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Baroness Blatch: My Lords, how are the noble Lord's comments consistent with 15.8 per cent of

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special grants decided by government and the amount of direction that takes place as regards passporting? That is all central government direction; it is not about the freedom of local people to make local decisions about local priorities.

Lord Bassam of Brighton: My Lords, I shall try to address that point before I conclude my remarks. The poll tax was imposed upon us. Local authorities were prevented through rate capping from setting local budgets. Those matters are important elements in the history of the way in which local government finance developed. This Government want to move away from the theory of "We know best". We want to ensure local responsibility. I recognise that passporting is an important issue and, as I said, we shall be sensitive to local concerns.

The other important point that the noble Baroness raised relates to ring fencing. We have received strong representations on that issue. Ring fencing was not invented by this Government, we inherited it. I fully recognise the concerns in that regard. We have given a commitment that we shall reduce the current figure of about 12.5 per cent to 10 per cent over the next three to four years. We have listened carefully to the representations made by local authorities and their representative associations in that regard.

The Government's determination to change the way the centre interacts with authorities has been well received by local government. I look forward to the forthcoming legislative programme and the changes and improvements that it will introduce. At the heart of our reforms lies a desire to improve local authority performance. That is why we have concentrated on improving political management and freeing up local authorities so that they are best placed to respond in innovative ways to address their own local problems.

The debate has been most informative and instructive. I take great heart from it and from the welcome that has been expressed for aspects of government policy from a not altogether uncritical audience on the Benches opposite. I congratulate the noble Lord, Lord Hanningfield, on introducing the debate. I thank him for all his many years of hard work on behalf of local authorities to ensure that they are best placed to deliver the services on which their local populations and residents are so dependent.

Baroness Hanham: My Lords, before the Minister sits down, I hope that he does not think it totally churlish of me to thank him for a long response on local government finance. However, there were a great many other points raised in the debate to which I regret to say he has not responded.

Lord Bassam of Brighton: My Lords, the noble Baroness rightly says that many issues were raised. It was not possible to respond to all of them within the limited time available. Perhaps we should have more debates on this subject. I shall try to ensure that the points that I did not cover are dealt with in correspondence which I shall circulate extensively.

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6.39 p.m.

Lord Hanningfield: My Lords, I thank the Minister for his reply. As he indicated, we should have more debates on this subject. We shall perhaps return to these issues on a future occasion. We shall discuss many of them when the relevant legislation reaches this House. I thank all noble Lords who have taken part in the debate. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.

University Teachers: Pay

6.40 p.m.

Lord Lamont of Lerwick rose to call attention to the levels of pay of university teachers; and to move for Papers.

The noble Lord said: My Lords, I am grateful for this opportunity to open a debate on the extremely important subject of university teachers' pay. I am also particularly delighted that so many people have put their names down to speak in the debate, people who are much more qualified and experienced than I in the world of universities and university teachers' pay.

In a way, the debate is a first for me, because as an ex-Treasury Minister it is the first time that I have ever expressed any sympathy with any pay claim. I believe that it is the first time that I have done that in my life. It is also the first time that I have ever participated in a debate to, at least by implication, support an increase in public spending. It is a Bateman cartoon situation, but I hope to explain why I have come to my view.

A number of friends have asked me why I have chosen to initiate the debate. The answer is simply because I have observed the problem through my contacts with universities—with my own university, Cambridge, and the university in my old constituency, Kingston. For the 25 years that I was the Member of Parliament for Kingston-upon-Thames, the constituency had a large number of academic staff living in it. I have been conscious that the problem has been with us for some time and is getting worse.

One thing that has always puzzled me a little is how some public sector workers capture the sympathy and imagination of the public. One minute it is nurses, then firemen or doctors. It has even been miners, but never university teachers. However, the figures for university teachers' pay tell a very dramatic story, relatively speaking. University teachers taken as a totality—I realise that that is open to question—represent some of the worst paid jobs in the public sector. Despite the importance that teachers in our universities ought to have, given that they are responsible for educating our children, there is little support or concern expressed about their pay.

I have raised the matter before, as the noble Lord, Lord Davies, will remember, because he answered my Question on it. I stressed then that I did not raise it in any partisan sense, and I repeat that today. As the statistics that I will give illustrate, the problem goes

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back a long time. If for a moment it is necessary for me to put on the odd white sheet of repentance, I will willingly do that as well.

Britain's universities are and ought to be a great national asset. We have two or three universities that are certainly the best in Europe and among the best in the world. However, many people believe that our universities may have been slipping and that, if the long-standing problem of pay is not addressed, they may slip further. It is possible that our enviable position on Nobel Prize winners, for example, has slipped in recent years.

I emphasise that I am not interested in the subject or initiating the debate for reasons of what is called, in an ugly phrase, national economic competitiveness. I have always been deeply sceptical about arguments that all education is a form of investment. No doubt specific forms of training and skills may increase national competitiveness, but universities are much more important on a wider basis than that. They are part of this country's quality of life. We value learning for learning's sake, scholarship for scholarship's sake. Above all, universities give people an opportunity to fulfil themselves.

It seems as though I have been trying to secure the debate for almost a year, but it is opportune now in the sense that, accidentally, it comes shortly after the White Paper. That White Paper has many good points, but many people will agree that one of its disappointing features was that it did not deal more explicitly with the subject of pay. Some of my noble friends may think that rather an odd assertion for me to make. How could I be so naive as to think that a White Paper would deal with the subject of pay? They never have in the past, so it would be extraordinary now.

However, there were reasons this time to think that the White Paper might have dealt with pay, given that the Prime Minister has expressed recognition of the situation facing us. He commented in December that,

    "the pace of college lecturers' pay increases has been nowhere near those in the rest of the public sector, never mind the economy as a whole. In the long term, it is going to be difficult for us to maintain a really strong world class university sector . . . unless we make sure we are able to attract and recruit people on decent salaries".

Given that acknowledgement, one might have expected the White Paper to be more up-front on the issue.

Of course, the White Paper and the Government have announced the allocation of a considerable sum of money for the next few years—a 19 per cent increase in real terms for the next three years. However, the question raised by vice-chancellors is whether the sum will leave anything for increases in pay because so much in the allocation of finance in the White Paper is localised, one-off, or relates to special premiums, market supplements and centres of excellence. I am not saying that increases in pay should not be tied to performance, but the Government have so many of their own special pet projects that there seems little reason to hope that somehow the money will penetrate

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through the system. There is little if anything left for general increases in pay, as the vice-chancellors have pointed out.

The most striking figure for university pay is that academic pay over the past 20 years has increased by only 4 per cent in real terms, compared to an increase in average earnings of 45 per cent in real terms. Such a difference must have an impact on universities' ability to recruit and retain staff, because that is a huge lack of movement compared to other salaries. The problem of retention is not confined to only a few subjects, but is manifesting itself across all academic grades in large numbers of different areas. According to a report from the Universities and Colleges Employers Association, the worst affected subjects include law, engineering, accountancy and biological sciences.

A particular concern is the low level of starting salaries in higher education. The starting salary for lecturers is now just over 22,000 while for a researcher at a pre-1992 university it is just over 18,200. At a post-1992 university, it is the astonishingly low figure of 11,932. Few salaries in the public sector are as low as that. It is lower than that of a lift keeper on the London Underground or a Railtrack level-crossing keeper. I know that some people feel that some universities are of lower or questionable quality, but we ought to ensure that quality is higher and pay researchers much more. There can be no justification for paying such a miserable sum. Most researchers will have spent at least three years after their degree gaining a PhD, and many will have post-doctoral experience.

