Select Committee on Education and Skills Minutes of Evidence


Examination of Witnesses (Questions 20 - 39)

MONDAY 10 DECEMBER 2001

SIR HOWARD NEWBY AND MR BAHRAM BEKHRADNIA

  20. That is going to be difficult when you have the perception of debt in front of you, is it not?
  (Sir Howard Newby) Well, we then get into the technical issues about how one wants to fund higher education, not only in the balance between the tax payer and the student but also whether the money is paid up front or subsequently. In Scotland the system there is that the money is not paid up front, it is paid subsequently. I think one has to improve the confidence of 16 to 18 year old's, that they are not going to be faced with a lifetime debt that puts them off going into higher education. As I said earlier, that is only half the battle. Last year you will all recall the Laura Spence affair, and I am always reminded of the headline in the Sun which said, "It is not cool to be clever". I think that also captures a very deep and cultural issue. In the playground at 13 or 14 it is not cool to be clever, especially amongst boys as opposed to girls from lower socioeconomic backgrounds. We have to address that issue as well. We have to raise the level of achievement and aspiration in schools, and that is something that we cannot do on our own, we have to do that in conjunction with schools and colleges. I would like to see us go back to a rather old fashioned model, more of a civic university, in which the universities were operating very much in partnership with the schools and colleges in their area to manage, if I can it put this way, the progression through. There is much more seamlessness between schools, colleges and universities, both ways people in the university helping, where necessary, the schools and colleges, this is how many of us began in the 19th century and that we all attack this together. I think we have to run this more or less like a campaign, a real campaign to win over the hearts and minds of young people as well as ensuring that when we have done that there are no disincentives in place for them coming through. A corollary may be, this is, I think, politically the most difficult, that those who can afford to contribute more may have to share some of this additional cost. I am happy to say that is not my decision and not my business.

Chairman

  21. It is your decision, you will have a very large role in this, it is all very well talking about seamlessness and supply chain, all of this brings joy to my heart, I am surprised you mentioned the name that I banned from the last Committee, the fact of the matter is, though you are not playing with one hand, are there certain universities that you are going to exclude from that partnership with their local community? There are rumours that the bulk of research money is going to go to the top 10 universities, even if it is the top 15 or 20, are they not going to be excluded from that community role?
  (Sir Howard Newby) The simple answer to that question is no. I do not believe that any university should abrogate its responsibilities to widening participation. As all of the figures we have been talking about indicate there is plenty of business out there to go round, it is not a zero sum game in which some universities by increasing their role in this will somehow diminish the role of others, and nor do I think that the aspirations we are holding out to students should be, well you can aspire to go to some institutions, but not to others. I do not think that is right either. So, yes, the outcome of the present research assessment exercise may well turn out to be more selective than the previous one, but I do not think that in itself is sufficient reason to let institutions off the hook in terms of their fully participating in what I call this campaign to widen participation.

  22. It does seem that the bulk of the money is flowing to a few institutions who do the interesting research and less money flows to those universities that are more teaching universities than pure research universities?
  (Sir Howard Newby) I certainly accept that moving forward we will not be able to do this this year, I have only been in this post for over two months, I fully accept that we have to incentivise universities and reward their excellence in things other than just basic strategic research.

  Chairman: We will come back to that later.

Mr Turner

  23. You said earlier that students, taxpayers, parents and employers all benefit and you pointed to social benefits and some other benefits which I assume are not social, concentrating on the latter, could you just illustrate how much they benefit by and do they all benefit?
  (Sir Howard Newby) The last time I looked at this, that is at the figures on return to lifetime earnings of taking a degree, then, from memory, but I do stand to be corrected on certain of the figures, the return was in the order of roundabout 12 per cent per annum compound. Interestingly, the return on the masters is about zero, the return on a PhD is negative.

  Mr Shaw: That is encouraging.

  Chairman: Are you thinking of taking up a PhD?

