are the resources sufficient to support teachers and students in order to meet the Government's policies for education and skills? The noble Lord visited the past and the present. He took a look forward to the future with energy and his usual passion for the subject. We thank him for that.

I want to touch on a number of reforms which have made a contribution to raising standards. The introduction of the national curriculum, even with some early teething problems, brought to an end the ability of schools to allow children to leave school without having studied—for example—a science, a language, history or geography, and, all too frequently, without any meaningful qualification.

The introduction of systematic assessment and testing and the setting up of Ofsted under its first chief inspector, the noble Lord, Lord Sutherland, made it possible for Ministers, teachers, parents, students and for the wider community to know just what was being achieved by children in our schools. Also, more information was provided about the performance and the management of schools.

The Government have added to that by introducing the inspection of the performance of local authorities. We welcome that. The problems resulting from the bureaucracy that accompanied the introduction of the national curriculum and the need for greater flexibility, particularly at key stage 4, was addressed by my noble friend Lord MacGregor as Secretary of State for Education and further refinements were carried out by his successors.

Additional choices for the 14–16 year age group were introduced through the development of national vocational qualifications and general national vocational qualifications which incorporated a more applied and vocational approach to learning.

City technology colleges were introduced by my noble friend Lord Baker of Dorking. These paved the way for the introduction of specialist schools with an emphasis on subjects such as science and technology, the arts and music, languages and sport.

The devolution of management to schools through the grant-maintained school system and greater financial autonomy for all schools resulted in better decisions being taken at the school level, consistent with school-based priorities.

There was also a revolution in the rights of parents and the public to receive information. As a percentage of GDP, as stated throughout the debate, funding for education during the five years up to 1997 exceeded that of the five years since 1997.

The number of students entering higher education was increased from one in eight to one in three. Students from poorer families received up to 50 per cent of their maintenance costs through government grant and did not have to pay tuition fees. The Government, since coming to office, have retained and even built upon many of those reforms. Unfortunately, self-management of schools was reversed. That has led to a high degree of central control which will increase yet further if the current Education Bill going through this House is passed in its present form.

The question posed by this debate must be considered against the background of concern on the part of teachers, parents and governors. The issue of teacher shortages remains serious. There are fewer applications to fill each school vacancy—especially, as has been said, in key subjects such as maths, science and languages. An unacceptable number of temporary supply teachers is employed in our schools and too many teachers are now teaching subjects for which they were not trained. All of that will impact on the quality of education.

On Radio 4 today, the concerns of the headmaster of a highly successful comprehensive school in Fareham that had lost 38 teachers during the year, 15 of whom—all of them young teachers—had left teaching completely, were dismissed as atypical and unnecessary whinging by a Labour Member of Parliament, Mr Barry Sheerman. His reaction was breathtaking in its complacency. There is also real concern about the increasing level of indiscipline in the classroom, against which teachers have few sanctions and little defence. Truancy rates are unacceptably high.

Head teachers and governors are concerned about core funding for their schools. That concern is shared by the Association of Colleges, representing further education colleges, which, like the school sector, argues for a greater proportion of funding currently held back and controlled by central government to be allocated direct to schools and colleges. There is an irony when the Secretary of State accuses local authorities of not passing funding to schools. The Government are more culpable of that charge and would do well to heed their own advice.

It is a widely held view within schools and further and higher education institutions that the level and cost of bureaucracy is far too high. The bidding process for the increasing number of government-controlled initiatives is time-consuming, wasteful and costly.

Nick Seaton, of the Campaign for Real Education, has done excellent work on a soon-to-be-published pamphlet exposing the way in which the system allows government at national and local level to eat away at core funding. Perhaps the Minister can tell the House—if not today, by letter—exactly how many centrally funded initiatives have been announced and at what cost in each year since 1997.

As has been said, the proposed flexibility, allowing for a better match of aptitude and ability with additional high-quality vocational options, planned for 16 to 19 year-olds, is to be welcomed. However, the proposals raise expectations. I know that it is stating the obvious to remind the Government that schools and colleges will require additional support if they are to deliver effectively. Greater vocational options will require high-quality syllabuses to be with teachers in good time. More training and more up-to-date equipment and materials will also have to be provided.