I turn to the position of lecturers. By mid-career, a lecturer in Britain earns about 33,000—less than a schoolteacher may make after five years. A typical City economist will earn five times what a typical economics lecturer will earn. Many people, conscious of that, believe that there is a limit to how long highly qualified and very able people will put up with such earnings and wonder whether Britain is heading for the same sort of recruitment crisis as we have experienced in schools.

It is already extremely difficult to recruit top-line economists. Professor Andrew Oswald of Warwick University said:

    "University pay is a disaster and will destroy quality in the long run, by not attracting our most talented graduates into academic life. We need a fundamental revaluation of pay if we are remotely to compete with the salaries offered by top jobs and American universities. For economics, pay would have to be doubled or trebled".

Pay will not, of course, be doubled or trebled but the warning that he gives does not appear to be far off the mark. Top banks and finance houses are staffed with many people with PhDs, yet last year there was no British-based student doing a PhD in economics.

Higher education is a global market-place. There is a market for top-level people throughout the world, but we do not have the capacity to pay world-class salaries. In the long run, the answer might be for the Government to set universities free from state control so that they can choose competition rather than central control and abandon the "nationalised industry" model with which they still stick. There is an

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argument for letting institutions decide what fees to charge, which courses to offer and what pay to give. The Government have chosen neither one thing nor the other and, whatever the Minister says in response to this debate, they remain responsible, by the funding that they provide, for what universities will be able to pay in salaries.

In 1999, an average full professor at Oxbridge or a top London college earned 50,000 annually, which is the same salary as that for a grade seven Whitehall civil servant, which used to be called a principal. In comparison, the top seven American universities pay, at senior and junior levels, roughly double what is paid at our top five universities. The average professorial salary at the Manchester Business School at the University of Manchester is just more than 54,000; of course the non-professorial academics there, most of whom are eminent in their fields, get considerably less than that. The average salary that the MBA students are paid in their first job is 54,000.

What really concerns me is that the problem may get worse. It has been estimated that higher education will have to recruit 42,000 academic and related staff simply to maintain the current student:staff ratio, and 20,000 to replace those current aged 55 and above who will be retiring in the coming decade. In 1999, 36 per cent of academic staff were already eligible for retirement. On top of that, more lecturers will be needed to teach the additional students in order to meet the Government's access targets. There is also the subject, on which I am sure other noble Lords will touch, of the worsening pay gap between male and female academic staff.

I raise this subject because I believe that there is concern that our universities face losing their pre-eminent position simply because they cannot recruit on a basis that compares with the best in the world. One academic whom I know well but who does not want to be named—the academic is very eminent in the field of economics—asked 27 heads of department in the Russell and 94 Group universities which British economics departments they would rank in the world's top 10 for research. Eighty per cent of them put the LSE in the top 10 but only one-third included Oxford, Cambridge or UCL, and the trend is downward. In world research rankings, LSE ranked third or fourth in the 1970s and 1980s but in the 1990s it was 12th. Oxford and Cambridge similarly declined in those ratings in the 1990s.

I look forward to the Minister's reply. This is an extremely important subject. I hope that the Minister will not simply say that universities are autonomous institutions and that these matters are to be resolved in the pay machinery. In fact, we all know that the finance that is provided carries assumptions about pay. The Prime Minister has acknowledged that problem. Surely, having acknowledged it, it is time for it to be addressed openly. My Lords, I beg to move for Papers.

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6.56 p.m.

Lord Morgan: My Lords, I declare an interest as one who has been a university teacher for the past 44 years. I am currently a member of the Oxford modern history faculty and the Queen's College, and in both cases I am unpaid. That serves to make one point underlying the excellent Motion of the noble Lord, Lord Lamont. Universities commonly cannot afford to recruit, hold or retain younger people, and therefore have to turn to grizzled veterans such as myself—we come cheap or we come free.

The university profession has never been well paid in my lifetime. I became a university lecturer in 1958 on a stipend of 650 a year. Years later, as a vice-chancellor, I was ashamed to offer able young people stipends of around 13,000 or 14,000, which was not a great deal more. As the noble Lord pointed out, there is not much that universities can do; they have no industrial muscle and are victims of the system.

There were compensations in 1958. We had pay scales then that were linked to the Civil Service and the hospital service, and we had prospects of research funding. Even in Swansea, my own relatively poor university—financially—it was possible to have research funding, write books, become a senior lecturer and afford a car. That was a breakthrough in my life. The Robbins report made us feel honoured and important figures. It was the only time in our history that we took university funding and universities seriously.

There was also a more leisured existence. If it is not too frivolous, I mention that I opened the batting for the university staff cricket team, playing, I believe, against the noble Lord, Lord Sutherland—and I believe that we won on that occasion. That is not so trivial a point, because in those days universities could afford, and hired, young men—I do not say athletic young men. It is a not altogether trivial comment on the times that the cricket team for which I played no longer exists because the profession is ageing: fully one-third and more are close to retirement or are in the age bracket in which retirement is possible.

The university teaching staff represent the cutting edge of the Government's priority, yet they are consistently under-remunerated. University teachers have had many grievances under Conservative and Labour governments. The noble Lord said that he might wear a white sheet, which may or may not be appropriate; however, I believe that it is correct to say that repentant sinners are likely to make it to the Kingdom of Heaven or have an above even chance of doing so. I therefore welcome that repentance.

Elsewhere, we have discussed the following problems: bureaucracy; university teachers not having proper facilities; the fact that the fabric is not maintained; and how, generally, the university system is in debt.

I do not believe that university teachers have been treated with basic respect. Many different kinds of accusation have been launched at a relatively defenceless and yet very meritorious group of people. We had the Laura Spence affair, in which a pack of lies

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was told about my college—Magdalen. Latterly, Margaret Hodge spoke about universities putting on "Mickey Mouse" courses—the poverty of the language perhaps indicating the poverty of the vision. The Prime Minister says very little about university teachers because no doubt they are considered as public sector workers.

I greatly welcome the new money and I welcome a great deal of Charles Clarke's recent Statement. But, as the noble Lord indicated, the question is whether it is possible that, particularly in the newer universities—which the noble Lord did not say so much about—the money will go towards administrative and other costs of access rather than towards remunerating the staff. There were ominous remarks from the Treasury about universities frittering away that extra money—that is, through higher pay to their staff. That makes 19th century mill owners sound like candidates for "Who Wants to be a Millionaire?"

As the Association of University Teachers has often shown, the general level of university finance has been consistently poor. The White Paper rightly emphasised the diversity of roles played by different universities. Universities fall into different categories, but what they have in common is that all their employees are exceedingly badly rewarded. As the noble Lord pointed out, there has been an increase of 44 or 45 per cent for professionals measured by the comparators but only 4 per cent at best for university teachers. Indeed, in recent years, the pay increase has fallen below the rate of inflation.

That is an almost uniquely bad record among trained professionals in our country. As the noble Lord rightly said, it produces problems for certain disciplines and, in particular, for the more professional ones, such as law, accounting and especially education. As I mentioned earlier, more than one-third of academic staff are now in their 50s and eligible for retirement. It is a contracting, as well as an ageing, profession.

The main features are clear. The first is the very poor starting salary—18,000 or so for researchers and 22,000 for lecturers. Universities need particularly able, highly trained people. They are likely to enter the profession with a doctorate and perhaps also with another higher degree. They are likely to enter the labour market when they are in their mid-20s and, in the case of women, perhaps older than that because of family responsibilities. Now, they may also bring with them a potentially very large inheritance of debt from their experience as students. Yet they are offered very poor rewards and it is no surprise that universities find it difficult to recruit. It is no surprise to me that latterly so few of my own undergraduates went into teaching of any kind, whereas in the 1960s many became school teachers and, indeed, university teachers.

