WEDNESDAY 30 JANUARY 2002
Dr Ian Gibson, in the Chair
Memorandum submitted by Department for Education and Skills
Examination of Witness
MARGARET HODGE, a Member of the House, Minister of State for Lifelong Learning and Higher Education, examined.
(Margaret Hodge) First of all, let me say that there is a misunderstanding about the purpose of the RAE. The RAE is not there to determine the quantum of money that the government invests in the research infrastructure; it is there to assess the quality - the relative quality - to give a mechanism for then distributing the quantum decided by the government. I do not get the vibes you do, Chairman, about it being a hated exercise by academics - maybe we talk to different academics. I think it is a peer review exercise which has a lot of credibility in the HE sector, and I also think the vibes I got after the results were announced this time were that a lot of people were chuffed with themselves. If I can give you a few statistics, the number of staff who are now in 5/5* departments has risen to 55 per cent of those who were entered compared to 31 per cent in the 1996 exercise, so that is something of which the research community should be proud and which UK plc should be proud. Clearly, within the quantum, it became impossible to maintain the formula that had been used for the 1996 distribution. We are anxious to sustain a good research capacity in the UK. I heard when I came in how well we are doing in terms of citations worldwide and so on, and we want to sustain and maintain that, so we found 30 million from an underspend which was the maximum we could find which will hold the fort. It is a one-off but it will hold the fort between now and the comprehensive spending review settlement when it may not surprise you to learn we are going to be seeking additional resources for research and other things in universities.
(Margaret Hodge) Devolution!
(Margaret Hodge) The decision is one for HEFCE. Of course there are discussions with us but it is one made by HEFCE. It is one I feel perfectly comfortable with because it is vital that we do sustain those research departments that excel internationally and the 5/5* ones have an international position so, in terms of priorities for funding, the sustaining of that international position must be our first priority.
(Margaret Hodge) Let me step back a bit from your first question. Having now had the portfolio for six months or so and thinking about how we fund research in the UK, we are trying to do a lot of things out of probably one pot of money which does not quite work. We are trying to fund basic research capacity where we can: we are trying to fund and promote and foster international excellence, which we must do: and we are trying increasingly to fund a knowledge-transfer capacity in regional economies. At the moment we probably try to do too much out of the one stream of money and too much out of that one assessment. One of the reasons I welcome the review that HEFCE is now undertaking is that it will give them an opportunity to step back and think a little bit about the sensitivity of the current regime to funding those three purposes, and whether it is fit for purpose. One of the things we are reflecting on as we prepare our CSR bid is again, if we are going to concentrate resources on the internationally excellent research departments, how we then keep a flow of growing departments and have most universities in all regions making a contribution to their regional economy. It may be that we need to look at a new settlement, a new way of funding, building perhaps on HEROBC/HEIF funding for some of the new universities, for example, who may not have done so well out of the RAE exercise, looking at whether or not, given the bunching up at the 5/5*, that is sensitive enough to those that we want to promote internationally. Also, of course, it all depends on the total quantum; the more money you have, the more generous you can be across the board. On your second question about new universities emerging, one of the interesting things and one of the successes of the RAE and all the funding research is that there has been quite a lot of fluidity in the system and Oxford Brookes, as an example of a new university, has done pretty well out of the RAE exercise this year and does very well out of the HEIF funding as well, so there is some fluidity in there. We have to keep maintaining that but remember that the purpose of the RAE is to measure relative excellence and distribute according to that.
(Margaret Hodge) What do you mean?
(Margaret Hodge) The options open to HEFCE were to ignore the results of the 2001 RAE exercise because they have to live within the quantum that was given them. We have moved on. It needs to be given a three-year settlement not a one-year settlement so they know the amount of money that is in the pot until the end of this spending review period, 03/04. You cannot suddenly magic - it is not a demand-led budget.
(Margaret Hodge) I think they use the additional resources that we were able to find mid-spending review period for them sensibly. Do I think that we ought to try and get more money for research overall? Yes. How should it be distributed? Well, I think that is for the RAE review and I still need to think about whether, over the longer term, we ought in that mechanism to be funding as wide a distribution of quality as we have in the past, and I think that is one of the issues up for debate in the review
(Margaret Hodge) What are you suggesting?