Mr Shaw

  24. Not now, I cannot afford to.
  (Sir Howard Newby) What economists would call the externalities, the other returns to society rather than the individual taking a degree lie in such areas as graduates on hold, they commit less crime, they tend to be healthier, they are less of a claim on the National Health Service. They tend, on the whole, to exhibit lower levels of social dislocation, however you define that. These are not the sort of arguments I would necessarily want to deploy going into a Spending Review with the Treasury but they do, nevertheless, exist.

Mr Turner

  25. You suggest it is cause and effect, which way does it work?
  (Sir Howard Newby) On the social dislocation, before my time we did undertake a study on this, it was a study on cause and effect.

  26. Which way?
  (Sir Howard Newby) From taking a degree to committing less crime or being healthier or having lower divorce rates.

Chairman

  27. Graduates have lower divorce rates than non graduates!
  (Sir Howard Newby) Lower divorce rates. I stand corrected here.
  (Mr Bekhradnia) That was not one of them, there were others. They are more likely to be engaged in social activity, in charitable work, these were causal effects.

Mr Turner

  28. Being a graduate means you are more likely to be engaged in social activity?
  (Mr Bekhradnia) Than a non-graduate from an equivalent background, class, wealth, etc.

  29. One of my colleagues said you are better at not being caught?
  (Mr Bekhradnia) The crime you engage in is probably more expensive.

  30. One of my concerns is that we have a rapidly expanding higher education system?
  (Sir Howard Newby) With respect, not at the present time. We have had one, it has been flat for four or five years.

  31. The premium calculation, therefore, depends substantially on there being a large cohort of people with A-levels or equivalent who did not have degrees who achieved their highest academic qualification some time before 1988/1989 and only recently has that group gone down to almost nil?
  (Sir Howard Newby) Yes.

  32. Are you confident that if those people had not acquired degrees the premium would still be at the same level?
  (Sir Howard Newby) My personal view is that I am confident because what has happened over the accompanying period is the structure of the economy has changed radically as well. My suspicion is that the reason for this premium having been maintained is the employment slots into which young people need to move, or the only slots available are such that they tend to be in the higher paid knowledge based businesses rather than in the traditional businesses where graduate employment was not necessary. This comes back to my previous point, a long time ago now, where I said that we need to keep investing. I do believe that moving forward that the growth in those slots, as I call them, that is the growth in employment opportunities, is likely to be disproportionate to those for which graduate qualifications are required rather than those where no graduate qualifications are accepted. I would be the first to accept that there are other slots that do not require graduate qualifications which are both vital to the economy and there may well be labour shortages at the present time. I am sure in our own domestic lives we can all think of a few of those. Nevertheless, moving forward, if we are to maintain our international competitiveness we will need to produce graduates with the requisite skills that can fill those slots. There are still, in certain areas, shortages of such people.

  33. I would like to explore further the point about maintaining international competitiveness, we all know graduates that find it hard to get a graduate level job and are doing jobs which in the past would have been occupied perfectly well by non-graduates.
  (Sir Howard Newby) Would they have been occupied perfectly well under today's conditions by non-graduates? That is a question you have to ask yourself. Let us take a nurse of 20 or 30 years ago, did he or she require the same skills that a nurse would require today, given that 20 or 30 years ago nursing, in general, was not a graduate profession and today it is and for a range of other professions what have recently come into higher education?

  34. It is you who are asking us to spend a hell of a lot of money. You have the responsibility to make the case and provide the evidence that it is doing something for our international competitors. I am not aware of that case or evidence.
  (Sir Howard Newby) I think in the past we have provided that evidence. I think a recent OECD report which compared I think 11 of the leading advanced industrial nations which looked at these issues would also support our view. I do not see, at the moment, as I said, any reduction in the premium for graduates for what I call the graduate premium. I do not see any reduction in the lifetime earnings for graduates nor do I see evidence of an across the board reduction in demand for graduates from employers?
  (Mr Bekhradnia) One other relevant fact, in graduate unemployment the rate has been consistently lower and not increasing at all when the rest of the unemployment rate has increased compared with non-graduates, which is another indication that graduates remain in strong demand.
  (Sir Howard Newby) The OECD report showed we had the highest level of employability of graduates than any country looked at.