The second feature is a very long pay spine and a poor expectation for later stipends. That is the case everywhere. London weighting has effectively been frozen for a decade. With regard to my own university of Oxford, it is difficult for a university teacher to live in Oxford and to buy a house and so on, as it is for a

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policeman, a postman, a nurse and those in other occupations. Yet, as the noble Lord rightly said, these institutions—particularly Oxford—must compete with Harvard, Stanford and MIT. Problems are also experienced in some of the newer universities with which I am familiar, such as the Universities of Glamorgan and Greenwich. I am fearful that, following last week's pay statement, some of the newer universities will be frozen out in what is increasingly a two-tier system.

Another point that I recall from my own experience as a vice-chancellor is that universities were commonly required to keep an unnaturally high proportion of people on short-term contracts. As temporary or part-time staff, they formed a kind of underclass in the academic world. They were often exploited and, in effect, helped to drag down the whole salary system.

I welcome many of the features of the Statement made by the Government a couple of weeks ago and those of the White Paper. It seems to me that, for the first time for five years, the present Government have the basis of a policy for higher education. I could possibly even learn to love the access regulator if I thought about it for long enough.

However, once again, as has frequently been the case over the past 20 years or quarter of a century, the people who will make it work—those at the academic coal face, or chalk face—may well be left out. We already need 20,000 staff to replace existing staff who are in the retirement age bracket, and as many again if the Government's proclaimed access target of 50 per cent recruitment is to be met.

I find all that deeply saddening and depressing, particularly as I have enormously enjoyed my own professional career, in spite of the lack of financial reward. University lecturers are needed to fulfil the Government's priorities. Universities are perhaps needed to contribute to economic revitalisation but are needed far more widely as cradles of civilised values. They are rare and precious institutions which are simply not being recognised in present policy and have been scandalously neglected for two or three decades.

My noble friend Lord Davies will reply to the debate. He is a distinguished educationalist and one with a very keen sense of history. He will know how in the Labour Party we have honoured the great teachers and scholars, such as Tawney, Laski and GDH Cole. We used to celebrate figures of that kind. Under so-called "new" Labour, they feel deeply and shamefully neglected. I say to the Government that, unless new Labour acts now to recognise the value of our university teachers and to pay them properly for the first time for more than a quarter of a century, that profession will feel simply betrayed, as they have been betrayed previously, and the Government and the country will suffer for it.

7.7 p.m.

Lord Brooke of Sutton Mandeville: My Lords, it is a pleasure to follow the noble Lord, Lord Morgan. I believe that he and I share a common descent from Wales. We certainly share a youth in Hampstead, and

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we have a common affection for cricket. I also regard him as a walking archive of political history. I congratulate him on the vividness of his speech covering the past 44 years, and I enjoyed his reference to the cost of living in Oxford.

I always remember with affection the book written by my former philosophy tutor, the late Marcus Dick, on the subject of Oxford, published by Batsford and illustrated by A F Kersting, in which he made the shrewd and perceptive observation that, if dons had been allowed to marry 30 years earlier, north Oxford would have looked like Bath.

I also congratulate my noble friend Lord Lamont of Lerwick not only on giving us the opportunity for this debate but also on setting out the case so clearly in every aspect and dimension of it.

I declare an interest as Pro-Chancellor of the University of London. I do not speak for that university; nor did I consult it in advance of the debate. I was at the Treasury at the same time as my noble friend Lord Lamont. Perhaps it is for him, as the more senior, to wear a penitential shroud, but I share that experience with him and I, too, have some form.

In 1978—25 years ago—I made a speech in another place on higher pay in higher education, which I argued was needed. The noble Baroness, Lady Warwick, who was formerly with the Association of University Teachers, knows that, during my time as the Minister with responsibility for higher education when she was at the AUT, she never once quoted back that speech at me. I always attributed that to her innate chivalry rather than to negligence.

I spoke in 1978 in the context of individual cases and national aspirations. The AUT sent me a detailed brief for this debate, as I am sure it did to other noble Lords. It is not because the AUT chivalrously ignored me on that previous occasion that I am not deploying its arguments this day but because I believe that it is pushing at an open door on the general thesis that university teachers need more pay. That issue is not an issue, unless that is the reverse of a tautology.

What is an issue is what problems we seek to solve, not just at the individual level but at national level. I remark in passing that the AUT briefing established the coincidence that academic pay had risen in real terms by 4 per cent, not just in the past decade but in the past 20 years. That may be right; it is not impossible, but it does not immediately look to be so. However, as I said before, it does not invalidate its overall case.

There is common cause between us that a large number of university teachers will soon be retiring, a proportion exacerbated by the freeze on the number of new university appointments during the early and mid-1980s when the then freeze on university student numbers occurred.

The noble Baroness, Lady Warwick, and I today heard my noble friend Lord Waldegrave of North Hill at the Parliamentary and Scientific Committee lunch describe a visit of his to Caltech when he was my predecessor as higher education Minister in 1982. He

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recounted how his interlocutor there had said that of course, the American higher education and research constituencies had more money than their opposite numbers in the UK but that the British Government had spared our higher education and research constituencies the morass of paper work through which the Americans had to wade. My noble friend today remarked wryly that in the past two decades the British Governments of both parties have thrown away that particular advantage.

I cite that because in filling the jobs the AUT have identified, it is not only pay, however comparatively unattractive, which is the deterrent to entrants to higher education teaching of the highest quality, but also the thickets of bureaucratic thorns with which we have surrounded them. Thus, though we have a pay problem to resolve, we have other problems to resolve too, especially at a time when there are so many other attractive opportunities for able young people to pursue, not least academically in North America. The Royal Society election lists already draw attention to that particular migration.

As to the pay issue, I think your Lordships' House agrees that that is a problem we must collectively solve if our ambitions are genuine to remain in the world league in this area for which history, it is not wholly unreasonable to say, has prepared us. I have never had responsibility to determine these matters in a higher education institution, though I was profit accountable and thus met a payroll for 18 years in the private sector and was ministerially responsible for pay and conditions in the Civil Service for four years in the Treasury. From both those experiences I can validate the belief that money is not necessarily a motivator but that lack of money is undoubtedly a demotivator.

My understanding of universities may be imperfect because of not having served directly in them, but as I understand it there is freedom for university management to determine pay for individual professors, or most of them, within the resources that universities have, but the posts below that are subject to national determination. However, within that generalisation I gather that management would be potentially free to exercise its own determinations but are—I hasten to say properly—constrained by union agreements.

If we are genuine about seeking to fill the gaps that will soon appear in teaching ranks with entrants who will be of the same class as their predecessors or better, against the additional disincentive that bureaucracy has created, we must seek to adjust the balance so that university management feels freer to manage. The benefits of that freer management accrue to the institution as a whole, for a healthy and successful institution will always be a more effective and generous employer.

When the policy of overseas students paying the cost of their tuition was introduced, considerable latitude was built into that policy as to how costs should be interpreted, but the benefits of that latitude were not swiftly secured because universities were apprehensive that the then UGC might penalise them for whatever

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interpretation they used. It would be sad if apprehensions about the higher education teaching unions paralysed university managements as this impending crisis unfolds but at a time when some help is at hand in terms of greater resources both from government and from higher tuition fees. I take great comfort from the Prime Minister's choice of his new Secretary of State for Education, but I gather that the AUT is opposed to higher tuition fees. I ask it sincerely through the agency of Hansard to believe that in this it may be mistaken, especially if it has its own members' interests at stake and at heart.