(Margaret Hodge) We have thought about, and no doubt you will reflect on that too. I think what the RAE has successfully done is focused universities on improving the quality of their research and I think, if you look at the benchmarking and you see what has happened to management research and what has happened to the composition of staff working on research, there has been an improvement in that management of research. Secondly, if you look at the citations, for instance, which is one of the measures we have to look at our relative success in research, we have gone up to 18 per cent in the last four or five years or something, which has been quite a considerable improvement, so if you look at quality as measured by that, the RAE reflected the improvement in quality and so did that. Is there an element of the clever old researchers in the HE sector learning how to manage the system that they themselves have put in place? There is probably a slight element but I do not want to overplay that. I think it is difficult to pull out and say, you know, that created a percentage improvement in people's RAE ratings. I think the prime reason that more departments did better is that they have got better.
(Margaret Hodge) That is again a matter for HEFCE to determine and I think they have been persuaded by the humanities academics that it takes them that long to find the fruits of their research. Interestingly enough, one of the things I hope that the review will do is look at that timeframe in which we undertake the reassessment of quality. There are various options: is it right? How can it possibly fit in better with government budget review timetables? Also, you might argue whether 5 stars need to be reviewed that often. These are all questions, I think, up for the HEFCE review and they will be looking at that and we will be talking to them about it, but I do not think there is a sort of, "If everybody accepted that in the world, why should we question it?"
(Margaret Hodge) No, I think they are all important. We have strong ambitions for the higher education sector. You have probably heard me say before that I think it is a sector that has suffered from massive under-investment for a generation: if you look at the cuts in unit funding in universities 36 per cent over the last decade is massive, and what is so pleasing really is that they have managed, despite that cut in funding, to sustain quality and expand numbers - quality both in teaching and quality in research - so I think interestingly enough for me, with all my experience of various bits of the public sector, this has been one of the more successful parts of the public sector in maintaining itself despite expenditure cuts.
(Margaret Hodge) Why? All I can say to you in response is our priorities are to expand wider participation and to have fairer access to universities, so there are two elements to that, so it is not just more numbers but from a much wider socio-economic profile of people, so that is one aspect. Increasing teaching excellence is another: maintaining our position for UK plc in terms of research pre-eminence internationally is another: and strengthening the links between the HE sector and their regional and local economies is a fourth in the business sector, so they are all our priorities. There is nothing wrong in such a broad sector spending quite a lot of money in having a lot of priorities
(Margaret Hodge) First of all, at this point we are in discussions across government as to how much money each of those priorities will require, and I cannot see us going for one and not another. We want to achieve progress in all four. I am surprised at your question - I am surprised that you see that one has to prioritise between them. I do not see that. I am trying to think of another analogy across another service, but if you were asked which is more important, your constituency role or your Parliamentary role, you would say you wanted to do both jobs properly.
(Margaret Hodge) So will I when it comes to it, and what we will want to do is to have sufficient resources to support those four very clear objectives we have set ourselves. I do not think that is a problem. You have several objectives in your job: you try to achieve more than one.
(Margaret Hodge) You are putting some presumptions behind that. I think across government there is a desire both for the purposes of inclusion in the economy to widen and broaden participation, and a desire to strengthen the research-base within universities, and both are necessary elements in achieving our overall economic objectives and our overall social inclusion objectives. It is not an either/or: we need them both. Whether we get enough money at the end of the day to meet, entirely, programmes that we might be able to pull out of a bottomless pit is another issue, but if you are asking me whether I will do one rather than the other, the answer is no
(Margaret Hodge) We work very closely, in a very joined-up way, with the Treasury and with the DTI on many of these issues and with No 10, so I am in very close discussions with my colleagues in DTI, Treasury and No 10 discussing what sort of programme we wish to put together for the next spending review period and how the money should be allocated. A lot of research money this time, for example, the infrastructure money, JIF/SRIF money came through DTI, the research councils' money goes through OST - there is a huge importance in getting proper joined-up government and I have frequent conversations and meetings and everything you can imagine with colleagues in DTI, OST and the Treasury and No 10.
(Margaret Hodge) I have said to Universities UK they are a very good trade union. If you are at a starting point as a trade union, you put in a big bid. I think it is slightly over-ambitious as to where we will end up but I do come from the perspective that I do think universities have been seriously under-funded over the last generation. I also think quite properly, in the first term of the Labour government, we focused our investment in education in the nursery and primary sector, and we recognise this time as a team that we have got to strengthen our investment and focus more to the secondary, post-16 and HE sector, and I think that will be reflected in our discussions ---
(Margaret Hodge) Yes, we certainly did.
