House of Commons - Science and Technology

Select Committee on Science and Technology Eighth Report

7 Regional issues

The need for a regional research presence in all core subjects

UNIVERSITIES AND BUSINESS: THE REGIONAL DIMENSION

128. Implementation of the hub and spokes model of university provision would mean placing a greater emphasis on the role played by the regions in the higher education system. Some research-intensive universities have been reluctant to endorse such a shift of emphasis because they see their focus as being international, rather than regional, in scope.[262] It is a common assumption that, by attaching greater weight to the role that a university should play within their region, their international standing will somehow be compromised. We believe that this is not the case: by collaborating with other institutions within a region, universities have the opportunity to widen and deepen their portfolio of activities, thereby enhancing their reputation.

129. The Lambert Review identified an important role for universities in supporting their regional economy, which in turn contributes to the health of the national economy. The review argued that these economic benefits can best be realised through links between universities and businesses, stating that "each region has a number of universities with different strengths that can attract talent, investment and professional services, raise the quality of education and skills, enrich intellectual life and serve as an entry point for the latest international thinking. Strengthening their links with industry should help raise the competitiveness of firms in each region".[263] In order to realise the vision outlined in the Lambert Review, we have argued in chapter 6 that collaboration between universities and university interactions with business need to be coordinated at a regional level in line with an overarching national strategy.

The Regional Development Agencies

130. In 1998 the Regional Development Agencies Act created eight new public sector bodies, the Regional Development Agencies (RDAs), the purpose of which was to increase regional output and reduce regional disparities. The following year a ninth RDA was created with the same purpose, the London Development Agency. Each RDA has a long term strategy based on the economic needs of their particular region. The Lambert Review commented that these bodies, which are chaired by senior industry executives, are "well placed to act as a bridge between business and universities".[264] In chapter 6 we recommend that the RDAs be given an important role in the coordination of university collaborations within their region by means of participation in a new Regional Affairs Committee within HEFCE. Concerns have been expressed in the past, however, about the ability of the RDAs to carry out such important work. In our Report on Too little too late?: Government Support for Nanotechnology, for example, we criticised the RDAs for their lack of scientific expertise.[265] This echoed criticisms made by the House of Lords Science and Technology Committee in their Report on Science & The RDAs: SETting the regional agenda.[266] The Lambert Review noted that "many businesses and universities are concerned that some agencies do not have the necessary level of skills and expertise for working on knowledge transfer. Raising the quality and breadth of their work in this area must be a priority".[267] Since these criticisms were made, all the RDAs have established Science and Industry Councils to provide high level advice from businesses and universities on regions' science priorities. This is a significant step forwards, although we have noted that "it is too early to tell whether or not the establishment of Science and Industry Councils within RDAs will improve their performance on science, engineering and technology-related matters".[268]

Knowledge transfer

131. With the creation of the RDAs came an increased recognition of the importance of "third stream funding" for universities' knowledge transfer activities, an area of their work that is frequently overlooked in favour of academic research and teaching. The proportion of university research income that comes from industry is relatively small. In 1990-91, industry spent £114 million on research in UK universities (6% of total university research income). By 2000-01 this had increased to £259 million (7%).[269] This still relatively modest sum shows that there is a potential for universities to further increase their interactions with, and thus income from, businesses. This aspect of their work is supported by the Higher Education Innovation Fund (HEIF), which supports universities in the exchange of knowledge and productive interactions with business, public sector organisations and the wider community. It is a consolidation of an earlier funding stream called the Higher Education Reach-out to Business and Community (HEROBC) fund.

132. HEIF is currently entering its third funding round, which will be announced in 2006. HEIF 3 will provide a total of £238 million to English universities, to be allocated between August 2006 and July 2008. Compared to the £3,826 million of HEFCE funding for teaching and £1,081 million for research, this funding stream still represents a relatively small proportion of total university income (see figure 4 in chapter 5). There are five key principles underpinning HEIF:

"HEIF 3 is focused on promoting activities that result in both direct and indirect economic benefit to the UK;
HEIF 3 will support a broad range of knowledge transfer activities that benefit the world outside but which would be unlikely to generate large amounts of net income for the universities themselves;
HEIF 3 is a national scheme with a regional dimension;
A substantial proportion of third stream funding should be allocated on a more predictable basis to allow retention of highly skilled staff and greater continuity; and
A small amount of funding should be allocated by competition. The competition is likely to focus on proposals with an innovative approach and support priorities which might include collaborative activities which capitalise on excellence and achieve economies of scale".[270]

In oral evidence, Professor Sir Keith O'Nions discussed with us "the extent to which universities which are not research intensive, which are not getting a significant proportion of Research Council or Higher Education Funding Council money have a role in terms of innovation and working with RDAs and other businesses and so on. My personal view is that this is an extremely important and possibly under-developed role".[271] Under the hub and spokes model of university provision, a greater number of universities may choose to focus on their knowledge transfer activities. Third stream funding (HEIF) is still relatively modest in comparison with the funds available for teaching and research. The Government may need to consider developing HEIF further in order to encourage more universities to concentrate on knowledge transfer. A concomitant increase in research funding from industry will also need to be encouraged if universities are to have a real opportunity of diversifying.

