Ahead of response to Leitch Review, minister sees 'best financial environment in a generation' for higher education.
"Huge opportunities" for dramatic expansion in higher education will come from work-based degrees, not the traditional model "of 18 to 21-year-olds going to leafy campuses", the Higher Education Minister said this week.
In his first in-depth interview since the arrival of Gordon Brown at 10 Downing Street and his formation of the Department for Innovation, Universities and Skills (DIUS), Bill Rammell set out a clear agenda for universities as the key drivers of the UK's economic prosperity.
The Leitch Review of the UK's skills needs, which was published late last year, said that more than four in ten adults should be educated to degree level by 2020, compared to today's levels of less than three in ten - putting 5.5 million more graduates into the workplace.
Speaking ahead of the Government's official response to the Leitch Review, Mr Rammell said the review's objectives were "compelling" and will be "extremely" important to DIUS.
"If we don't get many more people at all levels to higher levels of skills and qualifications, then we are fundamentally going to lose out in terms of economic competitiveness. To face up to that, you need a cultural change, you need the Government to be committing, you need individuals and employers to be contributing."
Higher education has a "fundamentally important" role to play in helping the UK develop the research, skills, training and qualifications it needs to succeed. "I don't think that's a threat to universities; I do think that it is a huge opportunity," he said.
Mr Rammell said that higher education institutions would be competing for a share of a £5 billion pot of professional development funding.
Financial contributions from employers towards the cost of higher education qualifications will be central to the success of this vision, he said.
"To face up to the skills challenge, we need both individuals and employers to contribute towards the cost of their education," Mr Rammell said.
"Do I have cast-iron evidence today that every employer is going to sign up to co-financing? No, I don't. Do I know that we have to go down this path? Yes, I do, if we're to square the circle financially of increased government funding, increased individual contributions and increased contributions from employers."
He added: "When we launch the Leitch implementation plan in a couple of weeks, part of what we will do is go to employers - persuading, communicating, pressuring that they need to sign up."
Listen to employers
When asked to define the "economically valuable" skills called for by the Leitch Review, Mr Rammell said that it was about clear channels of communication between employers and universities.
"I think that places a responsibility on universities to listen to the voice of employers. And, in my experience, the vast majority do want to listen."
He also wants coherence from employers when it comes to explaining their needs.
"I think we have a lot of work to do to make sure that there is a sound case being put forward by employers and it's not this issue this week and that issue the following week."
Mr Rammell insisted that there was a continuing place for pure research and pure academic activity, responding to concerns that too great a focus on economically valuable skills could harm academic excellence.
"But I don't meet a vice-chancellor who doesn't accept the need for higher education to be integrated within the economy, and I think the vast majority of academics as well accept that we live within a fiercely competitive global market economy," he said.
Foundation degrees, designed in partnership with employers, will have "a huge role to play", Mr Rammell said. He added that he is "very keen" on two-year compressed honours degrees.
Asked whether the Government will increase funding for part-time students, who currently are not entitled to same financial support as full-time undergraduates, Mr Rammell made no promises, describing this as a "complex picture" given the number of part-time students who are currently funded by their employers.
Aside from the Leitch agenda, the Higher Education Minister sees the other key priority facing the sector as "continuing to develop and embed" the Pounds 3,000 a year top-up fees, which were introduced last year. But he repeated the assertion that the Government needs to see through the first three years of the new system before deciding whether the cap should be raised.
The end of the RAE
After the 2008 research assessment exercise, instead of judging university research quality with a periodical peer review of every department's research output, the multibillion-pound research infrastructure budget will be awarded largely on the basis of metrics, such as the size of a department's research income, the number of research students it has and the number of times its academics' work is cited by other academics.
Critics say that this will damage emerging research fields, siphon funding from key subjects and encourage academics to pursue "safe" areas of research.
Mr Rammell said there was "a hell of a lot more work to be done in terms of getting the detail right", but said the new system could be made to work "in such a way that there are not the distortionary elements that are currently inherent within the RAE".
'Laser-like focus' on sector
Mr Rammell set out the case for the split of the Department for Education and Skills, now divided into DIUS, under Secretary of State John Denham, and the Department for Children, Schools and Families, which covers education below the age of 19.
A separate department can concentrate "with laser-like focus" on the combination of research, innovation, further and higher education and skills, he said of DIUS.
"There was always a risk that within a much larger department you didn't get as much focus on further and higher education as you might have done, given the paramount importance of schools."
Meanwhile he sees the decision to bring science and research funding together with universities as another positive step, eliminating the need to work across departmental boundaries on the science research base.
"I'm not saying everything in the garden is rosy and there aren't still difficult choices that have to be made," Mr Rammell said. "But when you look at the capital infrastructure, the research base, the additional fee income, the moves we're making on endowment programmes, it's the best financial environment that universities have had in a generation."