The higher education funding system is set to be reformed to ensure that universities make a greater contribution to the UK’s economic needs, it was announced today.
David Lammy, the Higher Education Minister, told the Universities UK Annual Members’ Conference in Edinburgh: “We are working with the Higher Education Funding Council for England to look at how we can develop the funding model to help the sector further increase its economic contribution.
“That may mean making a larger proportion of funding contestable. But that raises important and complex questions, and our thinking on it is still developing.”
He told the audience of vice-chancellors that the Higher Education Framework for the sector’s future, due to be published this autumn, will “ask you to move further and faster down the path you’re already on towards greater emphasis on economic outcomes”.
He also stressed that the research excellence framework, the forthcoming system for judging research quality and allocating billions of pounds in quality-related research funding, will strongly emphasise economic impact.
“Since these impacts are things that happen outside the academic realm, the [REF] consultation will propose that the panels assessing impact will include a large proportion of the end-users of research – businesses, public services, policymakers and so on – rather than just academics commenting on each other’s work,” he said.
“I want the REF to send a strong signal and give a strong financial incentive for departments to not only do excellent research, but also find ways of helping turn that into impacts that benefit the economy and society as a whole.”
On the future funding of the sector, Mr Lammy said it is “no secret that current levels of public investment are unlikely to be sustainable in future”, and urged universities to attract more private cash.
“[UUK president] Steve Smith spoke earlier about the proportion of gross domestic product that this country spends on higher education being half that spent by the US, and he’s right.
“But spending relative to GDP isn’t just about the Government. Private investment in universities has not kept pace with the huge increases in public spending that the last decade has brought. Any sensible analysis can conclude only that you need to find new ways to leverage more private money into the system.”
On quality, Mr Lammy was scathing about the recent report from the Innovation, Universities, Science and Skills Committee, headed by Phil Willis, Liberal Democrat MP for Harrogate and Knaresborough, which criticised degree standards.
“Personally, I regard Phil Willis’ comments – intentionally made on a Saturday morning to get maximum media coverage – as a piece of political grandstanding rather than a serious contribution to the debate. And I think the facts contradict him at every point.”
But he added that “there does remain a real challenge for you on quality in a consumer-driven 21st century. Even if you aren’t complacent about quality, you sometimes appear to be. I think you have to recognise that and deal with it. This is indeed another area in which you have to get better at telling your story.”
Meanwhile, Steve Smith, president of UUK, said in his speech to the conference that higher education institutions now contribute £55 billion to the UK economy, and have become “essential, not optional, for future social and economic success”.
“We now calculate that our universities generate about 2.3 per cent of UK GDP, and employ 1 per cent of the UK workforce,” he said. “No government, or incoming government, in any part of the UK can achieve its core goals without a thriving, strong university sector.”