On an administrative but important point, the logistics of transporting secondary school pupils, especially those in rural areas, who may be time-tabled for classes partly in school and partly in the workplace and/or in a further education college, will be complex and expensive. Who will be responsible for the arrangements and must the costs be met from schools' budgets?

The introduction of individual learning accounts, which was designed to improve technology training, turned out to be a costly disaster. It failed miserably because the Government's scheme was flawed from the outset. We know that genuine learning providers have been badly let down—not to mention the lost opportunities for potential students. What has been the cost of learning providers' losses? How much money has been lost due to fraudulent activity under the ILA scheme and when will the replacement scheme be announced?

Turning only briefly—due to time constraints—to higher education, I agree with the noble Lords, Lord Moser, Lord Sutherland and Lord Layard, about university salaries. Unless that issue is addressed, the quality of higher education staff will be affected, especially at the doctorate level. I must declare a vested interest as the mother of a doctorate researcher in a scientific field. It is only family embarrassment that prevents my telling the House precisely what he is paid.

The Government's target of 50 per cent of young people entering university has been seriously queried. Recent attempts by the Minister for Lifelong Learning and Higher Education in another place to suggest a system of social engineering to force universities to meet government targets are frankly risible. If the Government are serious about more young people from poorer backgrounds having access to university, improving their educational qualifications at school to equip them for entry is the answer.

It was the Government themselves who disadvantaged students from low-income backgrounds. Having given categoric assurances during the 1997 election campaign that they had no plans to introduce tuition fees or to abolish maintenance grants, within days of coming into office they turned down the excellent proposals of the noble Lord, Lord Dearing, abolished maintenance grants completely and introduced tuition fees. We now await new proposals with baited breath.

To punish universities that refuse to compromise standards to indulge in social engineering is wrong. More than that, it is patronising to the very young people whom the Government purport to help.

The final sting in the tail for education is the imposition of a 1 per cent national insurance levy on employers as well as on individuals in work. Local authorities will have to find a further £300 million, the bulk of which will have to be paid for out of the cash grants to schools announced in the Chancellor's Budget.

Education is a liberator. Its purpose is to pass on knowledge and to deepen the intellect as well as to develop applied skills. I do not doubt for a minute the Government's intention to raise standards and to raise the aspirations of those in education. Those are honourable aims concerning the quality of education for all. However, to make them a reality, much of the wise counsel that has emanated from this debate should he inwardly digested.

The Government—in particular, the Secretary of State for Education and Skills—should let go the reins by reducing central government control and freeing up professionals to teach. They should cut red tape and bureaucracy; they should resist the temptation to announce initiatives by the week; they should consider a radical reduction in the size of the department; and they should pass on the resultant savings directly to schools and colleges.

That would be welcomed by teachers, governors and parents alike, and it would go a long way to achieving the aims underlying the question posed by the noble Lord, Lord Dearing, at the beginning of this excellent debate.

6.27 p.m.

The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland)

My Lords, I thank the noble Lord, Lord Dearing, for initiating this debate. Indeed, I am always thanking him; he so eloquently makes the case for investment in education. I am also grateful to all other noble Lords for their contribution to what has been a stimulating debate, especially the reminiscence of "The Goon Show" from the noble Lord, Lord Sutherland of Houndwood. Of course, I heard the programme only in repeats, not in the original broadcast.

I agree with much that noble Lords have said, and apologise that speed must be my guardian; I shall answer as quickly as I can. I agreed with much of what the noble Baroness, Lady Blatch, said and pay tribute to her for the role that she has played in developments in education.

I begin by re-affirming the Government's commitment to the education and skills of this country. That remains a top priority. To quote the noble Lord, Lord Dearing, we believe in "bold decisions". We know that to be a successful country competing in the global marketplace we need a better educated and more highly skilled workforce. Demand for skilled workers is growing and estimates show that by 2004 we will need about another 150,000 information and communications technology workers alone. By 2010, about 55 per cent of new additional jobs will require a degree. As the noble Lord, Lord Dearing, and my noble friend Lord Puttnam said, we must succeed by competing successfully with the new or existing economic tigers—and do so by raising our game.