(Margaret Hodge) Let me put it to you this way: we prioritised nursery education and did brilliantly on it. We are finally going to be the government, as somebody who has campaigned for it since my son was born some 30 years ago, that has free nursery education for all 3 and 4 year olds and I am incredibly proud of that - as indeed, I hope, are a number of my colleagues round the table. Equally, we put an 18 per cent increase into the HE sector - we did not ignore it. Over the spending review period they have 1.7/1.8 billion which is an 18 per cent growth, so we did not completely put all our eggs in the nursery basket: we spread it across. Having said that, however, I think the focus in this spending review period has to be on addressing some of the serious under-investment in FE, HE and secondary schools, and that is where we are putting a lot of our energy. That does not mean we are going to stop implementing our policy on nursery education which will require additional resources for us to get all free nursery places by September 2004.
(Margaret Hodge) It is not unco-ordinated but I think that the JIF and SRIF investments in particular that came through the DTI were not matched by equal increases in the QR funding and, therefore, the ratio of QR to other investment has altered and that is one of the things we need to address. So it is not that its unco-ordinated but in a sense it is very difficult to say what we should have done first, and I think that capital investment, although it required the institutions, as Universities UK said to you, to find 25 per cent of the money and that caused some distortion in some budgets of some higher education institutions, nevertheless that was warmly welcomed and has been a good step forward. We now have to build on that and consolidate, and make sure we have the proper revenue funding and that is why there is a cross-cutting review on these issues and why there is also the transparency review, to look at the real costs of research.
(Margaret Hodge) I have not seen it.
(Margaret Hodge) Yes, because they are represented on HEFCE. John Taylor sits on the HEFCE board.
(Margaret Hodge) On that board, yes. He is a member of the board and HEFCE is very consultative. There really is good collaboration on trying to get these things better and right.
(Margaret Hodge) Yes.
(Margaret Hodge) I think you are laying at the door of the RAE blame for something which is not really related to that exercise at all. I have got the figures here which show - I have not got the history figures with me - that across all sciences the increase in research income between 1995/96, 1999/2000 was 27.5 per cent. The increase in research income across all arts in that same period was 28.1 per cent so it is about the same. Within that you are right that the increase for engineering was well below the science average, 17.6 per cent, and, if you take the other level, the increase in pure arts funding was 128.9 per cent - a very low base, they only started with less than 17 million ---
(Margaret Hodge) I do not think they would say that - not modern art - but that reflects this whole issue of careers in engineering and people right the way through from school and the lack of new people coming on in the engineering field, and that is an issue of real concern. You are right as well ---
(Margaret Hodge) But the answer does not lie necessarily either within the university sector and certainly it is not the fault of the RAE exercise. The answer lies in the schools, in encouraging more young people, women, to go into engineering. That is where we have to start it. You will not solve it by giving a different set of rules at the RAE level.
(Margaret Hodge) They take the decision. The HEFCE board take the decision; it is a matter for them. In a good working relationship, there are a lot of conversations that take place before those decisions are taken but, at the end of the day, the decision rests with HEFCE and it is theirs to take.
(Margaret Hodge) On that it exercised its own judgment. We happen to agree - which is not an unhealthy way to be doing business with a non-departmental public body, which is what it is - that the priority must go to sustaining as best we can the world excellence of 5s and 5*s, but it could have decided to give it all to 1s and 2s.
(Margaret Hodge) It would have decided. That is its prerogative.
(Margaret Hodge) I think, looking at the QAA outcome of the subject reviews, you tend to get a link between good quality teaching and good quality research. Having said that, we are thinking very much about that in reviewing where we think higher education should be in ten years' time. We have so far funded the higher education sector very much as if it is one-size-fits-all, so you get money through bodies and money through the RAE, two avenues, and you do not really get money for excellence in teaching. As we widen and extend participation it is going to become increasingly important that excellence in teaching is a feature in the HE sector and it needs to have a set of incentives around it so that some institutions can focus on that. So whilst traditionally if you look at the past there may be a connection, there is no reason why in the future you cannot think of not having a one-size-fits-all solution: having universities focusing on things they do best and then having a set of incentives to ensure that you reward them for doing that well.