However, it is not unreasonable for the unions to expect the rest of us to put our hands into our pockets in terms of endowment. I am a graduate of an American business school as well as of a British university and I know how much more demanding and well organised the former is than the latter at eliciting endowment help from their alumni.

My own rule of thumb is that if you wish to endow your Alma Mater with an income flow of a penny a day inflation proofed for ever, you need to put in a capital sum of 125. A real terms penny a day for ever is not wealth beyond the dreams of avarice, but nor is 125 or modest multiples of it an enormous sum to deprive oneself of. We cannot expect charitable foundations or corporations to solve these endowment problems alone unless we put our own hands in our pockets.

I realise that the Chancellor is concerned—the noble Lord, Lord Morgan, alluded to this—that universities should not get further resources or freedom to raise them unless they can prove they can manage them well. In this instance he could scarcely say that higher pay is not required against his fear of pay dissipation in the reform of other public services, but I can see that he will be the readier to give British universities the resources and freedom to raise them if the professionalisation of university management gathers further pace.

We have in this a chicken and egg situation. During the war my family kept chickens and I can remember as if it were yesterday a day when the family gathered round a chicken which was temporarily incapable of expelling an egg. I can remember too the various methods of lubrication we had to use. The same need for lubrication rests on all of us in the present chicken and egg case, but a great deal of our future potential as a nation rests on us in our generation making our own contributions or concessions to ensure that that lubrication exists.

The great Earl of Chesterfield was once in the great George Whitefield's congregation when the latter was painting a word picture of a sinner moving towards a precipice. The sinner was poised on the very brim when Whitefield paused, and it is a tribute to him as a preacher that in that moment of silence the Earl of Chesterfield cried out, "By God, there he goes".

The universities of this country are not poised on the brim of a precipice, nor is any purpose served by such rhetoric. But, to coin a phrase, we are at risk, even if in slow time, of proceeding like Gadarene lemmings into

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the sea. Unless we solve the problem of this debate, a gentle decline into international mediocrity lies ahead of us.

7.18 p.m.

Lord Watson of Richmond: My Lords, I, too, congratulate the noble Lord, Lord Lamont, on creating this opportunity for your Lordships' House to focus on the pay of university teachers. Perhaps I should declare several interests. I chair financial appeals at both Oxford and Cambridge. I am a visiting Fellow at Oriel and an honorary professor at Birmingham. However, as we are discussing pay, I too, like the noble Lord, Lord Morgan, would note that I do not get paid for any of those involvements, which is all too familiar to all Members of your Lordships' House.

However, the involvements I have fuel my concern over the impact of present levels of university pay. The point has been made in part, but I shall repeat it. We need to recruit, so it seems, an additional 42,000 academic staff by 2010, the target date for the 50 per cent objective for university education. By that time, coincidentally, almost 50 per cent of academic staff will be on the verge of retirement. The problem is particularly acute in certain areas: 47 per cent in terms of mathematics; 45 per cent in physics; 44 per cent in engineering and 40 per cent in chemistry.

Will we be able to recruit 42,000 academic staff by 2010? The prospects at the moment are bleak. The answer to that question must be that it is highly unlikely. The UCEA report, Recruitment and retention in employment in UK higher education, finds a situation that has steadily deteriorated over the past four years. There are specific areas where the urgency is greater than others; for example, computing and information technology, engineering, biological sciences and medicine. These areas are clearly important to our national competitiveness and, indeed, to our sense of well-being. Also particularly badly hit is accountancy, but I am not sure that its impact on national competitiveness and our sense of well-being is quite as unambiguous as the others.

We all know that starting salaries in higher education are low by comparison with other professions. The noble Lord, Lord Lamont, has already pointed that out in contrast with the Civil Service, but they are dangerously low when compared with levels in the United States where there is the magnet of alternative employment.

Will the extra funding for higher education in general, and the 19 per cent in real terms specifically for university funding over the next three years that the Government announced in January, help? Yes, of course it will, but on its own it will not be enough.

In many ways, January's White Paper, The Future of Higher Education, was robust, ground-breaking and positive. But it acknowledged that if British universities are to compete internationally and bridge the funding gap, including that on pay, they must raise much more money. That is critical to the issue of pay. That will mean a cultural change in some universities,

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although my personal experience in trying to help raise money at Cambridge for chemistry and at Oxford for German language endowments has persuaded me that those two universities are increasingly aware of the need for private and corporate giving, and, indeed, are increasingly adept at achieving it.

In the 19th century, Cardinal Newman wrote:

    "A university is an Alma Mater, knowing her children one by one, not a foundry or a mint or a treadmill".

Twenty-first century universities will of course not become mints but they will have to make a great deal of money in order to survive and be competitive. A key to that will be knowing their children one by one. The databases of alumni are really vital to future fundraising by universities and maintaining contact with alumni is absolutely essential.

I have a number of concerns and questions for the Minister. Many in this House, and more broadly in the country, feel that there is a danger that the decision on top-up fees may in the future reduce the generosity of graduates towards their Alma Mater. I think that matter must be addressed.

Secondly, and this is the main point that I wish to make today, there is a sense when reading the White Paper, and one feels it also more broadly with government policy, that there is still this rather touching belief that somehow the private sector—the corporate sector—will step in as a kind of Santa Claus and redress the balance and fill the gap caused by shortages of public funding. The atmosphere for raising money—corporate giving—by universities and indeed other charitable institutions, but particularly by universities, has never been tougher. We are really pushing water up the hill. The combination of the collapse in capitalisation values of companies and what has happened to the stock market collectively and accumulatively has transformed the atmosphere. I think we are in for a real struggle.

It would be quite wrong to allow ourselves to believe that, when we have done as well as we can from the government side, somehow automatically the corporate world will step in and fill the gap. I do not believe that. I wish it were true, but I think that it is no longer so.

In the White Paper there was reference to establishing a task force to look at corporate giving. I think that that is a priority that needs a great deal of fresh thinking. I ask the Minister what progress is being made with that. I note from the White Paper that the task force's terms of reference include encouraging potential donors,

    "to promote the existing incentives for individual and corporate donation";

in other words, making the most of the charitable status of universities and current Gift Aid mechanisms. My question for the Minister is: why only existing incentives? We are in a changed situation. The atmosphere for corporate and individual giving has significantly deteriorated. In this situation I believe that it is very important to throw the thinking much wider and to look at a whole range of other

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possibilities. The White Paper makes the comparison, for example, with endowments between American universities—and Harvard in particular—and British universities. That gulf is absolutely colossal. But, it is not an accidental gulf; it is there in significant part because of the tax benefits and the arrangements that have been made and which are part of the culture of corporate and individual giving in the United States. We should look at that matter again if we are serious about maintaining the competitiveness of British universities.

I have a further question. Will No. 11 urgently review the possibilities and open its mind to other possibilities?

The White Paper is encouraging in saying that the Government will explore how we could provide "matching funding" to incentivise university fundraising. If the Government go down that track, it is very important that the criteria for matching funding are not so prescriptive that they are self-defeating. It will be important to open the criteria for matching funding.

Finally, we face a kind of crisis on university pay. It is a crisis that is not wholly upon us, but which will progressively become more acute. The Government have taken a significant initiative in the White Paper. The universities themselves will clearly need to be increasingly imaginative and flexible in creating differentiated and differentiating pay packages, particularly if we are to attract people in the sciences to teaching in the universities. It is important that universities are willing to look at the question of differentiation.