There are also wider issues. In society as a whole, education helps to reduce crime rates, improve health, lower infant mortality and increase social tolerance. As the noble Baroness, Lady Sharp, said, it is also about self-fulfilment.

The past five years have witnessed improvements in education. Our commitment was to raise standards and lay the foundation for a world-class education system. We have begun to succeed.

Like the noble Lord, Lord Dearing, I am aware of many international comparisons and I am wary of trying to compare unlike systems. We have heard many statistics and figures today. The noble Lord, Lord Dearing, quoted the noble Baroness, Lady Sharp, who was of course accurate, but her figures include both public and private expenditure. Noble Lords will know that in Germany and the United States, in particular, private expenditure is especially high. That expenditure was on institutions and excluded expenditure on student support. Spending as a proportion of GDP is 4.9 per cent for the UK, 5.1 per cent for the United States, 6 per cent for France and 4.6 per cent for Germany.

In the past three years, education spending in the UK has risen faster than in France or Germany. As noble Lords have said, the proportion of GDP is set to rise to 5.3 per cent in 2003–04. Most importantly, we must have a reality check: what do those figures mean for pupil funding in schools? They mean that pupil funding has risen by £670 per pupil in real terms.

The noble Baroness, Lady Blatch, asked about centrally funded initiatives. We have set targets for LEA resources. Some 87 per cent of the resources should be delegated to individual schools. I will write to the noble Baroness with the details. The noble Baroness, Lady Sharp of Guildford, asked for the figures for the consistent spend in the department. The annual report is due to be published on 16th May and will have all the detailed figures in it. If she can wait that long, I commend it to her.

There are three basic principles behind the underspend in the department. First, there is slippage, which, last year, included the implementing of the teachers' threshold. There is also reorganisation, under which responsibilities have been moved between departments, and initiatives that have been ring-fenced but have not yet been able to spend their resources. The noble Baroness, Lady Sharp of Guildford, and other noble Lords will be aware that Sure Start is one of the initiatives in that category.

Capital funding has more than quadrupled since 1997. It is up to £3 billion this year. We aim to ensure that school buildings are fit for the teaching and learning needs of the 21st century. We want to make sure that they have the most positive impact on pupil and community achievement. We are making £6.5 billion available over the next two years, including £1.7 billion of PFI credits. In the Budget, the Chancellor announced £85 million additional capital funding. I say to my noble friend Lord Dormand of Easington that FE colleges will receive an equal proportion of that amount.

The noble Lord, Lord Dearing, talked about the plight of the 20 per cent of children whom society fails at school. We know that getting a good education is the key to breaking free from the cycle of deprivation. We must equip everyone with the education, skills, support and equality of opportunity that they need to succeed and avoid the risk of exclusion. In doing so, we will create the social and educational inclusion that the right reverend Prelate the Bishop of Portsmouth spoke about. He said that his experience in the Isle of Wight demonstrated the importance of support for children with special educational needs. I agree wholeheartedly with him.

The noble Earl, Lord Listowel, spoke eloquently—as he has, importantly, often done in your Lordships' House—about the plight of looked-after children. He made some really important points. We have designated teachers for such children. We believe that that will make a difference, and we recognise that the target for their educational achievement is low. It is a beginning, not an end. I work closely with the Minister of State at the Department of Health, Jacqui Smith, in a group that we have convened to look across government to see what more we can do to support such children.

The noble Lord, Lord Northbourne, talked about the crucial early years—from nought to three—in the development of children. He eloquently made the case for the involvement of parents and of government resources. Through programmes such as Sure Start—I thank my noble friend Lady Massey of Darwen for her support for the programme—we seek to improve the health, development and well-being of young children. We know that, by improving the social and emotional development of our disadvantaged young children, as well as their ability to learn, we will give them the best possible start in life. That is the kind of joined-up thinking referred to by the noble Baroness, Lady Walmsley.

The National Childcare Strategy, currently being reviewed throughout government under my chairmanship, has created 484,000 new childcare places. It, too, is concerned with how we make sure that we join up our thinking, something referred to by the noble Baroness, Lady Walmsley, and the noble Baroness, Lady Howe of Idlicote. We want to ensure that, by 2004, every lone parent who wants to go to work is offered a childcare place.