(Margaret Hodge) It does not and I do see it as a positive development. I think if we can encourage greater diversity in the higher education sector, that is great. I think there are some really strong, difficult issues we have to think about and that is something you have touched on - for instance, a new medical school. How do you provide the incentives there so that, if an excellent research capacity emerges, you nurture it and grow it. So I think there are some really tough issues you have to think through but I am very keen, particularly looking at our widening participation priorities, that one of them should be that we should focus on teaching. I really feel strongly that the cohort of young people who we want to encourage into higher education in the next decade, both to meet our target and to meet the skills needs that are required in the economy, will probably need a very different sort of teaching from the teaching I experienced when I was one of the 6/7 per cent to go to university, so we have to reflect that in the quality of the staff. I see nothing wrong, therefore, with having a diverse set of institutions but we need to have some permeability in the system a bit like the old football league, so they can go up and down and switch around as and when. Also, the reason I talked so much about the distinction between different sorts of research is that you do not want to end up with all your basic research being done, for example, in one area of the country; you want to have a knowledge transfer capacity really well spread across the region and economies.
(Margaret Hodge) I hope so!
(Margaret Hodge) I think it is beginning to change; I think it needs to change more. All universities are trying to link themselves into their regional economies better than they used to and that is to be welcomed, and the incentives we put in the system to achieve that are beginning to work and we need to do much more of that. It is interesting that only 3 per cent of UK companies use the HE sector in their businesses and we have to grow that. You have probably heard me going on about this terrible business of young people from the lower socio economic groups and their aspirations in relation to university, and there is this awful research that shows that over 40 per cent of people from C2DE socio-economic groups never think about university as an option for them during their school years. That is partly about the school sector getting itself sorted out; it is partly about what we do - the aim-higher campaign; promoting, raising aspirations; but it is also about universities going out and down into their communities.
(Margaret Hodge) That could emerge so, again, we need to see what incentives and structures we put in place to prevent that happening. Whilst it might be sensible, particularly in the sciences to concentrate on the funding because of the massive cost of much of the investment, you might think about opening up those facilities to be used by staff working in other institutions as a much more open way than currently happens. Making that a condition of grant might be one way of trying to ensure that we maintain some sort of permeability between institutions and allow new research capacity to flourish. There are issues and particularly in the sciences it would be crazy to think you can spread what will always be a limited pot too thinly, so you cannot get the real investment you need to succeed internationally.
(Margaret Hodge) If the Committee has any ideas of mechanisms that we could employ which would allow the concentration of resources which we require and yet the permeability that we also desire, let us know, please.
(Margaret Hodge) There will always be a regional dimension to a sensible higher education policy so we will want always to ensure a proper regional offer across the country. Beyond that, I have to say that I am not convinced that sustaining uneconomic departments where there simply is no demand for places is a sensible way of our using resources. If you think of how much money we do need and the under-investment over such a long period, I can think of other really important priorities to which I would put that money, so I am not sure it is a sensible way of doing it.
(Margaret Hodge) Actual departments and their value to the British economy? Can you re-read the passage, please?
(Margaret Hodge) Well, I think they are funded on the basis of their value to the British economy so it was a sentence that passed me by, I have to admit, in the drafting of that particular bit. I probably need to see the context.
(Margaret Hodge) I read it and I had a big hand in drafting it, Chairman, but I just cannot remember that particular paragraph.
(Margaret Hodge) I know what we are talking about now, yes. What we are anxious about is this issue of concentration. There are only a limited number of departments, particularly in some of the science areas, where we need really heavy concentration of investment to compete internationally, and the 5* has almost become too bunched up now to enable you to select within it those three or four. We know that, for example, under the 1996 allocation, a third of the RAE money went to four institutions - it was that concentrated, similar to in the States but it was pretty concentrated - and that seems not an unsensible way of proceeding. Given the growth in number in the 5*, is it still sensitive enough for us to be able to extract from that those that really need substantial investment to be able to pay the sort of salaries and attract the sort of person that will keep our capacity going, and we worry about that. There are various ways in which you can address that. One of the options would be, again, perhaps to create a new grade, those that are internationally competitive, where we would give extra resources which would enable them to attract the brightest of people.
(Margaret Hodge) That would be one way. It is not desperately sophisticated. I think probably round this table you could all do it better than I can because you are all scientists.
(Margaret Hodge) I am very concerned about our ability to maintain our international competitive edge. As you know, we talk about all the Nobel prize winners but they came out of investment ten, fifteen, twenty years ago and we want to have the Nobel prize winners of the next generation. I am really worried particularly about the salaries we are paying in competition to the States, which is the key competitor, and that we have not enough money in the system to pay competitive salaries.
