The Government has launched a series of reviews to decide what a future "world-class higher education system should look like" and to inform the debate on lifting the £3,000 cap on students' tuition fees.
In an address delivered last week at the Wellcome Trust, John Denham, the Universities Secretary, said that the outcome of the seven reviews - on widening participation, the student experience, international competitiveness among others - would be used to produce a 10 to 15-year plan for the sector.
The plan would be a "reference point for future policy decisions, including decisions about funding", he said. It would help to ensure that the UK maintained its global competitiveness. "Excellence today is no guarantee of excellence in 10 to 15 years' time," Mr Denham cautioned.
While praising the sector's achievements, he outlined the challenges it faced over the next decade.
Institutions' relationship with business came in for criticism. "Just 2 per cent of businesses said they rate universities as an important source of information about innovation. Both institutions and the country are paying a heavy price for this lack of engagement," he said. While employers spent £5 billion per year on higher level training, the higher education sector secured only £335 million of this money, he said.
The Government is to begin a consultation on the need to increase higher level skills by engaging employers in designing and funding degree courses. This will consider whether there are "sufficient financial incentives for universities and businesses to engage".
Mr Denham outlined five key objectives for the sector: research leadership; better business links; greater international collaboration; "unlocking home-grown talent"; and maximising universities' regional and cultural roles.
Universities should "play to their strengths" and funding should offer the "right support to different institutions as they pursue a variety of strategies for growth".
While the reviews were generally welcomed by students, lecturers and vice-chancellors in attendance at the address, some warned that they must not simply be a preface to raising tuition fees, set for review in 2009.
Stuart Bartholomew, principal of the Arts Institute at Bournemouth, said: "It would be disappointing if the review is merely the means to allow certain institutions to increase fees and release them from their responsibilities in relation to broadening participation. We recognise that a more open market approach is inevitable, but this still requires careful handling and a sense of responsibility."
Several audience members at the address had been expecting Mr Denham to criticise the sector and to announce funding cuts.
Rick Trainor, president of Universities UK, said: "I am increasingly struck by the extent to which the dynamism of universities depends on adequate funding and an ability to compete. I was half fearing that there would be a lot to worry and concern me on this fundamental theme."
UUK was in sympathy with the Government's approach, he added.
THE SEVEN CHALLENGES TO BE EXAMINED
The future size and shape of UK higher education will be examined as part of a major research project by Universities UK.
A report on the first phase of the initiative is due this month. It will look at projected demographic and economic changes over the next 20 years and their impact on the sector.
John Denham, the Universities Secretary, said: "Between 2010 and 2020, the number of 18-year-olds in the UK will fall by more than 100,000, or more than 15 per cent.
"Not only will there be more older students, there will also be more people studying part time and, hopefully, more people from overseas ... and I certainly expect there to be more students from non-traditional backgrounds."
The overall findings of the UUK research will be published this summer.
New success criteria
The Higher Education Funding Council for England has been asked to investigate new ways of measuring the success of different higher education institutions.
Hefce will look at ways of evaluating excellence in teaching, business engagement, support for communities, widening participation and international collaboration.
Mr Denham said: "The challenge is to fully exploit the value of diversity in the system. I want universities to play to their strengths because I believe that all organisations do best when they focus on what they are good at."
He has asked the funding council to investigate how to measure the elements of a successful higher education sector in a way that reflects the individual missions of different institutions.
The chief executive of the Higher Education Academy will analyse how universities and academics are responding to changing student expectations of their educational experience.
Paul Ramsden has been asked to examine institutions in the UK and abroad to identify the main challenges involved in maintaining and improving the quality of the student experience and to determine how they might be met.
Professor Ramsden said: "The evolving student experience must be central to the way universities and colleges, the Government and funders, plan for the next 10 to 15 years in UK higher education. This work will ... bring together a comprehensive view of the challenges ahead."
He will begin work after Easter with the aim of getting recommendations to Mr Denham this summer.
The methods by which universities exploit intellectual property developed by their academics will be reviewed by Paul Wellings, the vice-chancellor of Lancaster University.
Mr Denham said the debate would focus on the balance between the benefit to universities and to the "greater good".
He said: "As Secretary of State for Higher Education, I want institutions to reap the fruits of their own labour. But as Secretary of State for Innovation, I want to see financial benefits flow through the economy and the wider diffusion of knowledge across the country."
Professor Wellings will work with Baroness Morgan, the Intellectual Property Minister, on the review, which will analyse the relationship between investment, economic benefit and output in terms of papers, patents and products. It will also consider the roles of local and international business in translating research into products and services.
Rewarding policy advice
The relationships between academics and policymakers will be the focus of a review by the Council for Science and Technology, the Government's advisory body on science and technology policy.
The review will be led by Janet Finch, co-chair of the council and vice-chancellor of Keele University. It is expected to look at how academics who provide policy advice to the Government can be rewarded in the system to replace the research assessment exercise.
"This Government spends £6 billion a year on research, yet ministers and officials sometimes find it hard to access academic knowledge tailored to the practical needs of public policy," Mr Denham said. "In addition to commenting on the RAE ... (the review will) take a broad (look) at the relationship (between) academia and policymakers."
The review of the international challenges facing UK higher education will be led by Drummond Bone, vice-chancellor of the University of Liverpool.
Mr Denham said that teaching, research and business engagement all had international dimensions, adding that they were "setting the context for most of our domestic challenges".
He highlighted the rate of higher education growth in China and countries in the Middle East, and he warned that UK recruitment of foreign students was being outstripped by some rival countries.
He predicted a "marked" change in the international higher education sector in coming years.
Work on widening participation - and on building links between universities and schools in particular - is being led by Steve Smith, vice-chancellor of the University of Exeter, and his colleagues on the National Council for Educational Excellence.
The NCEE, which held its first meeting in July last year, includes Alison Richard, vice-chancellor of the University of Cambridge, and Richard Lambert, director-general of the Confederation of British Industry. The council is chaired by the Prime Minister and Ed Balls, the Schools Secretary.
Professor Smith said the NCEE had surveyed the existing links between universities and schools and would use the results to create a document highlighting best practice.
This would lead to a Universities UK statement and a Sutton Trust report on the steps needed to improve widening participation and recommendations to universities and colleges to build closer links with schools.
An interim report is due at the end of April, and the final report in July.