I am grateful to the noble Baroness, Lady Howe of Idlicote, for her support for our work in nursery education. There is funding for nursery education for every four year-old whose parents want it, and we are on track to provide funding for every three year-old whose parents want it by 2004. All those initiatives are geared to giving the under-fives the best possible start in life.

One of the most resounding and tangible achievements of the Government has been the improvement in standards and achievement in our primary schools. In 1997, almost half of 11 year-olds were leaving primary schools without the ability to read. The investment of £200 million a year in literacy and numeracy has paid off. Three out of four 11 year-olds are up to speed in English, and seven out of 10 achieve the required standards in maths. There is more to do. We have challenging targets for the future because we understand how important it is that every child reaches secondary school able to access the curriculum. To help children learn more effectively, we have invested to take 500,000 children out of overcrowded classes and put them into classes of 30 or fewer.

I can say to the noble Baroness, Lady Walmsley, that only 331 infant classes have 31 children or more. Of those, 249 exceeded the target for permitted reasons—for example, the children may have moved in-year. In small schools, for which administrative costs are proportionately high, we have invested £240 million for the next three years.

My noble friend Lady Gibson of Market Rasen talked about the teaching of modern foreign languages. We have debated that in your Lordships' House. I say categorically to her that we are developing a strategy to ensure that, within 10 years, it will be an entitlement for every primary school age child to learn a modern foreign language. I am happy to write to the noble Baroness or discuss the details with her at any time.

I also thank my noble friend Lady Massey of Darwen for her support for the National Healthy School Standards. She is right that it promotes a whole-school approach to health.

We want to build on the excellent work in primary schools to raise standards in our secondary sector. Our specialist schools will not be found only in middle-class areas but are part of a range of ways in which we hope to improve the sector. We are making the commitment that the noble Baroness, Lady Warnock, seeks.

We wish to see more 16 year-olds staying on at school, getting better GCSEs and going on to higher education. Although 50 per cent of pupils now achieve five good GCSEs, 50 per cent do not. The noble Baroness, Lady Carnegy of Lour, made some important points about the consequences of our failure to deal with that issue. The challenge is to raise participation and support the retention of young people in post-16 education.

Estimates have shown that, at key stage 3—the middle years, 11 to 14—two out of five pupils fail to make the expected progress in the year following their transition from primary school. The noble Baroness, Lady Carnegy of Lour, may find that that explains some of the figures that she gave for those two schools.

I hope that your Lordships will consider it fair if I say that, in the past, our pupils were sometimes expected to fit the education system, rather than the system being designed to fit their needs. We know that all children are different; they learn in different ways and at different paces. For our 14 to 19 year-olds, we want to introduce new pathways to learning and a revised curriculum. We want to give as much credibility to vocational as to academic routes and provide guidance and advice services. Those measures are all part of a package designed to transform that phase of learning.

I could not agree more with what the noble Lord, Lord Trefgarne, said. Industry needs diverse skills, and vocational GCSEs are an important part of that. The Connexions service has an important part to play in supporting pupils and helping them to understand industry. It is because we believe that it is an important area that we have put £25 million into education-business links, including the opportunity for work experience.

The noble Baroness, Lady Blatch, also referred to the issue of transport. I am in the process of writing to the noble Baroness on the subject, but I will say to her that we are considering pilot schemes to see how we can manage things effectively and ensure that we do not disadvantage young people, while recognising that there are costs involved.

My noble friend Lord Dormand of Easington and the noble Lord, Lord Dearing, and the noble Baroness, Lady Sharp of Guildford, raised the important issue of further education. We value what the further education sector has to offer and are providing substantial increases in further education funding. It is a key part of the 14 to 19 strategy. I agree that it should work in partnership with schools. I say to my noble friend that extra funding of £527 million is planned for further education for 2001–02. In real terms, that is an increase of 12 per cent, with a further increase of 3 per cent this year. The total allocation to the Learning and Skills Council for further education in 2002–03 is £4.3 billion. The noble Lord may, however, be right: not only has further education been underfunded, it has been undervalued.

