Funds may be siphoned away from courses from which graduates fail to obtain good jobs and redistributed to those geared more towards business needs, under plans outlined in a long-term strategy for the future of higher education.
In the long-delayed framework for higher education, Higher Ambitions: The Future of Universities in a Knowledge Economy, the Government outlines a raft of proposals to align university activity with the needs of the economy.
The document, published on 3 November, says that funds will be diverted "away from institutions whose courses fail to meet high standards of quality or outcome".
Speaking before he unveiled the ten- to 15-year strategy, Lord Mandelson, the First Secretary, said it was "reasonable for the Government to use public funds to incentivise the outcomes they think are important for young people but also for businesses". He added that one outcome of importance to students was previous graduates' success in "moving on to good occupations".
The framework says all universities will be expected to explain how they improve graduates' career opportunities and to educate students in workplace skills.
Institutions will receive cash incentives to train students in STEM subjects (science, technology, engineering and maths) and will also be encouraged to provide courses that meet the needs of key sectors of the economy, identified in the Government's New Industry, New Jobs paper in April.
Other areas of skills shortages are to be identified by a committee of universities, employers, the Higher Education Funding Council for England and the UK Commission for Employment and Skills.
The report adds that there will be "a greater element of competition for funding, with the winners being those who can best respond to these evolving economic challenges".
The framework is explicit about the financial constraints that universities will be under, and says that they should be more focused in their activities and stop working in areas in which they do not excel.
"Very few English universities will be able to achieve excellence across the full range of university activity," the framework says, noting that withdrawal from less productive activities may involve "painful and locally controversial decisions".
Competing for funds
The Government commits itself to the current block grant system of university funding but says it wants universities to compete for more funds than they do at present and to consider alternative funding models.
The framework refers to the Government's matched funding scheme, under which institutions bid for state cash to match donations in one of three tiers, each with different caps on the sums available. Universities decide which tier to enter based on how much they think they will be able to raise.
"We will ask Hefce to lead a debate with institutions about such alternative funding options," the document says.
At a time of belt-tightening, the framework says that the universities most likely to succeed will be those with "strong leadership that has the confidence to challenge vested interests". It goes on to order managers to control costs, including the wage bill, to be flexible in pay arrangements and to "promote career paths that span business and academe".
It also acknowledges Hefce's role in monitoring the financial health of universities and "offering support where necessary".
It adds that the likelihood is that the number of universities will decrease rather than increase and says "there may be a case for public investment to support mergers".
In addition, the framework sees a greater role for private providers with degree-awarding powers, and says the role that businesspeople play "as members of university boards of governors, advisory councils and in influencing course provision" should also grow.
Lord Mandelson said he wanted businesses to be more involved in designing university courses as well as funding them. He said: "Universities are not islands ... They have to respond to the needs of the society and the economy."
HIGHER AMBITIONS, WIDER TARGETS
Alongside plans to harness higher education for the country's economic prosperity, the framework sets out proposals affecting research, teaching, widening access and internationalisation. Times Higher Education staff report
The Government calls for a "strengthened" Quality Assurance Agency, and claims that the sector "can appear complacent" about concerns over standards.
Following recent allegations about "dumbing down", it says the QAA will have "a more proactive role in ensuring that complaints about standards are properly investigated, and either upheld and enforced or demonstrated to be unjustified".
"A poor-quality service to students by any institution should not be tolerated," it says.
Universities too often provide insufficient information to potential students about courses, the framework says. It sets out "tough new expectations" of universities to increase the transparency of the services they offer students, and says they must publish more consumer-style information about courses.
A standard set of information will include details about what students on individual courses have done after graduation, the amount of contact students can expect with academic staff, how and what students will learn, what that knowledge will qualify them to do, whether they will have access to external expertise or experience, the amount of independent learning required, what facilities they will have access to, and any opportunities for international experience.
"Well-informed student choice will be the most powerful force for change over the next decade," it says.
The introduction of top-up fees "has rightly sharpened attitudes to the value for money higher education represents as a personal investment", it adds.
The Government also says that the use of technology in teaching is too often left to individual pioneers, and calls for greater leadership in this area. It also supports plans to strengthen the external examiner system.
Research should become "more, not less" concentrated across the sector, "especially in high-cost scientific disciplines", the Government says.
"Not every institution should feel that maximising its success in the research assessment exercise/research excellence framework is central to its mission."
However, it stops short of formally designating "research" and "non- research" institutions or shifting from the principle that excellence is the "defining basis" for allocating research funding.
It proposes greater collaboration as the way forward for the "pockets of research excellence" identified across a wide number of institutions following RAE 2008, which saw a dilution in the concentration of research.
The strategy's overarching theme on research is around creating incentives to encourage institutions to deliver research impact, though not at the expense of blue-skies work.
There is also a focus on broadening links with businesses and research users.
"Those institutions that can demonstrate a track record of delivering impact from their research will be rewarded," it says.
Support is also offered for the idea of institutions publishing annual statements on how their research benefits the wider world.
The Government commits itself to maintaining the so-called "dual support system" of research funding to universities and to keeping the Research Capital Investment Fund for research infrastructure.
On intellectual property rights, it encourages universities to avoid deals that may maximise their income but prevent "potentially mutually beneficial" collaborative relationships with business.
The Government claims in the framework that its 50 per cent target for university participation was "never meant" to refer to school-leavers.
While insisting that it remains committed to the goal, it says this "has never meant that 50 per cent of the population should enter higher education directly from school to study on a conventional three-year degree programme".
Instead, it aims to increase the number of adults at university, as recommended in the 2006 Leitch review of skills, encouraging alternative and flexible modes of study such as work-based learning, part-time study, foundation degrees, studying from home and courses co-funded by employers. The distinction between part-time and full-time study should become "increasingly irrelevant".
The framework says that the strong correlation between university participation and parental wealth is a key concern, and urges all universities to consider using contextual data in the admissions process.
While universities have "shown creativity and enterprise" in addressing the question of wider and fairer access, it admits that "progress has fallen below the Government's ambition, and is highly uneven across the higher education sector, especially at our most selective institutions".
Sir Martin Harris, director of the Office for Fair Access, has been asked to consult vice-chancellors and advise the Government by the spring on what further action could be taken on this, including whether money spent on bursaries and access could be more effectively targeted.
Internationalisation and e-learning
Universities are to compete for funding to initiate partnerships with the private sector to provide online education abroad. The announcement follows the Government's appointment of a task force to help UK institutions become world leaders in e-learning.
Identifying a "unique opportunity", the framework says "the potential to develop international education through partnerships with broadcasters and internet service providers is considerable".
Universities are also told to encourage their students to learn foreign languages and to study abroad, alongside other elements of their international strategies.
One option raised is for universities to provide language modules in a wider range of courses, and the framework says institutions "should instil a sense of internationalism in students by teaching European and global perspectives".