With permission, Mr. Speaker, I should like to make a statement about university funding.
The University Grants Committee is today writing to the universities to inform them of their grants for the 1986–87 academic year in the context of their planning to the end of the decade. This announcement represents the allocation between individual universities of the recurrent grant for 1986–87 that I announced on 12 November last. The committee will also inform the universities next week of the detailed outcome of the important initiative it has taken to encourage and reward excellence in university departments by selective reallocation of the funds available.
The detailed results of this exercise will be conveyed to the universities by the UGC. In plain language, they mean the following more funds for the better research departments and less for the less good; a greater incentive to all universities and departments to improve both their academic standards and their management and use of resources.
This is a landmark in university funding which the Government strongly support. I am particularly grateful the UGC for the commitment, skill and energy it has shown in pressing forward in the interests of excellence this initiative directed towards greater effectiveness and value for money at a time when all budgets are under pressure.
If we are to continue to improve the quality and effectiveness of our universities, we must provide positive incentives to individual institutions for better management and better teaching and research. This is what the new selective arrangements for grant allocation are designed to achieve. Instead of basing future funding simply on the accumulation of decisions of the past, the UGC has started afresh and devised a method of distributing grant based on positive judgments about the needs of teaching, the quality of research in all disciplines, and the rewarding of institutional enterprise. In this task the UGC and its subcommittees have been helped by advice from the research councils, the Royal Society and other bodies.
The Government are under no illusions about the difficulties of restructuring and rationalisation involved. As some departments gain, others may have to be reduced and even closed. Universities will have to grasp every opportunity for greater efficiency and effectiveness in using the resources available to them. Decisions about future levels of funding are normally considered in the public expenditure survey. Precise amounts are for consideration then. But, in these exceptional circumstances, and in order to give the universities a reasonable chance to adapt to the changes needed in the national interest, I am telling the UGC today that the Government will be ready to consider with it some further financial provision in 1987–88 and the following financial years.
The Government's willingness to make such additional provision will, however, depend crucially on evidence of real progress in implementing and building upon the changes that are needed. They will include, as well as the development of the policy of selectivity and the rationalisation and where appropriate closure of small departments, better financial management and improved standards of teaching. If there is to be a new structure for academic pay, Ministers will need to be satisfied that it will provide the necessary flexibility to enable institutions to recruit and retain staff of the required quality.
I shall be discussing the way forward with the UGC and with the Committee of Vice-Chancellors and Principals.
The general letter of guidance that the chairman of the UGC is sending to all universities will be placed in the Library of the House tomorrow, and the grants to individual universities for 1986–87 will be published in the Official Report of tomorrow's proceedings. The chairman's letter will be followed in about a week's time by institutional annexes relating to the student numbers and research funding of each university, which will also be placed in the Library.
Is the Secretary of State aware, particularly after all the weekend publicity, that his statement today will be a bitter disappointment to all who are concerned about the state of higher education? Will he confirm that, coming on top of the £23 million cuts in 1987–88 announced by the National Advisory Body, today's UGC letter, of which I have a copy, shows that the universities' recurrent grant was cut by 5 per cent. in real terms in 1985–86, and is being cut by over 2 per cent. in the coming year? We did not hear anything about that.
Is it not the case that 18 universities, including Aston, Durham, Hull, Keele, Newcastle, Cardiff, and Aberdeen, face actual cash cuts? Is it not the case that many departments will close and that the UGC is planning for cuts in student numbers in physical sciences, mathematics and statistics and biological sciences, all of which the Secretary of State has said are vital to the nation?
Is not today's statement, with its support for cuts and half-hearted promises of talks some time in the future, a savage indictment of the Secretary of State's period in office? It is bad news for universities, bad news for students, and bad news for industry. We are the only major country in western Europe cutting back on higher education. and it is a shame for the country.
The reaction of the hon. Gentleman. as the representative of the official Opposition, will not be the reaction of the world of universities, nor of the world of science. It is a landmark for the country that the UGC, with the Government's encouragement, is for the first time providing tangible evidence of the encouragement of excellence in universities in terms of the research quality of all departments, be they in the arts and humanities or in the sciences.
The hon. Gentleman's comments about the National Advisory Body were to misunderstand totally the pure mischief-making which that unjustified prediction represented and are, anyway, irrelevant to this afternoon's statement about universities. The allocation of the already announced money that will be distributed by the UGC today, tomorrow and next week will recognise for the first time the differential quality of departments in universities so as to encourage excellence. That is a landmark which the House would be wise to recognise.