THE IMPORTANCE OF GEOGRAPHY

133. We have taken evidence on the extent to which geography plays an important role in the interaction of universities with their partners in the higher education sector, business or the wider community. The "cluster" theory asserts that clusters of businesses tend to develop in close proximity to research-intensive universities. The Lambert Review strongly supported this hypothesis, noting that "more often than not, research active universities are to be found at the heart of successful business clusters. Oxford and Cambridge are the most spectacular examples, but there are many others across the country, and more are developing".[272] The University of Durham, for example, told us that "the North East of England has a very strong presence in the chemical and pharmaceutical industries. Its RDA has placed the universities of the region at the heart of its regeneration strategy".[273] However, others have been more sceptical. HEFCE told us that "the proposition of a direct linkage between the location of centres of research strength and enhanced regional economic growth (sometimes referred to as 'clusters') remains unsupported by clear evidence and requires further investigation".[274] The Director General of the Research Councils told us that it was too early to make a judgement on this issue: "at some point, after sustained investment in these areas, we actually have to be very clear about what it is delivering. On this particular one we are still a few years away from a reasonable expectation of seeing measurable economic benefit".[275]

134. The evidence submitted to this inquiry strongly suggests that the availability of local skills and research are important factors in decisions taken by companies about where to locate. The Society of Chemical Industry told us that this was particularly the case for smaller companies: "many SMEs have strong ties with one local university department, with sometimes the majority of their staff having been first attracted to the area by the university".[276] The RDAs supplied us with evidence on the extent to which proximity was a factor in university-business collaborations. This is given in figure 8, below. These statistics show that the majority of companies which have local markets (88%), and a substantial proportion of companies that have regional or national markets (47% and 37%), collaborate mainly with universities in their region. Companies with an international market tend to collaborate mostly with universities at a national level. Ed Metcalfe of the South East England Development Agency, told us that "the large companies in the [South East] region cite skills supply as one of the reasons that they are there. If you ask them for the top three reasons why they are there, supply of skills is usually in the top three".[277] The proximity of a source of skills and research capacity is one of the main considerations when a business decides where to locate. This is particularly the case for smaller companies.Figure 8: UK university-business collaboration split by market size of company and university location

Type of firm's largest market Local university National university International university

Local 88% 12% 0%

Regional 47% 53% 0%

National 37% 47% 16%

International 26% 48% 26%

Source: Ev 307 onwards

135. The argument that it is important to provide businesses with a good local supply of skills relies, to some extent, on the assumption that graduates will tend to be employed in the region in which they studied. The Royal Academy of Engineering told us that "many students who attend university in their region are likely, at least initially, to take up employment in that region".[278] Data supplied by the RDAs suggested that regional retention rates of graduates varied from region to region, as is shown in figure 9, below. Many witnesses observed that graduate retention was stronger in the South East, particularly in London, which also attracted a high proportion of graduates from other regions. The RDAs told us that the North East and North West also did well at retaining graduates, whilst the East Midlands performed relatively badly in this respect.[279] It is difficult to interpret these statistics because it is not clear whether graduate retention rates are influenced most by the availability of jobs in the region of study or by graduate choice, which, as is shown in chapters 3 and 4, can be influenced by a wide variety of—frequently intangible—factors. There is some suggestion that, in some regions, "the supply of graduates is massively outstripping the local demand for new graduate labour", although we did not receive sufficient evidence on this subject to form a view.[280]Figure 9: Retention of graduates within region of study

Region Total number of graduates employed in region % of first degree graduates employed in region of study % of all graduates employed in region of study % of first degree graduates employed in home region

North East 5,115 59 54 64

North West 11,865 62 61 69

Yorks and Humber 8,430 51 47 61

West Midlands 9,235 52 41 61

East Midlands 7,535 39 40 51

South West 9,340 52 49 50

East England 3,835 50 45 46

London 13,595 70 61 66

South East 23,125 53 51 52

Source: Ev 307 onwards

SHOULD ALL THE REGIONS BE EQUAL?