My noble friend Lord Dormand of Easington also raised the issue of FE training. From 2001, all new entrants to FE must hold on appointment or acquire within a tight timescale an approved teaching qualification. All costs of training, including supply cover to enable new entrants to acquire a teaching qualification, are covered by the Standards Fund. Some £80 million is available to colleges this year from the Standards Fund to support continuing professional development for staff. That money will provide match funding and will double the impact of the colleges' investment in their staff.

The noble Lord, Lord Dearing, talked of the importance of the Cassels report. We are implementing the main recommendations made by that committee to ensure that all modern apprenticeships meet the highest standards. We have already announced an additional £180 million over the three financial years 2001 to 2004 to support and develop a new generation of modern apprenticeships. And we do indeed support the University for Industry.

The noble Lord, Lord Haskel, made some important comments about workforce education and training. We know that already employers make a substantial contribution to workforce development, but this expenditure is not uniformly distributed. The lowest skilled still tend to miss out and small firms are less likely to offer development opportunities.

There have been many successful initiatives. The Investors in People standard has been one example. In the Budget, my right honourable friend the Chancellor announced an additional £30 million to encourage take-up of this standard, especially in small businesses.

I agree with my noble friend Lord Haskel that the issue of partnership with business is crucial. A number of noble Lords, including the right reverend Prelate the Bishop of Portsmouth, spoke of the need for partnerships between different aspects of government, health, education and the voluntary sector to support our children. I refer to government, local education authorities, schools, HE, FE, adult learning and the excellent challenge of partnership between schools, FE and HE.

We also recognise that there is much to be done with our adults, 7 million of whom lack basic skills. It is a big challenge but the price of failure is bigger. Those adults represent, in a sense, our past failures; the 20 per cent to which the noble Lord, Lord Dearing, referred. As the noble Baroness, Lady Howe, said, some of the children we failed have arrived in our prison system.

The noble Lord, Lord Quirk, spoke of the prisoners' learning and skills unit based in the department. I take on board his points about Level 1 and Level 2 but we have been trying to establish a dramatic improvement in the quality and quantity of prison education and training. The partnership we have established will ensure that all prisoners have access to education and training in prison and that on release they have gained skills and qualifications as well as personal, social and life skills to hold down a job and resettle.

I take entirely the concerns raised by the noble Lord, Lord Dearing, and the noble Baronesses, Lady Massey and Lady Blatch, about recruitment and retention of teachers. I have said many times in your Lordships' House, and with support from your Lordships' House, that we owe an enormous debt to our teachers. Our education system will only ever be as good as those who work in it. I know that public sector pay has recently been discussed a great deal, but a good experienced teacher is now taking home a salary 30 per cent higher than in 1997 and all teachers have benefited from pay rises above the rate of inflation.

I have always acknowledged that we have teacher shortages and noble Lords will not be satisfied until we have filled the vacancies, especially the noble Baroness, Lady Warmsley, as regards maths and science and in other subjects such as languages and religious education. Golden hellos, training bursaries and the starter-home initiative are all part of the wide package of measures to increase the recruitment and retention of the workforce. They are beginning to work.

I say to the noble Baroness, Lady Walmsley, that in the Budget last week the Chancellor announced £87 million to help cut bad behaviour from the classroom. It is one of teachers' top concerns, a cause of low morale and for some leaving the profession.

We are also supporting teachers in other ways. We have recruited an additional 25,000 classroom assistants; we now have 94,000. We have given more than 100,000 teachers and heads access to laptops and provided funds to reduce bureaucracy—important points made by the noble Baronesses, Lady Blatch and Lady Howe. I know that we need to maintain that Momentum and to do all that we can to improve the lot of our teachers.

The good news is that national statistics published by my department today show that teacher numbers are up by 9,400 since January 2001, the biggest single-year increase in more than 20 years. There are also now nearly 500 fewer vacancies in London. The teacher vacancy rate in London is now down to 2.6 per cent from 3.5 per cent.

The noble Lord, Lord Quirk, spoke of teacher training. The number of people starting teacher training courses has risen by 5 per cent on last year's figures, which were up 8 per cent on the previous year. But as the noble Baroness, Lady Sharp, said, we need to offer more flexible routes to encourage mature applicants; those people looking for a change of career, classroom assistants, experienced teachers without QTS or those with family responsibilities—clear pathways. The Teacher Training Agency is charged with making teaching more representative of the wider community. For example, its corporate plan set the target of increasing the proportion of minority ethnic trainees from 7 to 9 per cent by 2005–06.