The issue will not go away. This debate, which was introduced by the noble Lord, Lord Lamont, is useful and timely and this House must raise the question again and again. I believe—slightly differently from the noble Lord, Lord Lamont—that our competitiveness as a nation in no small part turns on our ability to attract and retain the best teaching skills in our universities.

7.29 p.m.

Lord Hannay of Chiswick: My Lords, the timeliness and topicality of this debate initiated by the noble Lord, Lord Lamont, almost goes without saying. It comes two weeks or so after the publication of the White Paper on the future of higher education, of which this topic is an integral and essential feature. I hope that it will enable the Minister to say rather more about the pay of university teachers than was contained in the relatively sparse references to the subject in the White Paper. It also provides an opportunity for Members of this House to contribute to the Government's thinking during the consultation period that runs until the end of April. Those are all good reasons to thank the noble Lord, Lord Lamont, for his initiative.

In declaring an interest as pro-chancellor of the University of Birmingham, I add that that post requires me also to chair the university's remuneration committee, which brings me into direct touch with the

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subject of today's debate. It also leaves me after each committee meeting with a feeling of shame and embarrassment at the salaries that universities pay their academic staff.

I do not want to bore the House by reciting more statistics about academic pay relative to other sectors. Others who have preceded me have already set out the basic facts. I was particularly struck in an earlier debate by the illustration given by the noble Lord, Lord Moser, of how the relative salaries of civil servants and academics have diverged during the past five decades to the detriment of the latter.

If that divergence reflected a judgment of our national priorities, it would be a sad commentary—I say that as a former civil servant. It probably does not; it is probably a lot more haphazard than that; but the hard fact is that after many years of imposed efficiency savings, universities have been starved of the resources to pay their academics at a time when student numbers have been increasing exponentially and the demands on academic staff expanding. It is hardly surprising if teaching standards have declined and that the need to raise them is, rightly, one of the key themes of the White Paper.

The White Paper is surely right to underline the twin objectives of our whole higher education system—research and teaching—and to argue that the latter has tended to be the poor relation of the former. But it then proposes many more remedies and resources for research than for teaching. It fails to recognise that, whereas many academics who specialise in research have a number of ways to supplement their salaries, those who concentrate more on teaching than on research are less favourably placed in that respect.

So low pay impacts on teaching in particular, yet we are living through a period of rapidly expanding demand for university teaching. The targets for increased and wider access mean that that demand will continue to rise in the years ahead. If nothing is done to improve academic pay and, in particular, to make a career focused on teaching more attractive, the outcome will surely be a loss of quality.

That would be extremely damaging to the future of our whole society and to the prospects for our competitivity in a knowledge-based global economy. After all, the vast majority of university students do not end up doing research. Their years at university are the ones in which they acquire a lot of the knowledge and some of the skills with which they go through life. If they are well taught in that period, that contributes to a public as well as to a private good. If they are less well taught, that has clear negative implications.

It is also my experience that the inadequacy of academic salaries contributes to the basic conservatism and risk-aversion of our higher education system. If the rewards of success and imaginative effort are small, why on earth exert yourself? If universities cannot reward high performance adequately, if they cannot attract the best and the brightest, we risk programming ourselves for mediocrity. The Government continually call for more effective management and governance in our

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universities. Much has been done and achieved; and no doubt more remains to be done; but it is hard to do so if one is deprived of the means for motivating people and if retaining the people of highest quality is made more difficult.

That brings me to one of my favourite bugbears: the excessive bureaucracy that has been heaped on universities in recent years. It is bad enough to pay academics too little; it is even worse to do so and at the same time to require them to devote an increasing amount of time and effort to tasks that relate to neither of their main objectives—research and teaching. If the Government were to devote serious effort—I noticed some reference to this in the White Paper—to reducing the bureaucratic burden on universities, that in itself would contribute to a reduction in the impact of inadequate pay on academic recruitment and retention .

That must sound like a long list of complaints, but I do not want to sound merely grudging about the recent White Paper. In many respects, it is a breath of fresh air. It contains some excellent proposals that we will no doubt debate more fully at a later date. But in almost every respect, what is in the White Paper is a case of jam not today, not even tomorrow but many tomorrows away. The cash flow from tuition fees will not begin to have a major impact until about 2009. That is far too long to wait to address the long list of weaknesses arising from the inadequate pay of university teachers.

So I hope that the Minister will be able to say a good deal more about how that gap is to be bridged and how remedies can begin to be found in the mean time. In any case, perhaps he would answer a specific question: whether, as is being said, there will in fact be no additional resources for teaching in universities this year, rather than the 6 per cent in real terms that is trumpeted by the Government whenever they speak on the subject.

The conventional wisdom, when the Government provide substantial additional resources to a sector of the economy, is that those resources must not be, as it is said, "frittered away" in pay increases. Indeed, I noticed that the noble Lord, Lord Lamont, with great generosity recognised that he had expressed that view in earlier times, when he was Chancellor of the Exchequer. This debate demonstrates that that conventional wisdom is inappropriate to apply to the pay of university teachers at this juncture.

The University of Birmingham has managed to recruit only 50 academic staff under the age of 30 in the past five years. If that trend continues, in 10 or 20 years' time, we shall not have the world-class universities that this country wants and needs.

7.37 p.m.

Baroness Warwick of Undercliffe: My Lords, I join other noble Lords in thanking the noble Lord, Lord Lamont, for providing this timely opportunity to discuss one of the most crucial issues facing the higher education sector, which is especially close to my heart as a former general secretary of the Association of

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University Teachers. I hope that the noble Lord will not mind me savouring for a moment the vision of him in repentant shroud, as I spent the five years or so of his Chancellorship knocking on the door of the Treasury seeking money for university salaries. I declare an interest as the chief executive of Universities UK.

There are about 117,000 full-time and 24,000 part-time academic staff in our HE institutions. Including support staff, the total number of staff employed by the sector is more than 300,000. Each noble Lord who has spoken has highlighted the problems of low academic salaries in the sector, which are recognised by everyone in the sector and, as the noble Lord, Lord Lamont, said, was recognised by the Prime Minister just before Christmas.

We have growing problems in recruiting and retaining staff in many areas. As research carried out last year for Universities UK and the employers' organisation, the Universities and Colleges Employers Assocation, showed, a fifth of all universities and HE colleges now experience difficulties most of the time when recruiting academic staff, especially in subjects such as computing, law, engineering and education, which have all been mentioned. About a fifth of all institutions also face difficulties most of the time recruiting administrative, technical or clerical staff. Almost half of our institutions have difficulty most of the time when recruiting manual staff.

As everyone has acknowledged, the primary, but not the only, cause of those problems is uncompetitive salaries compared to those available elsewhere, particularly the public sector. For instance, pay increases for schoolteachers and NHS staff have now badly affected recruitment of the academics needed to train those staff. In some areas, by no means only London and the South East, pay levels for support staff are well below those for similar staff in local labour markets. There are also problems in our medical schools. A survey last year of medical and dental clinical academic staff by the Council of Heads of Medical Schools suggested that there were 73 unfilled posts at clinical professor level and 136 at clinical senior lecturer level.

Meanwhile, the attractiveness of salaries in the private sector has had a major impact on universities' ability to recruit and retain experienced staff to teach in such areas as economics, accountancy and law. The attraction is so great that it is now difficult to encourage many graduates to do postgraduate work, the first step towards an academic career. Several noble Lords mentioned the size of the challenge that institutions face in recruiting new staff in the next few years.