136. The importance to businesses, especially SMEs, of the proximity of a good source of skills and research can be used to argue that a strong research presence is needed in every region. The Lambert Review states that "small companies do not usually have the time or money to build partnerships with university departments that are not located in their neighbourhood. So business across the UK would not be well served by a university system which concentrated all its research expertise in the south eastern corner of England".[281] The Chemical Industries Association observed that the lack of university provision in some regions was already causing problems for business: "some CIA member companies are unable to find suitable universities in their local vicinity with whom they can undertake collaborative innovation or to whom they can send their staff for training. This increases the cost and inconvenience of undertaking such activities, putting barriers in the way of workforce up-skilling and innovation".[282] If university departments suffer particularly heavy losses in one region, there is a possibility that businesses within the region would also suffer or, worse, migrate to a region where conditions were better. In this way, universities play a pivotal role in their regional economies.

137. There was some hostility from the older universities for the idea that regional interests should be taken into account in national strategic planning for higher education. The Russell Group, for example, told us that "we see no merit whatsoever in seeking to preserve uncompetitive and lower quality provision merely to enable its continued availability at the sub-regional or indeed regional level".[283] We agree that, whatever model of provision is proposed, research quality should not suffer. However, we think it unlikely that any attempt to emphasise the role of universities in their regions would have a damaging effect on the quality of provision. In its evidence, the Government told us that "we do not believe there to be any immediate regional crisis in science: high quality research departments and associated funding are located throughout the UK in a wide spread of institutions".[284] This view was reinforced by the Director General of the Research Councils: "it turns out that most regions in the UK do have a presence of 5* and 5 departments".[285] Given existing research strengths in each region, there would be no need to maintain uncompetitive research in order to meet regional goals. Furthermore, as universities diversify, departments will no longer need to bid for funds in support of research of a low quality in order to remain viable as teaching departments.

138. Ensuring that each region has some research strength and supporting strong research departments to be internationally excellent need not be contradictory aims. Ed Metcalfe from the South East England Development Agency told us that "I think you have to do both; you have to invest to support science development in the north, and also you have to keep the triangle [Cambridge, Oxford and London] going".[286] This view was endorsed by the Lambert Review, which stated that

"the globalisation and growing costs of scientific research suggest that the arguments for greater selectivity in favour of world-class research departments will continue to strengthen. But this approach needs to be balanced by a broader view of the reasons for the public support of university research. Other forms of funding need to be developed to support alternative forms of excellence and emerging fields of research, as well as to ensure that all the regions and nations can share in the economic and intellectual benefits of R&D."[287]

There are sound economic and social arguments for ensuring that there is a strong research presence in each of England's regions. We do not agree that protecting this research presence would involve lowering standards. Quality can be preserved if every university and every region play to their individual strengths instead of concentrating all their efforts on the same goal, and the same limited pot of research money.

Student demand for regional provision

CURRENT REGIONAL PROVISION

139. One of the main arguments for maintaining university provision in every region is based on the assertion that increasing numbers of students are choosing to study closer to home. Two universities provided evidence to support this assertion. Sheffield Hallam told us that "approximately 50% of the student population (undergraduate and postgraduate together) at Sheffield Hallam University comes from the Sheffield area and a similar percentage remain in the area after graduation".[288] Similarly, the Department of Physics and Astronomy at Nottingham University said that "we are aware that many pupils taking physics in the leading 6^th form colleges in Nottingham do not wish to leave the city to attend university".[289] Nonetheless, as is shown in paragraph 45, Danielle Miles, one of the students that we saw on 7 February, told us that location had played no part in her choice of university.[290] This difference in view could be attributable to cultural and social factors. Students from poorer backgrounds, precisely those whom the Government is trying to attract to university as part of its widening participation policy, are logically more likely to study close to home for financial reasons. Some students who are the first in their family to attend university may not be comfortable with a move away from home.[291] Many students choose their university on the basis of the course they want to do: location may be incidental to them. Furthermore, some students may be prepared to travel further to attend a university that was deemed to be world class, such as Durham or UCL, than they would be to attend an institution that was not.

