Higher Education and the Economy

My Lords, we on these Benches welcome the Universities UK report into the impact of higher education institutions on the UK economy and the Leitch review. We recognise the enormous contribution made by the higher education sector and the need for it to remain healthy for the growth of wealth and development of the UK’s skills base and economy. As the noble Baroness, Lady Warwick, pointed out, the higher education sector not only generates revenue greater than UK pharmaceutical companies but directly employs more than 330,000 people, which equates to 1.25 per cent of total UK employment. In addition, 276,000 people in other sectors are also dependent on the higher education industry. The sector directly spent £15.4 billion on goods and services produced in the UK and, through direct, secondary or multiplier effects, it generates£42.5 billion in the output of the economy. Future learners believe that by going to university they will increase their potential to earn, to get better life skills and to enjoy better health. They therefore must not be deterred from committing to further education because of fears of rising debts through tuition fees and the general rising cost of living. The 2001 census shows that UK birth rates are falling: 600,000 fewer young people will enter the workforce between 2010 and 2020. At the same time, the Chancellor’s targets for economic growth need another 1.3 million people to join the workforce. An additional 1.9 million people are needed to secure economic growth and to provide industry with resources to remain competitive. The Government must bear in mind that declining numbers of young people in the UK will result in a natural decline in numbers applying to UK universities and, therefore, an increasing need to attract overseas students. Are there any plans to increase university marketing in countries such as China and Hong Kong, where recent figures show a decline? If we are to compete effectively with developing giants such as India and China, we cannot allow qualifications, especially in vocational subjects, to decline, as has happened with third-level qualifications, with the number achieving them dropping from 42,000 in 1999-2000 to 28,000 last year. We must also be concerned about the number of adults who are functionally illiterate. Approximately5 million adults are currently functionally illiterate, while 17 million people struggle with numeracy skills. The Leitch review of skills revealed that over one third of adults in the UK do not have basic school leaving qualifications. While we all recognise the huge importance placed on an educated and skilled workforce, we cannot ignore the 7.9 million people,13 per cent of the UK population of working age, who remain economically inactive. It is vital that the Government and higher education institutions reach out to this last group of people who may consider education as something you leave at school and cannot access afterwards. To reach this disengaged group, a culture of continuous learning must be available, one that offers much more flexibility and support in the different activities in higher education. The higher education sector works closely with business and industry, and is of course the key to improving the nation’s skills and productivity. As my noble friend Lady Rawlings highlighted, the contribution made by higher education institutions to the economy is substantial. In particular they are often the drivers of regional economies. Universities are now contributing increasingly to a knowledge-driven economy that relies on innovation and productivity growth. The noble Lord, Lord Bhattacharyya, was absolutely right to say that universities need to be freed from excessive bureaucracy, while my noble friend Lord Geddes highlighted the need to recognise the value of specialist institutions and how they add to our culture economy, in which we are world leaders in many areas. Let me take as an example of developing and retaining skilled individuals in the region the work of the University of York. York produces approximately 2,000 first-degree students and 1,000 postgraduates each year. The university is proactive in promoting local and regional employment for all graduates. It is also proactive in collaborative projects with businesses, while the activities of the science park yield substantial revenues for the region. However, can the Minister tell the House how he intends to address the shortage of science facilities in UK universities, and the question of access to separate science qualifications for school pupils? A large body of evidence indicates that chemistry and physics graduates will, on average, earn over 30 per cent more during their working lifetime than A-level holders of those subjects. I have some concern that to ensure that participation in higher education continues to grow, the Government need to assist the process rather than hinder it. I shall explain what I mean. There is little evidence to suggest that when parents are asked to provide information on whether they have been to university, it increases graduate participation. We already have increased participation and we do not need to meddle in parents’ backgrounds. The National Union of Students is absolutely right to highlight the continued effort by universities to ensure greater participation by the black and minority-ethnic communities, those in the lower socio-economic groups and people with disabilities. We should be careful not to deter those for whom university would be a natural life choice by erecting artificial barriers against them. I look to the noble Lord for reassurance that measures to discriminate against the children of better-off families will not be pursued in this way. I agree with my noble friends Lord Norton of Louth and Lady Bottomley of Nettlestone that the higher education sector, through the diversity of its students, adds economically, socially and culturally to our towns and cities. The research and development carried out in our universities has had groundbreaking results, thus greatly contributing to the wealth of our intellectual capital and economic growth. The Government must give assurances that our top universities will not face difficulties in attracting appropriate levels of funding to ensure a continuing stream of quality work using well funded resources for research and training. As my noble friend Lord Norton of Louth observed, the Government need a lighter touch. I congratulate the noble Baroness, Lady Warwick of Undercliffe, on securing this important debate. I must declare that I have no interests to declare with any university.