Does my right hon. Friend accept that the proposals will be widely regarded as a watershed in the funding of universities? Does he further accept that the idea of funding those departments which are demonstrably better is to be encouraged and in itself will do much to improve standards throughout higher education?
My hon. Friend has precisely the right reaction. In an attempt to assist universities, especially those that might otherwise be hard hit by the changes, the Government have expressed themselves ready, subject to the compliance of the universities with the conditions laid down, to consider allocating more money for 1987–88 and subsequent years.
Does my right hon. Friend agree that it is fundamental to the idea of a university that each department of the institution should combine research and teaching functions? Although it is necessary to be discriminating in the allocation of grant between departments and universities, and although it may be necessary to encourage structural change, will my right hon. Friend assure the House that each department emerging from the changes will continue to combine teaching and research functions?
Is it not an insult to the UGC and universities to suggest that they have never before sought selectively to promote excellence in their activities? In plain figures, is not the truth that the universities have been cut by 10 per cent. during the past five years, will he cut by 2 per cent. next year and that the promises which the Secretary of state is making now relate to a time when he will not be the Secretary of State and even to a time when the Government will not be in power any more?
The hon. Gentleman fails to recognise that, although it is true that universities and departments have striven to improve excellence, this is the first time that the UGC has sought, in distributing taxpayers' money, to recognise the differences of quality.
As for the reductions in expenditure by the taxpayer, the universities have contributed to constraints on public spending. This year, for which I am making the announcement, that is also true, but the universities have said—the Government have listened carefully—that it will be necessary to change the prospects for future years if the consequences of redistribution and rationalisation are not to endanger the existence of some universities. In recognition of the reallocation to recognise the qualities of different departments and the warnings that we have received from universities, the Government have undertaken to consider the provision of more money for 1987—88 and future years, provided that the universities comply with the conditions laid down.
Does the Secretary of State appreciate that there is little confidence in British universities in the capability of the UGC to carry out the exercise in pursuit of excellence that he has suggested? If he had confidence in the UGC, would he not have been more specific about the impact on many institutions that have had to put up with repeated attacks on their funding during the past five or six years? Would he be specific about Stirling university and say to what extent its funding will be affected by the consequences of his statement?
I cannot go into the individual circumstances of universities. That is for them to learn from the UGC. I am not at all surprised by the hon. Gentleman's expression of doubt about the confidence of anybody to make the judgments, but the UGC has about 100 academics on its sub-committees. They have contributed their judgment, as have the research councils, the Royal Society and some people who are eminent in their fields. The UGC has taken great trouble to gather peer voices which will be respected in their areas.
Does my right hon. Friend agree that it is a little difficult to follow and evaluate a statement without the figures and the details? Will he give some thought to that for the future? Can he tell us whether the UGC has expressed complete satisfaction with what it has done?
The UGC has taken a bold and pioneering step. No doubt there will be some discussion between it and the universities. It is for the UGC to announce the figures. They will be placed in the Library and in the hands of universities later today, if the universities catch them, or tomorrow, with a supplementary letter from the UGC next week.
The Secretary of State must accept that he has made a dismal statement today. Scholarship, research and education will suffer far more than they already have under the Government.
As for the UGC letter, can the right hon. Gentleman tell me why universities mainly in the leafy south-east such as Bath, Bristol, Exeter, Kent, Loughborough. Southampton, Sussex and Warwick have been protected the most and have had cash increases during the past year whereas nearly every university and college in Scotland and Wales and most universities in the north of England are experiencing cash cuts in 1986–87? This is a disgraceful statement, and the Secretary of State ought to resign.
As I tried to explain in my statement, the UGC has attempted to rectify the overfunding and underfunding that has occurred during the past few years as the basis for allocation between universities and to build into that redistribution a recognition of quality of research, which includes, as I understand it, in brief, scholarship that breaks new ground in knowledge and understanding, between different departments of different universities.
Will my right hon. Friend confirm that it will be the Government's policy to prevent the brain drain and to ensure that the best scientists are glad to work in British universities?
My hon. Friend is on to a most important subject. As part of the remedy for the brain drain, it is crucial that salary structures in higher education should give some discretion and flexibility to the institutions concerned and not have as little flexibility as now.
When the Secretary of State recently required the universities to reduce the number of staff, the UGC felt unable, because it did not have sufficient expertise, to guide the universities on how the job reductions should be done. How has the UGC suddenly acquired the expertise necessary to advise on degrees of excellence?
