Higher Education

My Lords, I congratulate my noble friend Lord Luce on securing this debate. I declare an interest: 21 higher education institutions are members of London First, the business organisation that I lead. Each year, London’s universities turn over £11 billion and earn £1 billion in export earnings. The higher education sector in the 21st century continues to fulfil its traditional role of providing our society with skilled graduates and intellectual capital, but it is now also a major economic powerhouse. The success of our universities and the future competitiveness of our economy have become intimately entwined. The Government, universities and business cannot afford to rest on their laurels. We must produce employable graduates and we must ensure that entry and completion standards do not drop if we are to meet ambitious throughput targets for higher education. To illustrate this, I will borrow an example from our newly elected Mayor of London, who asked his audience to name the most competitive city in the world—politically, intellectually and economically—in 800 AD. The answer was Baghdad. Then the largest city in the world, with more than a million people, Baghdad was home to a great university, the House of Wisdom, where scholars came from all points of the compass to study mathematics, astronomy, medicine, chemistry, zoology and geography. Today, London attracts 86,000 non-UK students each year and is the top destination worldwide for international students, who contribute nearly £1.5 billion per year to the UK economy. However, no city’s or country’s pre-eminence is guaranteed for ever. For the sake of our country’s future competitiveness and for their own self-interest, our universities must now build much closer relationships with the business world. Currently, the topics and contents of the courses offered by universities are largely determined by students’ preferences. Universities are funded according to the number of students who start and finish their courses. Their incentive from the Government is to provide popular courses that can be filled easily and make progress towards achieving the Government’s target of 50 per cent of young people entering higher education by 2020. Courses in more difficult and unpopular subjects, such as maths, science and engineering, which are vital to our economy, are undersubscribed and remain in notoriously short supply. Furthermore, employers complain that too many newly qualified graduates apply for jobs without the essential skills needed in a modern workplace: problem solving, the ability to work in teams, communication skills and even—incredibly—reasonable levels of literacy and numeracy. I illustrate that with the example of a leading legal firm in the City, which recruited 70 new graduates last year after receiving 1,200 applications. Although the vast bulk of these came from UK universities, only three successful candidates came from this group; the remainder were from overseas universities. This example is borne out by a London First survey of more than 2,000 London employers. It is a student’s employability skills, not just their paper qualifications, that win jobs in a highly competitive market. My plea to the Government and the higher education sector is to recognise more clearly the urgent imperatives of the 21st-century economy. Please listen more carefully to employers and take more account of what they need from the higher education system: more emphasis on quality, not quantity, and on higher standards of employability.