Review can lead to stable funding

Tories promise fairer deal for part-timers, better careers advice and more information to guide student choice

By David Willetts

It is no secret that whoever wins the next election, public spending is going to have to be cut. Ed Balls has pledged that education spending will rise “this year, next year, the year after”, but even his own colleagues admit that cannot be true given the scale of the debt crisis we face.

The truth is that the axe is already falling - just before Christmas, Lord Mandelson told the Higher Education Funding Council for England (HEFCE) that its budget is being cut by £398m this year, and will fall by as much as 12.5 per cent over the next three years. As Mandelson himself has said: “There is … a huge need for … new priorities. That means that spending in some areas will be reduced”.

So despite the spin, cuts to higher education are already a grim reality. But how should the sector respond? What can universities do, and what should the Government do, to help relieve the pressure? And how can we ensure that Britain's universities remain world class in an era of collective belt-tightening?

Firstly, we must get universities on a more stable financial footing. The review of university funding currently being lead by Lord Browne is the right place to start. It is clear that the current system needs to be improved, and that issues like social mobility need to be addressed, but it is also clear that the right way to do this is not for politicians to start plucking figures from thin air in an effort to win favourable headlines. A comprehensive review of the whole funding system, conducted by an expert, bi-partisan panel, with input from students, universities and businesses, is the right way to tackle these questions. The Conservatives led the way in calling for the review to be established and we await its results with keen interest.

Second, even before the Browne review is completed we need to start encouraging much innovative approaches to financing higher education. At our party conference in October, I announced plans to fund an extra 10,000 university places in 2010 by introducing an early repayment bonus on student loans, giving graduates a discount on outstanding debt in return for repaying ahead of schedule. By recycling money through the system faster, we can increase funding at the frontline and cut graduate debt without increasing the burden on the taxpayer. The rapid implementation of policies like this is exactly what's needed.

Third, we need to think carefully about how we can encourage people to study in more cost-effective ways. Part-time study, for example, is an obvious way for students to carry on earning while learning, keeping costs down and providing alternative routes into education. Part-time students now make up one third of all undergraduates, but under the current system a staggering 90 per cent of them receive no financial support at all from the Government. Almost 70 per cent receive no help from their employer either. Giving a fairer deal to part-time students could raise our skills base and improve social mobility while actually saving the Government money.

Fourth, we need much better information for prospective students to inform their choices. This may seem tangential to the funding question, but it is not – while the average premium associated with a university education is around £160,000, many fall well short of this. Graduate unemployment is worryingly high, and graduates often feel their studies have not translated into a stable career path. We support the Robbins principle that everyone who has the necessary ability and who wishes to do so should be able to attend university. But in an era when everyone has to deliver more for less, we need to ensure that money is not being wasted on putting people through courses that do not match their ambitions or their ability. That is why my party is currently working with Microsoft to pilot a website providing prospective students with much more detailed information about the options available to them, the true costs of going to university, and what they might expect to earn after graduating.

We also want to see much better careers advice in schools and a stronger focus on vocational training which translates into successful careers. While it has sometimes been fashionable in recent years to bemoan the rise of ‘Mickey Mouse’ degree courses, courses like computer game design or brewing or golf course management often provide excellent vocational training leading to a highly specialised careers. While ‘traditional’ academic subjects must never be neglected, we must also work with employers and trade bodies to design courses which will deliver workers with the skills they actually need. By ensuring that individuals are better matched with their courses, and their courses are better matched with businesses’ needs, we can help reduce graduate unemployment and make the whole economy more sustainable in the long run.

25 January 2010

David Willetts. Shadow Universities Secretary,