  35. Given this 12.5 per cent premium is not evenly spread across the board what information would you say a potential undergraduate needs to help them discriminate between institutions and courses to ensure the best possible return on their and our investment?
  (Sir Howard Newby) That is running a little bit beyond the questions you have been just been asking, first of all I would say they need much more meaningful information than they traditionally had about the learning outcome of the courses they are proposing to take. In terms of meaningful for them, what could they expect to achieve in such a course. Secondly, I think they would need more information—it is available, it is difficult to find, more readily available information—on the employability of recent graduates that have undertaken such a course. Personally all this needs to be made much more available these days through, for example, a website address which is published on a course by course basis in the university perspective so that perspective student can click straight on to a site which will give them this and a whole lot of other information they need about this.

Mr Baron

  36. Can I press you again, you commented earlier that we have gaps and we are not finding the right people to fill these gaps, how would you remedy that? Coming back to an earlier point, perhaps the perception of the debt with lower income students going off to university and further education generally, where does the perception of debt fit, if at all?
  (Sir Howard Newby) One has to remember, this may be behind Mr Turner's question, many of our graduates go into, despite the issue of premium on earnings, relatively low paid employment, especially in the public sector. I think, Professor Rees may be able to comment on this more later. For those students who come into university already having a vocation to move on in to rather low paid public service, and we have plenty of those around, of course, then I would expect at least for them to feel this problem particularly, whereas other students who come into university with a view to go into other parts of employment, especially the private sector, may feel less concerned about it because these days especially they know in certain parts of the private sector where skills are particularly scarce prospective employers often offer to write off part or even all of their debt.

  37. If I could just press you further. If there are areas where we know we are going to have shortages of skilled workers, so to speak, filling the slots, and this seems to be the perennial problem in certain industries, not just for one year but we get different skill gaps in different areas, is there something to be said for taking debt out of the equation altogether in order to attract more highly qualified students in certain areas?
  (Sir Howard Newby) I think debt is being taken out of the equation by a number of employers in the private sector already, but of course this has not affected students' perceptions because they are probably not aware this is happening at the time they are having to make up their minds whether to enter into higher education. My experience as a Vice Chancellor was that many large employers had forsaken what used to be called the milk round, had targeted specific universities where they knew they could obtain students from the kinds of courses they wanted, and were looking for a much closer relationship with those departments in those universities, which included offering golden hellos and other means of writing off debt to get the right kind of student. In certain so-called "shortage areas" that was quite common, and is quite common.

  38. Is it working?
  (Sir Howard Newby) In those areas I think it is, yes, and it works in the sense that the students are going disproportionately towards those companies and their debts are being written off, but I do not think this is widely known about, certainly not at the age of 16 to 18.

  39. So, again, it comes back to the point of better communication, that there are lessons we can learn from that across the board, that, one, it does seem to be that the perception of debt has an impact on whether one goes into higher education, two, if you are looking at certain skill set areas it would be particularly useful if the Government was to consider that option rather than just private industry and, three, it reinforces the case that universities and business perhaps need to get into schools rather than just having discussions between themselves, ie between universities and private business?
  (Sir Howard Newby) I would agree with quite a lot of that. First of all, as I hope I hinted at earlier, the way forward is indeed to encourage greater partnerships between universities, colleges and schools in which the other stakeholders, whether it is Government or employers, ought to have a part. We need to encourage widening participation through those partnerships. I also referred earlier to the fact that young people act on their perceptions, not on the reality, and the perception of incurring very large debts amongst young people has been prevalent, although I think it has often been very much exaggerated in their minds.


 
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