140. The ability of students to study a STEM subject at a university in their home town, or home region, is threatened by the recent spate of departmental closures. Thus the Association of University Teachers (AUT) told us that "the market approach is failing to deliver adequate regional provision, for example, there are no 5 or 5* chemistry departments in Wales and in the eastern region of England, Cambridge is the only institution to provide physics. With an increasing number of students attending local institutions, this development has negative implications for the government's widening participation agenda".[292] A lack of regional provision of a subject could also be damaging to the economic health of a region, as is discussed in paragraphs 134 to 137. Professor Ian Diamond of RCUK told us that, as a result of departmental closures, "it is not absolutely clear at the moment that there will be large numbers of students who will be forced to travel who would not have been forced to travel in the first place".[293] Nonetheless, we believe that, if STEM departments continue to close, there is a real danger that some STEM students will be unable to study their chosen subject in their home region, should they choose to do so.

VARIABLE TUITION FEES

141. There are two factors that are likely to cause an increase in the number of students opting to study closer to home. The first is the Government's aim to increase participation in higher education, particularly by those from lower socio-economic backgrounds. Several witnesses speculated that, amongst this group of new recruits to higher education, the proportion choosing to study in their home region would be high. Thus, the Department of Physics and Astronomy at the University of Nottingham told us that the trend towards remaining at home "will become more prevalent as fees increase, particularly amongst students from families who have not previously participated in higher education".[294] The second influencing factor is the introduction of variable tuition fees. As the effect of tuition fees has yet to be seen, the evidence we received was speculative. The AUT, for example, stated that "as students increasingly study from home—a trend which will inevitably increase once top-up fees are being paid—how are we to ensure all students have access to all subject areas?"[295]

142. Whilst it is logical to assume that increasing debt may lead some students to economise by studying closer to home, the evidence on this subject is less clear cut. A Higher Education Policy Institute paper explains that, overall, "price elasticity of demand for higher education is low", but does not comment on the impact of fees on students' choice of university location.[296] In answer to further questions, DfES provided a summary of a range of studies on the factors that influence student demand. Whilst one study found that "amongst potential entrants the costs of going to university led half to apply to universities nearer their homes and nearly two-fifths were taking a subject with better employment prospects", another found that the right course, rather than financial considerations, was the most important factor influencing students' choice of where to study.[297] When we asked the Director General of the Research Councils about the impact that variable tuition fees would have on the finances of university STEM departments he told us that "in most things to do with education and science […] when you change the rules a little bit it may be totally well-intentioned and so on but one often induces some behaviour which one might not have anticipated. All I can say is that we have to look at this and watch it very carefully".[298] It is too early to assess what impact the impending introduction of variable tuition fees will have on departmental closures as universities position themselves in preparation for the new system. We agree, however, with the reply given to the Committee by the Director General of the Research Councils, that the impact of variable tuition fees on STEM departments should be kept under constant review, and that emerging evidence should be published as part of the Government's ongoing reviews to make clear what the impact of the scheme has been. It is also logical to assume that, given increasing levels of student debt, an increasing proportion of the student population will be unable to live away from home. It is therefore extremely important that provision for core STEM subjects is maintained in every region.

143. When Exeter University announced that its chemistry students would have the opportunity to transfer to one of two other chemistry departments in the region, either Bath or Bristol, it was quickly pointed out that the distance between Bath or Bristol and Exeter was over 100 miles. Parents Against Cuts at Exeter told us that "the closure of the chemistry department at Exeter University […] deprives future science students of the possibility of attending their local university. The South-West will become a wasteland in terms of chemistry teaching and research".[299] Particularly in the largest regions, a distinction is frequently drawn between "local", or sub-regional, and "regional" provision. Whilst we believe that all prospective STEM students should have the opportunity to study within their region, it would be unreasonable, and a strain on resources, to expect provision of each and every subject to be maintained in every sub-region. Sub-regional provision can be addressed through regional collaboration between universities.

262 See for example, Anna Fazackerley, "End 'willy-nilly' closures - MPs", Times Higher Education Supplement, 25 March 2005 Back

263 HM Treasury, The Lambert Review of Business-University Collaboration, December 2003, p 65 Back

264 HM Treasury, The Lambert Review of Business-University Collaboration, December 2003, p 67 Back

265 Fifth Report from the Science and Technology Committee, Session 2003-04, Too little too late?: Government Support for Nanotechnology (HC 56), pp 33-34 Back

266 Fifth Report from the House of Lords Science and Technology Committee, Session 2002-03, Science & The RDAs: SETting the regional agenda (HL 140-I) Back

267 HM Treasury, The Lambert Review of Business-University Collaboration, December 2003, p 68 Back

268 HC [2004-05] 8, p 30 Back

269 HM Treasury, The Lambert Review of Business-University Collaboration, December 2003, p 81 Back

270 www.hefce.ac.uk Back

271 Q 212 Back

272 HM Treasury, The Lambert Review of Business-University Collaboration, December 2003, p 65 Back

273 Ev 159 Back