Why exactly do the problems in recruiting and retaining staff matter? In the academic field, for example, staff-student ratios have got radically worse. That has meant a radical worsening of the student experience. The diluted contact with staff has been tackled in several ways, including teaching by postgraduate students. That results in mutual gain, because it helps to prepare postgraduates for teaching roles. But, it cannot be a long-term solution. It is

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essential to maintain the availability of pastoral and learning support through academic staff, because that is what students value most. Universities have gone to great lengths to preserve the standards of their degrees. In an internationally competitive market for students, they could not do otherwise. But continuing pressures on staff as ratios worsen will damage the student experience and threaten standards and quality.

On 22nd January, universities learnt how much they will receive from the 2002 spending review settlement—overall, a 6 per cent increase year on year. The sector in general recognises that that is a necessary start to reinvesting money in a sector that has seen more than 25 years of cuts. It is certainly welcome. But, as is always the case, we now have the major task of unravelling exactly what that will mean for the universities' bottom line. There are always strings attached to funding increases, and this White Paper is no different. We welcome the continuation and increase in the funding earmarked for rewarding and developing staff. But, at present, there is a lack of clarity about how the money can be used to modernise pay structures. I predict that simply tacking performance rewards and market supplements on to the present rickety, old arrangements will be a sure route to many employment tribunals.

So it is vital to change pay arrangements. That is already happening under the auspices of the new Joint Negotiating Committee for Higher Education Staff. I hope that it will bring in new structures better to serve the needs of our diverse institutions. Those new structures will help to ensure equal pay for work of equal value; respond to developments in the delivery of teaching and learning; and offer clear links between staff contributions and their rewards. I hope that the money to reward and develop staff will allow universities to reform their pay structures in that way.

But there are serious issues that we need to watch out for. I agree with the Government that wider use of market supplements is necessary to tackle many of the problems highlighted today. But they are not a panacea. Used rashly, they would exacerbate the equal pay problems that everyone in the sector is working to eradicate. That is an outcome that neither my noble friend nor I want.

Then there is the dog that didn't bark. One of the glaring omissions from the White Paper is any mention of support staff and how they should be properly rewarded. If we focus too much on academic salaries and forget the pay of non-academic university staff, we risk selling short both the staff and the students who depend on them.

Recently, one Government proposition in particular caused the university world some confusion: that average salaries in the UK were higher than those in the US. Heaven knows what indefatigable researcher came up with that, but it flies in the face of the experience of academic pay in the US that many colleagues in this country have. If experience is not enough, let me give noble Lords two reasons for doubt. First, the definition of a university in America is wider than in the UK. So a consideration of the whole US

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sector might well include institutions that would not be called universities here. In addition, a large swathe of academic salaries in the US cover only nine months of the year, whereas they cover 12 months here. But, in any case, as other noble Lords said, when one compares salaries like with like, professor with professor, senior lecturer with senior lecturer, the proposition does not stand up.

What other issues does the White Paper highlight? There is bound to be a lively debate on differential fees for undergraduates, both in this Chamber and in another place. However, I hope that we will look at the impact of increased levels of graduate debts on postgraduate choices. For example, will increased debts deter graduates from the expense of postgraduate research? What impact will that have on the supply of tomorrow's university teachers? I hope that my noble friend can assure us that the issue has been, or will be, considered as a matter of urgency. The noble Lord, Lord Brooke of Sutton Mandeville, referred to the Parliamentary and Scientific Committee lunch that we both attended today. At that meeting, a senior academic from an academic family sadly told me that neither of his recently graduated children were prepared even to contemplate the prospect of becoming academics even though they were well qualified to do so. That experience is writ large in similar families across the country.

Finally, I share with the Government an awareness of the need to recruit, retain and reward the brightest and the best in our universities. But I urge my noble friend to bear in mind that the problems that universities face are not confined to high-flying academic staff. A recognition of the essential role of support staff in achieving the academic excellence that the Government want to see would be a welcome step. I hope that the Minister will agree.

7.47 p.m.

Lord Quinton: My Lords, I, too, declare an interest. Until 1987 I was in direct receipt of university payments. Since then, I have received a modest pension in recognition of my past services. But I do not think that that should debar me from taking part in the debate, because everything I shall say is non-retrospective. I am not urging any rectification of past deficiencies but looking to improvements for the future. We must all be grateful to the noble Lord, Lord Lamont, for raising the matter. I am glad that it was not raised in too comprehensive and massive a form—for example, in a debate about the welfare, well-being or future of universities. Rather, the debate is tied to a particular feature of the problem: payment.

I propose to talk about a smaller sector of the university world than that discussed by most previous speakers. I shall explain why later. On an autobiographical note, as a university teacher I soon became aware that university teachers were discriminated against financially. That theme emerged over time. Other employees seemed to get increasingly well paid, but university teachers did not. So I introduced research of a highly sophisticated character, with the Oxford University Gazette in one

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hand and Whitaker's Almanack in the other. I consulted several past numbers of both to see how professorial salaries compared with Civil Service salaries. Someone—I cannot remember who it was—suggested earlier that the salary of a principal in the Civil Service was roughly equivalent to that of a professor in a university. My experience was that professors were gradually sinking and that lecturers were not much above doorknob polishers in the Civil Service. The gap was getting larger and larger.

Where does that have its most deleterious effect? It produces a brain drain. We used to talk about a brain drain 30 or 40 years ago. In the natural sciences, it was already as serious as it is now, but, in my experience, the brain drain had a mild, playful quality. Fairly tweedy characters of no great pretension or ambition went off to fairly tweedy colleges in the United States of no great pretension or ambition, and that was an acceptable and tolerable move. That is no longer the case. Now, the very best people go to North America.

I shall take the example of my own discipline, philosophy, because I know more about it. It is not difficult to discern what is going on in respect of the merits of newly emerging philosophers; it is a bit like football. It is a close, tight-knit profession, and judgments pass from mouth to ear. A fair consensus—never universal, of course—is usually reached on someone's abilities. Over the past two decades, about eight people of the highest ability have emerged. Seven of them are employed in the United States; the eighth is very young and may not yet have made up his mind. There is a fearful creaming-off of emerging academic talent.

Other noble Lords spoke about the problems of the lecturing profession as a whole. They are serious, but I am not sure that the problem is not even worse at the top. Sooner or later, there will be nothing left. I fear that Britain will become a sort of academic Nepal, sending its best young people off as Gurkhas to the academic frontline in the United States, either never to return or to return, battered and bemedalled, when they are not much use for anything.

It is a serious problem, but how much does it matter? Some would say that it does not really matter and that the system can get on perfectly well without such glamorous figures. I am not sure that that is so. In what I will call—rather repulsively—a cultural domain, the role of the star is nearly as important as it is in a football team. They are objects of emulation. They are great invigorators. In particular, academic disciplines can get somewhat ossified, if nobody comes along to—I mix my metaphors atrociously—move the goalposts and bring about a different view of how the subject should be conducted, the direction in which it should go and the things that it has hitherto neglected and should now take up. That is not the work of decent, ordinary, middle-level academic performers; it is the work of remarkable creative and original people. Such people are the salt in the fine, nutritive educational pie, and it will be a disaster, if they are all creamed off.

I cannot give anything like the dramatic figure that I gave for philosophers for, say, historians. However, even on the TV, the two great historical performers of

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recent times are British academics, one of whom has been in the United States for a considerable time and the other of whom has just gone there.

As has been said, the suffering of all academic staff is not solely a matter of pay. It is also a matter of what might be called in good trade union language "conditions", by which I mean the distribution of the workload and many other things. Such things may seem trivial, but they include things such as the ability to get to conferences or access to secretarial staff. The noble Baroness, Lady Warwick of Undercliffe, referred to the problem of support staff. My experience of university life was that there was little of it, and there was little assistance to be obtained. No doubt, things have picked up a bit in our more technological world.