My noble friend Lady Gibson raised issues contained in the European Union sub-committee's report, Working in Europe: Access for all. I am advised that Eurostat is looking to improve that data to provide consistent data across the EU. Over and above that, I can reassure the noble Baroness that my officials are considering the issue and keeping an eye on its progress.

Higher education is a more mixed picture. I am grateful for the eloquence with which so many noble Lords spoke of that. Our target of 50 per cent of all under 30s to enter higher education is a challenging one, as the noble Baroness, Lady Warnock, indicated. It is one which clearly has complex funding implications; for instance, how to establish the right balance of contribution between state, student and family.

That is why last October we initiated a review of higher education finance. In thanking the noble Lords, Lord Moser, Lord Layard and Lord Sutherland of Houndwood, for their contributions, perhaps I may say that we have included research in the review. I recognise what the noble Baroness, Lady Warnock, said about the combination of training and research, although I will want to read with more care some of her other remarks on widening access.

While recognising that graduates can expect to earn considerably more than non-graduates, we particularly need to show that there are proper support mechanisms for students from poor or disadvantaged backgrounds so that they are not prevented from entering higher education. The good news is that we have a record number of students entering higher education—87,000 more in 2001 compared with 1996–97.

In answer to the noble Lord, Lord Dearing, we are investing in higher education. For the first time in a decade it has risen in real terms. We have provided £1.7 billion of publicly planned funding to universities and higher education colleges over the six years to 2003–04.

Noble Lords spoke of the research assessment exercise which took place. More than half—55 per cent—of research staff now work in departments which contain work of international excellence. I agree with the noble Lords, Lord Bragg, Lord Hannay, Lord Browne, Lord Northbourne and Lord Layard, on some of the issues raised.

The noble Lord, Lord Browne, spoke of the need for our commitment to support excellent research. The Government are doing so. The research funding system always rewards the best funding research wherever it is found. But there is a question of how we look at that in the future spending review.

I also want to point to the issue of academic salaries. In response to the question posed by my noble friend Lord Layard about academic salaries, I confirm that our spending plans—and I will not refer to the Bett report—include £50 million, rising to £110 million in 2002 and £170 million in 2003, to support increases in academic and non-academic pay. The noble Lord, Lord Layard, should answer the young person who asked him whether he should take a job in academia, "Yes".

I will conclude by saying that the issue of the independent learning account is important. There are no losses on rights or claims and arrangements are in place to pay all outstanding claims. The budget was £271.5 million. I hope that that information will be of use to the noble Baroness, Lady Blatch.

The Government's commitment to education is clear; we have achieved a lot and we are not afraid to admit that there is still much more to do. We have laid the foundations for the next stage of transformation. Again, I thank the noble Lord, Lord Dearing, for initiating the debate. I conclude with a misquote of a quotation: "Let it be said that society's failures in education are that the past was another country. They did things differently there".

6.48 p.m.

Lord Dearing

My Lords, I thank all noble Lords who have contributed to the debate. My 1,000 trillion synapses are amazed at the erudition and the passion that has been shown. I agree so much with the noble Baroness, Lady Sharp, that our concern is not merely economic. It is about developing a human being.

On this occasion, we had in mind the triennial funding review. I am conscious that the Chancellor in reading the debate—and of course he will—might be thinking that we are pitching for more money for education. We are pitching for the wealth of the nation. We are seeking very clear economic objectives.

When I refer to the nation, I want to pick up on the social point; that of one nation. Not only must we invest in those who succeed, but in those whom we have failed. Otherwise they cannot become part of one nation. So this debate has shown as much concern for those who lose out as for those who can become doctoral students. In conclusion, I very much agree with the point that was developed by my noble friend Lord Browne of Madingley, that the wealth of a nation also needs research-rich and powerful universities. We may be reputation-rich, but a reputation will fade unless it is sustained by reality.

I shall now say my final sentence, for I know not what would happen if I did not do so. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.