In reply to my hon. Friend the Member for Clackmannan (Mr. O'Neill), did I understand the Secretary of State to say that, in the mechanism of shrinkage of universities, the Royal Society, sub-committees of the UGC and other bodies such as research councils agreed to take part? Has Sir George Porter, for example, the President of the Royal Society, been consulted? Who is to make these positive judgments about the needs of teaching, the quality of research and rewarding institutional enterprise because, on the basis of those criteria, the first place to go is All Souls college, Oxford?
The hon. Gentleman has misunderstood. The exercise that I explained in my statement is connected not with the shrinkage of universities but with the redistribution of taxpayers' money to recognise more or less excellence in research. The effectiveness of teaching cannot be identified from the outside while, to some extent, the quality of research can be recognised. The quality and effectiveness of teaching remain overwhelmingly the responsibility of the individual university and department. The committee of Vice-Chancellors and Principals has assured us that it proposes to set up staff training functions, and will do whatever it can in every way to improve the effectiveness of teaching.
On Sir George Porter, I said that in exercising its judgment on research the UGC has turned not only to its sub-committees, but to experts from the Royal Society, from related bodies, from the research councils and from eminent recognised authorities in the peer groups.
Order. I have to take account of the fact that following this statement there is a further statement, three applications under Standing Order No. 10, a ten-minute Bill and the Social Security Bill under the guillotine. Therefore, I shall allow questions on this statement to continue until 4 pm. Then we must move on.
Can my right hon. Friend be more forthcoming about how better teaching will be rewarded? Will there be appraisal systems; and, if so, who will conduct them? Is the implication of his statement, which is welcome in so many ways, that no university is destined for closure?
Stories in the press about possible closures are not remotely justified by the picture that I have presented this afternoon. As for the encouragement of teaching, I understand that the universities and, indeed, the Association of University Teachers, recognise that appraisal might be relevant in universities. For the first time the UGC has recognised the needs of certain subjects for a larger allocation of public money for teaching. That will emerge from the statement.
Will the Secretary of State confirm that this, his final statement in the House as Secretary of State, will lead during the next four years to a planned reduction in the number of undergraduate places at British universities, thereby making it more difficult for highly qualified young people to find places at universities? Will he take this opportunity to answer an earlier question about why the Government intend to cut the physical sciences, the biological sciences and mathematics—the very subjects that are supposed to be at the heart of future economic development?
The answer to the first question is no, Sir. The answer to the second is that the hon. Gentleman must not confuse reduction with redistribution. Redistribution is what is involved.
Does my hon. Friend accept that universities such as Lancaster which have demonstrated their ability to attract outside funding and are led by a dynamic vice-chancellor will welcome the challenge put to them by my right hon. Friend and the UGC, and will continue to play a full part in the national and international scene of higher education?
I would have expected my hon. Friend and Lancaster university to respond as robustly as she has. I should like to emphasise that the scope of those departments which have not been identified as excellent in this particular survey will remain for improvement, if it is so decided.
Will the Secretary of State say how many places will be created or saved by these proposals, and whether the sum matches the £30 million that the UGC has said is needed to protect university places now? Will next year's allocation exceed the £60 million which it estimates will be needed to protect the ongoing commitment to university education?
There is no implication in my statement for student numbers this year, either up or down. The Government take pride in the fact that students in higher education are a record proportion of a record age vintage.
As for the financial figures to which the hon. Gentleman referred, any financial improvement agreed by the Government will be considered against the performance of the university's compliance with the conditions that I am laying down at the normal time of the public expenditure survey, in the autumn. I invite the House to recognise, as the Government do, that universities and polytechinics have moved substantially nearer to industry, business and commerce in recent years, and we recognise and are grateful for this.
Does my right hon. Friend agree that the Government's initiatives to encourage charitable giving open up the possibility of worthwhile additional funding from industry and grant-giving charities for academic institutions, of demonstrable value? Does he accept that the limitations on what can be afforded from taxation are not necessarily the ultimate constraint on academic funding?
Does not the courageous and proper decision by the UGC reflect a widespread feeling among universities, particularly the scientific ones, that it is essential to concentrate resources on excellence and phase out the weaker elements? Are not certain of the figures bandied about this afternoon put into perspective when one remembers that one small university adjacent to my constituency, Cranfield, raises no less than £35 million a year from industry and private contract sources?