Does it matter? I said that it did. I cannot quantify such things, but it matters more intensely than the problems of the broad mass of lecturers. The problem with lecturers is so obvious, immense and immediate that something will have to be done about it, unless we are prepared to let the whole university system disintegrate. The departure and non-return of the people about whom I am speaking will not cause the disintegration of the university system but will cause a lack of savour. The word "mediocrity" has been used from time to time. There will be an approximation to the condition of Spanish universities in the eighteenth century. I do not think that anyone will be insulted by that comparison.

There is another reason why it matters. There is a great tradition of remarkable university academics in Britain, and it would be terrible if it died down and everybody became Mr Chips-like. I do not say that Mr Chips-like persons are not splendid, but they need some rat-like genius there to ginger the whole thing up intellectually. What would it have been like if Wordsworth, Coleridge, Byron, Shelley and Keats had been seized by Harvard, Yale, Princeton, Columbia and Berkeley as full-time permanent poets-in-residence? We would have had to make do with Crabbe, Felicia Hemans and Robert Southey. What would have happened afterwards? How could a tradition have been kept going after such a fearful lacuna? That is the menace that hangs over us.

It matters most of all from the point of view of stimulus, invigoration and vitalisation of subjects. I also hope that we might see a patriotic motive for sustaining and retaining our most gifted people and not letting them float away to employment elsewhere. I hope that, in what must be a massive re-thinking of university remuneration, they will not be left out.

7.58 p.m.

Lord Sutherland of Houndwood: My Lords, I thank the noble Lord, Lord Lamont of Lerwick, for introducing the debate at such an appropriate time. We have all benefited from his initiative. It is a particular pleasure to follow my colleague, the noble Lord, Lord Quinton, who is a distinguished philosopher and academic. He spoke with

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characteristic skill, accuracy and style. I shall not, however, rise to the bait and respond to the coat-trailing of the former vice-chancellor of the University of Aberystwyth about cricketing skills. I shall not deter the House with a detailed account of what I can only regard as the Welsh equivalent of what the Australians call "sledging".

The needs that we confront are clear. They are twofold. First, we need a baseline for salaries that is adequate and appropriate for all competent professional staff in the university system in Britain, of whom there are very many. They ought to be treated as professionals and be able to share in the steady increase of national wealth in a way that they have not hitherto been allowed. Equally, we must ensure that those who have international excellence—for all the reasons just given by the noble Lord, Lord Quinton, and by others—can be persuaded that their families can stay here and enjoy a respectable quality of life. They are not seeking huge salaries. But, on the other hand, they have responsibilities to families and to ageing parents. They ought to be able to remain in this country; they ought to be retained here and, if necessary, recruited back.

Many general comments have been made. I shall particularise and draw to your Lordships' attention a specific individual. I refer to a university teacher who is acclaimed internationally for the quality of his teaching. He attracts students to his own classes from around the world and, indeed, from his native city. Political and intellectual leaders recommend him to their best prospects, to their best pupils and to members of their own family. Not only is he a skilled and dedicated teacher, but his books are in great demand. Indeed, it is safe to say that they will be in demand a century or two after his death. Yet, even he, as a full professor, has to offer bed and breakfast, at an agreed rate, to his pupils or to as many of them as he and his wife can accommodate. One might judge him to be the veritable paradigm of an academic who knows what it is to be a penny short of the full shilling.

Who then is this exemplar of the matter before us today? It is safe to say that he will not mind or be embarrassed that his name is placed on record in Hansard for all to behold. It is, in fact, Dugald Stewart, one of the great figures of the Scottish Enlightenment, who lived and taught in Edinburgh for several decades at the end of the 18th and beginning of the 19th centuries. Why mention him? Is it simply an attempt to say that the academic poor are always with us, and always will be? Certainly not; because he, Dugald Stewart, managed to obtain a quality of life better than most academics could afford today. His exceptional gifts as a teacher brought their own rewards which were tied to his reputation, his competence and his teaching practice. He was allowed to supplement his limited stipend from the public sector by putting a price on the practice of his gifts. Like other professors in his university, he was permitted to charge each student who chose to come to his classes a per capita fee to supplement his public sector salary. One might

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say that was an early precursor of top-up fees, which helped to deal with the inadequacies of public sector academic salaries.

Of course, there is no one-to-one correlation. I am not suggesting that university teachers should stand at the entry to their classrooms asking for brown envelopes to be handed over as the students go in. There is no one-to-one transfer from Dugald Stewart's time to our own, nor vice versa.

However, there are lessons in this. Before I draw out two—I think that they are very clear lessons—let us be momentarily fanciful of what it would be like if Dugald Stewart were alive today and trying to practise in this way to enhance his meagre earnings. The key experience that he would have, in addition to being an excellent teacher and researcher, is he would be regulated.

On Monday, the funding council would send him an e-mail followed up by a hard copy wishing to be reassured that he was not using his additional teaching income to subsidise his research, and vice versa. That would take an hour or two to justify.

On Tuesday, the cold wind of the research assessment exercise would blow through his study in the form of a letter from his vice-chancellor—I say to the noble Lord, Lord Lamont, yes, we too have sinned—writing to him to point out that he may be spending too much time making beds and preparing breakfast for his student lodgers. Does that leave enough time to prepare his four peer-reviewed papers for the next research assessment exercise? So he would have to deal with that.

On Wednesday—oh, the delight of Wednesday—there is a new form of regulation: the access regulator would wish to know the postcodes of the home addresses of those students who come and lodge with him during university terms, lest he gets the balance wrong.

On Thursday, the Quality Assurance Agency would ask the reasonable question whether the charging of fees at a personal level was not interfering with the entry standards of his particular classes.

On Friday comes a self-imposed home goal by the university: the local ethics committee would check up, with the help of the director of finance, that he was not undercutting student hostel prices in the services that he and his wife were offering.

Yes, of course, that is silly. But it is a picture of the bureaucracy and the degree of regulation from which we suffer today in the university world.

I have two messages. The first can be taken from the 18th and 19th centuries: public sector sources of funds must take account of salary differentials between university teaching and other professions. Noble Lords who have already spoken have given adequate evidence of the need to do that. I simply emphasise a point that I made previously. The council of British professors of computing science has conducted a study of the number of chairs which lie vacant in Britain in this key subject simply because salaries are not sufficiently attractive to ensure that the next

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generation will be taught at an appropriate level. There must be an adequate base within the public sector as the structure hangs at the moment.

Secondly, the increasing burden of regulation on universities must be set aside to allow them the freedom necessary to recruit and to retain especially those staff of the highest calibre. We must be allowed the freedom to find whatever may be the 21st century equivalent of Dugald Stewart's capitation fee.

8.6 p.m.

Lord Oxburgh: My Lords, I declare an interest. Most of my working life has been spent working in or for universities in this and other countries. Most recently, until two years ago, I served as rector of Imperial College. At present, I am an honorary professor at Cambridge. I should also like to echo the sentiments expressed by those who spoke earlier in thanking the noble Lord, Lord Lamont, for raising the important matter of university salaries and for his very clear exposition of the current problem.

Pay in our universities is a disgrace to our society. It is damaging to our system of higher education and, indirectly, the long-term prosperity of the country, not to mention its cultural heritage. I do not believe that the Government should have any direct involvement in or responsibility for how people in universities are paid. However, successive governments do bear responsibility for funding higher education at such a low level that very little money was available for salaries. As a vice-chancellor, I saw salaries as but one expression of the general underfunding of universities, and I believe that salaries have to be considered in that general context.