(Margaret Hodge) Could you just repeat the last bit?
(Margaret Hodge) Yes, so that is one of the issues we need to address in the review of the RAE as a way of determining quality.
(Margaret Hodge) I have to say I think I start from a completely different perspective on this, in that I think we have been kidding ourselves that all universities are the same anyway. A little bit of honesty about universities doing different things now might be a healthy way of learning about the future and a sensible way of how you can appropriately and properly fund the things that universities do. I do not want all universities to be the same, I do not think they have ever been the same. I do not think any of you round the table really do think they are the same. What we want to do is value and reward those things that we think are important.
(Margaret Hodge) Did you? Did you honestly think that?
(Margaret Hodge) We do not have a system of national standards and national examinations. I heard the Universities UK representative saying to you there are something like 50,000 courses, and I thought, poor old students having to wade through that lot to make a choice. Courses are independently set and although they are externally monitored I think we are kidding ourselves if we really do think or we have thought that every university is the same, it does not mean they do not all do great and important and good things and we should nurture and grow them. I really do not think anybody really believes they are all the same. Therefore, maybe we start from a different basis, from my basis what I want to do is ensure that we provide all of those things that we talked about; that we have a good research capacity throughout the United Kingdom; that we promote the excellent research that we need to compete internationally; that we grow a knowledge transfer role; that we start to foster through the various funding streams; that we widen participation; that we value teaching and that we reward excellent teaching. Those are probably the key things, some universities will do all, some will do some better than others and some will focus on some and do them extremely well. I think I start from that perspective. What I am anxious to do is to look at a funding mechanism which does reward all of those functions but does not force universities to try and be the same, which I think our funding mechanism has done to date. That is the first thing. The second thing is, I do not want to go back, I do not want to go to centrally planned places. There is a real, real problem about engineering in particular. I do not think the solution lies in growing or in maintaining the supply of engineering places in universities, the solution lies in what my colleagues in the DFES are doing through the school stage and preschool stage in encouraging more young people to go into engineering and other related subjects . Do not let us be too dismal, we are doing jolly well internationally on it, hence citations. I do not want to go back to that. The HE sector is an odd place because they are fiercely independent institutions who run their own affairs, yet we have never let the market flow within the institutions because we have had that control over places. HEFCE advised us last week on something that we have been thinking about as well - coterminous views - that they are thinking of lifting the control of student numbers as of 2002/2003. It will be interesting. We will have to watch it and see what happens, but I think it is quite a healthy way to foster student choice actually, which is very important, and we have not talked about that much this afternoon. I am not very attracted to the idea of centrally planning places or to deal with deficits in engineering or modern languages, let me take another area where there are lots of departments closing just at a time when we want more British people to learn European and other foreign languages. I do not think you can plan the university sector from the centre, you have to deal with it in other ways. Teaching and research are interconnected, yes, traditionally so, but that is because we have never valued and rewarded excellent teaching. Think, who has been promoted in the universities that you have been associated with simply on the grounds of their excellence in teaching? They are few and far between. We just need to think again about whether or not we cannot create different career structures, different incentives which will start rewarding teaching and that might change people's attitude. It does not mean they do not do some research as well, it just might change that. That is to the benefit of the customer in the system, which is the student, and, if we are going get to the 50 per cent target, that is a huge growth, it will be a change in the cohort and they will require much more focussed teaching and supported teaching than we did probably when we went to university. Can you devise a funding system which meets all of our objectives? It is back to the question of we have a number of priorities, I resisted prioritising them at this stage. I still think that however much money we manage to achieve out of the CSR we are going to have to do some of everything and we will just have to see that quantum will determine a lot, as, indeed, it would in research, because all of those decisions about selectivity and relative strengths all become much easier if you have a bit more money floating round the system. Again, those sort of decisions will have to be taken when we actually have the final determination on the next Spending Review. What we attempted to do, and what I think, if I can say this in the end, is that universities need a pat on their back for doing jolly well on the RAE. I do not think it has been a reflection of the great inflation exercise, I think it has been a real improvement in the quality of research. What we have attempted to do with the interim money we put in is just keep the show on the road until we get the outcomes of the Spending Review and we will have to take tough decisions, and we will take them.
(Margaret Hodge) Thank you very much indeed.
Chairman: Thank you.