My Lords, we are all indebted to the noble Lord, Lord Patel, and other members of the Science and Technology Select Committee, for the comprehensive manner in which they examined such an important sector of the economy, and for the clarity of their report and its recommendations.
A year may have passed, but many of the issues highlighted by the committee are now even more pressing, as many noble Lords have demonstrated today. The UK’s world-leading university and research institutes and their academic staff, researchers and students are a national asset, which is why it is so important that steps are taken to ensure their future
and its future. As the report makes clear, if the Augar review recommendation of reducing the tuition fee cap in England to £7,500 was ever implemented, then without compensating direct government funding, the financial consequences for universities would be serious. As my noble friend Lady Young said in colourful terms, it is to be hoped that Augar’s proposal remains just that.
A recent Institute for Fiscal Studies report stated that the Covid-19 crisis posed a significant financial risk to the UK higher education sector, predicting that 13 universities would end up with “negative reserves” and would be at risk of insolvency without a bailout. Yet for those institutions, such assistance is by no means a given. The Government have recognised the threat to universities by establishing a higher education restructuring regime board. Alarmingly, however, at the board’s launch, the Secretary of State said that he is prepared to see universities go to the wall. Perhaps the Minister could let us know the circumstances in which that would be allowed to happen.
In part, the threat to some institutions stems from the impending drop in the number of international students, but it emanates also from threats to research funding, and of course, the two are linked. University research is underfunded against its true costs—the latest official figures showing a gap of some £4.2 billion across the UK—and as the noble Lord, Lord Patel, said, universities close this gap using the international student fee cross-subsidy. Each international student pays an average of £5,000 more than it costs to educate them, so this contribution will be severely reduced by the inevitable fall in numbers this year.
In recent years, domestic student numbers have remained static, with international students responsible for overall growth. The UK higher education sector had almost 350,000 international students in 2018-19—14% of all students at UK universities—so the effect of the reduction in numbers will be stark and the resulting drop in funding will carry through the system for several years.
Regarding research, capacity must be maintained in the face of competitor countries already actively and aggressively pursuing UK academics with offers. The noble Baroness, Lady Randerson, said that we cannot take the UK’s pre-eminent position for granted, which is absolutely the case, and the noble Lord, Lord Willetts, graphically illustrated the constraints on post-doctoral researchers coming to the UK. The research community extends worldwide and if researchers have their contracts terminated because of short or medium-term funding issues due to Covid-19, they will find work elsewhere and be unavailable whenever the sector regains strength.
In the Government’s response to the committee’s report, the then Universities Minister, Mr Skidmore, said:
“We have asked UKRI to provide formal advice to BEIS … on the balance of funding across the functions of Research Councils and Research England in preparation for the Spending Review.”
That was 11 months ago and under a different Government, but what formal advice did UKRI subsequently provide to the Minister’s department, and what decisions were taken as a consequence? Perhaps I should have directed that question to the noble Lord, Lord Willetts, as a UKRI board member.
On the subject of the spending review, is it still the Government’s intention to proceed with one this autumn? If so, will it be comprehensive or, perhaps, a curtailed version in response to the particular effect on the economy of the coronavirus pandemic? I hope that the Minister can enlighten us.
International students, which will now include those from EU member states, provide £6 billion a year to higher education institutions, with a further £7 billion spent in the UK economy. Exact numbers, and therefore losses, will not be known until later this month, but analysis for the University and College Union by London Economics forecast a reduction of around £2.5 billion. The British Council’s survey of international student intentions produced a similar figure.
There is an urgent need to protect—indeed, enhance—domestic and international research. Under the EU’s Horizon 2020 project, UK research received £3.5 billion and was a crucial part of hundreds of international research projects. I add my name to those of the many noble Lords who have urged the Government to follow the committee’s recommendation that the level of funding that the UK currently receives from the EU for research be matched in full.
Currently, 62% of research in UK higher education institutions is publicly funded. The committee report noted that public funding has largely not kept pace with inflation over the past decade, which it said has led universities to cross-subsidise research from other funding streams, such as resources for teaching. Public funding for research in universities after we leave the EU should seek to replace not just the total amount of funding but other areas it supports in quality-related unhypothecated research.
Earlier this year, BEIS and the DfE established the snappily titled Ministerial University Research and Knowledge Exchange Sustainability Taskforce. It has an impressive membership, including representatives of the devolved Administrations, so can the Minister say what consideration the taskforce has given so far to the most pressing issue facing university research, namely the future of funding when Horizon 2020 comes to an end?
Horizon Europe uncertainties must be resolved. In June, the Government confirmed that continued participation in that programme formed part of the negotiations currently being conducted with the European Union. We know all too well that those are not exactly going swimmingly and that the situation is unlikely to improve now that, as the noble Baroness, Lady Walmsley, cited, the Prime Minister is planning to act illegally by reneging on his own treaty—a treaty on which he successfully fought a general election just nine months ago. That sort of tactic—if indeed that is what it is—is hardly likely to increase the likelihood of the UK being welcomed as participants in Horizon Europe. It is a matter of trust.
In a Written Answer on 6 August, the noble Lord, Lord Callanan, stated this in relation to ongoing negotiations:
“If we do not formally associate to Horizon Europe we will implement ambitious alternatives as quickly as possible from January 2021.”
He suggested that a new discovery fund might be introduced. I hope that he will be able to say a bit more when he comes to reply about such a venture and how the funding attached to it would measure up against the opportunities available through Horizon Europe. Research teams are entitled to know the likely extent of the funding pool to which they will have access from next year.
In their response to the committee’s report, the Government committed to increasing levels of R&D to at least 2.4% of GDP by 2027. That is to be welcomed, although the research community is rightly sceptical, given that, according to the Office for National Statistics, the current figure is just 1.71%. I wonder whether the Minister can say something about the manner in which he and his department foresee that figure increasing towards 2.4% between now and 2027.
I must say, the Government are due some credit for their support for the higher education sector in reaction to the coronavirus pandemic. In May, they brought forward the relatively modest amount of £100 million of research finding as well as £2.5 billion of advance tuition fee payments. In June, they announced a support package for university research and a pledge was made to increase public funding for R&D to £22 billion a year by 2025. That is welcome and is all well and good, but what will the sector look like by 2025 if the pandemic is not brought under control and the UK’s universities remain unable to admit international students in significant numbers?
No deal with the European Union looks increasingly likely. The cost of that in terms of jobs and the general standard of living, particularly for those least able to withstand it, will be filed by government zealots under the heading “collateral damage.” That collateral damage is very likely to include the excellence of the UK’s research base, and with it would go the sector’s international reputation. The Government must decide whether that is a stain on their record that they are willing to accept.
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