The majority of universities in England derive the greater part of their income from teaching. Over the past 25 years, the unit of resource—the average sum paid by government to universities for each undergraduate taught—has approximately halved. Over that same period, student numbers have increased by approximately a factor of three, so that today more than 40 per cent of young people in England go to university.

How did universities cope with this reduction in resource? They did so in a number of ways. First, they looked for improved efficiency, and of course increased numbers offered some opportunity to reduce overheads. Secondly, those that could, subsidised the teaching of UK teachers from other income, particularly that derived from teaching students from overseas, who paid the full cost of their studies. Needless to say, that was an option that was available largely to the better known universities.

And then—and this was serious—virtually every university was obliged to defer long-term maintenance and to accept that their buildings, their classrooms, their lecture halls and their laboratories would become progressively more dilapidated.

I have personal experience of the consequences of that from my time at Imperial College. We had negotiated and won, against international

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competition, a major contract for research with a US-based multinational company. The day arrived when the relevant vice-president was due to come to London with his entourage for the formal signing of the agreement. They arrived and, quite reasonably, asked to see the laboratory in which the collaborative work was to be carried out. We took them to see it. It was neat; it was clean; it was fully equipped to do the work. But its most recent refurbishment had been in the late 1930s and the outside of the building was far from prepossessing.

They said little as they went round but, as they came out, they said that they wished to discuss some details privately. Half an hour later, with some embarrassment but quite firmly, they said that they could not proceed with the agreement because, although they knew that the work would be good, they felt that the reputation of the company would be damaged if it became known that work important to them was carried out in such surroundings. That was not a good day.

Universities also saved money by giving less personal attention to students. The average number of students per teaching staff member increased from around 10 in 1986 to more than 18 in 2000. But, finally, they saved money on paying staff, at every level—secretaries, technicians, maintenance staff, lecturers, administrators—and the consequence is the levels of pay and the recruitment problems that were referred to earlier.

Of course, as officials and Ministers to whom I used to make these points were quick to point out, a reduction in resource does not necessarily mean that the reduced resource is inadequate. It could simply mean that the provision had been too generous and that there was fat to be trimmed. All I can say is that, although purchasing parities make fair comparisons difficult, British universities have for a number of years been run very inexpensively by any fair international standard of comparison.

The other argument was that there was no case to increase university salaries because there were always applicants for posts that were advertised. This is, of course, generally true—but it is rather facile to conclude that this proves that pay levels are adequate. There will always be those who wish to teach in universities, but many will simply not be up to the job. I believe that many universities have been obliged to appoint people with lower levels of attainment than they would have wished simply because they had to have someone to teach the students.

Perhaps a clearer indicator, however, is that even when it has been possible to appoint first-class young people they have not stayed in the profession for very long. I have seen many who were prepared to take a first job as a junior lecturer on pay that, although not very good, at least offered a better standard of living than they had had as a research student and, above all, allowed them to continue working in the discipline they loved. That was all very well for a year or two, but then, naturally enough, they married and had

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families—and it was at that point that many found that they could not manage and resigned to take posts outside the system that paid better.

Another significant indicator is the difficulty in filling research posts. At the time I left Imperial College we had an alarming number of research posts, paid at junior academic levels—but, admittedly, without long-term prospects—which we simply could not fill. True, there were plenty of applicants but they were simply not good enough. A few years earlier they would have been snapped up by first-class people.

The Government's White Paper on the future of higher education is to be broadly welcomed—although I hope that the process of consultation that it invites will lead to a number of significant changes. The most important element of the White Paper is that, for the first time, it gives government recognition to the fact that there is indeed a funding crisis in our universities and, unless something is done about it, the system will slide into mediocrity. That is important.

This is not the time to discuss the White Paper in detail. There are new funds for research and infrastructure and these are certainly to be welcomed. It seems to me, however, that when allowance is made for the various new initiatives that are contemplated, the unit of teaching resource, which underpins the finances of many institutions, remains, in real terms, very much as it is today. Top-up fees may help some universities but certainly not all.

These days, the term "university" is almost as all- embracing in this country as it is in the United States. Different universities do different jobs, in different ways and in different parts of the country where costs may be different. This means that there must necessarily be differences in salary levels to match a wide variety of different situations. But it seems to me that, in spite of the opportunities offered by increased fees, the current proposals do not go far enough towards meeting the fundamental costs of running any university and thus are unlikely to do much for general levels of pay.

Universities are important to this country. Our long-term prosperity depends on the quality of the education that they offer. That quality ultimately depends on having the right staff. No one takes a job in a university expecting to become rich; nor should they. But equally, they do not want to feel poor. Work in a university at one time—as my noble friend Lord Sutherland pointed out—had many attractions. Let us see whether we can put some of them back and help universities to attract and retain the staff that they need to ensure that our universities have a future that matches their distinguished past.

8.16 p.m.

Baroness Sharp of Guildford: My Lords, I, too, thank the noble Lord, Lord Lamont, for introducing this timely and important debate. I declare an interest, having spent most of my life as an academic. I was recruited into that profession in the post-Robbins expansion. On leaving Cambridge, I spent three years in the Civil Service, and married a civil servant. I joined

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the staff at the LSE in 1963. I believe I am right in saying—the noble Baroness, Lady Warwick, can correct me—that the noble Lord, Lord Chorley, was then secretary of the AUT. I can distinctly remember him saying to me: "We are at long last breaking the link between the academics and the Civil Service. This can only be to our benefit". How wrong he was. I ended my career running a research group on a professorial salary well below the grade 7 maximum at that time. It is sad to see the degree to which academic salaries have fallen way behind not only Civil Service salaries but local government and other public sector salaries.

The facts and figures have been recited by many speakers. I do not think that there is any point in my repeating them. Like others, I was delighted that, just before Christmas, the Prime Minister picked up the 4 per cent real increase over the past 20 years as compared to 45 per cent elsewhere. In the days when I was a academic it was not quite so bad as that. I used to use the example of the 1 per cent real increase and 37 per cent outside increase, which was the position in about 1998.

There is no doubt that starting salaries in universities are much too low, as are career prospects. I used to recruit young lecturers. They would now receive a salary of 22,000 at age 27 or thereabouts, at point 7 on the scale, having done a Master's degree and a PhD. Seven years later, at point 14, a lecturer receives 30,000. That is not too bad, but let us look at the comparators: a school teacher, even without outside responsibilities, would be earning somewhere in the region of 32,000; an environmental health officer would be earning 41,000; a major in the Army 45,000; a grade 7 principal in the Civil Service, at the top end of the scale, earns 45,000; and a police inspector 42,000. The lack of prospects over the medium and even the long term—after all, the average professorial salary is now about 50,000 or 52,000—is combined with the responsibilities that lecturers are now expected to bear.

We have cited the number of professions in which it is difficult to recruit—these are largely where there are obvious jobs to go to outside, such as IT, computing, engineering, economics, accountancy and so forth—but in other areas there is a surplus of people applying for lecturer posts. Why? There are a number of interesting issues here. To some extent we lock people with a PhD into a career. I have known a number of students who, having undertaken a PhD, apply for a career in, say, journalism or broadcasting, and are told, "You are too specialist for us". These are bright students who do a Master's degree and go on within the university environment to do a PhD. Their ambition becomes to achieve within that university environment, which is fine, but sometimes we lock them in.

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We have also increased the number of contract researchers. Almost 50 per cent of those employed in universities are contract researchers, and their ambition is to get a tenured lectureship.

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