Universities

Part of the debate – in the House of Lords at 5:50 pm on 21 March 2001.

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Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour 5:50, 21 March 2001

My Lords, first, I congratulate the noble Lord, Lord Norton of Louth, on introducing this debate on accountability. I certainly welcome it. It is a vital issue. In my capacity as chief executive of Universities UK--I declare that interest--I know that our universities would be the first to agree that they should be accountable for the public funds that they receive. After all, public funds account for a large proportion--some 62 per cent--of their money.

However, the systems by which our universities account for that public money certainly need to be reformed. There are questions about cost-effectiveness and whether those systems are all necessary. I am sure that we all want to relieve universities of unnecessary burdens because they are time-consuming and costly and they limit innovation. Universities are finding that the burden of red tape is reducing their scope for flexibility. Flexibility is vital if universities are to develop their students to the full.

Our universities will be able to do that if they can tailor their programmes to the interests of students. That is a particular strength of UK universities. However, I fear that the burden of too much red tape might force our universities into constructing more limited programmes. I cannot emphasise enough how important flexibility is in allowing our universities to carry out the research which is so important to the economy.

The present system places a cost on universities which they can ill afford. After decades of cuts, the last thing that they need is for the much-needed extra resources, hard won from the Government, to be siphoned off into dealing with red tape.

It is worth asking how much the present systems cost. The noble Lord, Lord Norton, mentioned PA Consulting Group--the independent consultants retained by HEFCE, the Higher Education Funding Council for England, to look into the burden of accountability, as we have all come to call it. PA Consulting said that the direct and indirect costs of the present systems--the noble Lord, Lord Norton, enumerated them in detail--stand at approximately £250 million each year. Not only is that equivalent to 5 per cent of the total budget of HEFCE but, according to my calculations, it is equivalent to the funding of about two universities.

The main areas of accountability which cause those costs are, as has already been mentioned, the work of the Quality Assurance Agency; the research assessment exercise; to my mind, the cost of bidding for the ever-increasing small pots of money for special initiative funding; and the inexorable increase and sheer cost of extracting more and more information about students, finances and staffing.

Therefore, I was very pleased today to read the announcement from the Department for Education and Employment about the reduction in the burden of higher education quality assessment--one area where we know that there is a substantial burden. I certainly welcome it as a significant step towards reducing that burden. I believe that it is a step towards fulfilment of the Minister's intention that the burden should be reduced, as she said in a response to the noble Baroness, Lady Perry, just a month ago.

I also welcome the further dialogue with the funding council and the Quality Assurance Agency that is intended to continue that process and to identify further measures to reduce the burden on universities. Of course--I believe that everyone will acknowledge this--at the same time, that must be consistent with the need to provide reliable public information for students and other stakeholders.

I also want to stress that the auditors and assessors of the Quality Assurance Agency do a good job. The problem rests with the system of accountability rather than with the people who carry it out. However, I agree that reform must be much more ambitious. The new "light touch" of the QAA may well save the sector money. However, the £250 million bill needs to be reduced drastically. To achieve that, a fundamental reform of the whole series of audit systems is needed. Wholesale reform might mirror more accurately, for example, the good practice, tried and tested, which is employed at present in industry and commerce. I believe that we have much to learn in that regard.

I said that PA Consulting estimates that red tape costs £250 million each year. It is important to put that figure into context. Many noble Lords will know that Universities UK's Funding Options Review Group, under the guidance of Sir William Taylor, issued its final report on university funding, New Directions for Higher Education Funding, only a few weeks ago.

That report identified a funding requirement in the university sector of at least £900 million each year which must be found by 2004-05. Universities need that extra money, among other things, to improve their deteriorating teaching facilities. Those are, of course, enormously important if universities are to provide the skills and knowledge which the economy needs. The extra money is also important in enabling universities fully to motivate their students. Without it, it becomes increasingly difficult to ensure that the UK's rate of student retention, which is almost the highest in the world, remains that way.

To my mind, if some of the resources which are now being used up in meeting the accountability burden were spent instead on improving the teaching infrastructure and other forms of student support, that would go some way to meeting the funding requirement set out in New Directions for Higher Education Funding.

Having said all that, I very much support the call by the noble Lord, Lord Norton of Louth, for attention to be given to this issue. I certainly also welcome the Government's intention of ensuring that that happens.