Is the Secretary of State aware that the statement confirms the view of Scottish people that the universities of Scotland are not safe in the hands of the Department of Education and Science and the UGC? Therefore, will the right hon. Gentleman consult the Secretary of State for Scotland to implement immediately the view of the Scottish Tertiary Education Advisory Council that there should be a separate UGC to take account of the separate nature of Scottish universities?
My right hon. Friend's statement has not been welcomed by the Opposition, but it will be welcomed on the campus of Stirling university if it means that resources will be allocated to the departments according to performance and success. Will my right hon. Friend go further and consider allocating resources according to student preference as the measure of a department's success, and accept congratulations on ending the horse trading that has gone on within the UGC to allocate resources?
I am grateful to my hon. Friend, and agree with much of what he has said. To some extent, the fact that public money follows student choice already recognises that student choices have a large contribution to make. Nevertheless, we want to ensure, as I am sure my hon. Friend does, that the quality of teaching and research in the chosen universities is excellent.
Is it not true that the universities need at least a 5 per cent. increase this year to maintain their present capacity, so that the 0·3 per cent. that the Secretary of State is knocking off the allocation to Hull university amounts to a cut in real terms of 5·3 per cent? Hull has suffered more than any university under this Secretary of State. Why does he have it in especially for Hull and Humberside? Last week he announced that a further 500 places were to go at the college of higher education. What have we done wrong to be treated in this way?
Notwithstanding proper allowance being made for the different types of course on offer at universities, is it not true that there is a substantial difference in the cost per student as between one institution and another and that therefore past spending is a measure neither of need nor of excellence? Is the Secretary of State saying that nuclear magnetic resonance and other medical research at Nottingham is precisely the kind of excellence to which public funds should be directed?
How can the Secretary of State describe these changes as being in the national interest when his policies cannot result in a substantial increase in the number of graduates and undergraduates at levels equivalent to those in Europe or North America? Will he specify exactly how many' redundancies in both teaching and non-teaching staff will be created throughout the system by his statement?
No change in student numbers or employment in universities is, in aggregate, presaged by today's statement. A redistribution may result. One of the main contributions to excellence is quality of research and effectiveness of teaching. That is precisely what the UGC' with the Government's encouragement, has now pioneered.
Was there not a key phrase in my right hon. Friend's welcome statement, namely, that further financial provision would be conditional upon selectivity? In the light of that, does he pay due regard in his discussions with the Treasury and other Government Ministers to the figures in, I believe, volume 2 of the public expenditure White Paper which make it clear that the social rate of return on higher education in this country is between 5 and 8 per cent., which is much better than the return on almost any other category of public spending?
I must say yes to my hon. Friend. I hope that hon. Members on both sides of the House will read the details of what I have announced today. We are offering to the university system the possibility of further funding, depending upon the negotiations on the public expenditure survey this year, if it builds on the announcements that have been made today.
Will the Secretary of State give a clear undertaking that the university of Bradford, which, with Aston and Salford, suffered savage cuts in 1981 and which recently announced the closure of its physics department, is to receive under his proposals a net real increase in resources, or the reverse?
The hon. Gentleman will have to look at the details in the letters, but the former chairman of the UGC who presided over the allocations in 1981 recently wrote to The Times to say that, in his view, thanks to the presence of two very vigorous vice-chancellors, Salford and Aston are both better universities now than they were in 1981.
I welcome the announcement and I bear in mind that Leicester university will benefit from today's announcement, but will my right hon. Friend confirm that no blank cheque is available, that university results must be improved, and that the unnecessary courses in some universities should be done away with and excellence maintained?
Will the Secretary of State explain why he has not put the UGC letter before the House today so that right hon. and hon. Members could see for themselves the extent of the real term cuts both in resources for the universities and in student numbers? Will he also tell us why the Government believe that higher education should be cut? Does he not agree that this is only one of three attacks on higher education — the universities, the public sector, and student grants? Does he not agree also that his statement is blackmailing the universities: that if they go along with this reallocation of smaller levels of resources and allow major cuts in research at places like Aston, Hull, Keele, Newcastle, Aberystwyth, Bangor, Swansea, Aberdeen, Dundee and Stirling they might get a few extra resources? Does he not agree that rather than being a landmark his statement puts a landmine under higher education in this country?
Order. I am sorry that I am unable to call everyone today, but I remind those right hon. and hon. Members whom I have not called that there will be education questions on 10 June. I shall keep a careful list of those who were not called today.